International Finance

EU and Canada sign historic free trade agreement

CETA was almost derailed by objections from the Wallonia region in Belgium

November 4, 2016: Canadian Prime Minister Justin Trudeau flew to Brussels on the weekend to attend an EU-Canada Summit which had been delayed for three days because of opposition in Belgium to the Comprehensive Economic and Trade Agreement (CETA). Belgium came back to the negotiating table after getting added guarantees on GMO crops and protection for certain food products, clearing the way for joining all other EU members in signing the deal.

Trudeau and top EU officials signed the agreement paving the way for most import duties to be removed early next year. However, the treaty needs the approval of at least 38 national and regional parliaments, including the UK’s, to come into force.

Positive implications

Supporters of CETA say it will increase Canadian-EU trade by 20% and boost the EU economy by €12bn (£10.9bn) a year and Canada’s by C$12bn (£7.4bn).

Trudeau said consumers and businesses would immediately feel the benefits. “We will make sure that everybody gets that this is a good thing for our economies and that it is also a good thing for the world,” he said.

Speaking at the end of the 16th EU-Canada Summit, European Commission President Jean-Claude Juncker said, “Today, the people of Canada and the European Union have opened a new chapter in their relationship. More than half a billion people on both sides of the Atlantic will enjoy new opportunities. For many people, it will mean new jobs and better jobs.”

By removing almost all import duties, CETA will allow European exporters of industrial and agricultural goods to save more than €500 million every year. The agreement protects workers’ rights, environmental standards and consumer safety. Governments will retain all of their powers to legislate, regulate and provide public services.

“CETA promotes all of the things that Canadians and Europeans care about,” said President Juncker, “decency in the workplace, our health and safety, our cultural diversity, the quality of the land, sea and air that surround us.”

With free trade under attack from populist movements and anti-globalisation campaigners, the deal reduces Canada’s reliance on the US and gives the EU a first trade pact with a G7 economy when its credibility has taken a knock from Britain’s decision to leave.


Critics of the deal say it would favour big, multinational corporations at the expense of local, smaller businesses. One study by the EU and Canada projected the trade deal would boost total household income for both Europeans and Canadians, but a recent Tufts University study says Canadian and European workers’ income would take a hit, according to a Reuters report.

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