Canadian businesses should keep their eye on the trade prize around Canada-EU Summit

With the 17th Canada-European Union Summit taking place this week on July 17 and 18 in Montreal, there will be no shortage of challenging global issues to tackle. The summit is one of the regular exchanges and dialogues between Canada and the EU on themes such as development, climate, energy, migration and trade. This week’s agenda includes foreign relations and security challenges faced by both sides and climate change and the Paris Agreement.

Joining Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland will be International Trade Diversification Minister Jim Carr, and Canada’s European Ambassadors, Stephane Dion and Daniel Costello. The high-level EU delegation, including European Council President Donald Tusk and European Commission President Jean-Claude Juncker, as well as European Trade Commissioner Cecilia Malmström will join them for the two-day summit.

Ratification of the 2016 Comprehensive Economic and Trade Agreement underway

Canada and the EU have been long-standing and close partners, mostly through a shared commitment to multilateralism, a rules-based international order and free trade. The conclusion of the Strategic Partnership Agreement (SPA) and the Comprehensive Economic and Trade Agreement (CETA) in October 2016 marked an important milestone in intensifying this relationship further and upgrading cooperation in foreign policy, cybersecurity, research, sustainable development, energy security and climate change.

What should not be lost in all of this is how vital the trade discussion is for the future economic prosperity of both Canada and the EU. The conversation around free trade and diversification becomes even more pertinent with President Donald Trump’s increasing rhetoric around trade protections, Buy America provisions, and escalating tensions with China.

Today, two-thirds of CETA (including all trade provisions) is effective on a provisional basis, while the rest (mostly related to investment) will enter into force upon ratification by all EU Member States and Canada (completed by Canada and ongoing at EU level – currently 13 out of 28 Member States have ratified, with France – a known trade sceptic - having a vote on ratification on Wednesday). Despite public outcry over potential eroding of environmental and health standards, forced liberalization, and private justice for big corporates, CETA is now being recognized as one of the most progressive agreements that either party has ever negotiated. In fact, Brexiteers have been said to be hoping to model their own future trade agreements with the EU on the Canadian model.

Already a staggering increase in trade between Canada and the EU

Two years into provisional application, the benefits for both sides are already visible: trade flows in goods and services have increased due to cuts in tariffs and non-tariff measures, which have lowered trading costs, and companies have benefited from easier and better access to each other’s markets, including public procurement.

This prescient trade agreement has put Canadian businesses in the driver’s seat for engaging with the EU, their second-largest trading partner after the United States. 2018 saw a staggering 7% increase in Canadian exports from 2017, totaling nearly $44.5 billion. CETA has proven equally lucrative for the EU. The Europeans, not to be outdone, have demonstrated a one-year growth of 9% from 2017 to 2018, generating revenues of nearly $60 billion worth of goods to Canada. For France, where CETA ratification is talk of the town this week and where the leaders of the federal NDP and of the Green Party in Canada have encouraged French legislators to reject CETA, arguing against what they see as a flawed agreement, the trade numbers tell an ironclad story about booming trade successes: in the first 18 months after CETA was signed, Canadian businesses have grown their imports from France by 21% overall, and by 11% in the agri-food sector, while Canadian investments in France have increased by nearly 10% in 2018all indicative of the post-ratification trade trend both countries can expect.

There could not be a better moment to turn the attention to Canada-EU opportunities

While eye-catching news from south of the border will distract many, industry leaders will be looking to Europe for their next big opportunity, and opportunities are plenty: the recent EU elections (and resulting new Parliament and EU leadership) have brought new winds to Brussels: in the coming months and years we can expect higher ambitions on climate policy, including carbon-neutrality by 2050; a new cross-sectoral circular economy action plan; reviews of e-commerce legislation; more research focus on the energy transition and AI; and many more. In all of these files, the EU is looking to Canada as a partner to be forward-looking together.

Overall there could not be a better (or more lucrative) moment for Canadian businesses to be turning their mind toward Europe and the EU. Opportunities exist to engage all twenty-eight member countries of the EU, and NATIONAL and our sister agency Hanover are ready to assist with experts on both sides of the Atlantic.