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CanadaNews

Canada grows EU trade in shadow of Trump’s protectionism

Canadian Prime Minister Justin Trudeau likely could not have had a better place to show European Union officials the benefits of a free trade agreement than the Port of Montreal. 

Montreal’s European volumes increased by 6.6 percent in 2018, the first full year that the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU was in effect. The 2016 agreement abolished tariffs on more than 90 percent of goods.

Trudeau toured the port with European Council President Donald Tusk as part of a trade summit with EU officials, which ended July 18. The cordial summit with Canada’s second-largest trading partner contrasted with the prickly relationship with its largest, the United States, under tariff-prone President Donald Trump. 

Thanks to CETA, exports of goods to the EU increased by seven percent in 2018 to C$44.5 billion (the Canadian dollar equals US$0.76). But the boost to the EU was greater – a 9 percent increase in goods exported to Canada, to C$60 billion. 

“It is clear that CETA has brought many benefits to people on both sides of the Atlantic,” Tusk said after the summit. 

Trudeau acknowledged that the benefits to Canada’s exports lagged behind the EU’s, but told reporters, “We have tremendous confidence that Canadian companies will continue to benefit and increase their opportunities to grow their businesses through selling more to Europe.”

In Canada, the effects have been visible. After the government placed retaliatory tariffs on frozen pizza from the U.S., low-cost pies from Germany increasingly appeared in grocery store shelves.

Effects visible from frozen pizzas to bikes

A small shop in Toronto became the first North American re-seller to carry Fahrradmanufaktur bikes from Germany – imported without a 13 percent duty. Meanwhile, a Quebec-company, PSB Urban Solution, expanded its bike-sharing platforms into European cities.  

Trudeau used the summit as an opportunity to urge full ratification of CETA across all 28 EU member states – required for all provisions of the agreement to take effect. 

But with the bulk of CETA’s provisions already in place, Trudeau’s biggest concern may be right at home. Canadian businesses have been slower to take advantage of export opportunities.

A recent survey found that only seven percent of Canadian exporters had awareness of CETA, underscoring the dominance of the U.S. market. Canada exported C$438.4 billion in goods to the U.S. in 2018, 10 times more than the EU.

Apart from lack of awareness by exporters, CETA has met resistance within some corners of Canada. 

Two federal opposition leaders, Jagmeet Singh of the New Democratic Party and Elizabeth May of the Green Party, signed a letter urging French leaders to reject CETA. 

“We agree that trade between our countries and continents is important,” the letter stated. “However, we believe in a type of trading relationship very different from this one. We strive for a trading relationship that addresses the fundamental issues of inequality, human rights and climate change.”

The letter also cited the threat to Canada’s supply management system, which tightly controls the production, sale and export of dairy and poultry products.

Dairy, in particular, has been a point of contention in CETA. Canadian dairy processors received part of the tariff-free quota of EU cheese. EU officials reportedly lodged complaints about having limited access to the Canadian dairy market.

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Nate Tabak, Canada Correspondent

Nate Tabak is a journalist, editor and producer in Toronto. He covers Canada for FreightWaves, with a keen interest on the cross-border economic relationship with the United States. Nate spent seven years working as an investigative editor and reporter based in Kosovo. He covered everything from corruption to the country’s emerging wine industry. He also reported across the Balkans and investigated Albania’s multibillion-dollar marijuana industry with a grant from the Pulitzer Center on Crisis Reporting. Nate grew up in Berkeley, Calif. He enjoys exploring Toronto with his wife and is always looking forward to his next meal.

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