EU and Canadian leaders have signed up to a trade agreement worth over €25 billion per year, in a deal seen by Brussels as the forerunner to a successful trade accord with the US.
European Commission President Jose Manuel Barroso Friday (18 October) said the agreement, which is the first such deal between the EU and a G8 country, was “a landmark achievement” which marked “a turning point in EU-Canadian relations”.
“This is the biggest deal our country has ever made,” said Canadian prime minister Stephen Harper.
Harper added that the deal “means the access of Canadian businesses to half a billion affluent citizens, and to a market that is bigger than NAFTA”, the trade agreement between Canada, the United States and Mexico which came into force in 1994.
The deal should increase bilateral trade between the EU and Canada by 23 percent and the EU’s GDP by €11.6 billion per year, according to the EU executive.
But Barroso and Harper conceded that not all sectors would reap quick rewards.
The Canadian premier confirmed that dairy farmers would be compensated for losses resulting from the expected increase of European cheeses on their markets, although he said that Canadian farmers would benefit “overwhelmingly” from the accord. He also indicated that medicine prices were likely to increase in the short-term.
Under the proposed deal, an estimated 99.4 percent of the remaining tariff barriers on industrial goods will be scrapped on the signing of the agreement. The remaining levies are to be phased out over a seven year transition period.
EU officials have indicated that the machinery, textiles and chemicals sectors were likely to be the biggest winners from the deal.
Meanwhile, Canada and the EU will both scrap around 93 percent of agricultural tariffs. Prepared agricultural products (PAPs), which includes wines, spirits, chocolate and some dairy, will have all import and export levies removed.
That said, the most sensitive agricultural products – beef, pork and sweetcorn for EU and cheese for Canada – will still be subject to annual quotas.
But the agreement to open up of all Canadian government procurement contracts to EU firms is arguably the most significant reform in the eyes of commission officials.
“This goes beyond NAFTA,” said one EU official, adding that “we have not only gained a level playing field with NAFTA members but in some areas been able to exceed that.”
The deal was immediately welcomed by EU trade chief Karel de Gucht as a “template” for the recently opened trade talks with the United States.
The German and UK governments were also quick to offer their endorsement.
“The EU has delivered its largest free trade agreement ever and proved that it can be an asset for British business,” said UK prime minister David Cameron in a statement.
But French trade minister Nicole Bricq expressed reservations at the deal.
“I am waiting for confirmation from the commission that this accord, particularly in agriculture, does not set a precedent for talks with the United States,” she said at a meeting of EU trade ministers in Luxembourg on Friday.
However, although EU officials described the agreement, which comes after more than four years of negotiations, as “the political breakthrough”, signing and sealing the deal is expected to take another two years.
Officials confirmed that the draft text would be subject to several months of “legal scrubbing” by lawyers before being initialled by politicians.
The EU’s 28 governments will have to give their consent together with the European Parliament before the deal enters into force.
For his part, Harper will require the support of Canada’s thirteen provinces and territories in addition to the Canadian parliament in Ottawa.
In a separate development, trade ministers agreed on a mandate for the commission to begin negotiations with China on an investment treaty. Talks are expected to begin in November.