<aside> 🇺🇸 Canada - US Trade
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<aside> 🌎 Canada - US Country Relations
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<aside> 🇪🇺 Canada - EU Trade
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<aside> 🌎 Canada - EU Country Relations
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Prime Minister Justin Trudeau signs the Comprehensive Economic Trade Agreement (CETA) with European Commission President Jean-Claude Juncker, left, and European Council President Donald Tusk, right, in Brussels, Belgium on Sunday, Oct. 30, 2016.
For consumers in Canada (as well as the European Union), CETA provides the market with competition. This means that prices for products sold by Canadian companies in Canada will have to be lowered in order to continue to make profits.
The same can be said about European companies selling their products within the E.U. These products include medication, cars, seafood, cheese, fruit, and vegetables. Currently, products from the European Union are being imported by Canada at a rate higher than Canada’s exports to the E.U., which means that it is fair to say that Canadian consumers are enjoying the effects of CETA more than their European counterparts. This reduction in costs can be attributed to the reduction in tariffs that came with CETA, with 98% of tariffs being removed with its ratification.
The agreement will eliminate the E.U.’s 4.5% tariff on Canada-made auto parts immediately, a potentially significant gain for Canada’s Ontario-based auto-parts sector, a sector that has been plagued by job layoffs in recent years. Tariffs on all Canada-built vehicles, including 10% on automobiles, will be phased out over seven years, with some of these removals coming sooner than that. EU tariffs of up to 22% on light-goods vehicles will be phased out over three years, while tariffs of up to 16% on minibuses carrying at least 10 people will be phased out over five years.
CETA will also allow Canada to export to the EU annually up to 100 000 vehicles partially assembled in other countries. This will be done under more liberal rules of origin, which hearkens back to the CVMA’s commendation of CETA and their citing of NAFTA (now known as CUSMA in Canada).
One cost that Canadians can expect to rise is that of medication. It is forecasted that prices on medication will rise within eight years, but experts cannot pinpoint exactly how much it will rise, since it is unknown what new drugs are on the horizon. If the government keeps its commitment not to make these changes retroactive, only new drugs will have longer patents.
CETA aims to shorten the process for generic drug companies to get a permit for a product manufactured by a brand-name company. CETA also allows for brand-name pharmaceutical companies to get a right of appeal, something they didn't have before, which promotes a more equal process. The extension of the duration of the patents allows for products of generic drug companies to stay in the market longer and compete with the brand-name companies, lowering prices for consumers. The process for granting patents as new drugs are approved will be simpler and more efficient in the future. This is expected to lower costs, as it means that legal and administrative costs will drop, which should, in turn, lower the cost of prescription drugs.
However, it should be noted that these products can take years to reach the market. Health Canada confirmed CETA will not have any material impact until about the mid-2020s. Will savings from expiring patents on popular drugs offset the arrival of more expensive drugs with longer patents? Will future drugs cost about the same as current ones? These questions remain unanswered.
According to the official Government of Canada website pertaining to CETA, Canadian companies can bid on opportunities at all levels of government in the EU, opening potential business estimated at $3.3 trillion annually. CETA has also caused an increase in Canada’s importation of cheese, which is expected to go from 18 500 tonnes to 30 000 tonnes over the span of five years. With CETA, 94% of the E.U.'s agricultural and 96% of its fish and seafood import tariffs are duty-free.
However, CETA has caused the agricultural market to become quite competitive, forcing the Canadian government to implement two programs to help combat a potential imbalance due to increased European imports. Federal Agriculture Minister Lawrence MacAulay announced two programs worth $350 million on November 10, 2016. Of the $350 million, $250 million will go to helping farmers update their technology and equipment to boost productivity. Some examples include robotic milking equipment, automated feeding systems or new herd management software. A separate $100 million fund for dairy processors would be available to help modernize their operations or diversify product lines for new markets.