October 24, 2013
After years of negotiations, the President of the European Commission, José Manuel Barroso, and Canadian Prime Minister, Stephen Harper, agreed on the key elements of a Comprehensive Economic and Trade Agreement (CETA) on October 18, 2013. It will be the first bilateral free trade agreement between the European Union and a G8 country.
Extending their trade relations will generate new opportunities for economic growth and the creation of jobs in both Canada and the EU.
It is anticipated that the deal will have far reaching impacts, touching almost every sector of the Canadian economy as well as millions of workers and consumers. The agreement with the 28-member European Union covers everything from the automotive sector to agricultural tariffs to intellectual property.
The key elements of CETA can be summarized as follows:
As Canada and the U.S. have already liberalized their trade under the North American Free Trade Agreement (NAFTA), this agreement will afford Canadian companies with better access to the European market and vice-versa for European companies. Canada has been eager to reach this trade deal, believing access to the EU’s $17-trillion economy will boost gross domestic product by $12-billion and create up to 80,000 jobs.
It is anticipated that consumers will benefit from the changes arising from this agreement and that products and services from Europe will become less expensive.As a result, Canadians may pay less in the future for thousands of products made in Europe, such as cars, which are currently subject to a 6 per cent tariff.
Based on 2011 figures, the EU was Canada's second most important trading partner after the US, representing 10.4% of Canada's total external trade. The value of bilateral trade in goods between the EU and Canada was about € 62 billion in 2012. Once implemented, the agreement is expected to increase two-way bilateral trade in goods and services by 23% or € 26 billion, resulting in economic growth and creation of employment on both sides of the Atlantic.
Canada’s Prime Minister Stephen Harper acknowledged that in the short term there might be some negative effects to some sectors, but he said compensation is being considered. However, the overall benefits of CETA outweigh any problems. Mr. Harper has stated that “this agreement is vastly positive for the Canadian economy across the board […] This is not just a big deal, it is a very, very positive deal for Canada.”
“This is a highly ambitious and far-reaching trade agreement of great importance for the EU's economy," agrees Barroso, President of the European Commission. "This agreement will provide significant new opportunities for companies in the EU and in Canada by increasing market access for goods and services and providing new opportunities for European investors.”
On the basis of this political breakthrough, the negotiators will now be able to settle all of the remaining technical issues. The agreement will need to be approved by Canada’s provinces and territories and as well as the member states of the European Union.
Further information on this topic can be found at http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/canada/. Further information on next steps required to implement the agreement can been found online at: http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149616.pdf.
Sven Walker is a Partner with Dale & Lessmann LLP. For more than 50 years, Dale & Lessmann has had a specific focus on the representation of clients from Europe in Canada in relation to the establishment and expansion of their businesses. Sven Walker leads the firm's European Practice Group and acts for many of the firm's European clients - in particular clients from Germany, Switzerland, Austria and Scandinavia.
Born in Germany, Sven advises his clients in German, French, and English in his daily law practice. Like other members of Dale & Lessmann LLP’s European Practice Group, Sven has worked, lived and studied in Europe and in Canada and is a recognized expert in regards to Canadian-European cross-border legal matters.
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