Canada-European Union: Comprehensive Economic and Trade Agreement (CETA)
Benefits for Yukon
Creating jobs and opportunities for Yukoners
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) will bring benefits to every region of our country. It will unlock new opportunities by opening new markets for Canadian businesses and creating new jobs for Canadian workers. CETA is a 21st-century, gold-standard agreement and is Canada’s most ambitious trade initiative ever. It is broader in scope and deeper in ambition than the historic North American Free Trade Agreement (NAFTA).
Canada’s historical and cultural ties with the EU make it an ideal partner for a comprehensive and ambitious free trade agreement. The EU, with its 28 member states, 500 million people and annual economic activity of almost $18 trillion, is the largest and most lucrative market in the world. It is also the world’s largest importing market for goods: the EU’s annual imports ($2.3 trillion) are worth more than Canada’s total gross domestic product (GDP), which stood at $1.9 trillion in 2013. Reducing and eliminating tariff and non-tariff barriers will make Canadian goods, technologies and expertise more competitive in the lucrative EU market and benefit businesses of all sizes, as well as workers and their families.
A joint Canada-EU study, which supported the launch of negotiations, concluded that a trade agreement could boost Canada’s income by $12 billion annually and bilateral trade by 20 percent. Put another way, the economic benefit of a far-reaching agreement would be equivalent to creating almost 80,000 new jobs or increasing the average Canadian household’s annual income by $1,000.
Across Canada, workers and businesses from a wide range of sectors will benefit from increased access to the EU’s lucrative market—the largest in the world. This enhanced access will give a competitive edge to Canadians in all 13 provinces and territories.
Yukoners stand to benefit significantly from this preferred access to the EU market. The EU is already the territory’s ninth-largest export destination and sixth-largest trading partner. CETA will eliminate tariffs on almost all of Yukon’s exports and provide access to new market opportunities in the EU. The Agreement will thus help some of Yukon’s sectors, such as information and communications technology, to grow. Exporters will also benefit from other CETA provisions that will improve conditions for exports—provisions, for example, that ease regulatory barriers, reinforce intellectual property rights and ensure more transparent rules for market access.
Overall, Yukon has a lot to gain from this historic agreement. This document provides a summary of CETA’s key benefits for Yukon.
Top territorial benefits
- New markets for fish and seafood
- EU tariffs eliminated on machinery and equipment
- Improved access for professional services
Principal merchandise exports from Yukon to the EU, by sector (annual average, 2011-2013)
(value in thousands of Canadian dollars)
Advanced Manufacturing: 237.9
Fishing and Fish Products: 79.4
Information and Communications Technologies: 60.6
Other: 148.2 (Including: Agriculture and agri-food)
Merchandise exports from Yukon to the EU (2009-2013)
(value in thousands of Canadian dollars)
Opening new markets in Europe for Yukon’s world-class services
The services sector plays an integral role in Yukon’s economy, accounting for 70.3 percent of the territory’s total GDP in 2013.
Canada’s services exports to the EU were worth an annual average of $14.4 billion between 2011 and 2013. Jobs in this sector are traditionally highly skilled and well-paying, creating enormous opportunities for Canadian expertise.
Improved access to markets
- CETA will establish preferential access to and greater transparency in the EU services market, resulting in better, more secure and predictable market access in areas of interest to Canada, such as professional services (e.g. auditing, architectural and integrated engineering services), environmental services, related scientific and technical consulting services, and services incidental to energy distribution.
- Canada has negotiated the most ambitious market access commitments the EU has ever made in any of its free trade agreements. This includes, for the first time for the EU, a broad and transparent approach to market access in which every service sector is subject to the terms of the agreement unless explicitly indicated otherwise (i.e. through a “negative list” approach).
- The agreement ensures that if the EU were to reduce or eliminate restrictions on foreign service providers or investors in the future, this better treatment would be locked in for Canadians (this is referred to as the “ratchet mechanism”).
- Temporary entry provisions will provide increased transparency and predictability, facilitating movement between Canada and the EU of intra-company transferees, investors, contract service suppliers and independent professionals (including a broad coverage of professionals, and limited coverage of technologists), business visitors and others. EU commitments for temporary entry under CETA are more extensive than any other country has received from the EU under a free trade agreement.
- Recognition of professional qualifications is a key aspect of labour mobility. In addressing this issue, CETA’s mutual recognition provisions are both ambitious and innovative. Some professions in Canada and the EU have already expressed interest in engaging in discussions on mutual recognition agreements, including stakeholders representing the architecture and engineering professions.
