On October 18, the Canadian government signed a free trade agreement with the European Union. Though it still awaits ratification by EU member states and Canadian provinces, a quick peek into the historic document reveals exactly how reduced trade barriers will foster growth and boost prosperity on both sides of the Atlantic.
While this is definitely an important step for an integration of these two markets, one should not forget that the treaty does not mean unlimited free trade, but rather it means an increase of duty-free quotas.
Among the many goodies provided by the agreement is a provision allowing Canadian fishermen to sell their lobsters for 20 percent less to European gourmet distributors. The import quotas for Canadian beef will also be raised by six fold, giving European consumers the opportunity to buy cheap and good meat on European shelves.
Canadians will be able to buy European cars such as Volkswagens or Fiats for up to 6 percent less, owing to the abolishment of the import tax on cars from the European Union. Sky-high prices for cheese and other dairy products in Canadian grocery stores will fall dramatically once cheaper European competitors are allowed to enter the food market.
A change in the taxation of wine will similarly give European winemakers a huge boost as they sell their products at more competitive prices in the Great White North.
By all objective measures, the treaty is expected to create sufficient growth for the domestic economy, some estimates putting it as high as 80,000 additional jobs in the Canadian labor market over the next several years.
If all goes well, consumers on both sides of the Atlantic will benefit from relaxed trade between the European Union and Canada. Put simply, they will be able to buy more products for less money. In addition, companies hoping to export will face fewer bureaucratic hurdles, giving rise to mergers and tighter trade relations across multiple borders.
A success in this round of negotiations between the European Union and Canada will spark further optimism for the illustrious EU free trade deal with the United States, the all-but-completed Transatlantic Trade and Investment Partnership.
Relaxed import tariffs and increased import quotas should be welcomed in the name of giving more choices for consumers. While this is definitely an advancement to free up the world economy, Western leaders have it in their power to do even more.
EU trade policy makers could unilaterally liberalize trade and thus empower producers of goods and services from all over the world to export to the European Union. This would allow the 500 million customers living there to choose from a wider variety of goods at lower costs and thus boost their purchasing power; that would be a true stimulus package of epic proportions.
And while managed trade deals with politicians at the negotiating table aren’t anyone’s idea of a great time, it is beyond doubt that the benefits for consumers worldwide will come to fruition in lower taxes, lower prices, and more competition in the world market.
Let us celebrate this agreement but also make certain that we push for further reductions of trade barriers around the world, so the positive impact of fruitful exchanges can make everyone, not just in Canada and the European Union, richer and better off.