If you've been watching the news lately you have probably heard the acronym CETA being tossed around a fair bit. Confused? Then listen up.
Just over 3 years ago, the former Harper government reached a tentative agreement with the European Union on a "Comprehensive Economic and Trade Agreement," also known as CETA. The goal of CETA was to increase trade between Canada and the EU by eliminating importation taxes which would basically allow for free trade on both sides. However, skip ahead to 2016 and a deal had still not been ratified by the two parties.
What was the hold up?
After over 7 years of negotiations, the two sides reportedly came to a mutual understanding in 2014 but nothing official ever came of it due to several factors. Issues included fears over the vagueness of some clauses and a small stubborn part of Belgium that was strongly opposed to the deal. These problems, and others, stalled the agreement from becoming 'official' until now.
One Step Closer
After taking office in 2015, the Trudeau administration reworked CETA to properly address the vague clauses and continued to negotiate with Belgium with the hopes of finally reaching a formal deal. After much back and forth and even some classic political drama, the Canadian government finally reached and signed an official agreement in October 2016.
Why All The Fuss?
Everyone is calling this a 'big deal' because it literally is just that: a big deal, one that will have a significant impact on both Canada and the EU (sorry Britain, you're leaving). It's called 'comprehensive' because the deal really does just about cover everything in terms of trade between Canadian and the European Union. Once the deal is officially passed and fully implemented, virtually all importation taxes in both Canada and the EU will be eliminated. Some of the current import taxes are as high as 22% so this agreement will likely provide a big boost to both economies as trade becomes much cheaper. In fact, it's estimated that Canada will see a GDP increase of $12 billion per year as a result of the agreement.
So What's Next?
While this might all sound good and promising, there is still a long way to go before we see anything actually come about. Despite both sides coming to an agreement there is more that must be done. The European Parliament, which has 751 members from 28 member countries, needs to formally approve the deal. Likewise, the Canadian Parliament will also need to approve the deal and address the issue of how to compensate the Canadian businesses that will be harmed by cheaper imports. Nevertheless, we're getting closer to a completed deal so be prepared to hear much more about CETA into the new year.