Free Trade Deal Reached Between Canada and European Union

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After four years of negotiating, the European Union and Canada agreed to terms on a free trade deal on October 18, 2013.[1] In 2012 the European Commission estimated that nearly 116 billion U.S. dollars of trade in goods and services was conducted between the two parties.[2] As a result, the European Union is Canada’s second largest trading partner.[3] Approval of the deal by the European Parliament and its member states is pending, as is federal and provincial approval in Canada.[4]

Once the Canada-EU Trade Agreement (CETA) is approved, 99 percent of tariffs between the European Union and Canada will be removed.[5] For example, “the 10 per cent EU tariff on passenger vehicles will be eliminated, as will tariffs on auto parts which run up to 4.5 per cent.”[6] If retailers pass these savings on to consumers, this will mean that Canadians will pay substantially less for items including food, wines and spirits, and European cars.[7] Canadian businesses will also benefit from this deal. For example, the Canadian agricultural industry will be able to export products such wheat, maple syrup, pork, and beef duty free to the European Union.[8] With increased exports, Canadian businesses are expected to create more jobs. The government in Ontario, for example, estimates that CETA will lead to the creation of 30,000 jobs throughout the province.[9]

This deal has been hailed as a “breakthrough” for Brussels’ free trade agenda, and is estimated to increase bilateral trade by five percent or nearly 35 billion U.S. dollars a year.[10] Canadian Prime Minister Stephen Harper has praised the deal as "the biggest [trade] deal our country has ever made,” because it will give Canadian businesses access to the European Union’s 17 trillion U.S. dollar economy.[11] Canada will now have a unique position in the global economy because “the deal will make Canada the only G8 country to have preferential access to the world's two largest markets”—the United States and the European Union.[12]

CETA will ultimately serve as useful model for the current free trade negotiations between the European Union and the United States. While the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the United States and European Union recently suffered a setback after a second round of negotiations was canceled because of the U.S. government shutdown,[13] TTIP negotiations will benefit from seeing how CETA was able to find a workable solution to contentious issues such as agricultural imports. French beef farmers, for example, have been vocal in their opposition to any deal that increases beef imports into the European Union.[14] Even after facing opposition from interest groups, the fact that the parties reached an agreement on CETA proves that a broad reaching trade agreement is feasible.

Increasing business competitiveness has been a key focus for developed nations that are seeking to find ways to stimulate their domestic economies. Deals such as CETA and TTIP could potentially provide a boost to the economies of Canada, the European Union, and the United States. With the CETA as a starting point, hopefully the United States and the European Union will be able to come to terms on the TTIP in the near future.

[1] See Associated Press,European Union and Canada reach landmark free trade deal after 4 years of negotiations, The Washington Post (Oct. 18, 2013).

[2] See id.

[3] See id.

[4] See id.

[5] See id.

[6] Susana Mas, 5 ways the Canada-EU trade deal will impact Canadians,CBC News (Oct. 18, 2013),

[7] See id.

[8] See Robin Emmott & Philip Blenkinsop, Say cheese: EU strikes trade deal with Canada, looks to U.S., Reuters (Oct. 18, 2013),

[9] See Susana Mas, supra note 6.

[10] Emmott & Blenkinsop, supra note 8.

[11] Associated Press, supra note 1.

[12] Emmott & Blenkinsop, supra note 8.

[13] See id.

[14] See id.

Posted by Max P. Biedermann on Tue. November 5, 2013 8:00 AM
Categories: Canada, European Union, Free Trade

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