CETA Broadens Trade Horizons

Signed with little ado in October, we take a closer look at the Canadian/European Union trade agreement that is focused on creating new opportunity for Canadian businesses.

01.01.2017 - Giles D. Marshall, Vice President, Portfolio Manager

CETA Broadens Trade Horizons

 For many years, the General Agreement on Tariffs and Trade and its successor—the World Trade Organization—helped boost global trade, a key driver of global growth. As The Economist reports, “between 1985 and 2007, trade volumes shot up at around twice the rate of global GDP.”[1] Since 2012, however, growth in global trade has hardly kept pace with sluggish global growth. In addition, the benefits of global trade, a key component of globalization, have come under increasing scrutiny with the rise of populist political rhetoric.

 Against this backdrop, Canada and the 28 member states of the European Union (EU) signed the Comprehensive Economic and Trade Agreement (CETA) on October 30, 2016. The signing in Brussels attracted little attention, likely due to the agreement’s technical nature and protracted development over the past 12 years. Although the European Parliament and national legislatures must still ratify the agreement, once fully implemented, CETA will eliminate tariffs on 99% of goods sold between Canada and the EU, versus a meagre 25% of tariff-free goods today.