EU And Canada Commence Free Trade Negotiations

by Ulrika Lomas, Tax-News.com, Brussels

12 June 2009

EU Trade Commissioner Catherine Ashton and Stockwell Day, Canadian Minister of International Trade, have set in motion negotiations for a Comprehensive Economic and Trade Agreement (CETA).

It is believed that the CETA could provide up to EUR20bn per year in additional benefits to the two economies as a result of the removal of tariffs and other barriers to bilateral trade and investment.

Ashton and Day met at the Conference de Montreal on June 10, where both spoke at a plenary session on the economic crisis and international trade. The two agreed that the first full round of formal negotiations for the CETA, at senior official level, should take place in October.

Ashton said: “The EU and Canada are trading partners with close historical ties, and our ambitions for this agreement must reflect the depth of our relationship. We come to the table prepared to discuss all subjects of interest to either of us. There will be difficult issues, but we are convinced that the ultimate prize justifies the effort as we seek to trade our way out of the economic downturn.”

Day added: “This first meeting represents a solid step toward a historic economic agreement between Canada and Europe. These negotiations are a priority for our government. Canadian officials have met their EU counterparts a number of times and are in regular contact with them."

A recent joint scoping exercise showed that the two sides would both benefit from a comprehensive agreement covering trade in goods and services, investment, public procurement, the protection and enforcement of intellectual property rights, and commitments on the social and environmental aspects of trade and sustainable development.

According to the European Commission, EU member states are “fully committed” to concluding an “ambitious” bilateral agreement with Canada. The Commission has also welcomed the commitment given by Canada’s provinces to the negotiating process.

Goods and services trade between the EU and Canada is now worth some EUR70bn annually. Canada's exports to the EU include chemicals, transport equipment, metals, minerals, machinery, paper products and processed foods. Key EU exports to Canada include machinery and equipment, chemicals, motor vehicles and parts, transport equipment, petroleum, beverages and processed foods. Transportation, travel and business services are the main services traded between the EU and China.

The EU is Canada's second-largest source of foreign investment. As of 2007, the EU's direct investment stock in Canada reached EUR160bn, while Canada's investment stock in the EU was worth EUR108bn, making it the EU’s fourth largest source of foreign investment.

Day said that the importance of trade is “front and centre” of government policy as it navigates the economic downturn. That is why our government is working with our trade partners to reduce trade barriers and open doors for Canadian business,” he commented, adding that the negotiations with the EU are “a priority” for the Harper government.

Canada has recently sealed a trade agreement with the United Arab Emirates and has launched a public consultation on proposals to launch trade negotiations with India. Earlier this month, Canadian government officials took part in exploratory discussions on the possibility of launching free trade agreement negotiations with Morocco. Further free trade negotiations are pending with Panama, South Korea, the Caribbean Community (Caricom), the Dominican Republic, the Central American 4 (El Salvador, Guatemala, Honduras and Nicaragua) and Singapore.

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