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

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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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