The Canadian and European Union governments today announced an “agreement in principle” to enter into a wide-ranging free trade agreement. The Comprehensive Economic and Trade Agreement (CETA), if it is ultimately completed and ratified, would immediately eliminate 98% of all Canada-EU tariffs and would greatly facilitate trade, investment and the movement of labour between Canada and the EU.

According to a joint Canada-EU study at the launch of negotiations, the CETA could increase bilateral trade by 20% and yield an annual benefit of $12 billion to the Canadian economy. Both the Canadian and EU governments have expressed confidence that the CETA will be completed and fully ratified by 2015.

The full text of the proposed CETA has not yet been made public. However, based on details released by Canada and the EU, topics to be addressed by the agreement would include:

  • Trade in Products and Services: The CETA would eliminate the vast majority of tariffs on products traded between Canada and the EU, including industrial tariffs and agricultural tariffs. Limited tariffs would continue to apply to “sensitive” agricultural products, including dairy for Canada and beef, pork and sweet corn for the EU (both sides have also excluded the poultry and egg sectors from the CETA). Several quotas will also be increased, including cheese (from the EU to Canada) and beef, pork and automobiles (from Canada to the EU). The CETA also is also to include measures to facilitate trade in services.
  • Investment: The CETA will eliminate or lessen barriers to foreign investment and will implement measures to protect investors from discriminatory treatment. However, European investors will still have to undergo the ministerial review process under the Investment Canada Act (for high-value acquisitions of control of Canadian businesses), and decisions taken thereunder will not be subject to the dispute settlement provisions of the CETA.
  • Public Procurement: The CETA will provide greater access to each party’s public procurement market, including at both the federal and sub-federal (provinces, states) levels. The CETA will apply only to high-value procurement processes.
  • Intellectual Property Rights and Counterfeit Goods: The CETA will address copyright, patents, geographical indications (marks of origin for products of a particular geographic origin) and counterfeit goods. Publicly-available materials do not provide a clear indication of what specific measures will be implemented. However, the CETA is expected to include patent term restoration for pharmaceutical patents (which allows patent-holders to extend their patents in the event that their ability to market a patented product is delayed while other regulatory approvals are pending).
  • Movement of Labour: The CETA will allow for temporary movement of staff between Canada and the EU (which will facilitate trade in services and foreign investment) and will provide a framework for future discussions regarding the mutual recognition of professional qualifications.