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What You Need To Know About the Comprehensive Economic and Trade Agreement
The Comprehensive Economic and Trade Agreement, also known as CETA, is a new trade agreement between the European Union and Canada. It was provisionally applied on September 21, 2017, after seven years of negotiations. This is Canada’s biggest bilateral initiative since the North American Free Trade Agreement (NAFTA). This deal will strengthen economic relations by creating new opportunities for EU companies by boosting trade. It will make business with Canada easier, it will open up new sectors of the Canadian service market, substantially improve access to public contracts, offer predictable conditions to investors, protect 143 European high-quality agriculture food products, known as Geographical Indications. The most beneficial aspect of CETA is the removal of customs duties. According to the Canada- European Union, “prior to CETA’s entry into force, only 25 percent of EU tariff lines on Canadian goods were duty-free. Upon CETA’s entry into force, the EU will remove tariffs on 98 percent of its tariff lines.”[1] Another 1 percent of import duties will be phased out over a period of up to seven years.
Opening markets also have the potential to keep prices down and provide consumers more choice. At the same time, free trade does not mean lowering or changing EU standards that protect people’s health and safety, their rights as consumers, social rights, or the environment. These standards will remain untouched, and imports from Canada will have to satisfy all EU product rules and regulations without exception. So, what this means is that CETA will not change the way the EU regulates food safety.
This is the most far-reaching agreement ever concluded by the EU in the area of services and investment. When it comes to getting investment projects approved in Canada, European firms will have new advantages. There will be more opportunities for European firms to provide services, for example like dredging, shipping certain cargo within Canada, and moving empty containers. As in all trade agreements, in CETA the EU fully protects public services.
In CETA, there will also be fewer restrictions on moving across the Atlantic for temporary work. This will help firms move their staff temporarily between the EU and Canada. This will help European companies run their operations in Canada.
CETA’s progressive nature will set a new global standard for sustainability in trade agreements. The EU and Canada are committed to ensuring that economic growth, environmental protection, and social development are fully supported by CETA. CETA arrives during a very turbulent period in International Trade in Canadian history. While Canada and the United States remain engaged in negotiations surrounding a new North American Free Trade Agreement, CETA offers new challenges and new opportunities for Canadian and European companies. According to the European Commission, “There is a clear proof that free trade agreements spur European growth and jobs. As an example, EU exports to South Korea have increased by more than 55% since the EU-Korea trade deal entered into force in 2011. Exports of certain agricultural products increased by 70%, and EU car sales in South Korea tripled over this five-year period. The Korea agreement was also provisionally applied during its ratification process. On average, each additional 1 billion euros of exports supports 15.000 jobs in the EU. 31 million jobs in Europe depend on exports.”[2] The EU and Canada are sure that CETA will have the same benefit when it comes to the economy.
It is imperative that companies immediately evaluate the options available to them under CETA.
Contributor: Katie Kirk
[1] CETA: “A progressive trade agreement for a strong middle class.” http://www.international.gc.ca/gac-amc/campaign-campagne/ceta-aecg/index.aspx?lang=eng
[2] Strasbourg. “European Commission welcomes Parliament’s support of trade deal with Canada.” (February 2017) http://europa.eu/rapid/press-release_IP-17-270_en.htm
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