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Creating jobs and opportunities for New Brunswickers
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.
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 $17 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 $1.8 trillion in 2012. 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. This is like adding the number of jobs currently found in the city of Moncton to the Canadian economy.
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.
New Brunswickers stand to benefit significantly from this preferred access to the EU market. The EU is already New Brunswick’s second-largest export destination and fourth-largest trading partner. CETA will eliminate tariffs on almost all of New Brunswick’s key exports and provide access to new market opportunities in the EU. Exporters in these sectors 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, New Brunswick has a lot to gain from this historic agreement. This document provides a summary of CETA's key benefits for New Brunswick.
Top provincial benefits
- New markets for fish and seafood
- Duty-free access for forestry and wood products
- New markets for agricultural and agri-food products
- Improved access for professional services
Principal merchandise exports from New Brunswick to the EU, by sector (annual average, 2010-2012)
(value in millions of Canadian dollars)
Metals and Mineral Products: 617.1
Fishing and Fish Products: 38.2
Forest Products: 25.3
(Including: Advanced manufacturing, Information and communications technologies, Agriculture and agr-food)
Merchandise exports from New Brunswick to the EU (2008-2012)
(value in millions of Canadian dollars)
Opening new markets in Europe for New Brunswick’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 on the first day 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 processed herring can be as high as 20 percent—a hefty cost to enter the market. When CETA comes into force, tariffs on herring and almost all Canadian primary goods will be eliminated. Equally important to New Brunswick’s economy is the fact that tariffs on manufactured products will also be eliminated.
Increasing exports of fish and seafood products
New Brunswick’s fish and seafood sector is a vital component of the province’s social and economic fabric. More than 7,000 New Brunswickers are employed in the province’s world-class fish and seafood industry, which was responsible for an average of 21.3 percent of Canada’s fish and seafood exports to the world between 2010 and 2012.
- New Brunswick’s fish and seafood exports to the EU were worth an average of $38.2 million annually between 2010 and 2012, making this New Brunswick’s top exporting sector facing tariffs in the EU.
- Canadian fish and seafood exports to the EU faced tariffs up to 25 percent.
When CETA comes into force, almost 96 percent of EU fish and seafood tariff lines 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 New Brunswickers.
For example, EU tariffs will be eliminated on:
- live lobster, from a rate of 8 percent;
- frozen lobster, from rates up to 16 percent;
- processed lobster, from a rate of 20 percent;
- frozen shrimp, from a rate of 12 percent;
- cooked and peeled shrimp, from a rate of 20 percent; and
- herring, from rates up to 20 percent.
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 New Brunswick processors to sell more of their goods and create new jobs.
New Brunswick has earned an international reputation for developing policies and programs that support environmentally responsible practices and sustainable approach to development. The governments of both Canada and New Brunswick are committed to ensuring sustainable fisheries and 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, for example, 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
New Brunswick’s fish and seafood sector is a vibrant and diversified industry. Its competitive advantage stems from superior product quality, a focus on value-added goods, and a commitment to responsible resource management and development. The EU is the world’s largest importer of fish and seafood, with a global import market averaging $25 billion annually from 2010 to 2012 and average seafood consumption of 26 kg per capita in 2010.
With EU demand growing for convenience offerings such as ready-meal and single-portion products, CETA will provide Canada’s world-class fish and seafood industry with a competitive advantage. By opening new markets in the EU and improving access for fish and seafood, CETA will benefit workers in the fish and seafood sector from coast to coast to coast, including workers in New Brunswick’s exceptional fish industry.
Increasing exports of manufactured products
New Brunswick’s vibrant manufacturing sector plays a key role in the province’s economy, covering important and diverse sub-sectors such as agri-food, wood, and pulp and paper—to name just a few. In 2012, the sector employed close to 30,000 hard-working New Brunswickers.
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-8 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 New Brunswick companies and new investors will lead to more high-paying manufacturing jobs for New Brunswickers.
Increasing of forestry and value-added wood products
Forestry is the largest industry in New Brunswick and has long been an economic mainstay of the province. In 2012, firms in this sector employed some 11,800 New Brunswickers in jobs that tend to be highly skilled and are of particular importance to the economy of the province’s rural regions and northern area.
- New Brunswick’s exports of forestry and value-added wood products to the EU were worth an average of $25.3 million annually between 2010 and 2012.
- Canadian forestry and value-added wood product exports to the EU face tariffs as high as 10 percent.
- In particular, exports of veneered panels to the EU face rates of 6 percent to 10 percent.
Upon entry into force, CETA will immediately eliminate existing EU tariffs on forestry and value-added wood products, making them more competitive and creating the conditions for increased sales. Higher sales of these world-class goods can lead to more jobs, higher wages and greater long-term prosperity, directly benefiting hard-working New Brunswickers.
For example, EU tariffs will be eliminated on:
- plywood, from rates up to 10 percent;
- veneered panels, from rates up to 10 percent;
- fibreboard, from a rate of 7 percent; and
- particle board and oriented strand board, from a rate of 7 percent.
Given the vital role played by the forestry and value-added wood product industry in the socio-economic development of the province and its regions, responsible management and sustainability are of key importance to New Brunswick’s companies and communities. CETA will establish a bilateral dialogue on forest goods that will support and facilitate Canada and the EU’s trade in forestry and value-added wood products from sustainable and legal sources. The bilateral dialogue will also serve as a forum to discuss measures potentially affecting bilateral trade in these goods .
Reaping the benefits
New Brunswick’s forestry and value-added wood product sector accounted for an average of 10.7 percent of the province’s total exports to the world between 2010 and 2012, and is forecast to grow over the next few years. Opportunity abounds for New Brunswick’s forestry and value-added wood product exports to the EU.
