The Comprehensive Economic and Trade Agreement (CETA) is beneficial for both the European Union (EU) and Canada, but could be further improved, states a new Verbatim from the C.D. Howe Institute. In “Understanding CETA: An Upgrade for Canada’s Global Connections,” author Dan Ciuriak suggests that CETA represents a tidy deal for Canada and the European Union. It will encourage companies that are not currently trading to do so, which will have a positive economic impact on both sides of the Atlantic.
CETA represents an important statement for the international community presently. It shows an agreement between two sides committing themselves to maintaining open economies, rules-based free trade, as well as multilateralism. Both the Canadian and E.U. economies also stand to benefit from the agreement, with the E.U. seeing real GDP gains of 0.02%, while Canada would see a gain of 0.24%.
These gains are not transformative, but are tidy at a time when economic gains have been hard to come by. For companies that are already engaged in Canada-EU trade and still face tariffs or actioned non-tariff barriers (NTBs), CETA will have immediate effects in lowering the costs of market access. For companies not yet engaged in Canada-EU trade, but looking for new and steadier opportunities in an uncertain international trade context, CETA will likely induce new entry into international trade.
The paper also provides two recommendations to some of the problems that have been raised throughout the negotiations.
- CETA should accommodate rules of origin (ROOs), which dictate what products qualify for lowered tariffs, to encourage small and medium-sized enterprises (SMEs) to trade.
- The CETA investor-state dispute settlement (ISDS) mechanism, while a substantial improvement upon existing mechanisms in procedural terms, could be further improved in order to provide substantive guidance to arbitration panels as to exactly when it is that government regulation is “legitimate.”
CETA is an important agreement for both Canada and the European Union. It is being implemented at a time when uncertainty about international trade relations is rising and, in addition to generating valuable economic benefits to both parties, it sends an important signal about commitment to open borders, support for the multilateral system, and for sustainable economic development.
For more information contact: Dan Ciuriak, Director and Principal, Ciuriak Consulting Inc., and Fellow-in-Residence, C.D. Howe Institute: 416-865-1904 or email: amcbrien@cdhowe.org
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