Beyond border measures
Transparent and objective treatment by regulatory authorities is essential to the success of both Canadian and EU service providers. CETA contains provisions on domestic regulation that will facilitate trade in services by ensuring that regulatory measures related to licensing and qualification requirements and procedures are clear, publicly available, objective and impartial. While recognizing the right of all governments to regulate in the interests of their citizens, CETA’s services provisions will help to ensure that government regulations are applied in a non-discriminatory and transparent fashion.
Protecting services and policies that are fundamental to our social fabric
As do all of Canada’s international trade agreements, CETA will continue to preserve policy space for activities that are fundamental to our social fabric. Nothing in CETA prevents governments from regulating in the public interest, including for delivering public services, providing preferences to Aboriginal peoples, or adopting measures to protect or promote Canadian culture. For example, public services such as health, public education and other social services have been excluded from the obligations of CETA, ensuring that governments remain free to enact policies and programs they choose in these areas. Similarly, CETA will preserve policy space for cultural policies and programs at all levels of government, recognizing the importance of the preservation and promotion of Canadian culture, as well as its various forms of expression.
Reaping the benefits
The EU services economy is among the largest in the world, at approximately $12.6 trillion in GDP terms in 2013. The total value of services imported by the EU from around the world reached $699.4 billion in 2013. Providing Canadian service providers with better, more predictable and secure access to the EU market will give Canadian companies a competitive edge in the lucrative EU market. Ultimately, this advantage will benefit the entire Canadian economy and lead to new jobs, growth and prosperity in a sector that exemplifies Canadian expertise.
Opening new markets in Europe for investment
Foreign investment enhances Canada’s competitiveness by revitalizing domestic industries and increasing the flow of goods and services between Canada and its trading partners. It links Canadian companies, consumers and workers to the new knowledge-based global economy. Foreign investment not only produces jobs, but introduces new technology, new management techniques and new market access.
Foreign investment is of strategic importance to Canada’s resource-rich territories. Yukon boasts a wealth of natural resources and untapped business potential. Situated near several largely unexplored gas-producing regions, Yukon’s oil and gas industry offers tremendous growth and investment opportunities. Yukon is home to a flourishing mineral industry that has been the foundation of the territory’s private-sector economy.
As the second-largest foreign investor in Canada, the EU can contribute to economic growth and job creation through investment in these and other of the territory’s strategic sectors.
Snapshot of investment
The stock of known foreign direct investment by Canadian companies in the EU totalled $187.3 billion at the end of 2013, representing 24.0 percent of Canadian direct investment abroad. The same year, known foreign direct investment from European companies in Canada totalled $191.4 billion, representing 27.9 percent of total foreign investment in Canada.
Improved access and rules that work
- CETA will guarantee a level playing field for Canadian businesses by securing access to a broad range of EU markets.
- Key sectors of interest to Canadian investors that will benefit from the agreement include energy, mining, manufacturing, financial services, automotive, aerospace, transportation, and business and professional services.
- CETA’s predictable investment rules, including a requirement that Canadian businesses be treated no less favourably in the EU than EU businesses, will further reduce risks associated with investing abroad.
- CETA’s investment provisions will provide Canadian and EU investors with greater certainty, transparency and protection for their investments, while preserving the rights of governments to legislate and regulate in the public interest. This will lead to greater two-way investment, which will help create jobs and long-term prosperity for hard-working Canadians.
Reaping the benefits
Investment and trade are inextricably linked and are extremely important to the territory’s prosperity. Greater direct investment in the EU will improve access to European markets, technology and expertise and enhance the competitiveness of Canadian firms. Greater EU foreign direct investment in Yukon will stimulate economic growth and job creation here at home, provide new technologies and increase competition in the marketplace, ultimately benefiting Yukon consumers.
Setting the stage to attract investment in Canada
Investment is key to job creation and economic prosperity. Canada has always been open to investment, welcoming and encouraging foreign companies to invest in Canada. Canada’s foreign investment policy framework provides a welcoming environment that seeks to maximize the benefits of foreign direct investment for Canadians, while preserving other public policy interests. Part of this framework includes the Investment Canada Act (ICA), which provides for the review of significant investments in Canada by non-Canadians in a fast-changing global investment landscape. CETA recognizes the importance of the ICA and protects it.
At the same time, CETA recognizes the special relationship that Canada has with the EU: the EU is already Canada’s second most important source of investments. As part of the ongoing review of the ICA, Canada will raise the threshold for net benefit reviews, and CETA will provide a higher threshold for investments from the EU.
