By Anna Barrera (Research Associate, Dawson Strategic)
November 3, 2016
After a bumpy road, the Canada and European Union (EU) Comprehensive Economic and Trade Agreement (CETA) was signed in Brussels on October 30, 2016. While we are still several steps away from ratification, this is an important development not only for Canada and the EU, but also for the state of trade policy globally.
The intention of the agreement is to boost trade and investment flows between Canada and the EU (the world’s second largest economy with over US$16 trillion in GDP). The trade agreement with the EU could bring a 20 per cent boost in bilateral trade and a $12-billion annual increase to Canada’s economy. A failure to ratify the agreement would represent a step back for both actors.
If CETA is ratified, Canada will be one of the only developed countries in the world to have guaranteed preferential access to the more than 800 million consumers in the world’s two largest economies, the EU and the United States.
Canada is not the only country currently negotiating with the EU. The Transatlantic Trade and Investment Partnership (TTIP) is an agreement being negotiated between the United States and the EU. The TTIP is an important agreement for both Canada and the United States. If Canada manages to ratify CETA and the United States does not sign TTIP, Canada will have an advantage over its southern neighbour, and the other way around if CETA can’t be ratified and the TTIP can. Although, now that CETA has been signed, there is a higher chance of the TTIP going through the same process.
It is worth noting that for now the United Kingdom is part of CETA, but if it leaves the EU that will no longer be the case. However, it is unclear at this point whether Canada will have a potential future opportunity to negotiate a bilateral trade agreement with the United Kingdom, which is worth considering given that the current bilateral trade relationship is $22,390 million, and Canada exports more to the United Kingdom than the rest of Europe.
“Canada and Europe: Creating Jobs and Opportunities Together.” Global Affairs Canada. 2015. Accessed November 4, 2016. http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/ceta-aecg/web_inbrief-final-eng.pdf.