After almost 17 months, Canada and the European Union have finally agreed on a legal text for a proposed free trade deal, raising hopes it will be ratified by the end of this year and in effect in 2017.
The conclusion of the legal text was announced by Chrystia Freeland, minister of international trade and Environment Minister Catherine McKenna.
The key change since former Prime Minister Stephen Harper announced the deal in September 2013 is “strengthened rules allowing governments to regulate to protect the environment,” Freeland told reporters Feb. 29. “We have responded to Canadians, EU citizens, and businesses with a fairer, more transparent, system.”
In addition, the changes will establish “a permanent, transparent and institutionalized dispute-settlement tribunal; revise the process for the selection of tribunal members, who will adjudicate investor claims; set out more detailed commitments on ethics for all tribunal members; and agree to an appeal system.”
Once the original wording of the deal became public, German politicians and groups have publicly criticized the investor state protection provisions in the deal for giving corporations too much power to sue governments over laws and regulations that interfered with their business. There was a genuine concern the Germans wouldn’t ratify the deal, which would kill it.
The next steps are approval of legal texts in French and the language of the EU. “Once finalized, we will focus on the swift ratification of CETA so that individuals and businesses, both large and small, are able to benefit from the opportunities offered by this gold-standard agreement,” Freeland said. We are confident that CETA will be signed in 2016 and will enter into force in 2017.”
She said it is “a gold-plated trade deal. It will have benefits in all sectors across the country.”
McKenna said the deal will give Canadian exporters better access to a market of 500 million consumers. It fits well with the Trudeau government’s goal of combating climate change and encouraging economic growth at the same time.
Freeland said the government hopes the changes on investor state protection and dispute resolution will encourage talks with other trading partners “to pursue the establishment of a multilateral investment tribunal, a project to which the EU and Canada are firmly committed.”
In 2013, the 28 countries of the EU imported agricultural products valued at $139 billion. However, many agricultural goods, including meat products, continue to confront significant tariff and non-tariff trade barriers.
The trade deal will provide for duty-free exports of 81,011 tonnes of Canadian pork; duty-free exports of 64,950 tonnes of Canadian beef and veal; duty-free exports of 3,000 tonnes of Canadian bison meat; unlimited duty-free exports of Canadian horsemeat; and, unlimited duty-free exports of Canadian prepared meats. In return, the EU will: retain duty-free access to the Canadian market for pork; obtain duty-free access for beef; and, receive reciprocal unlimited duty-free access for prepared meats.
While the trade deal could be a challenge for dairy producers in Eastern Canada, overall it should benefit farmers in export commodities. Ron Bonnett, president of the Canadian Federation of Agriculture, has welcomed “the increased market access secured for Canada’s agricultural exporters. The deal will also eliminate approximately 95 per cent of EU agricultural tariffs, previously a huge barrier for trade, which averaged 13.9 per cent.”
He’s confident the government will live up to promises made by the Harper government to compensate the dairy industry if the full 32,000-tonne increase in European cheese shipments occurs.
Food & Consumer Products of Canada also welcomed the deal for providing secure and meaningful access for Canadian companies to the largest economy. Chris Kyte, president of Food Processors of Canada, said his members “are excited for the opportunity to grow our businesses. In some categories, we need policy and program improvements which will allow us to compete in the EU and to defend our home markets.”
Canada doesn’t subsidize farm production as Europe does and that means Canadian processors have higher input costs that will prevent them from expanding into Europe, he said. Ottawa needs to find a way to level the playing field or Canada’s deficit in the trade of manufactured food products will grow worse than the nearly $7 billion a year.
The Canadian Pork Council, the Canadian Cattlemen’s Association and the Canadian Meat Council saw the potential for greatly increased sales to Europe with the end of quotas and other duties.
Cam Dahl, executive director of Cereals Canada said increased access to Europe will help the entire Canadian food supply chain. “We are also strongly in favour of the inclusion of dispute resolution mechanisms for sanitary and phytosanitary issues. These may prove to be as important to our industry in the future as the elimination of tariff barriers.”