Michael Economopoulos, Fordham University:
With November 8th looming closer, there is one subject of discussion that has gripped the nation. That’s right, the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. After seven years of negotiations, both parties finally signed the agreement on October 30th. However, many questions arise from this. Firstly, what exactly does the Comprehensive Economic and Trade Agreement accomplish? Secondly, why did CETA take so long to be agreed upon? And finally, what does this mean for the United States and for the future of global trade?
The main bullet point of CETA is that it will eliminate 98% of all tariffs between Canada and the European Union. In addition, the EU suggests that over half a billion ($549 million to be exact) in taxes will be saved by EU exporters each year, while also invalidating over 9,000 tariffs. These tariffs range from various industrial to agricultural products. This will serve as a big boost for Canada as its economy has been damaged significantly by the collapse in commodity prices. In theory, CETA will also create a “level playing field” between Canada and the EU in regards to intellectual property rights. Lastly, CETA will also encourage competition in the services sector.
The fact that CETA has been a work in progress for the last seven years is astounding, and there are numerous factors surrounding this overwhelming amount of negotiation time. The thorn in the rose that is CETA stems from the critics of the agreement. Concerns over food safety, arguments that tariffs were already too low, and criticisms that CETA only served multinational corporations and not the average citizen all took their toll on the agreement. In fact, there was such outrage, that numerous protests against CETA erupted in Canada and across Europe. However, the greatest dispute over CETA was between Canada and Belgium (the region of Wallonia in particular). Wallonia, with a strong socialist tradition, naturally has anti-globalization sentiment. Their fear was mainly giving multinational corporations too much power over governments. The fact that Wallonia, with a population of just 3.6 million, has been able to postpone and almost foil such an historic agreement, has widely been considered a great embarrassment to the EU. Until October 30th, boosts for business and opportunities for jobs had been frozen.
As far as the United States is concerned, there are lessons to be learned from this ordeal, due to the fact that protectionism and fear of trade agreements have been major themes in the current presidential election. Moreover, while there are issues that stem from CETA with direct implications on United States trade (such as various hurdles to overcome for agricultural producers), this opens a window of opportunity for the United States to negotiate their own trade agreements. The goal would be to boost access to global markets for the United States’s products (there is currently a trade agreement involving the United States and eleven Asia-Pacific countries currently in deliberation).
Lastly, the difficulties and friction that Canada and the European Union faced in the enactment of CETA are not a good omen for the United Kingdom and the challenges they will face if/when Brexit becomes a reality. The UK now sees that negotiating a trade agreement to grant their exporters access into the European Union (with little to no tariffs) is easier said than done.
It is apparent that CETA is not just an agreement between the European Union and a foreign country. It is an historical creation, which will set precedents and will become the benchmark for future trade agreement negotiations. While it’s success is yet to be determined, there is definitely great promise that the Comprehensive Economic and Trade Agreement will be a significant boost for globalization and the transatlantic economy.