With the technological advances of the 21st century, it seems that we live in a world without boundaries. These incredible breakthroughs have changed the way we access information, travel and communicate. However, we still face certain challenges such as restrictions on importation and exportation.
In June 2007, Canada and the EU decided to study the possible outcomes of a closer economic relationship. The objective of this partnership was to reduce and possibly eliminate the barriers to importing and exporting between both parties. In February 2017, almost 10 years later, the European Parliament officially approved this new partnership also known as the CETA. From Thursday 21st September 2017, this agreement enters into force provisionally.
WHAT IS THE CETA?
Better known as the Comprehensive Economic and Trade Agreement, the CETA is an agreement drafted by the European Union and Canada to support the theory of free trade. The draft was finalized in August 2014 and signed by all European Union countries in October 2016. This historical trade agreement was concluded while Canadian Prime Minister Justin Trudeau traveled to Brussels to close the agreement.
WHAT CLAUSES DOES THE CETA HOLD?
The CETA aims at eliminating as many as 98% of tariffs which would save EU exporters up to (€)500 million of annual duties between the two economies. The agreement also aims at easing the exchange of professionals across borders, including maintenance engineers and technical specialists to provide after-sales services and support for technological products. Simplifying this process will benefit both businesses and consumers.
In addition, EU firms will be able to bid for public contracts in Canada. Not only that, the Canadian government has vowed to make the bidding process more transparent by openly publishing all its public tenders online.
A common misconception of trade agreements is the perception that they entail only the exchange of tangible goods across borders. However, exchange of services is expected to contribute twice as much to the economy as goods. The free and restriction-free movement of the workforce between the EU and Canada would likely promote the quality of the workforce in both countries in sectors such as environmental services, telecoms, and finance.
IMPACT OF THE CETA ON CANADA AND THE EU
This trade agreement has been qualified as the most progressive and ambitious between the EU and Canada. Indeed, the CETA will have an important impact on the targeted countries’ economic growth and it will create job opportunities in fields such as aerospace and agriculture. Here are some of the advantages of implementing this bill:
- Increase in investment opportunities for international companies.
- In return, these new opportunities will create jobs and therefore decrease the unemployment rate.
- Consumers will benefit from imported goods and services at a lower cost.
- Even smaller firms in Canada and the EU will be able to bid for public contracts across the border and gain favor.
- This regulation will further protect EU products against plagiarism and improve copyright protection.
- Some qualifications will be recognized by both Canada and the EU on the same level making it easier for the degree holders to find jobs in countries under the CETA agreement.
The Comprehensive Economic and Trade Agreement has many advantages and the complete spectrum of impacts will only be revealed in the years following its implementation. At the moment, it is clear that Canadian and EU leaders have created this economic partnership in order to strengthen the middle class by creating job opportunities and by giving them access to European goods and services at a lower cost.
For more informations, contact our experts from ASD Group Canada.
This article is intended for informational use only and does not constitute legal, financial or tax advice. For specific advice applicable to your business, please contact us.