Canada, EU reach FTA agreement

Published on: Oct 18, 2013

Canada and the European Union (EU) have reached an agreement in principle on a comprehensive trade agreement that will significantly boost trade and investment ties between the two partners, and create jobs and opportunities for Canadians.

Canada said this is the "biggest, most ambitious trade agreement that Canada has ever reached." It covers most aspects of the Canada-EU bilateral economic relationship, including trade in goods and services, investment, and government procurement. It also grants the flexibility to include areas of mutual interest beyond those that have traditionally been included in Canada's trade agreements, such as regulatory cooperation.

Now that an agreement in principle has been reached, both parties will seek to conclude the formal agreement and undertake a legal review of the document. Once the final agreement is signed, it will then need to be ratified by respective parliaments.

“This trade agreement is an historic win for Canada,” said Prime Minister Stephen Harper. “It represents thousands of new jobs for Canadians, and a half-billion new customers for Canadian businesses.”

"CETA is the good opportunity that the Canadian barley value-chain has been waiting for," said Barley Council of Canada Chair Brian Otto. "There is more work to be done, but we are confident that if our federal and provincial governments finalize this agreement, sustainable growth and profitability will be achieved."

A joint study by the Canadian government and the European Union has estimated that Canada's processed food exports could grow by as much as $2 billion annually if Canada integrates itself into the European market.

Canada’s agricultural exports to the EU were an annual average of $2.5 billion between 2010 and 2012, led by wheat (durum and common), soybeans and other oilseeds, and canola oil. Canada is interested in expanding exports of these and a wide variety of products, including meats, grains and oilseeds, fruits and vegetables, and processed foods. Canadian agricultural exports to the EU face high tariff rates, with average EU agriculture tariffs of 13.9%.

Canada will gain unlimited duty free access to the EU with live cattle, genetics, most offals, tallow and rendered products, processed beef products and hides and skins effective immediately.

Upon entry into force, almost 94% of EU agricultural tariff lines will be duty-free, including durum wheat (up to $190 per ton), other wheat (up to $122 per ton), and oils, including canola oil (3.2%- 9.6%). These and other tariff reductions in the agriculture and agri-food sector will be of greatest benefit to Alberta, Saskatchewan, Manitoba, Ontario and Québec.

The European market holds great opportunity for Canadian beef and veal, with the potential for 64,950 tonnes of duty-free market access for Canadian beef and veal worth over $600 million, Canada Beef reported. Discussions around CETA have been ongoing since 2009, and reported breakthroughs on meat and dairy issues in September have allowed Canada and the EU to move forward and finalize the agreement.

Since 1997, Canadian beef has been included in the Hilton quota which is limited to high grading beef finished on high energy ration, has had a duty rate of 20% on 14,950 tonnes of beef shared with the United States. Under CETA, the duty rate for Canada's Hilton quota will be reduced from 20% to zero. Two new duty free quotas will make up the remaining 50,000 tonnes.

Canada also continues to have access to export an additional 45,000 tonnes of beef to the EU through the Global quota, to which Canada will continue to have shared access with other suppliers, Canada Beef said. 

Currently, Canada is the world's fifth largest agri-food exporter in the world, generating more than $40 billion each year through its beef, malting barley, pork, wheat and canola supply.