Canada to see some ‘modest’ gains from trade deal with Europe: budget watchdog

EU deal 'modest' gain for Canada: PBO

OTTAWA — Canada’s free-trade pact with Europe is poised to produce “modest” economic gains that work out to an average annual income boost of $220 per Canadian, the federal budget watchdog says in a new report.

The parliamentary budget officer released a study Tuesday that estimates the trade deal would have lifted Canada’s overall economic output in 2015 by 0.4 per cent or $7.9 billion, had it been implemented at the time.

Canadian exports of goods to the EU would have increased $4 billion, services would have been up $2.2 billion and investment would have grown by $3.1 billion, the analysis found.

But the report did put the overall projected improvement into perspective by noting that Canada boasts a $2-trillion economy.

“CETA will lead to some gains for Canada, but they will be modest,” the report said, referring to the deal’s full name: the Comprehensive Economic and Trade Agreement.

“The work outlined in this report projects a small, but positive, overall effect on Canada’s economy … Starting from relatively low levels, exports of goods will increase by 9.3 per cent and services by 14 per cent.”

The PBO based its analysis on 2015 because projecting into the future would have been more difficult. It was also the most recent year for which a complete set of economic data was available.

Sectors including transport and motor vehicles, some metals and wheat will likely grow more quickly, the budget office predicted.

On the other hand, it also said some Canadian sectors will likely see slower growth under the agreement, including textiles, some machinery and manufactured goods as well as some dairy and agricultural products.

Canada’s international trade minister was asked Tuesday whether Ottawa had done enough to compensate dairy farmers following the federal decision to open up part of the dairy sector to European producers.

The federal government has committed $350 million to help ease the negative effects of CETA on dairy farmers, but the industry association has argued it isn’t enough to offset the damage.

Francois-Philippe Champagne added that he recently met with Canadian milk and cheese producers. He said he reminded them of the new opportunities under CETA.

“We also obtained an opening in the European market, which is the biggest consumer market for food items,” said Champagne, who added he had yet to see the PBO report.

The PBO report focused on the parts of the agreement that it said could be studied analytically.

The areas analyzed included tariff reductions on goods, reduction in trade barriers for services and intellectual property as it relates to royalty payments for patented drugs. The report also examined the overall impact that the deal might have on Canada’s gross domestic product through investment.

“With the signing of CETA, questions arise concerning the magnitude of the benefits and impacts, as well as how they will be distributed,” said the report by Jean-Denis Frechette’s office.

“Liberalizing trade is intended to bring benefits through greater specialization … but the impact on sectors could be uneven.”

Parliament is expected to ratify CETA in the coming months. Once approved, about 90 per cent of the deal would come into force under provisional application.

The deal will likely arrive amid concerns in corporate Canada over protectionist policy proposals under discussion in the United States.

Frechette’s office predicted that strengthening business ties with the EU will make Canadians a little less dependent on their existing trade partners.

It predicted Canada’s annual exports to the U.S. could decline by 0.4 per cent or $1.4 billion, while exports to the rest of the world could fall by 0.7 per cent or about $384 million.

Even with an increase in trade with the EU, the U.S. will remain by far the most-important market for Canada.

Last year, Canada exported about $39.8 billion worth of merchandise to the EU, making it Canada’s second-largest export destination, the report said. In comparison, Canadian merchandise exports to China were about $21 billion.

“But this is still only a tenth of the exports that go to the United States,” the PBO said. 

“Canada’s sales of oil and gas to the United States alone are worth more than all the goods and services it sells to the EU.”

Follow @AndyBlatchford on Twitter

Andy Blatchford, The Canadian Press

Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Four staff members at the Okanagan Men’s Centre have tested positive for COVID-19 since Oct. 23, 2020. (Adult and Teen Challenge OMC photo)
Four positive COVID-19 cases at Okanagan Men’s Centre

Those affected are staff and have been in isolation since Oct. 23

Three Okanagan College Mechanical Engineering students manufactured 3D printed Trick-or-Treat Bowls to aid in a physically-distanced Halloween experience amid COVID-19. (3D Okanagan Facebook)
Trick-or-treating made safer thanks to Okanagan College students’ project

3D-printed Trick-or-Treat Bowls available for sale ahead of Halloween

RCMP are investigating a trailer fire off Firwood Road on the Westside, discovered Oct. 27. (Google maps image)
RCMP investigate Westside trailer fire

Burned trailer discovered by RCMP Oct. 27 near Fintry

A man was caught on surveillance taking a large outdoor heater from the patio at Intermezzo early morning Wednesday, Oct. 28. (Contributed)
WATCH: Heater theft leaves Vernon business cold

Patio heater stolen from Intermezzo, found trashed

The Kalamalka Lake water source was turned off due increased algae in Kalamalka Lake Sunday, Oct. 25, 2020. (Stock photo)
Vernon water source shut off due to algae increase

Regional district says the switch from Kal Lake to Duteau Creek water is out of abundance of caution

A woman wears a face mask and plastic gloves while browsing books as a sticker on the floor indicates a one-way direction of travel between shelves of books at the Vancouver Public Library’s central branch, after it and four other branches reopened with limited services, in Vancouver, on Tuesday, July 14, 2020. (THE CANADIAN PRESS/Darryl Dyck)
B.C. reports 234 new COVID cases, 1 death of senior who had attended small birthday party

Roughly 5,700 people are isolating due to being exposed to a confirmed case

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

This Photoshopped version of the crosswalks near the entrance to the Salmon Arm Arts Centre on Hudson Avenue show what is proposed to help create safety for and show inclusivity to the LGBTQ2S+ community. (Salmon Arm Arts Centre image)
Tri-rainbow crosswalk and Progress flag requested to help make Salmon Arm safe

Council will consider budget requests to help make city inclusive to LBGTQ2S+ community

A can of Canada Dry Ginger Ale is shown in Toronto on Thursday Oct. 29, 2020. The maker of Canada Dry Ginger Ale has agreed to pay over $200,000 to settle a class-action lawsuit launched by a B.C. man who alleged he was misled by marketing suggesting the soda had medicinal benefits. THE CANADIAN PRESS/Joseph O’Connal
B.C. man’s lawsuit over marketing of Canada Dry ginger ale settled for $200K

Soda’s maker, Canada Dry Mott’s Inc., denied the allegations and any liability

Animal care manager Tracy Reynolds confirmed the lynx is the same wildcat that was spotted wandering North Kamloops in broad daylight on Sunday, Oct. 25. BC Wildlife Park.
Lynx found wandering Kamloops taken to BC Wildlife Park

While the lynx’s outward appearance was deemed normal, it actually had an abdominal infection

Wild Tiger
AlleyCats Okanagan: Pet of the week

Meet two lovely felines looking for their forever homes

Highway 97 was closed near Monte Creek due to a vehicle incident Oct. 29. (DriveBC map)
UPDATE: Highway 97 crash cleared near Monte Creek

Vehicle incident shortly before 1 p.m. Oct. 29 impacted traffic untl 4 p.m.

Vancouver Island-based Wilson’s Transportation has expanded to fill some of the routes left unserviced by Greyhound as of Nov. 1, 2018. (Black Press files)
B.C. bus companies say they need help to survive COVID-19

Like airlines, motor coaches have lost most of their revenue

Homes in Summerland have been among the households in Canada to participate in radon testing. (TakeActiononRadon.ca)
Testing finds 38 per cent of Summerland homes have unsafe radon levels

Okanagan community one of 15 involved in national testing program

Most Read