Sask business community hopes stalled CETA negotiations resume

Posted on October 25, 2016 in

Sask business community hopes stalled CETA negotiations resume

The potential benefits of a landmark trade agreement between Canada and the European Union mean it’s vital that officials resume stalled negotiations and ratify the deal, according to the head of the Saskatchewan Trade and Export Partnership (STEP).

Saskatchewan’s economic fortune hinges on its ability to export goods, and the Comprehensive Economic and Trade Agreement’s (CETA) removal of high European tariffs will make it easier for the province’s companies to compete, Chris Dekker said.

“We’re clearly in a non-competitive position against their domestic supply, so what this would have done is opened that up to Saskatchewan exports,” Dekker said of the deal, which was proposed in 2008.

The federal government says CETA is broader and more ambitious than the North American Free Trade Agreement, and that increased access to 500 million European customers could boost Canada’s income by $12 billion annually.

Those potential gains were jeopardized this year when Wallonia, a region of 3.5 million in southern Belgium, refused to support CETA. Passing it requires the unanimous agreement of all 28 EU members; Belgium’s vote requires unanimity from its regions.

Trade minister Chrystia Freeland walked out of negotiations on Friday and Belgium said it would not be able to approve the agreement by the Monday deadline imposed by the EU. Now, a signing ceremony scheduled for Thursday may not happen at all.

Saskatchewan exported $32.7 billion worth of goods and services last year, $1.28 billion of which flowed to EU countries. With annual imports of $468 million, Italy is the province’s largest customer, followed by Belgium, the Netherlands and Germany.

About half the province’s exports to the EU consist of agricultural and agri-food products. Between 2010 and 2012, Saskatchewan’s annual agricultural sales to European countries averaged $669.6 million.

Over the same period, annual sales of chemicals and plastics averaged $588.4 million, advanced manufacturing products averaged 29.8 million and others — including minerals, metals and technology — averaged $32.2 million.

Dekker noted the EU is Saskatchewan’s fourth-largest export market — after the U.S., China and India — and that high tariffs on agricultural and other products have created a “real burden” for local companies looking to expand trade.

According to the federal government, the $114 per tonne tariff levied by the EU on Canadian oats has added an estimated 51.7 per cent to the price of the grain in Europe. Dekker said the oat tariff is just one example of burdensome European penalties.

“The CETA agreement would have removed the bulk of those within very short order.”

Besides eliminating 98 per cent of about 9,000 EU tariffs, CETA would also benefit Saskatchewan companies by cutting through jurisdictional red tape, according to a vice president of the Canadian Manufacturers and Exporters trade association.

“(Aligning) regulatory approval processes would have a huge impact, especially on smaller and mid-size companies who maybe don’t have the internal resources they need to get regulatory approvals in foreign markets,” Matthew Wilson said.

Because of its high regulatory standards, passing CETA would have the additional benefit of creating a template for other free trade agreements, including one with a post-Brexit Britain, Wilson said.

However, it remains unclear if Canadian and European officials will be able to persuade Wallonia to accede to the agreement. Freeland said Monday that “Canada is ready to sign CETA but the ball is in Europe’s court and it’s time for Europe to do its job.”

Like Dekker and Wilson, the head of the North Saskatoon Business Association is optimistic that the Belgian region will give up its veto. Saskatoon and Saskatchewan are trade-dependent, and CETA would have huge benefits in the province, Keith Moen said.

“We have been able to have success in the international marketplace in terms of Saskatchewan exports in its current format. I guess that speaks to what the potential could be, and the potential we’re losing as a result of this.”

—With National Post files

Sign up for NSBA News
Subscribe to our email list for our weekly newsletter, upcoming events, and all the latest.

Sign Up Now