Hard to believe that it has been three years since the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) came into effect. Maybe that has something to do with the political and economic climate since. And then there’s COVID-19. Large and significant trade deals almost seem like part of another era. So, does this anniversary bring hope for better outcomes on the other side of the current maelstrom?
CETA’s successes speak for themselves. An excellent report from the economists at Global Affairs Canada spells it out: after the deal came into effect, there was a massive increase in exports to the Netherlands (75%), Ireland (65%), Germany (37%), Italy (36%) and a less-dramatic but significant increase to our top EU customer, the United Kingdom.
Tariff cuts were a big driver of this new growth. Where the deal cut tariffs between 5% and 10%, average growth in the recent two-year period was 40%. Where tariffs decreased 10% or more, the average increase was 20%. These are impressive numbers, but there’s more: goods that were tariff-free saw a 28% jump, likely a signal of the power that a free trade deal has to profile and promote Canadian exports in the European market.
At the same time, imports from the EU to Canada also increased sharply—at virtually the same rate as exports. Key import growth was seen in autos and parts and organic chemicals (Belgium), aerospace (France) and machinery (Germany and Italy). Overall, import growth was somewhat more broadly distributed across EU members than exports...
This was excerpted from a 24 September 2020 commentary by Peter G. Hall, Vice-President and Chief Economist, Export Development Canada.