Canada and the EU Meet on Expanding Trade

By October 17, 2008Economy

Stephen Harper’s Conservatives were re-elected as the government in Canada this week, gaining more seats in the Parliament, a success that merits close attention in the United States. For one thing, voters resoundedly defeated the opposition Liberals’ call for a carbon tax. With Canada relatively untouched by the global financial crisis, voters did not punish Harper for being in power.

Most notably, Harper is a strong advocate of free-trade agreements, so Canadians explicitly rejected the protectionism that can be found in other political parties, especially the leftist New Democrats.

Today, preliminary talks open in Quebec City between Canada and the European Union on a free-trade agreement, or an “economic partnership” as it is being described, a meeting that included Prime Minister Harper, French President Nicolas Sarkozy headed the meeting — Sarkozy currently holds the EU’s rotating chairmanship — and EU President  José Manuel Durão Barroso.

The case is compelling, especially in light of the current financial crisis. From The Ottawa

OTTAWA – Business leaders say the stars are aligned for Canada and the European Union to begin talks on an “ambitious” trade liberalization deal that could see both economies reap combined benefits of nearly $40 billion a year.

The $40-billion figure will emerge from a joint Canada-EU study to be released Friday, when Prime Minister Stephen Harper meets with French President Nicolas Sarkozy and Jose Manuel Barroso, the European Commission president, in Quebec City. At present, two-way trade between Canada and EU countries stands at $100 billion.

The study, say people familiar with its contents, will suggest a wide-ranging trade liberalization deal would boost Canada’s annual real income, up until 2014, by $16 billion. That translates into 0.8 per cent of Canada’s GDP. The EU would realize a gain of $22.5 billion a year, or 0.1 per cent of its GDP.

The Globe and Mail reports the focus will be on services:

Both sides are expected to emphasize the benefits of removing barriers to trade in services, as opposed to goods, based on the study, which concluded that tariffs on most goods are already relatively low. Canadian officials had repeatedly pressed for the negotiations to be called “free trade” discussions, apparently because it is a term Canadians understand, according to a source from a European nation.

Quebec Premier Jean Charest has pushed hard for the arrangement, and the statement will be issued when French President Nicolas Sarkozy, who currently holds the rotating presidency of the EU, is in Quebec City for the Francophonie Summit.

“The financial crisis makes this deal even more likely,” said Jason Langrish, the executive-director of the Canada Europe Roundtable for Business (CERT), an association that tries to boost trade and business links between the two economies. “We need to create liquidity between these markets.”

Powerful arguments for a Canada-EU Free Trade Agreement….or even more.



Leave a Reply