Canada-EU Comprehensive Economic and Trade Agreement (CETA)

free essayCanada is one of the most dependent countries on trade. For Canada, it is critical to have strong multinational ties to achieve an economic growth and sustainability. One of the most important negotiation partners is the European Union (EU), which is the second largest investment and trade partner after the US. The paper describes the enormous significance of the negotiations on Canada-EU Comprehensive Economic and Trade Agreement (CETA) for the Canadian economy. The work analyzes CETA as a free trade agreement, which regulates the fundamental relationships between the EU and Canada. CETA also covers all Canadian board trading relationships with the EU, including regulatory cooperation, investments, services and goods, and government procurement.

Among the big countries, Canada belongs to those countries that heavily depend on trade. Thus, it is crucial to establish the multinational ties to provide Canadian communities and businesses with rule-based investments, trade, and open global markets. Moreover, this country is able to ensure that its communities and businesses have growth opportunities only due to its international trade diversification. The negotiation resources have to be concentrated on increasing exchanges with major economies in recognition of changing investment and trade patterns. One of the most important negotiation partners is the European Union (EU). This is the second largest investment and trade partner after the US. Additionally, a great meaning for the Canadian economy has the negotiation on Canada-EU Comprehensive Economic and Trade Agreement (CETA) that aims to generate forty billions of dollars for annual investment and trade. CETA is a legally binding agreement that regulates the basic relationships between the EU and Canada. It is concentrated on all Canadian board trading relationships with the EU, including regulatory cooperation, investments, services and goods, and government procurement. Therefore, the paper emphasizes on the CETA importance for the Canadian businesses and economy as a whole. Particularly, it aims to analyze the main policies stated in the agreement and their impact on the Canadian economy.

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Canadian economy and its sustainable growth greatly depend on the trade and investments. For Canadian community and business, it is critical to have a rule-based trade, sizeable investments, and open global markets. To reach it, Canada must strengthen the multinational ties. Moreover, the Canadian economic success and ability to develop growth opportunities for business and communities directly rely on the international trade abilities. For the purpose of stimulating the economic growth, Canada involved in the trade negotiation process with the EU. Canada and the EU have a strong historical and cultural connection that is a firm base for the steady relationships. Nowadays, these parties are trying to create a background not only for the development of stronger cultural ties but also for the improvement of the trade and economic ties. Hence, this paper is focused on the Canada-EU Comprehensive Economic and Trade Agreement (CETA) and its significance for the Canadian economy growth.

CETA Background

Canada and the European Union (EU) Comprehensive Economic and Trade Agreement (CETA) is an agreement of the paramount importance as it regulates the relationship between Canada and the EU. CETA is focused on all the issues of Canadian board trading s with the EU, including government procurement, services and goods, regulatory cooperation, and investments (Bierbrauer, 2014). This agreement is can provide Canada with access to the largest markets around the world with more than five hundred million people in twenty-eight countries with a combined GDP in twenty trillion of dollars (Global Affairs Canada, 2016). The negotiations on CETA began in 2009 during the EU-Canada summit in Prague and were eventually concluded in 2016 during the EU-Canada Summit in Ottawa. Apart from NAFTA, it is the one of biggest Canadian bilateral initiatives. However, it is not the first attempt to build trade ties with the EU. The first negotiations began after the Canada-EU summit in Ottawa in 2004, where leaders agreed to the new Canada-EU Trade and Investment Enhancement Agreement (TIEA) framework. The main TIEA goal was to achieve access beyond the traditional market issues and to cover such areas as sustainable development, financial services, mutual recognition of professional qualification, science and technology sharing, small- and medium-sized enterprises, e-commerce, and trade and investment facilitation. The TIEA also had to build the Canada-EU regulatory cooperation framework for bilateral promotion of cooperation regarding the approaches to trade and investment facilitation, advancing reliable practices for controlling, and regulatory governance. Additionally, it was aimed at increasing the EU and Canadian interests in their own markets. The TIEA was prolonged till 2006 when the EU and Canada decided to have a pause in the negotiations. This action led to the CETA negotiations and this agreement has gone beyond TIEA. It was signed in 2013 by European Commission President Barroso and Prime Minister Harper. The text was officially published on the EU website on September 26, 2014 (Bierbrauer, 2014). Completion and the final text translation in twenty-four EU languages and the ratification were expected to be done within the two years, since the agreement may require not only the European Parliament and the European Council approval but also the approval of the EU member states as well. For the EU, Canada is a strong investment and trade partner and CETA has to open new opportunities for the both sides by increasing the cooperation and liberalizing markets while reducing the business transaction costs (Bierbrauer, 2014).

