The European Union and Canada have agreed to launch talks on a trade pact worth an additional $27 billion each year to their combined economies, suffering from dwindling trade because of the financial crisis.
“It is a great success today. We signed the start of a process leading to the deepening of our economic co-operation,” Czech Prime Minister Mirek Topolanek, whose country holds the EU presidency, told a news conference May 5.
Canada and the EU first agreed in October 2008 to seek a “comprehensive economic agreement” to boost two-way trade by lowering tariffs on goods and services, and encompassing areas such as investment, regulatory cooperation and rules of origin.
A joint study by Brussels and Ottawa showed in October the 27-nation EU and Canada would stand to gain about $27 billion each year by liberalizing trade further.
The study estimated the annual real income gain by 2014 would be 11.6 billion euros for the EU, representing 0.08 per cent of EU gross domestic product.
The gain for Canada would be about 8.2 billion euros, representing 0.8 per cent of Canadian gross domestic product.
“It is a highly ambitious economic agreement which will bring considerable benefits to both sides,” European Commission president Jose Manuel Barroso said after a summit of EU and Canadian leaders in Prague.
The launch of talks between Brussels and Ottawa is also widely seen as giving a political boost to world trade during the economic downturn and meeting a pledge by the Group of 20 industrialized and developing nations to avoid protectionism.