EU, Canada Hail Benefits Of New Trade Deal

A joint summit between Canada and the European Union (EU) has marked the official conclusion of five years of talks towards a free trade deal which, when fully implemented, is expected to boost bilateral trade in goods and services by 23 percent. Negotiations were completed on September 26.

A statement issued by the Prime Minister of Canada, Stephen Harper, and the Presidents of the European Council and European Commission, Herman Van Rompuy and José Manuel Barroso, said: "The Agreement delivers on the 2009 promise of a very comprehensive liberalization of trade in goods and services, significant new opportunities in government procurement, provisions to enhance and encourage investment, and improved and modernized rules on other trade issues."

Approximately 98 percent of the EU's more than 9,000 tariff lines will become duty-free when the Comprehensive Economic and Free Trade Agreement (CETA) enters into force. A majority of industrial duties will be eliminated immediately and the remainder will be removed over a period of up to seven years.

Once the deal is fully implemented, 99 percent of the EU's tariff lines will be duty-free, including 100 percent of non-agricultural tariff lines and 95 percent of agriculture tariff lines. Nearly 92 percent of EU agricultural and food products will be exported to Canada duty-free.

For certain sensitive products – including beef, pork, and sweetcorn on the EU side, and dairy for Canada – the preferential access will be limited to quotas. Poultry and eggs will not be liberalized on either side, and the EU's entry-price system will be maintained.

Around half of the overall gross domestic product (GDP) gains for the EU are expected to come from liberalized trade in services. The financial services, telecommunications, energy, and maritime transport sectors are expected to benefit in particular. Output gains for the EU could reach EUR5.8bn (USD7.4bn) a year once the agreement is fully implemented.

A chapter on technical barriers to trade is designed to improve transparency and foster closer contacts between the EU and Canada in the field of technical regulations. Both sides will further strengthen links between the relevant standard-setting bodies.

The CETA is to reform and improve the investment-to-state arbitration system, which offers investors the possibility of legal redress. The new regime will replace the existing eight bilateral investment agreements between EU member states and Canada. Firms will only be allowed to bring a claim in a number of well-defined cases where there has been a breach of CETA's terms based on discrimination against an investor because of their nationality.

The CETA also contains provisions on public procurement. European companies will be able to bid for public contracts in Canada at all levels of Government. They will be the first foreign companies permitted this degree of access to the Canadian market. Canadian companies will be able to bid for contracts from the three main EU-level institutions (European Commission, European Parliament, and European Council), the 28 EU member states, and regional and local entities within the EU.

The EU is Canada's second biggest trading partner after the US and accounts for nearly ten percent of its external trade. Canada is the EU's 12th largest trading partner. Bilateral trade in goods is worth almost EUR60bn a year. The value of commercial services exchanged in 2012 exceeded EUR26bn. In 2012, European investments in Canada were worth nearly EUR260bn, while Canadian direct investment stocks in the EU amounted to more than EUR142bn.

In the closing remarks of their joint statement, Harper, Van Rompuy, and Barroso said: "The Agreement will help generate more trade and two-way investment, and promote jobs and growth." They committed to "work expeditiously to ensure that all our businesses, workers and consumers throughout Canada and EU member states are equally positioned to realize the opportunities created by this historic accord as soon as possible."

Source: Tax News