Trade deal with EU slashes taxes on goods from food to cars

Canada and the European Union have signed a tentative deal to open up markets and drop nearly all import taxes on everything from food to cars. 

Under the Comprehensive Economic Trade Agreement (CETA) and NAFTA, Canada will have preferential access to more than half of the world's economy. 

 The sweeping agreement with the 28-member European Union covers everything from cars to food to intellectual property

"This is a big deal. Indeed, this is the biggest deal our country has ever made," Prime Minister Stephen Harper said in Brussels on Friday after signing the agreement alongside European Commission president Jose Manual Barroso. "This is a historic win for Canada."

Harper said the deal will increase the number of countries in free-trade agreements with Canada from 14 to 42. According to a joint study, bilateral trade will increase by an estimated 20 per cent, add a $12-billion boost to the Canadian economy and create 80,000 new jobs. 

The document Prime Minister Stephen Harper signed in Brussels on Friday, alongside European Commission president Jose Manual Barroso, is an agreement in principle and full ratification is likely two years away. (Francois Lenoir/Reuters)

"Equally important, Canadian families will have greater access to European goods at a lower cost, as 98 per cent of tariffs, both ways, will be removed immediately," he said. 

Key aspects of deal

Highlights from the agreement include:

• Canadian automakers will be able to export 100,000 cars a year, 12 times their limit now.
• Full access to EU markets for Canadian fresh and frozen fruit and vegetables, or processed foods.
• Full access to EU markets for Canadian wheat, oats, barley, rye and canola oil.
• Full access to EU markets for Canadian dairy farmers, with both sides excluding poultry and egg sectors.
• No more tariffs for many seafood products, including cooked and peeled shrimp, live lobster, frozen lobster and frozen scallops.
• No more tariffs on metals and mineral products, including iron and steel.
• EU cheesemakers will have an extra 16,000 tonnes to export to Canada, an increase over 13,000 tonnes.
• The government is considering compensation for Canadian dairy farmers if they lose money because of the agreement. It's not clear whether compensation is being considered for small cheesemakers.
• Canadian beef producers will be able to sell an additional 50,000 tonnes of beef – the current quota is 15,000 tonnes.
• Canadian pork producers will be able to export 75,000 tonnes, a substantial increase to their current 6,000 tonne quota.
• The government is also talking to the provinces and territories about compensation if the provision to extend drug patents by two years increases their costs.
• It's not clear what the cost will be to the government of losing all the revenue it earns off tariffs on European products – for example, a six-per cent tariff on luxury vehicles.

Reporters were provided with briefing notes and access to officials, but told nothing could be quoted attributed to them and must be written into reports without attribution.

The negotiations aren't yet done: some areas of the agreement still need drafting, while others need fine-tuning, reporters learned through a briefing. But the most contentious points have been settled. The agreement text then has to be drafted, run past lawyers and translated into 22 languages for 28 EU countries to examine.

The document Harper and Barroso signed Friday is an agreement in principle and full ratification is likely two years away.

Dairy farmers had expressed concern over the deal earlier this week, particularly the provisions increasing imports of EU cheese, saying it could threaten jobs and industries in Canada.  

Speaking in Brussels, Harper said the system of supply management that supports the dairy industry is protected.

"For the dairy industry specifically, they gain virtually unfettered access to the European market," he said, though he allowed that cheese producers may see "some small and transitory negative effects in the years to come."

U.S., EU have started talks on similar deal

Negotiators built in exclusions for public health care, public education, social services and culture. They also preserved the right of regional governments to prefer local service providers.

But an important provision in the deal ties Canada's fortunes to those of other countries negotiating trade deals: If any country negotiates a better deal, those provisions will apply to Canada automatically. The EU and the U.S. have recently started their own set of talks for a similar-style agreement.

Investments will still be subject to the net benefit test, which allows cabinet to review takeovers above a certain value.  

The two sides have also set up working groups to look at non-tariff barriers — regulations on health and sanitation, for example — that interfere with trade.

Negotiators also built in incentive for automakers to invest in Canada: tariff-free access for cars that are 50 per cent Canadian-built, on top of the 100,000 quota.

Europeans are said to be excited about the prospect of opening up the Canadian market to more luxury goods like textiles, clothing and perfume.

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