At times it seemed an impossible mission. Nit-picking and compromise more than once threatened to derail a free trade agreement between Canada and the European Union (EU). Finally on Oct. 18, 2013, Canadian Prime Minister Stephen Harper and European Commission president Jose Manuel Barroso announced they have signed the memorandum of understanding for the Comprehensive Economic and Trade Agreement (CETA) between the two governments.
The deal is getting mostly rave reviews. It certainly looks to be a boon to Canada’s metal miners.
“Given the global nature of our sector, the Canadian mining industry is highly supportive of the formation of new trade agreements with key markets,” said Pierre Gratton, president and CEO of the Mining Association of Canada (MAC). “Today’s agreement in principle on the comprehensive economic and trade agreement is a significant step forward that, once finalized, will eliminate existing European tariffs on Canadian mineral products, help facilitate labour mobility, and encourage European investment in the Canadian mining sector.”
MAC was quick to point out that the EU is Canada’s second largest export market for metals, the third largest for non-metals, and the fourth largest for mineral fuels. Those markets were worth $20.4 billion between 2010 and 2012.
Canadian metal producers will benefit when tariffs are lifted on aluminum, nickel, copper, zinc, lead and tin as well as iron and steel. When CETA comes into force, 98% of all tariffs will be eliminated, and the rest will be phased out over time.
But CETA does more than cut tariffs to promote trade. It also covers areas of investment, labour mobility and – for the first time – regulatory co-operation. There are also provisions making it easier for highly skilled professional such as engineers and senior managers to work on either side of the Atlantic. There are also provisions intended to provide greater certainty, stability and protection for investors in both jurisdictions.
CETA contains much that may make winners of both Canada and the EU, but not everyone is singing its praises. It is of less benefit to Canadian egg producers and dairy farmers who may lose market share to European imports. The Prime Minister has promised compensation to any industry that is negatively affected, but details about compensation are not yet available.
Now the process of ratifying the agreement will begin, a process that may take two years (just in time for another federal election). All 38 EU nations and 10 Canadian provinces must endorse CETA, the details and fine print of which have yet to be written.
Given that the Canadian mining industry stands to benefit from free trade with the EU, we should support CETA. There are opportunities for people as well as metals markets.