CETA's Impact on the Canadian Economy

The Comprehensive Economic Trade Agreement — better known by its acronym CETA —made headlines in late 2016 when a region in Belgium threatened to torpedo the trade deal some seven years in the making. Among other things, the agreement eliminates 98 percent of trade tariffs between Canada and the EU.

The agreement is not without controversy, however, as many Europeans protested the loss of some customer rights, most prominently those concerning food safety. On both sides of the Atlantic, people are worried the agreement endows multinational companies with too much power. However, in the mainstream, the agreement is being championed by the likes of Trudeau and Merkel, and enjoys broad support from liberal, centre-left, and centre-right parties across Europe and Canada.

The 28-county bloc (27 once the UK leaves the EU) has long had strong trade ties with Canada, which meant it was worth Canada and the EU spending some seven years creating the agreement. Most polls indicate that a majority of people support the arrangement, especially in Canada. 2017 has already seen several bodies, including national parliaments in Europe as well as the European Parliament, ratifying the agreement. Bill C-30 received Royal Assent on 16 May and the agreement will be ratified in Canada by or on 1 July.

As is the case with most international trade agreements, it will probably be some time yet before the effects are noticed in one’s day-to-day life. With trade links between Canada and the EU already valued at €63.5bn in 2015 according to the European Commission, once implemented, trans-Atlantic businesses are expected to flourish.

The European Union Chamber of Commerce in Canada (EUCCAN) bills itself as “the business voice of Europe” and already has offices in Toronto. Their mission to facilitate business links across the Atlantic is underway and expected to gain momentum as national parliaments continue to ratify the treaty throughout Europe.

European companies have been investing in Canada — even without CETA — for quite some time, with the EU being Canada’s largest source of foreign direct investment. Gibraltar-based Lottoland, a licensed wagering firm operating in the UK, Sweden, and Austria, amongst other countries, has recently opened its digital doors to Canadian customers. Partly as a result of its involvement in Canada, the company recently landed in the top 15 percent of a Financial Times list of the fastest growing companies.

With or even without CETA in place, there have been rumours that German discount supermarket chains Aldi and Lidl are eyeing an entry into the Canadian market. Both companies have gone from strength to strength in recent years and have already expanded into the United States. With Lidl planning to add 100 locations to its US presence in 2018 and Aldi expected to have some 2000 branches in the same year, it’s only a matter of time before they enter the Canadian market.

Now that CETA is indeed beginning to be implemented and discount supermarkets account for only 3 percent of market share, according to Financial Post reporting, Canada looks more attractive for European companies.

CETA negotiations were completed recently and the agreement will start influencing trans-Atlantic trade as early as this year. What remains to be seen is only the specific impact the agreement will have on the economies of the EU and Canada.