Reasons of CETA for Canada

It is essential to state the main reasons why the trade and economic agreement are highly important for Canada. First, it is preferential and improved access to the market that will lead Canada to the economic growth and a creation of new job opportunities (Global Affairs Canada, 2016). The European Union is one of the best partners for effective trade agreement due tothe cultural and historical ties between the EU and Canada. Particularly, this organization is the second largest investment and trade partner for Canada after the US. CETA will result in the improvement of the trading relations which has to provide the Canadian businesses with new advantages. According to the statistics, the common size of investments of the EU member states in 2013 was 17, 880, 2 billions of dollars, while two-way trade with Canada in 2013 provided 86, 357, 1 billions of dollars (Global Affairs Canada, 2016). Second, Canadians need advantageous and clear business rules (Global Affairs Canada, 2016). The ways of businesses can vary from country to country because of different regulations, rules, policies, laws, and different requirement and standards. CETA includes points that will make the governments reach issues, which are fair and clear and thus decrease costs for Canadian business communities (Global Affairs Canada, 2016). Moreover, CETA offers effective protection that will save Canadian territories, provinces, a federal government, and abilities of the municipalities to continue the regulation of the public interests relying on cultural identity, environmental protection, safety, health, and other areas crucial for Canada. Third, the country must aim at creating diverse business opportunities and favorable conditions for the Canadian investors, businesses, and workers (Global Affairs Canada, 2016). The main point is that CETA has to tackle not only the current issues but also tomorrow’s, so the adaptation to changes would be as easy as possible. In this way, CETA will be able to face all challenges effectively. Fourth, Canadian businesses improve faster when the trade barriers are decreased or removed (Global Affairs Canada, 2016). Countries usually treat foreign services and goods differently in comparison with the domestic services and goods. This usually happens due to the border taxes and such measures as discriminatory permits and licenses, regulations, and certifications (Global Affairs Canada, 2016). The discrimination can destroy the business competition in all markets. CETA, in this case, seeks to eliminate tariffs, create mechanisms directed to the discrimination reduction, fix predictable and fair business conditions, and to ensure that all sides treat the foreign companies properly. Finally, CETA will definitely provide the country itself with enormous benefits. Canadian employees in every region of the country work in different sectors, so if these sectors will be assimilated with the EU market, they will obtain extra profits and other multiple benefits (Global Affairs Canada, 2016). Additionally, this agreement will provide the employees with services in such diverse areas as engineering, construction, architecture, and other fields. Furthermore, with CETA the level of investments will increase which will consequently lead to the job creation, new prosperity sources generation, and new technology implementation. Owing to CETA, Canada can become the only developed country simultaneously open to the two biggest markets of the world, namely the US and the EU, which would provide Canada with more than eight hundred million consumers around the globe (Global Affairs Canada, 2016). Therefore, this agreement empowers the most critical plan in the Canadian history that is aimed at developing new markets. Hence, the Canadian increase in exports in such large and powerful markets around the world is a substantial progress in the Canadian Economic Plan.

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CETA Details Analysis

CETA is divided into several major contextual parts. One of these part concerns the trade in goods. Tariffs are important taxes that are provided at the borders and due to which the cost of imported goods increases to consumers. Some of these tariffs can be too high which might make the imported goods too competitive on the market. Due to CETA, all products traded between Canada and the EU will profit from this agreement as the customs tariffs on 99% of all tariff lines on both sides will be liberalized (Webb, 2016). The European commission has underlined the projected results for sectors, such as processed agricultural products, for which the most of duties will be eliminated. Regarding the other tariff lines that include agricultural goods some protection in the form of quotas is about to be implemented. The elimination of the progressive EU tariffs for the Canadian exporters, manufacturers, and producers will offer a better access to the competitive market (Global Affairs Canada, 2016). Canadian goods that have no problems with tariffs will be cheaper on the EU market, which will give Canadian exporters a great preference over the exporters that still have to tackle the tariffs.

