10 things you need to know about CETA - Macleans.ca

10 things you need to know about CETA

What’s known about the Canada-EU trade agreement in a nutshell


It’s hard to believe, but the Comprehensive Economic and Trade Agreement between Canada and the EU, better known as CETA, has finally seen the light of day. Prime Minister Stephen Harper and European Commission president Jose Manual Barroso signed the tentative deal on Friday in Brussels. The two parties still have to iron out some details, so there isn’t yet a final text of the agreement.

Here’s a primer on we know about CETA so far:

1. This has been a long time coming. Four years of negotiations, to be exact.

2. And it’s not for sure yet. Canada’s provinces and all of the EU’s 28 member states, plus the European Parliament, must ratify CETA before it comes into effect. France is already making threatening noises, saying it will only make a decision after “after a thorough examination” of the deal, especially its clauses on agricultural products. The EU’s Barroso told reporters on Friday he expects to have all the signatures on his end by 2015 —we’ll see.

3. But CETA is a big deal , potentially bigger than NAFTA. CETA gives Canadian exporters preferential access to the EU, which is a bigger market than the U.S. and Mexico put together. The EU counts 500 million consumers and has an annual economic activity worth $17 trillion, according to Ottawa. The U.S. and Mexico, Canada’s NAFTA partners, had a combined output of $16 trillion in 2008 and some 400 million consumers. Besides, CETA reaches into certain sectors of the economy that NAFTA left untouched, for example, allowing European companies to bid for Canadian public contracts at all levels of government.

4. Jean Charest says it was all his idea. It was the former Quebec premier, apparently, who caught wind that some European businesses were interested in a broad trade agreement. The Doha Round of global trade negotiations seemed paralyzed, so Charest started informal talks with the Europe-based constituency and eventually convinced a rookie Harper government to come on board. The rest is, as of Friday, history.

5. Bilateral trade, worth $113 billion a year, is expected to increase by 23 per cent. CETA tackles both tariffs Canada and the EU have been imposing on imported merchandise and other trade barriers such as investment restrictions, different automobile specifications and procurement rules that banned foreign companies from competing for government contracts. The EU said half of its estimated GDP gains from increased trade flows will come from eliminating some 98 per cent of the tariffs, the other from liberalized access to Canada’s service sector. Canada doesn’t seem to have provided a similar breakdown so far. Most of the tariff cuts will kick in when the agreement takes effect, but a few—for example those on motor vehicles and parts—will be phased in over several years.

6. Among Canadian producers, there are several big winners. Canada is one of the world’s bread baskets, and now it will be able to sell its wheat (and canola oil) duty-free. CETA also slashes some 96 per cent of tariffs on fish and seafood products, meaning better access for Canadian fish to Europe’s food-processing industry. Canada’s auto industry will be able to sell up to 100,000 passenger vehicles tariff-free to EU customers every year. The cap is admittedly a restriction, but the quota is well above current export levels, which hover around 8,000-10,000 cars per year. CETA will also boost EU market access for Canadian beef and pork. The duty-free quota for beef has been lifted by 50,000 metric tonnes, and the quota for pork has been upped by 80,000 tonnes.

7. Cheese-makers look like the losers, but they might be better off than you think. The last major stumbling block in the negotiations was reportedly over beef and cheese—and cheese lost out. Canadian dairy producers will see European cheese imports double, to 30,000 tonnes per year, as a result of CETA. Ottawa has pledged to provide financial aid to help Canada’s dairy industry adjust, but cheese-makers, who are an important lobby group in Ontario and Quebec, are unhappy. Still, Canada’s dairy producers might be able to benefit from greater access to the EU market. Details on this are scarce, but if Canada increased its supply-management quota (which regulates product meant for foreign customers as well) it might offset some of the shock from soaring import by stepping up exports.

8. It will be easier for EU companies to take over Canadian businesses. The threshold that triggers a government review of a foreign takeover will be set at $1.5-billion for European companies, as opposed to $1-billion for everyone else.

9. We’ll have to wait longer for certain new drugs to become available as cheaper generics. But we’ll get our French wine and cheese (and BMWs!) for less. Under CETA, Canada will lengthen patent protection for brand-name drugs produced by EU pharmaceutical companies from 20 to 22 years—not good for consumers. On the other hand, the deal eliminates most of the tariffs on food products coming from the EU: Get ready for cheaper Roquefort and Veuve Clicquot champagne. Also, CETA would phase out Canada’s 6.1 per cent tariff on vehicles assembled in the EU, i.e. lower prices on many coveted German cars.

10. CETA might be a springboard for more trade agreements. For the EU, this agreement will serve as a blueprint for the much bigger trade deal it is seeking with the U.S. through the Transatlantic Trade and Investment Partnership. Canada could also point to CETA as a useful precedent when seeking concessions in Ottawa’s numerous ongoing trade negotiations.