CETA also includes rules for the protection of investors. Investor protection rules ensure that foreign investors will not be treated worse than similarly situated domestic investors or other foreign investors, nor will they have investments expropriated without prompt and adequate compensation. These rules include investor-state dispute settlement procedures, which provide for independent access to an impartial and timely process for the resolution of conflicts. These rules have been a standard feature of Canada's comprehensive free trade agreements since NAFTA and give assurance to investors that their investments will be protected from discriminatory or arbitrary government actions.
Opening new markets in Europe for Yukon’s world-class products
Under CETA, world-class Canadian products will enjoy preferential access to the EU. The benefits will be extensive, including for those who produce primary goods (like minerals and agricultural products) and those who turn them into value-added processed and manufactured products.
Out of more than 9,000 EU tariff lines, approximately 98 percent will be duty-free for Canadian goods when CETA comes into force. Some EU tariffs are high enough that they impose a real burden on Canadian exporters and prevent or limit considerably their ability to compete in the EU market. For example, the EU tariff applied on Canadian exports of arctic char can be as high as 15 percent—a hefty cost to enter the market. When CETA comes into force, tariffs on almost all other Canadian goods will be eliminated. Equally important to Yukon’s economy is the fact that tariffs on manufactured products will also be eliminated.
Increasing exports of manufactured products
Yukon’s manufacturing sector is diversified and contributes significantly to the territory’s economy. The production of advanced manufacturing goods represents a growing share of the manufacturing industry.
When CETA comes into force, approximately 99 percent of EU tariff lines will be duty-free for Canadian industrial products. Seven years later, 100 percent of these tariff lines will be duty-free.
With CETA, Canada will be the only G-7 country and one of the only developed countries in the world to have preferential access to the world’s two largest markets, the EU and the United States—giving us access to more than 800 million of the world’s most affluent consumers. This will make Canada the envy of trading nations all over the world and an even more attractive destination for investors and manufacturers looking to benefit from this access. The expanded opportunities for Yukon companies and new investors will lead to more high-paying manufacturing jobs for Yukoners.
Yukon’s advanced manufacturing industry is growing and makes an important contribution to the local economy. Scientific instruments are an area of particular export interest for the EU market, with opportunities in specialized items such as oceanographic equipment for Arctic use.
- Yukon’s exports to the EU of advanced manufacturing products, led by scientific instruments, were worth an annual average of $237,923 between 2011 and 2013.
- Canadian scientific instruments exports to the EU face tariffs up to 6.7 percent.
Upon entry into force, CETA will immediately eliminate the vast majority of existing EU tariffs on advanced manufactured products, making these world-class products more competitive and creating the conditions for increased sales. This will directly benefit hard-working Yukoners through more jobs, higher wages and greater long-term prosperity.
For example, EU tariffs will be eliminated on scientific instruments, from rates up to 6.7 percent.
Minimizing the impact of technical barriers will help maximize market access for our exports.
Regulations or other requirements on labelling, product testing, and certification requirements, even for legitimate reasons, can be barriers for a product exported to a foreign market. These requirements are known as “non-tariff barriers.” For example, requesting that a particular product include information on every step of its production for all of its component parts could impose unreasonable costs that would end up making this product uncompetitive. To help ensure that non-tariff barriers do not create barriers that are overly burdensome, trade restrictive or discriminatory, CETA includes provisions that will help Canada and the EU figure out ways to either prevent non-tariff barriers or deal with them when they do arise.
Canada and the EU have negotiated provisions on regulatory cooperation, the first of their kind in a free trade agreement, which aim to reduce regulatory differences as early as possible to try to prevent the creation of non-tariff barriers down the road. CETA will establish a Canada-EU Regulatory Cooperation Forum that will facilitate dialogue between regulatory authorities and benefit Canada by providing earlier access to the complex and sophisticated regulatory development system in the EU.
CETA will also include a mechanism that will provide for the acceptance of test results and product certification by designated Canadian bodies. The ability of Canadian manufacturers to have their products tested and certified in Canada for the EU market, also a first for the EU in a free trade agreement, will reduce costs and delays associated with bringing products to market.
Reaping the benefits
Opportunity abounds for Yukon’s advanced manufacturing exports to the EU. A large market exists for clean power generation across the European Union. Additionally, robotics and high-end tools are in demand in established EU markets, while demand is growing for industrial machinery in EU member states with expanding economies.
Increasing exports of fish and seafood products
Yukon’s fish and seafood resources are naturally abundant and economically important, and the sector is the economic mainstay of many northern communities. The sector’s exports to the EU are currently subject to high tariffs.