Services differ from goods, because they include economic activities that are based on the expertise or advice exchange, rather than tangible products. Trade in services section states that the EU has agreed to access open market in the service area on a negative list basis. It means that all service markets have to be liberalized except for such services as education, healthcare, and other social services combined with some air services, water distribution, and audio-visual services (Bierbrauer, 2014). Apart from this, CETA will provide a framework to simplify the recognition of professional qualification, which will have a positive effect on the qualified workers on the both sides. Therefore, the EU and Canadian service suppliers will reach the most preferred access that can only be given to the trade partner (Global Affairs Canada, 2016). The main idea is that Canadian suppliers in the service areas will have equal conditions with the EU service providers and will reach better treatment in comparison with the non-EU competitors.

The chapter focused on the sanitary and phytosanitary issues that were fully integrated from the already existing ones in Canada and the EU Veterinary Agreement (Bierbrauer, 2014). Basically, the economic and trade agreement has also provided some rules for the approval procedures of the plant products. All countries have sanitary rules the main goal of which is to prevent the spread or the appearance of diseases. Specifically, the phytosanitary measures have to prevent the spread or introduction of the plant pests that may infest trees and crops. According to CETA the new Sanitary and Phytosanitary Measures Joint Management Committee, this process will involve experts to discuss issues before they can grow into serious problems (Global Affairs Canada, 2016).

Technical barriers to trade are considered in CETA basing on the WTO Agreement on Technical Barriers to Trade that involves the transparent areas, conformity assessment, technical regulations, and international standards (Bierbrauer, 2014). Essentially, the agreement is focused on the regulatory reduction of the divergences because of the disadvantages risks for both consumers and producers. CETA provides several steps that have to reduce the technical barriers. First, the agreement offers to implement a mechanism that will allow recognized bodies in the EU and Canada to accept product certification and test results from both sides. This step will help to reduce marketing delays for exports and administrative costs. In addition, by accepting public participation in the technical regulations, people will be able to participate in it in Canada as well as in the EU. Apart from this, the EU and Canadian standard-setting bodies have to cooperate closely on the common priorities to recognize the role of the critical standards.

The role of the government in the procurement process indicates that the sustainable access to the public procurement markets has to be improved. Both sides seek to reach full coverage of the central and sub-central government procurement in all sectors (Bierbrauer, 2014). Canada has agreed to broaden the coverage of municipal, provincial, and federal levels that would make the procurement process possible in the transparent and open manner to ensure that taxpayers get the best value for their money.

The intellectual property section is based on the WTO Agreement on Trade-Related Aspect of Intellectual Property rights. Nevertheless, it was decided to improve the intellectual rights protection in CETA with the help of some directions. For example, the most difficult issue in the negotiation process became the issue of the pharmaceutical patents’ intellectual rights protection, thus, to improve it, the agreement includes some points to attract and retain investments in this area (Bierbrauer, 2014). Furthermore, the trade control over counterfeit products has been improved. In this case, CETA will assist Canada in providing the right conditions to reach leadership in innovative industries that include aerospace, nanotechnology, information and communication technology, sustainable and energy technologies, and health (Global Affairs Canada, 2016).

Sustainability development role of the agreement is based on the fact that the EU and Canada share similar labor, environmental, and social objectives. Due to CETA, the sustainability development can be achieved through the implementation of the labor and environment rights, which are centered on core labor standards provided by the International Labor Organization and by the internationally accepted corporate social responsibility standards (Bierbrauer, 2014). Moreover, this chapter includes a dedicated dispute settlement mechanism that is grounded on the independent expert panel and government consultations whose reports have to be made in public and they require a follow-up (Bierbrauer, 2014).

The investment part is concentrated on the protection and establishment of investments and investors. In general, foreign direct investments made a great contribution to the economy in Canada and it is still the most important contributor to the further economical growth. CETA will help to promote Canada as a positive place to invest. Due to this agreement, more EU companies will invest in Canada to take advantage of Canadian preferential access to the US or other markets. The agreement imposes investment rules that regulate issues about investors and their investments in the host country. Particularly, it is focused on the equal and fair investors and the treatments of their investments without providing excessive support to the domestic or other foreign investors (Global Affairs Canada, 2016). Furthermore, CETA enables the investors to have the compensation ability that can be achieved through the independent arbitral panel that considers facts and takes the decisions. The Canadian government realizes that not all investments will have a positive impact on the country. Therefore, the agreement protects the governmental rights to use the Investment Canada Act to review the high-value investments to be certain that they will bring enormous benefits to Canada (Global Affairs Canada, 2016). Hence, CETA will provide Canada with the new investments and will give more abilities to invest in other countries under strict control that it is based on fair and equal conditions for both sides.

