EU, Canada sign free trade deal but battle not over

Brussels | Reuters –– The European Union and Canada signed a free trade agreement on Sunday that aims to generate jobs and growth though it must still clear some 40 national and regional parliaments in Europe in the coming years to enter fully into force.

Canadian Prime Minister Justin Trudeau signed the treaty along with the heads of EU institutions, a step that should enable a provisional implementation of the pact early in 2017 with the removal of most import duties.

The Comprehensive Economic and Trade Agreement’s (CETA) passage has not been smooth.

French-speakers in southern Belgium, a minority within their own small country and accounting for less than one per cent of the 508 million EU consumers likely to be affected by CETA, raised objections that held up the deal until a breakthrough on Thursday, confirmed by regional parliamentary votes on Friday.

“We are setting standards which will determine globalization in the coming years,” European Commission President Jean-Claude Juncker told a news conference alongside Trudeau. “Nothing in other trade agreements will be able to remain below the level of what we have reached today with Canada.”

The Canada agreement is seen as a springboard to a larger EU deal with the U.S., known as the Transatlantic Trade and Investment Treaty (TTIP), which has been the target of labour unions and environmental and other protest groups.

EU Trade Commissioner Cecilia Malmstrom said TTIP talks are not dead, contrary to what some politicians in Germany and France have said, but would need to wait for the next U.S. president — who will take office in January — to resume.

Supporters say CETA will increase Canadian-EU trade by 20 per cent and boost the EU economy by 12 billion euros (C$17.65 billion) a year and Canada’s by C$12 billion.

For Canada the deal is important to reduce its reliance on the neighbouring U.S. as an export market.

For the EU, it is a first trade pact with a G7 country and a success plucked from the jaws of defeat at a time when the bloc’s credibility has taken a beating from Britain’s vote in June to leave after 43 years of membership.

Around 100 anti-globalization protesters clashed with police outside the venue in Brussels, trying to break down barriers in front of the main entrance and hurling red paint. A Reuters photographer saw police detain some people.

Not the last act

Sunday’s signing will not be the last act.

Assuming the European Parliament gives its assent, CETA could come into force partially early next year. However, full implementation, which would include a contentious investment protection system, will ensue only after clearance by more than three dozen national and regional parliaments.

The Belgian experience shows this outcome is no given, but Trudeau said provisional application would unlock 98 per cent of CETA’s key measures and that consumers and businesses would immediately feel its benefits.

“We are confident that demonstrating that trade is good for the middle classes (…) 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,” Trudeau said.

The main focus of protests against CETA and TTIP remains the system to protect foreign company’s investments. Critics say its provision for arbitration panels to rule on disputes with states can be abused by multinational companies to dictate public policy, such as on environmental standards.

The EU and Canada say their investment protection system guarantees the right of governments to regulate, make use of independent judges and be more transparent.

The deal will eliminate tariffs on almost 99 per cent of goods. The beneficiaries would include, for example, carmakers or the EU textile sector, for which Canadian duties of up to 18 per cent can be imposed at present.

Service companies could also benefit and EU companies would be able to tender for public contracts at Canadian provincial and municipal level, the first time Canada has offered this.

Canada would be able to send larger quotas of pork, beef and wheat to the EU market, and EU dairy producers would be able to export more than double the current amount of “high quality” cheeses to Canada.

The terms of the deal give Canada duty-free access for up to 80,000 tonnes of pork and 65,000 tonnes of beef per year, while European dairies get duty-free access for an additional 16,000 tonnes of cheese and 1,700 tonnes of industrial cheese per year, on top of their existing 13,500-tonne quota.

CETA, which Canada negotiated largely during Stephen Harper’s Conservative administration, was hailed Sunday by Conservative leader Rona Ambrose as “a deal that will create thousands of jobs and billions in economic benefits for our country.”

Jean Rousseau, agriculture critic for the federal Green Party, on Friday ripped the Liberal government as “neglecting small farmers in its unabashed promotion of CETA.

“Our farmers and artisans are trying to survive despite the influence of large corporations. The mass import of European cheeses will devastate our homegrown industry.”

Bruno Letendre, president of les Producteurs de lait du Quebec, said in a separate release that Canadian dairy producers can expect a $150 million downturn in gross revenues per year from CETA.

Compensation programs announced during the Harper administration “for us represent a minimum,” Letendre said Sunday, adding dairy producers are waiting to see what the Trudeau government will offer.

Reporting for Reuters by Robert-Jan Bartunek, Philip Blenkinsop and Francois Lenoir. Includes files from AGCanada.com Network staff.

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