Saturday, September 22, 2018Canada's Leading Online Business Magazine

CANADA REACHES HISTORIC TRADE AGREEMENT WITH THE EUROPEAN UNION

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Canada and the European Union (EU) have reached an agreement in principle on a comprehensive trade accord that will significantly boost trade and investment ties between the two partners, and create jobs and opportunities for Canadians. It’s the largest trade agreement for our country since entering into NAFTA.

In fact, this is now the biggest, most ambitious trade agreement that Canada has ever reached. It covers most aspects of the Canada-EU bilateral economic relationship, including trade in goods and services, investment, and government procurement. It also grants the flexibility to include areas of mutual interest beyond those that have traditionally been included in Canada’s trade agreements, such as regulatory cooperation. The new trade agreement will have effects on virtually all of the country’s main economic sectors.

“This trade agreement is an historic win for Canada,” said Prime Minister Harper. “It represents thousands of new jobs for Canadians, and a half-billion new customers for Canadian businesses.”

The Agreement will provide Canada with preferential market access to the European Union’s more than 500 million consumers. Canadian workers in every region of the country – including in sectors such as fish and seafood; chemicals and plastics; metal and mineral products; technology; forestry and value-added wood products; automotive; advanced manufacturing; and agriculture and agri-food stand to benefit significantly from increased access to this lucrative 28 country market which currently generates $17 trillion in annual economic activity.

Canada now exports about 13,000 vehicles a year to the EU, but will soon be permitted to increase that to up to 100,000 vehicles per year, on the proviso they are at least 20% manufactured in Canada. Vehicles with at least 50% Canadian content will enter duty free and would not be subject to the quota.
Under the agreement, both countries will phase out tariffs on vehicles and parts over seven years. Canada’s tariff is 6.1% on automobiles. Europe has a 10% tariff on vehicles and a 4.5% duty on parts. Canada has a large trade deficit in autos with Europe.

The elimination of about 98% of all EU tariff lines on the first day of when the Agreement comes into force will translate into increased profits and market opportunities for Canadian businesses of all sizes, in every part of the country.  For example, the elimination of EU tariffs in the agricultural sector and the fish and seafood sector will mean that lobster fishermen in the Maritimes, maple syrup producers in Québec, apple growers in Ontario, grain producers in the prairies, cherry growers in British Columbia and arctic char farmers in the Yukon who export to the EU will see their bottom lines improve.

The trade negotiations with the European Union on the Comprehensive Economic and Trade Agreement are the most transparent and collaborative trade negotiations Canada has ever conducted. From the outset, provinces and territories have been active participants, and municipalities and stakeholders from across the country from a variety of sectors have been consulted regularly. Input from the general public has also been sought, including as early as Dec. 20, 2008, in the Canada Gazette. Foreign Affairs, Trade and Development Canada’s website has also been open to consultations from Canadians at all times throughout the negotiations.

“Businesses, provinces and territories have been crucial partners in reaching this point in the negotiation,” added the Prime Minister. “That is why we have been able to deliver on our commitment to reach an agreement that is in the best interest of Canadians.”

Now that an agreement in principle has been reached, both parties will seek to conclude the formal agreement and undertake a legal review of the document. Once the final agreement is signed, it will then need to be ratified by respective parliaments.

Canada also becomes the first nation in the world to have trading agreements with both the United States and the European Union.
Main points of the agreement:

Canadian automakers will be able to export 100,000 cars a year (it’s currently less than 10,000).

Full access to EU markets for Canadian fresh and frozen fruit and vegetables, or processed foods.

Full access to EU markets for Canadian wheat, oats, barley, rye and canola oil.

Full access to EU markets for Canadian dairy farmers, excluding poultry and egg sectors.

No more tariffs for many seafood products including live and frozen lobster.

No more tariffs on metals and mineral products, including iron and steel.

Canada will allow 29,000 tonnes of tariff-free cheese from the EU, up from 13,000 tonnes.

Note: The government may compensate Canadian dairy farmers if they lose money because of the agreement. Canada’s artisan cheese makers have already stated this new deal will be disastrous for them through spokespeople at the Dairy Farmers of Canada. There is a concern they could lose up to 30 per cent of their market to the Europeans.

Canadian beef producers will be able to sell 65,000 tonnes of beef – the current quota is 15,000.

Canadian pork producers will be able to export 75,000 tonnes, up from the 6,000 tonne quota now.

The government is also communicating with the provinces and territories about compensation if the provision to extend drug patents by two years increases their costs.

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