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Why the EU-Canada trade deal is a big deal

Jo Harper
November 22, 2023

CETA's proponents say it's progress, others a threat to national sovereignty. EU and Canadian leaders meet again this week to inch ahead with the EU-Canada trade agreement.

Canada's Prime Minister Justin Trudeau (right) and European Commission President Ursula von der Leyen arrive for a welcoming ceremony
The EU-Canada trade deal continues to draw substantial criticismImage: DAVE CHAN/AFP/Getty Images

What is the CETA?

The Comprehensive Economic and Trade Agreement (CETA) is a free-trade deal between Canada and the EU. 

CETA was negotiated between 2009 and 2014 and signed by Canadian Prime Minister  Justin Trudeau, in Brussels on 30 October 2016, before the European Parliament approved the deal in February 2017.

Much of it has been provisionally applied since then.

Why is it in the news now?

The president of the European Council, Charles Michel, and European Commission President Ursula von der Leyen will be in Canada for the EU-Canada Summit on November 23-24.

In a statement they said they will highlight "CETA's positive results on trade and investment and tangible outcomes of the EU-Canada Strategic Partnership on Critical Raw materials."

Italy refuses to ratify EU-Canada trade deal

Has CETA been ratified?

As of December 2022, 17 member states had completed domestic ratification: Austria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Slovakia, Spain and Sweden. Italy, Ireland and Belgium have been laggards, with France also dragging its feet.

What does CETA do?

The deal eliminates or reduces tariffs on imported goods between the two parties.

The EU has eliminated 97.7% of tariffs on Canadian goods, with a goal of 98.7% this year. In Canada, 98.2% of all tariffs on EU goods have been eliminated and it's targeting 98.6% this year.

CETA mutually recognizes regulated professions such as architects, accountants and engineers. 

The agreement also imposes stricter enforcement of intellectual property, including liability for internet service providers, and a ban on technology that can circumvent copyright. 

Both the EU and Canada retain the right to regulate freely in areas of public interest such as environmental protection and health and safety.

What do its supporters say CETA achieves?

The European Commission estimates the treaty will eventually lead to savings of €500 million ($545 million) in taxes for EU exporters annually.

It says CETA will further boost trade between the EU and Canada, create new jobs, enable speedier business operations by abolishing goods checks and other levies, make easier mutual recognition of diplomas and regulate investment disputes by creating a new system of courts.

The Commission also claims CETA will create a more level playing field between Canada and the EU on intellectual property rights.

What do CETA's opponents say?

Opponents say CETA weakens European consumer rights, including EU standards concerning food safety. Some see it as a benefit mainly for big business and multinational corporations. 

The deal includes a controversial investor-state dispute settlement mechanism that critics say multinationals may use to sue national governments. Such investment courts are run by corporate lawyers and have not been models of transparency and accountability, critics add. 

There are also concerns that CETA sidelines the European Parliament and gives more power to governments and bureaucrats. Critics say it benefits lobbyists, as all its committees work in secret.

EU Commission President Ursula von der Leyen (left) sitting next to Canadian Prime Minister Justin Trudeau in the House of Commons
The EU is Canada's second largest trading partnerImage: JUSTIN TANG/AFP/Getty Images

Some trade facts about CETA

With 500 million people, the EU is the world's largest (according to the UN) or second largest (according to the World Bank and IMF) economy. Canada, with a population of 36 million, has the world's 10th largest GDP. 

The EU is Canada's second largest trading partner in goods and services. Canada and the EU engage in $67 billion-worth (€63.5 billion) in trade annually.

According to Statistics Canada, the EU is also the second largest source of foreign direct investment (FDI) in Canada. According to Eurostat, the EU identified Canada as its third largest destination and its fourth largest source of FDI.

In 2020, Canadian small and medium-sized enterprises (SMEs) exported $8 billion in goods to the EU, a 24% increase since CETA's provisional application in 2017. Bilateral trade in 2020 was 12.5% higher than it was pre-CETA in 2016.

Is CETA popular?

A poll by Angus Reid Institute in February 2017 found that 55% of Canadians support CETA, while only 10% opposed it. The North American Free Trade Agreement (NAFTA) with the US and Mexico had a 44% support rate among Canadians, according to the pollster.

In some parts of Europe, most vociferously in Ireland, CETA is widely seen as a threat to national sovereignty at best and at worst a bridgehead for US multinationals to move into Irish markets.

Edited by: Rob Mudge