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

Just Posted

World Down Syndrome Day: The up side of Down

A Kelowna family’s journey with Down Syndrome: ‘There is tremendous beauty in these kids’

Kelowna cops crack down on drivers using cell phones

Drivers caught talking or texting behind the wheel now face a fine totalling $543

Okanagan Falls winery showing international photo project

Liquidity Wines will be sole Canadian show of National Geographic’s Photo Ark

West Kelowna mayor meets finance minister to protest speculation tax

Doug Findlater presents Carole James with booklet of info outlining tax’s impact on his city

Kelowna celebrates World Down Syndrome Day

More than 50 people gathered in Kelowna to bring awareness to diversity and difference

Crook’s Corner

Arts and entertainment highlights this week across the Okanagan

B.C. Scientists witness first-ever documented killer whale infanticide

“It’s horrifying and fascinating at the same time.”

Lawyer for one suspect in beating of man with autism says he’s not guilty

Ronjot Singh Dhami will turn himself in, lawyer said

Liberals awarded $100,000 contract to man at centre of Facebook data controversy

Christopher Wylie says his voter-profiling company collected private information from 50 million Facebook users

Facebook’s Zuckerberg admits mistakes in privacy scandal

Zuckerberg admits to privacy scandal involving a Trump-connected data-mining firm, but no apology

Rockets’ Foote a finalist for top WHL D-man

Cal Foote named the Western Conference top defenseman; Foote and Dube named all-stars

UPDATE: Former B.C. city councillor sentenced nine months for sexual assault

Dave Murray, convicted this past fall, hired a private investigator to intrude on the victim’s life.

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Shots fired in Kamloops

Kamloops RCMP are investigating a report of shots fired and a possible explosion at a trailer court

Most Read