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10 things you need to know about CETA

  1. “Details on this are scarce, but if Canada increased its
    supply-management quota (which regulates product meant for foreign
    customers as well) it might offset some of the shock from soaring import
    by stepping up exports.”

    Would it be fair to say by this you mean we will need to offer our cheese exporters more subsidy to compete head on with EU subsidies? I can’t say i see that as being much of a positive for them or for us. I wouldn’t be that saddened to see inferior Canadian cheese makers go out of business or see better EU cheeses displace them [ hey we could try making better cheeses, is that too radical?] if they don’t pick their game up, but i do object to playing who’s the better subsidizer.

    • Increasing the quota increases supply of milk and lowers prices. The whole idea of quotas is bonkers to begin with.

      • yeah, bonkers are not I don’t think it “relieves the shock” to Canadina producers.

        • Well, there is not much long-term success guaranteed if you force the Canadian public to put up with an inferior product to please a minority of over-paid dairy farmers. The Canadian public have not been asked to pay to subsidize beef ranchers or wheat farmers and those products are internationally acclaimed. Better to tell the dairy farmers they need to step up their game and start producing some cheeses that can compete with the European product.

    • “hey we could try making better cheeses, is that too radical?” Hmmm…no. No, it isn’t too radical. In fact, it is a great idea. Believe it or not, not all farm industries in Canada are protected through “supply-management”. Beef for one is not and as such we have a reputation as providing a great product. Wheat is another that is not. Again, Canada provides a great product and there is much demand for it on the international market. Should be “protect” our market by forcing our citizens to accept inferior products just because they are made in Canada OR should be demand a better product that will be popular everywhere in the world. In the long run, a strategy that provides long-lasting success and happiness for both producer and consumer.

      • I’m hearing our beef industry isn’t in any position to expand into the EU. Something to do with restrictions on hormone treated beef and lack of industrial capacity to expand???
        If that’s the case it doesn’t look like a good trade off so far.

        • I don’t believe you are hearing right. There has been an agreement in place since 2010 that the Canadian beef producers would provide “hormone-free” beef to the EU. If you go to the government of Canada website, you will see the press release regarding same.

          • But are they shipping any?

          • Why would you think they aren’t? Someone told me that a so-called rancher phoned into the CBC “As it Happens” claiming that the industry was only producing enough beef for the people in Canada. What a hoot. Canadian ranchers are shipping beef to Japan and the US and anywhere else that there is a market. If Canadian ranchers weren’t providing product internationally why would there be such a big deal every time the US border closed to our beef?
            We ship hormone free beef to Europe as well as bison which is very popular there. Apparently, this expert also claimed that slaughter houses weren’t distinguishing between the hormone-free beef and those with the hormone implants. What a ridiculous claim. Do you honestly think a rancher who has made a deal to sell his more expensive hormone free beef is going to let them be mixed in with the beef that have hormones added?

          • I’ve no idea. It doesn’t sound likely. But i’ve heard others claiming we aren’t in a position to start shipping large amounts of hormone free beef to Europe. It seems to be more then one “expert”.
            The guy wasn’t an expert by the way, he was just someone who called back to the cbc callback number. Let’s keep our stories straight.
            If we are in a position to take advantage that’s good news for all of us.

          • The head of the BC Cattleman’s Association was very pleased with news. He did an interview in Kamloops a few days ago and said Canada has been shipping beef to Europe and will now be increasing that amount. He talked about the money this will mean for the the industry in BC.

        • 500 million consumers would say it’s a good investment for Canadian beef farmers to up their game, if that’s the case. It’s hardly a criticism of the free trade agenda if a byproduct of said agenda is higher quality beef.

          • I never said it was.

    • I couldn’t agree more. The whole cheese thing is a media fabrication. They can’t tell a story about a “winner” without there being some “loser” involved.

      Like almost all Canadians, I do eat cheese. And I can tell you that there’s a small town called New Bothwell in South Eastern Manitoba that makes the best damn cheese money can buy. I’m not sure of what their market is, but I know you can buy it anywhere in Manitoba. I also know that company would be VERY well positioned to compete globally with any European cheese maker.

      I’d be willing to bet that any losses in the Canadian cheese making industry will be more than made up for by market gains by great Canadian cheese markers.

      • Wont see me crying if kraft loses market share. Or if there’s more affordable provolone around – the good stuff, Italian please. It’s the subsidies and the cost of compensation that bothers me.

  2. What takes so long is Ottawa wants to protect revenue and “family” business with price gouging protectionism.

    Ottawa collects $40+ billion in hidden taxes customs, excise and tariffs, and it drives up your costs as a consumer. A good part of why it is cheaper in USA is Ottawa tariff and taxes, GST/HST extra.

    As this protection is discrimination for other countries to fair market access, takes Ottawa this king to figure out how to protect revenue and their back room protectionism buddies.