CETA Critique

It is true that trade with the EU will bring many benefits and opportunities to Canada. However, CETA has provoked a lot of criticism from the both sides. From the Canada’s part, many people argue about rising pharmaceuticals costs and potential outsourcing to the automotive and dairy industries. Nonetheless, the government promised to compensate the affected industries 4.3 billions of dollars (Bajan, 2016). As for the EU side, the criticism is quite different. One of the arguments concerns a suitable legal framework implementation. The main point, which dissatisfies critics, is that from the EU perspective, this agreement will be more difficult in comparison with Canada as this organization includes twenty-eight countries (Bajan, 2016). Additionally, the Europeans critique CETA for the fact that the most of the trade agreements will include an Investor-State Dispute Settlement (ISDS) clause. This will allow corporations to launch private arbitration against international trading partners including national governments, in case they feel that the trade agreements are not being adhered to (Bajan, 2016). There is a fear of repeated disputes over the NAFTA period, so that such European members as Germany may often note that ISDS in CETA can seriously lessen protection of the European government if the trade deals would go wrong (Bajan, 2016).

Similar critique has fueled misunderstandings and myths among Canadians about CETA. The first false statement is that free trade agreements (FTA) can threaten Canada’s public services (Global Affairs Canada, 2016). However, the fact is that CETA excludes public education, health care, and many other social services created for the public purposes. Moreover, it cannot understand the government contract as well as deregulate or privatize public services. The second myth is that CETA will exclude governments from controlling safety, health care, labor, and environmental standards (Global Affairs Canada, 2016). The truth is that CETA cannot limit governmental control over such public standards. The third misunderstanding is that CETA threatens the public healthcare system in Canada (Global Affairs Canada, 2016). It is an erroneous statement, because in CETA the parties negotiated about not privatizing public healthcare system in Canada. The next false allegation is that CETA can damage water services regulation and water-quality standards. In fact, CETA does not prevent the government from providing standards to be sure that people can have safe drinking water (Global Affairs Canada, 2016). Additionally, the agreement does not suspend contract, deregulate or privatize services related to water, since all functioning in Canadian companies, foreign or domestic, must submit to Canadian regulations and laws. Another misunderstanding concerning water is about coercing Canada into its exportation. In the agreement, the water is not regarded as a “product” that can be exported (Global Affairs Canada, 2016). Another wrong concern is about the idea that CETA will prevent Canadian government from protecting its own cultural interests (Global Affairs Canada, 2016). In reality, the promotion and preservation of Canadian cultural diversity are the most critical obligations of the government. The same concerns appeared twenty-five years ago during NAFTA negotiations (Global Affairs Canada, 2016). However, nowadays, it is possible to see that Canadian culture is protected and safe. Hence, the same policy is provided in CETA. Another myth is centered upon allowing foreign companies and investors through CETA to argue Canadian regulations and laws (Global Affairs Canada, 2016). This is a false claim, because Canada does not allow anyone to force the government into the regulations and law changes. The main point is that the dispute resolution mechanism, through the international arbitration that is included in CETA, does not prevent the government from representing public interests. Thus, there are many wrong statements about CETA that have to be explained to avoid the unnecessary criticism.

In summary, it is important to state that free trade relations between Canada and the EU will be soon regulated by CETA. This agreement covers all Canadian board trading relationships with the EU, including regulatory cooperation, investment, services and goods, and government procurement. CETA has provoked a lot of criticism, but many of the negative positions are based on the wrong understanding of this agreement. Moreover, despite this critique, CETA may bring many opportunities for Canadian economic growth, because the agreement will provide the investment and trade flow from twenty-eight countries. Additionally, with the NAFTA agreement and further agreement with the EU, this country will become the only country that will have access to two largest markets of the world. Therefore, free trade agreement with the EU will result in the rapid growth of Canadian economy.

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