We have to credit Trudeau Government for the swift and thoughtful actions towards signing the CETA deal. What does it mean for the country? Canada through this mutually beneficial for Europe and Canada Trade Agreement gains advantages in accessing the 500+ million mature European market without trade tariffs, with minimum restrictions for capital movements and labor movement. So, it happens while NAFTA, as it was acknowledged by Jason Langrish, Chairman of Canada Europe Roundtable for Business, which for many years had been a very lucrative and successful agreement for the country, is no longer as useful as it used to be. He emphasized, that NAFTA has lost already its attractiveness for Canada. But how to fill the growing gap for Canadian businesses and consumers?
Now after Donald Trump, who threatened to shut down NAFTA, became the President Elect of USA, Canada one day could face the disaster – no free access to 300+ million US market. Of course Canada in turn also will raise tariffs on USA import damaging this way USA businesses; at the same time American tariffs having been imposed on Canadian import will surge the prices for American consumers. Probably this could be a possible scenario of the future events, should Donald Trump implement his threats to NAFTA. Still even in this worst case scenario – who says that trade ties between Canada and Mexico will be lost?
Donald Trump’s assurance that USA should rely mostly on domestic production rather than import of any goods and services from Canada, China and other countries sounds like a wishful thinking. To transfer from almost 16% of imported by USA goods and services to the completely domestic production apparently is impossible to achieve overnight. This announced transfer will take more than 2 terms of his Presidency and will cost American tax payers huge amount of money. Well, on top of this obvious consequences it will damage the whole sector of already well-established ties outside of pure economics, such as political, social and other connections.
Being the third (after China and EU) largest economy and with 47% of huge national debt (about $19 trillion) held by foreign countries and companies means that the country is deeply involved in extensive network of connections, should one link be broken the whole chain will be damaged. Today it is not that easy to break the agreement for such large country as USA, other countries – big investors in its economy will raise their brows. So, therefore one does not have to forget that Donald Trump is a businessman first and foremost all his rhetoric and tough threats could be translated as possible links to the future tough negotiations on the exposed topics.
Already today it is possible to foresee growth in certain areas of USA economy such as construction with all sectors around it, fossil fuels, biofuel production, military industry, pharmaceuticals, biotechnology, medical equipment production, pesticides and herbicides production, etc. Organic farming most likely will be shrinking, and after closing EPA (Environment Protection Agency) he will try to kill all the “prejudices” regarding environment. So as a result, it is possible to foresee occurrence of a great shift in professions’ demands, consulting companies, businesses niches. Construction will definitely be thriving in many other countries, who would cut a deal with USA on construction. Trump already had an experience (not a very positive, though) of building in Canada as well. He wants to boost USA small farms – but how it can happen without using already habitual foreign labor (often by illegal immigrants from the South) it is difficult to explain now. So, very brief review of anything “promised” by the candidate to USA President will probably become very problematic for the President of this great country, because it all carries the burden of the tectonic shift in the American economy and for American people.
Anyway, with CETA on the horizon Canadian Government almost doubled it’s security of Canadian consumers, market, SMEs and large businesses. The country gets an access to the market that is almost double the size of the American market, the European market of 500+ million. Even taking into account the geographical distance between two partners to get to the huge EU market without tariffs and to take advantage of other privileges of CETA will help Canadian businesses to find the best solutions possible for the transportation of their products and vice versa. Also Canadian businesses will acquire an opportunity to use the latest of European achievements in environmental research, technology, food technologies and Clean Tech, making Canada an exciting and vibrant market.
We asked Gregory Rust, Senior Trade Commissioner, Commercial Counselor, Embassy of Canada in Belgium, to comment on the two very defining for the markets questions regarding CETA and give us some prospects for the Canadian businesses in the next future when the agreement will be ratified.
CETA is signed, now it has to be ratified. Can you please comment on the schedule and what is the preliminary date when Zero rate tariffs will be implemented?
Now that CETA has been signed, both Canada and the EU are taking steps to implement the agreement according to their respective domestic procedures. For Canada, this will require the passage of implementing legislation by the House of Commons and the Senate (which started October 31 with the tabling of Bill C-30) as well as bringing all regulations and policies into accordance with Canada’s CETA commitments. For the EU, this will require approval of the European Parliament and the subsequent ratification of the treaty by all 28 EU Member States. It is expected that CETA will be provisionally applied in early 2017, after the Canadian and European Parliaments have completed their ratification processes.
It is an intention of both sides to pave the road for SMEs to take advantage of trade deal, what are the key drivers for SMEs success in the Agreement?
CETA will provide new opportunities for SMEs. They will come from several areas including from comprehensive tariff elimination (which will boost SME exports and enhance their competitiveness by allowing virtually all goods to, for example, enter Canada duty free), from simplified border procedures (which will reduce costs due to more predictable and efficient border procedures as well as being automated wherever possible), from expanded access to government procurement markets (which will expand access to procurement for EU SMEs at the federal, provincial and municipal levels in Canada and, for the first time, procurement by Canadian public utilities as well as major energy entities), from formal mechanisms for joint initiatives on regulatory cooperation (which will facilitate the reduction of regulatory hurdles) and from a protocol on conformity assessment (which will allow SMEs to have their products tested and certified to Canadian standards within the EU, which will further reduce their costs).
So, we can conclude, that Canada now can grow its economy, employment and solidify itself as a powerful modern country through applying all the opportunities opened by CETA. Europe also will benefit from CETA by opening the new market, strengthening transatlantic ties and gain more access to Arctic.