High-level officials from Canada and the European Union (EU) met in Ottawa on 20th April for the third round of negotiations of a wide-ranging economic and trade agreement. The Canadian Minister of International Trade Peter van Loan highlighted the importance of the agreement for Canada in terms of competitiveness and market access.
Canada is currently the EU´s 11th largest trade partner and the EU is Canada´s 2nd largest, almost doubling the value of products traded with its 3rd largest partner, China. Bilateral trade reached a record high in 2008, when the value of goods and services traded reached around US$ 66.35 billion. Canada’s trade relations with the EU are essentially asymmetric: Canada represents only 1.7% of the EU´s external trade, while the EU accounts for 10% of Canada´s. The EU has maintained a substantial bilateral trade surplus at least for the last 5 years. The trade agreement under discussion is expected to bring greater balance to the relations.
According to a joint study released by the parts in October 2008, a bilateral economic and trade agreement could potentially increase Canadian GDP (Gross Domestic Product) by 0,77% per annum (around US$ 11 billion each year) and EU´s GDP by 0,08% per annum (around US$ 15.42 billion each year).
Tariffs on goods and services traded between the two countries are already low. The EU´s average tariff on Canadian goods was around 2.2% in 2007 and EU goods entering the Canadian market faced an average 3.5% tariff for the same year. However, both parts sustain that even low tariffs, together with potential non-tariff costs, constitute a crucial competitive disadvantage, especially in the case of services and highly efficient high-tech industries such as those accountable for almost 50% of bilateral trade.
The comprehensive economic and trade agreement is expected to boost bilateral trade by US$ 35 billion, with high value-added goods accounting for US$ 24.73 billion and services trade accounting for US$ 9.3 billion of this increase.
If all goes according to schedule, the fourth round of negotiations will take place during the second week of July 2010 in Brussels, Belgium.