On Wednesday, February 15, the European Parliament voted to ratify the Comprehensive Economic Trade Agreement (CETA) with Canada, a trade deal that promises to remove significant trade barriers between Canada and the European market, and boost Canada’s GDP.

Overview:

The European Union is the world’s second largest economy, and Canada’s second largest trading partner after the United States.

According to The Government of Canada, CETA aims to “open new markets in the EU for Canadian exporters, and generate significant benefits for all Canadians.”

Background:

At the 2007 EU-Canada summit in Berlin, leaders from both Canada and the EU agreed to come together and analyze the costs and benefits of pursuing a closer economic partnership. In October of 2013, Canada and the EU announced they had reached an agreement-in-principle. In September 2014, then-Prime Minister Stephen Harper and European Commission President José Manual Barroso presented the trade agreement during the EU-Canada summit in downtown Toronto.

In October 2016, a year after the election, Prime Minister Justin Trudeau finally signed the trade deal, expressing hope that the deal might happen within months. On February 15, 2017, the European Parliament voted 408-254 to approve CETA.

The deal is not law quite yet, however. According to the CBC:

“The House of Commons passed C-30, Canada’s implementation legislation for the European Union trade deal, at third reading on February 14. Once it clears the Senate, a range of federal laws and regulations will change to bring Canada into compliance with the new trading arrangements. Similar changes now need to be made at the provincial and territorial level as well.

Once Canada has finished these processes, over 90 per cent of the agreement may come into force provisionally on the first day of the second month following the date both sides notify each other that they have completed all their necessary legal and regulatory changes to comply.”

CETA and Canada:

Backers of CETA argue that it will offer tremendous opportunities and a competitive edge for Canada in the market. Canadian businesses will have almost unlimited access to a market of half a billion people. Additionally, Canadians will see a reduction in the prices of European products, due to the removal of tariffs. Finally, as well as an expected $12-billion GDP boost, CETA is also projected to increase Canadian-EU trade by 20 per cent.

As the current United States administration turns inward, removing itself from trade partnerships such as the TPP, many experts say that the approval of this trade deal is timely for Canada, and will greatly reduce our reliance on the US as an export market.

Controversies:

While CETA was approved by a wide margin, there were nevertheless numerous demonstrations against it, primarily from far left and far right groups. Some arguments against CETA include that it will allow big corporations to sue governments if they decide to make policy changes that effect their bottom line, and that this type of multilateral agreement may no longer be relevant, nor sustainable in the marketplace.

Not all Canadian industries were happy about the trade deal, either. Back in the fall of 2016, the Dairy Farmers of Canada calculated a potential $116 million in estimate perpetual lost revenue with the implementation of CETA. To help them compete, Agriculture Minister Lawrence MacAulay announced in November 2016 two programs worth $350 million for Canada’s dairy sector. According to the CBC:

“One $250 million program will help farmers update their technology and equipment to boost productivity. The minister suggested robotic milking equipment, automated feeding systems or new herd management software as examples of what might qualify.

A separate $100 million fund for dairy processors would be available to help modernize their operations or diversify product lines for new markets. Under CETA, Canadian dairy products will have tariff-free access to the large European consumer market.”

Looking ahead:

Although CETA will likely go into force on a provisional basis in April 2017, it still needs to be ratified by individual EU parliaments, which could take years. On Thursday, February 16, Prime Minister Justin Trudeau will be addressing the EU Parliament – a first for a Canadian leader – to speak about the deal, before heading to Berlin for a meeting with German Chancellor Angela Merkel on Friday.