    This isn’t really as much progress as it sounds, not really. We will still be screwed by meat and dairy boards, CRTC, RIV and other anti-competitive Ottawa efforts.

    • Wondering where the loss of $40+ billion in revenue to Ottawa is to be made up.

      • Who cares. I don’t wake up in the morning hoping that I can grow the size of the federal government.

        • Rick, you missed the point, it is not about growing government. Anyone who voted for a government to behave more business-like should care about this loss of revenue. What are the new income streams being proposed to replace this $40 + billion?

    • Dave, there is no beef board.

  3. All in all this seems to be a great deal. Well done Stephen Harper.

    • [All in all this seems to be a great deal.]
      How would you know without any details? What happened to the concept of “Due Diligence?” Your business acumen is very poor.

      There’s a number of gaping threats to this agreement.

      Make no mistake, Canada has no choice but to open up trade, *just to stand still, rather than going backwards* as the US is the real target of the EU. Harper has at least enough brains to realize it would be curtains for Canada if the US got there first. As it is, the auto industry is finding production far more affordable back in the southern US. But hey, don’t let facts destroy a good rah-rah….

      *IF* this agreement promotes efficiency of economy (expressed as Productivity) then there will be no job gains…save for a few chosen locations, Germany’s factories being one, but in net, Productivity by its very nature, means less jobs for the same output.

      So how can each side claim massive job gains?

      Hey, it seems to work for the sheep…..

      • He did say SEEMS.

      • Productivity by its very nature, means less jobs for the same output

        What utter nonsense. By your logic we’d have peak employment by being as unproductive as possible. It’s the type of intellectually vapid comment I’d expect from Justin Trudeau. Are you next going to suggest that we’d be much better off as a country if we all just smoked a bit more weed?

  4. How long are we locked into this deal, and is there a clause that allows corporations to sue governments at all levels for bringing in ANY law that affects profits? To me, these two issues make me not like free-trade agreements because it really means ‘sovereignty trading’ and instead of trading to the other state, we are trading it away to large corporations. I understand there does need to be protections for a company that invests large sums of money under a regime they believe they can make money under, only to find that system completely upended when they have finished investing. But I think the solution arrived at thus far is like using an atomic bomb to kill an ant.

  5. I wish that Europe would have used this deal as a lever to require real and effective action on climate change mitigation from Canada. European countries have been far more accountable on environmental accords, and far more innovative about moving away from fossil fuel addiction. For the sake of our children’s futures, we need something to force government and society to act. The best feeling I have about a deal with Europe is that at least I respect the other party’s stance on things like public transit and cycling infrastructure, and taxation on fossil fuel use, far more than I do my own. I think more Europeans than Canadians have an idea of what’s really of value in life, and what’s at stake with our fossil fuel addiction.

    Heck, even the US, despite the Tea Party influence, is state by state embracing alternative energy at a much faster clip than Canada, and have federal incentive programs for solar energy initiatives and the like. They are making progress despite the way their system of government handicaps Obama and despite the vast overweighting of the voices of the ultra-wealthy in politics.

  6. CETA also allows for Privatization of our public municipal water services.

    • It does no such thing.

      • Why do you think it doesn’t?

  7. The Harper government has gutted every regulation and law we had in place to protect our freshwater supplies. Now this deregulation is locked in as corporations from Europe as well as the U.S. can soon claim to have invested in an environment without water protection rules and sue any future government that tries to undo the damage.

  8. CETA bans municipalities from enacting buy-local or hire-local policies, and potentially impinges on city contracts such as water services.

  9. Under the CETA procurement clause, a Municipality would have to open their contracts to European companies – and face a tribunal challenge and possible penalty if it chose to contract out locally. If decisions are made for whatever good a municipality decides is best for their community they’d be in a position that would be risky. That places more costs on the municipality.

  10. It is an affront to democracy for a binding international treaty – negotiated in secret, with its exact terms still concealed from the public – to be agreed to without any opportunity for debate, reflection or independent analysis. There needs to be informed public debate, based on full disclosure of the treaty text. This should happen before Canadian governments, at all levels, make a final decision.

  11. With the elimination of tariffs. Where will the funds come from for the supposed subsidies that the Feds will pay to provinces for higher drug prices, and farmers for lost sales on cheese, etc.?? HIGHER TAXES??

  12. CETA, the TPP, and other trade agreements are primarily about enhancing the power of multinational corporations and limiting the public policy options of democratically elected governments. There are many reasons to question whether this agenda benefits the majority of Canadians.

  13. If only CETA was about lowering tariff barriers, trade barriers, there would be no arguments.

  14. Yay. Some people struggle to pay for their drugs now, but at least an expensive car is a bit more affordable! I guess they can just get drunk on French wine to drown their sorrows. *ugh* C’mon government!! Where are the priorities!?