Canada-European Union: Comprehensive Economic and Trade Agreement (CETA)
The Canada-EU Trade Agreement in Brief
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Canada and Europe: creating jobs and opportunities together
Trade is equivalent in value to more than 60 percent of Canada’s gross domestic product (GDP), and exports are directly linked to one in five Canadian jobs. Canada’s prosperity requires expansion beyond our borders into new markets for economic opportunities that serve to grow Canada’s exports and investment.
Prime Minister Stephen Harper and European Commission President José Manuel Barroso have announced that Canada and the European Union have concluded negotiations on the Comprehensive Economic and Trade Agreement. This agreement is by far Canada’s most ambitious trade initiative. Indeed, it is deeper in ambition and broader in scope than the historic North American Free Trade Agreement (NAFTA).
Canada will now 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. With 28 member states, 500 million people and annual economic activity of almost $18 trillion, the EU is the world’s largest economy. It is also the world’s largest importing market for goods: the EU’s annual imports alone are worth more than Canada’s GDP. Preferential access to this market offers tremendous opportunities and a real competitive edge for Canadian workers, businesses, exporters and investors.
This agreement will create jobs, growth and long-term prosperity for the benefit of all Canadians. A joint Canada-EU study that supported the launch of negotiations concluded that a trade agreement with the EU could bring a 20-percent boost in bilateral trade and a $12-billion annual increase to Canada’s economy. Put another way, this is the economic equivalent of adding $1,000 to the average Canadian family’s income or almost 80,000 new jobs to the Canadian economy.
New export opportunities in Europe
Under the Canada-EU trade agreement, world-class Canadian products will enjoy preferential access to the EU, and Canadians will have the tools and support they need to succeed in this lucrative market. The benefits will be shared among those who produce primary products (for example, from the minerals and agricultural sectors) and those who turn them into value-added processed and manufactured products.
Tariffs on almost all Canadian primary products will be eliminated when the agreement comes into force. Equally important to our economy’s health and well-being is the fact that tariffs on manufactured products will also be eliminated.
We are all very familiar with the richness and diversity of our primary sectors (that is, sectors that make direct use of natural resources). We also know that manufacturing— including sectors like the automotive and chemicals and plastics industries—touches every part of the economy. There are also significant manufacturing interests even within the primary sectors—interests such as agri-food, forest products, fish and seafood, and metal fabrication, to name just a few. The Canada-EU trade agreement will provide benefits for all of these manufacturing sub-sectors and for every hard-working Canadian employed in them.
The agreement also covers a wide range of issues that will translate into real benefits for Canadians, including improved access to EU markets for goods and services; greater certainty, transparency and protection for investments; and new opportunities in EU procurement markets. Other benefits include mechanisms for enhanced cooperation with the EU in areas of mutual interest, such as regulatory development and labour mobility. Greater access to such a large, dynamic market will directly benefit Canadians through more jobs, higher wages and greater long-term prosperity.
Did you know?
Of the EU’s more than 9,000 tariff lines, approximately 98 percent will be duty-free on the very first day the Canada-EU agreement comes into force. By comparison, only 29 percent of tariff lines were duty-free on the first day that NAFTA took effect.
Benefit: trade in goods
The rules governing trade in goods are at the core of all free trade agreements and cover aspects such as tariffs, regulatory obstacles (known as non-tariff barriers) and rules of origin.
On the day the Canada-EU agreement comes into force, nearly 100 percent of all EU tariff lines on non-agricultural products will be duty-free, along with close to 94 percent of all EU tariff lines on agricultural products. Overall, the elimination of tariffs will make Canada’s world-class products more competitive, resulting in increased exports and higher sales. This, in turn, will generate more jobs, higher wages and greater long-term prosperity, directly benefiting hard-working Canadians.
But improving market access is not just a matter of tariff elimination. The agreement also includes key provisions to ensure the non-discriminatory treatment of Canadian products in the EU and parameters aimed at limiting the use of import and export restrictions.
This is good news for Canadian businesses, which will benefit from lower business costs and fewer regulatory obstacles.
Benefit: trade in services
Service industries are vital to the Canadian economy. Canada is one of the largest exporters of services in the world and has significant expertise in a wide range of fields, including management, computer and information technology, architecture, engineering and many others. In 2013, service industries employed more than 13.8 million Canadians and accounted for 70 percent of Canada’s total GDP, making services by far the largest economic sector in the country.
Citizenship or residency requirements, barriers to temporary entry, and ownership and investment restrictions can all act as barriers to exports of services. These barriers will be reduced or eliminated, directly benefiting workers and businesses across Canada.
The agreement gives Canadian service suppliers the best market access the EU has ever granted to any of its free trade agreement partners. The Canada-EU trade agreement will establish greater transparency in the EU services market, resulting in better, more secure and more predictable market access for Canadians.
Investment plays an important role in the Canadian economy and is crucial in linking Canada to global value chains. Greater investment by foreign sources in Canada and by Canadian businesses abroad stimulates economic growth and job creation, provides new technologies and increases competition in the marketplace.
The Canada-EU agreement’s investment chapter will provide Canadian and EU investors with greater certainty, stability, transparency and protection for their investments while preserving full rights for governments to legislate and regulate in the public interest.
Benefit: government procurement
Finally, the Canada-EU trade agreement also gives Canadian suppliers of goods and services secure, preferential access to the EU’s $3.3-trillion government procurement market, providing them with significant new export opportunities.
The agreement expands and secures opportunities for Canadian firms to supply their goods and services to the EU’s 28 member states and thousands of regional and local government entities. Greater access to the world’s largest procurement market will benefit workers and their families in sectors that are vital to Canada’s economy.
As Canadian companies explore the opportunities the Canada-European Union trade agreement offers to grow their businesses, they can count on the support of the Government of Canada—through, for example, the Canadian Trade Commissioner Service, Export Development Canada, the Canadian Commercial Corporation and the Business Development Bank of Canada.
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