A free trade deal with the European Union estimated to be worth $12 billion annually to Canada has been signed in Brussels.
An agreement that may eclipse North American Free Trade Agreement in scale, the Canada-European Union Comprehensive Trade Economic Trade Agreement (CETA) is said to be the most comprehensive trade deal ever signed by either Canada or the European Union.
It will remove 98% of all European tariffs on Canadian goods and services, and give Canadian companies access to a 500-million person, $18 trillion market.
In the wake of Brexit and a growing antipathy towards free trade in general around the world, there were fears that CETA might fall apart.
It nearly did fail, when one region of Belgium – Wallonia – moved to veto the deal, prompting Canada’s International Trade Minister, Chrystia Freeland, to storm out of a meeting with EU officials October 21 and pronounce the deal “impossible.”
The Belgian government has since managed to get Wallonia on board, and on Sunday, October 30, Prime Minister Justin Trudeau, Donald Tusk, president of the European Council, and Jean-Claude Juncker, president of the European Commission, officially signed the agreement in Brussels.
The B.C. government and business groups across Canada are hailing the news as a major accomplishment for the Canadian economy.
"Next to the North American Free Trade Agreement, CETA is Canada's most-historic trade initiative,” said B.C. International Trade Minister Teresa Wat.
“Once CETA is implemented, Canada will be strategically positioned to become one of the few developed countries with preferential access to the world's two largest markets: the European Union and the United States.”
A joint Canada-EU study estimated CETA’s economic benefits in terms of annual real income gains within seven years of implementation: $12 billion for Canada; $17 billion for Europe.
There are still lingering concerns about what the UK’s withdrawal from the EU will mean for CETA, however. The UK represents about 18% of the European market. Some experts say that Canada may have to try to negotiate a bilateral agreement with the UK outside of CETA.
Sectors in Canada that are expected to benefit from the elimination of tariffs include: advanced manufacturing, agriculture, the automotive sector, chemicals and plastics, fish and seafood, forestry and value-added wood products, metal and mineral products and technology.
"CETA will offer significant benefits for most sectors of the Canadian economy, from fishermen in Newfoundland and Labrador, to aerospace workers in Quebec, and from people assembling automobiles in Ontario, to forest industry workers in British Columbia to miners in the Northwest Territories,” Trudeau said.
Some sectors – engineering and construction, for example – will see increased competition from European companies, since it levels the playing field for companies bidding on government procurement contracts.
Canadian companies, on the other hand, will also have more opportunities to bid on European government contracts.
Now that the agreement has been signed by the leaders of Canada and the EU, enabling legislation must still be passed in the House of Commons and the European Parliament.
Once CETA comes into force, 98% of all European tariffs will be removed.