CETA: The New Trade Giant

On 30 October 2016, Canada and the European Union signed what is being referred to as the largest trade of the decade: The Comprehensive Economic and Trade Agreement (CETA). Considered a milestone in trade agreements, the BBC states that the ‘deal removes 99 per cent of tariffs’ and plans to ‘generate and increase in trade worth $12bn a year.’ It is predicted, by CETA supporters, that the deal will boost ‘Canadian-EU trade by 20 per cent’ in the coming years. This upsurge in trade is expected to help both the Canadian and the European economies flourish – a hope of both regions given Canada’s current slow-moving economy and the impending negotiations the EU will engage in with United Kingdom’s exit. According to the European Commission, the CETA deal will specifically ‘remove customs duties, end restrictions on access to public contracts, open-up the services market, offer better conditions for investors and help prevent illegal copying of EU innovations and traditional products.’ This extensive list of modifications in trade between the two regions is a landmark move in the name of free trade and a global market. The 1,500-page document is considered a large economic opportunity especially due to the fact that it will provide the two powers considerable access to each other’s markets, allowing for an exponential increase in the variance in imports and exports.

Additionally, CNN reported that the deal will save the European Union up to 500 Million euros a year due to the lack of tariffs and may ‘potentially [surpass] the North American Free Trade Agreement (NAFTA) in scope’ putting both the EU and Canada in the spotlight with the success of the deal. Furthermore, the deal is an important political step for the current Prime Minister of Canada, Justin Trudeau, due to the increasing pressure from the Canadian public to his Party to ‘boost the country’s economy.’

Polish Institute of International Affairs

Image courtesy of Polish Institute of International Affairs, © 2014, some rights reserved.

However, while the CETA was signed, there is the underlying uncertainty regarding its implementation. While twenty-seven of the EU’s countries have processed the deal through their respective signing procedures – which took a total of seven years – Belgium, particularly the region of Wallonia, blocked the CETA deal and was in a position to hold all talks hostage between Canada and the European Union. The small, French-speaking region has a population of 3.6 million and was able to ‘single-handedly block’ the talks from progressing and delayed the original signing date. The effect that Wallonia had in the negotiations was immense as the CETA deal was on the verge of complete breakdown, with both negotiating parties ready to leave talks. Days before the signing was due to take place, questions regarding the rights of small businesses and the nature of a globalised market arose. Canada’s minister of trade, Chrystia Freeland, stated that while Canada was highly in favour of the deal, ‘the European Union is not capable of having an international agreement, not even with a country that has European values like Canada.’ She expressed her disappointment to the delay – and the potential collapse – of the deal while on the verge of tears. Fortunately for the Canadian government, with the signing of the deal, seven years of negotiations were not in vain. There will now be a discussion at the Council level of the European Parliament and also with all the EU member states in order to progress through their ‘relevant national ratification procedures’ so that the deal may go into effect. The BBC reported that ‘for the deal to pass, Belgium’s federal, regional and community bodies (seven in all) must give their approval.’ The efforts in Wallonia to block the CETA deal were heralded by many to be an act of defense for ‘the rights of all European citizens.’ Indeed, the majority of the protests regarding the deal were from ‘anti-globalisation groups, anxious to protect Europe’s welfare and environmental standards.’

Additionally, critics of the deal say that it ‘threatens product standards and protects big businesses,’ which will eventually harm the European economy. The primary concern here is that if the deal were to be implemented, then large corporations would have greater access to the both Canada and the EU and therefore, there would be a decrease in the diversity and range of products available in both regions resulting in the decrease of small domestic businesses. Overall, there has been greater opposition to the deal in Europe than in Canada, though there are concerns in certain Canadian communities as well. An example of such a concern on the Canadian side would be that of dairy farmers who believe the access to European dairy will harm the domestic dairy market. However, the majority of the Canadian population is in favour of the deal, especially in the country’s business sectors as the deal will provide access to the 508 million potential customers in the EU.

Interestingly, some officials in the UK see the CETA deal as a model for Brexit talks. According to CNN, the deal may represent the possibility of a similar deal between Canada and the United Kingdom. The prevailing notion is that whatever the consensus is in the trade negotiations between Canada and the EU, the United Kingdom will be capable of formulating a similar trade negotiation. However, it is crucial to mention that the CETA deal does not encompass the same freedom of movement of goods and people as the EU trade agreements have among the EU member states. Additionally, while the United Kingdom is generally hopeful in its negotiations with the EU on trade, officials have acknowledged the varying circumstances of the two deals, their contexts, and their consequences. It is clear that ‘this CETA saga has illustrated an additional layers of complexity that the UK will have to deal with’ given the complications that took place with Wallonia. However, regardless of the implications the CETA deal will have for the United Kingdom, the signing on 30 October 2016 proved to be a victorious step for all those in favour of a globalised market.