Update on CETA: Industry awaits Ratification amidst “Brexit” Uncertainty

June 29, 2016 | Andrew Hentz, Carol S. VandenHoek

In October 2013, it was announced that Canada and the EU had reached an agreement in principle with respect to the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). CETA is intended to co-exist with other trade agreements including the Trans-Pacific Partnership (TPP). CETA is Canada’s largest trade initiative since NAFTA and provides Canadian exporters preferential access to the EU, which is a bigger market than the U.S. and Mexico put together.

When CETA is implemented, tariffs will be lowered or eliminated on a wide range of agricultural products including wheat, fresh and frozen fruits and vegetables, maple syrup, processed pulses and grains, oils, and others. CETA will also provide new market access for Canadian agricultural exports such as beef, pork, and bison. Only goods made in Canada or in the EU will benefit from preferential tariffs. Accordingly, there are mechanisms to address whether a product is in fact Canadian or EU in origin.

Much has been reported on the impact of this trade deal on Canada’s supply management industries. Some producers and organizations have voiced concern that the increase in market share for European cheese and milk concentrates granted as part of CETA and TPP will lead to income loss and permanent loss of market position. In response to some of these concerns, the previous federal government announced new programs to compensate producers and processors in supply managed industries for the new market access granted to foreign producers. However, the current government states that it is reviewing this compensation package, but has committed to providing a compensation package for the supply-management sectors.

On February 29, 2016, Canada’s Minister of International Trade, Chrystia Freeland, and the European Union’s Commissioner for Trade Cecilia Malmström announced the completion of the legal review of CETA. The legal text was recently finalized, representing a large step forward to ratification and implementation.  The recent “Brexit” referendum result has created uncertainty as any ratification may be pushed down the agenda as the European Union begins to grapple with the ramifications and mechanism of any exit of one of its larger member states. Furthermore, Canadian exports to the United Kingdom dominate trade with EU countries. However, Chrystia Freeland has recently stated that CETA is moving forward and expects ratification to occur before any withdrawal of the United Kingdom from the EU.


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