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% 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% of goods.
Trudeau toured the port with European Council President Donald Tusk as part of a trade summit with EU officials that ended Thursday. 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 7% in 2018 to CA$44.5 billion. (The Canadian dollar equals 76 cents U.S.) But the boost to the EU was greater — a 9% increase in goods exported to Canada to CA$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.
A small shop in Toronto became the first North American reseller to carry Fahrradmanufaktur bikes from Germany — imported without a 13% 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 7% of Canadian exporters had awareness of CETA, underscoring the dominance of the U.S. market. Canada exported CA$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.