- Yukon’s fish and seafood exports to the EU were worth an annual average of $79,374 between 2011 and 2013.
- Canadian fish and seafood exports to the EU face tariffs up to 25 percent.
When CETA comes into force, almost 96 percent of EU tariff lines for fish and seafood will be duty-free. Seven years later, 100 percent of these tariff lines will be duty-free, making these world-class goods more competitive and creating the conditions for increased sales. Higher sales can lead to more jobs, higher wages and greater long-term prosperity, directly benefiting hard-working Yukoners.
For example, EU tariffs on arctic char, which can go up to 15 percent, will be eliminated.
Eliminating tariffs on value-added goods like cooked and peeled shrimp, frozen cod fillets and processed crab and lobster will make these goods more competitive in the EU, allowing Yukon processors to sell more of their goods and create new jobs.
Fisheries are a major source of socio-economic and cultural benefits in the Yukon. The territory’s oldest fishery is the Aboriginal fishery, which provides nutrition, cultural value and income to First Nations people and communities. The Government of Canada is committed to ensuring sustainable fisheries, aquaculture, and healthy and productive aquatic ecosystems. CETA will establish a framework for dialogue with the EU on trade-related sustainable development issues of common interest, including on such matters as the sustainable management of fisheries and aquaculture. In addition, nothing in CETA affects Canada’s sovereignty and full control of its territorial waters or control over granting commercial fishing licences.
Reaping the benefits
Yukon is home to arctic char farms, whose products will benefit from tariff elimination under CETA. As the world’s largest importer of fish and seafood, with global imports averaging $21 billion annually from 2011 and 2013, the EU presents significant export opportunities for Yukon’s fish and seafood producers. The territory’s world-class product is well placed to take advantage of the growing demand for high-quality and sustainable fish and seafood goods from discerning and health-conscious European consumers.
Opening new government procurement markets in Europe to world-class Yukon companies
Government procurement is a major source of economic activity. The market for EU government procurement is estimated to be worth about $3.3 trillion annually. CETA will provide Yukon suppliers of goods and services with secure access to EU procurement on a preferential basis, providing them with new opportunities to win major government contracts. Opening procurement processes also increases competition; CETA will ensure that procurements covered by the agreement are conducted with transparency and openness in order to help ensure the best value for money in public spending.
New access to markets
- CETA will expand and secure opportunities for Canadian firms to supply their goods and services to the three main EU-level institutions (the EU Commission, Parliament and Council), the 28 EU member states and thousands of regional and local government entities within the EU.
- Approximately 18 percent of EU contracts are for business services. This means that workers in Canada employed in the fields of architecture, engineering, construction, environmental services, technology and marketing consultancy, among many other areas, will benefit from greater access to the EU’s procurement market.
- CETA will also ensure that Canadian exporters are eligible to supply any EU firms engaged in government procurement contracts in the EU.
Reaping the benefits
CETA’s greater access to the world’s largest government procurement market will create opportunities that could benefit workers and their families in sectors that are vital to Yukon’s economy.
Supporting Canada’s municipalities
Municipal governments have an interest in guaranteeing that suppliers of products and services in their communities benefit from access to the EU’s lucrative procurement market. At the same time, the Government of Canada recognizes the importance of ensuring that Canada’s municipalities have the ability to support local interests. CETA procurement rules will apply only to high-value procurement contracts in order to ensure that governments can continue to use procurement to support local development, especially small and medium-sized enterprises. CETA rules will not apply to any procurement under the CETA thresholds, which are much higher than the Agreement on Internal Trade and are comparable with Canada’s thresholds in the WTO. Procurement thresholds in international agreements are typically expressed in “special drawing rights” (SDRs), which are an international reserve asset based on a basket of four key international currencies (the U.S. dollar, the euro, the British pound and the Japanese yen). For the 2013 cycle, in Canadian dollars, the thresholds are $312,881 for goods and services (in CETA: 200,000 SDRs); $625,762 for procurement by utilities entities (in CETA, 400,000 SDRs); and $7.8 million for construction services (in CETA, 5 million SDRs).
CETA will also preserve governments’ flexibility to give preferences to Canadian companies through grants, loans and fiscal incentives. Like all other procurement rules found in Canada’s trade agreements, CETA will continue to allow governments to determine which selection criteria help them best meet their procurement needs—like quality, price, experience or environmental sustainability. And, as in all of Canada’s free trade agreements, important sectors, such as education and health-care services, will be excluded from the Agreement.
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