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CETA and Transatlantic Ties

June 14, 2017

Canada and Europe are drawing closer together even as the United States is distancing itself from its Transatlantic partners.  Last week, in a landmark speech in the House of Commons, Canada's Foreign Minister, Chrystia Freeland, set out a framework for Canadian foreign policy.  The speech underscored Canada's support for multilateralism and the liberal international order, in stark contrast to the "America first" theme of the Trump Administration. 

Minister Freeland said:  "A cornerstone of our multilateral agenda is our steadfast commitment to the Transatlantic Alliance.  Our bond is manifest in CETA, our historic trade agreement with the European Union - which we believe in and warmly support - and in our military deployment this summer to Latvia.  There can be no clearer sign that NATO and Article 5 are at the heart of Canada's national security policy."  NATO's Article 5 states that an attack against one member shall be deemed to be an attack against all.

The Minister went on to stress Canada's commitment to an open trading system:  "....we are a trading nation.  Far from seeing trade as a zero-sum game, we believe in trading relationships that benefit all parties.  We look forward to working with our continental partners to modernize the North American Free Trade Agreement, and to making a great trading partnership even better.  We will also intensify our efforts to diversify Canadian trade worldwide.  We will actively seek new trade agreements that further Canadian economic interests and that reflect our values - with the Canada-EU Trade Agreement as our template." 

The speech was a deliberate signal sent by Canada to Europe and to the world.  It challenges the Trump Administration's narrow protectionist messages, its abandonment of a transatlantic deal with the EU, and its ambivalence about support for its NATO allies in Europe.  The U.S. relationships with Germany and France in particular are at a low point.

CETA has become one of the cornerstones of Canadian foreign policy.  On its entry into force, the trade liberalization benefits will be felt immediately with lower tariffs on European exports to Canada and on Canadian exports to the EU.  This should happen in the coming weeks as the necessary regulations are modified  in Canada and similar measures are taken in the EU.  While the entry into force will be called "provisional" it will cover all trade aspects of CETA under the jurisdiction of the European Union, about 90% of the agreement.

In 2015, trade in goods between the EU and Canada was 63.5 billion euros and trade in services exceeded 30 billion euros.  Foreign direct investment between Canada and the EU totalled over 470 billion euros.

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