Canada-EU Comprehensive Economic and Trade Agreement (CETA): What it means for Canadian business

By: 
Molly Shaw

The Comprehensive Economic and Trade Agreement (CETA) is a freshly negotiated EU-Canada treaty and one of the largest Canada has ever signed. Dubbed “the Wayne Gretzky” of trade deals by Jayson Myers, president and CEO of Canadian Manufacturers & Exporters, CETA paves the way to amplified free trade between Canadian businesses and the EU’s 28 country strong, $17 trillion integrated economy.

The historic arrangement is by far Canada’s most ambitious trade initiative says Foreign Affairs Trade and Development Canada, broader in scope and deeper in ambition than the North American Free Trade Agreement. CETA addresses a whole range of issues restraining trade between Canada and EU countries, but one of the most significant is the near elimination of customs duties on goods traveling between both shores.

The negotiators of CETA finalized the work in early August 2014. The Member States and European Parliament received the complete text Aug. 5 and President Barroso, President Van Rompuy and Prime Minister Harper announced the end of the CETA negotiations at the EU-Canada Summit Sept. 26, 2014.

According to the European Commission, the objective of CETA is to increase bilateral trade and investment to push growth in times of economic uncertainty on both sides of the Atlantic. From reducing tariffs to ending limitations in access to public contracts, opening up services markets to creating jobs, CETA is sure to shape the future of the Canadian economy

A competitive advantage for Canada

Foreign Affairs Trade and Development Canada claims CETA will, “open new markets to exporters throughout the EU and generate significant benefits for all Canadians.” But why the push for an aggressive trade arrangement?

The Government of Canada says it’s about leveraging a competitive advantage for all Canadians due to the following factors:

  1. Tightly tied to the global economy – Canada’s two-way trade is equivalent to 60% of the country’s gross domestic product (GDP) and one in five Canadian jobs are linked to exports.
  2. Eliminating tariffs CETA will remove 99% of customs duties and many other obstacles for business, helping Canada gaining secure access to the EU market –one of the largest and most lucrative in the world. CETA also ramps up import quotas, allowing more goods to flow freely.
  3. Clear rules across the board – Trade rules can vary from one country to another due to differences in policy. CETA contains provisions that will commit governments to pursue policies that are transparent, clear and fair and that minimize costs for business communities. CETA also builds in protections that will ensure that Canada’s municipalities, provinces, territories and federal government can continue to regulate in the public interest, whether in matters of health and safety, environmental protection or cultural identity.
  4. Less Red Tape and business barriers – From border taxes to discriminatory licenses and permits to certifications, red tape often hinders small to medium-sized enterprises. CETA takes aim at these problems by eliminating tariffs, locking in fair and predictable conditions for business and ensures that each side treats other companies and goods the same way as they treat their own.

The long period to ratify the deal, while it is translated into numerous languages and pushed through the European Parliament, has made way for some criticism by those unsure if CETA is really in Canada’s best interest. “If the deal is so important, shouldn’t Canadians have the chance to accept or reject it?” suggests Maude Barlow, head of the Council of Canadians.

The fact of the matter is CETA affects various industries differently, causing for concern in some. For cattle farmers and ranchers, it’s good news. “The removal of long-standing barriers in this agreement, such as high tariffs, finally enables Canadian beef producers to benefit from the value that the European beef market represents,” Martin Unrau, president of the Canadian Cattlemen’s Association, told Huffington Post.

Meanwhile, Canada’s dairy farmers are not so thrilled about CETA making way for doubled cheese imports from EU countries. The Dairy Farmers of Canada group, which represents approximately 13,000 dairy farmers said: “Dairy Farmers will not support the Harper government agreeing to deal with the EU that gives away the Canadian cheese market that Canadian dairy farmers and cheese makers have worked so hard to develop over the years.”

From agriculture to the automotive industry, CETA will allow Canadian auto manufacturers to increase sales into Europe to 100,000 units, up from about 10,000, the figure in place. The EU will phase out a 10% tariff on auto imports and in turn, Canada will diminish a 6% tariff on European auto imports –good news for fans of luxury foreign cars, but in turn, could reduce domestic auto sales.

Foreign Affairs Trade and Development Canada says CETA will create more global professional career opportunities, one example being engineers without borders: “Under CETA, Canadian engineering bodies and their EU counterparts will have the opportunity to negotiate a mutual recognition agreement, following a streamlined process that allows for the automatic recognition of credentials without the need for individual assessments. Once a mutual recognition agreement is in place for a profession, such as engineering, professionals will be allowed to provide their services in the EU as well as in Canada, creating new opportunities for professionals,” says the body.

But for now, it’s still early in the game to determine the impact of CETA across Canadian industries, but Prime Minister Harper says it would be a risk not to take action. “I think anyone who opposes [CETA] will lose and make a big historic mistake politically for so doing,” he said. Only time will tell as Canada makes one of the most historic economic moves to date.