The EU market is growing at a rapid pace in areas such as wood energy products. For example, future EU consumption of wood pellets, an important input for wood energy, is conservatively expected to double by 2020. The lucrative EU market provides substantial opportunities for this important sector.
Increasing exports of agricultural and agri-food products
New Brunswick’s diverse agricultural and agri-food sector benefits from one of the highest levels of value-added processing in Canada for this industry. Some 9,600 New Brunswickers are employed in the sector, whose goods are exported to 88 countries around the world.
- New Brunswick’s agricultural exports to the EU were worth an annual average of $4.9 million between 2010 and 2012, with many of these goods facing EU tariffs.
- Canadian agricultural exports to the EU face high tariff rates, with average tariff rates of 13.9 percent.
When CETA comes into force, almost 94 percent of EU agricultural tariff lines will be duty-free, and seven years later, that number will rise to over 95 percent. This duty-free access will give Canadian agricultural goods, including a specified amount of Canadian beef, pork and bison, preferential access to the EU market and a competitive advantage over producers from other countries that do not have a free trade agreement with the EU. Creating an opportunity for increased sales will benefit hard-working New Brunswickers through more jobs, higher wages and greater long-term prosperity.
For example, EU tariffs will be eliminated on:
- processed fruits and vegetables, including sweetened, dried cranberries (EU tariffs of 17.6 percent) and frozen potato goods, such as french fries (EU tariffs up to 17.6 percent);
- maple syrup (EU tariffs of 8 percent);
- fresh and frozen fruits and vegetables, including frozen blueberries (EU tariffs of 3.2 percent to 14.4 percent are not currently applied, but CETA will lock in as duty-free);
- processed goods, including and miscellaneous food preparations (EU tariffs that start at 12.8 percent); and
- other goods, including processed goods such as mixed seasonings and condiments.
In addition to tariff elimination, CETA includes provisions to address non-tariff barriers in the EU, such as those related to animal and plant health and food safety. Building on the strength of existing Canada-EU cooperation in these areas, CETA will establish a mechanism under which Canada and the EU will cooperate to discuss, and attempt to prevent or resolve, non-tariff barriers that may arise for New Brunswick’s agricultural exports to the EU market. CETA will provide opportunities and tools for Canadian and EU regulators to exchange information in order to better understand each other’s requirements and obtain information to assist importers and exporters alike.
Reaping the benefits
Agriculture and agri-food is a vital international export sector for the economy of New Brunswick. It accounted for an average of 3.1 percent of the province’s total exports to the world between 2010 and 2012 and is expected to grow over the next few years. Major crops include potatoes, greenhouse production and ornamental crops, fruits and berries, vegetables and grains.
As the world’s largest importer of agriculture and agri-food goods, with imports worth more than $130 billion in 2012, the EU presents new and expanded export opportunities for New Brunswick’s agriculture and agri-food sector, not only in areas of traditional strength but also in innovation-driven niche goods. For example, the EU market for specialty foods and beverages, in particular those in the health and wellness sector, is growing at a sustained pace, driven by consumers seeking healthier, more nutritious food and beverages. New Brunswick’s producers and agri-food processors strive to be innovative, effectively applying new technologies in areas of production, sustainability and food safety. Their expertise will ensure that they are well positioned to meet this demand.
Maintaining Canada’s supply management system
Canada’s supply management system provides Canadians with a consistent supply of high-quality dairy, egg and poultry products at reasonable prices. This system supports farmers on around 17,000 Canadian farms. CETA will not affect Canada’s supply management system, which will remain as robust as ever. The supply management system and its three key pillars (production control, import controls and price controls) remain intact. The vast majority of supply-managed products will be exempt from increases in market access. The Government of Canada remains committed to working with industry stakeholders throughout the implementation period to ensure that Canada’s agricultural sector remains strong and vibrant.
New access for world-class Canadian beef, pork and bison
CETA will provide new market access opportunities for key Canadian agricultural exports: beef, pork and bison. These world-class products will now benefit from preferential treatment in the EU. CETA establishes tariff rate quotas for each product, giving Canadian farmers yearly duty-free access for up to:
- 80,000 tonnes of pork (including consolidation of existing quota of approximately 6,000 tonnes);
- 50,000 tonnes of beef; and
- 3,000 tonnes of bison.
In addition, CETA will give farmers duty-free access:
- for high-quality beef under the existing quota of nearly 15,000 tonnes (Hilton beef quota, current duty of 20 percent); and
- for processed beef, pork and bison products.
Opening new markets in Europe for New Brunswick’s world-class services
The services sector is a key driver of New Brunswick’s economy, accounting for 75.1 percent of the province’s total GDP and employing close to 277,000 New Brunswickers in 2012.
Canada’s services exports to the EU were worth an annual average of $14.5 billion between 2010 and 2012. New Brunswick’s key export interests in this vibrant sector include tourism, information and communications technology (ICT), and environment. Jobs in this sector are traditionally highly skilled and high-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 $12.1 trillion in GDP terms in 2012. The total value of services imported by the EU from around the world reached $664.5 billion in 2011, a 4.9-percent increase over the previous year. Providing Canadian service providers with better, more predictable and secure access to the EU market will allow Canadian companies to compete on a level playing field with their competitors in the EU and give them an advantage over their competitors from other countries. Ultimately, this advantage will benefit the entire Canadian economy.
Opening new markets in Europe for investment
Investment plays an essential role in New Brunswick’s economic growth, in traditional as well as in emerging sectors. New Brunswick is looking to attract foreign investment, including from the EU, in sectors such as energy, advanced manufacturing, chemical processing, agri-food, software development, aerospace and defence, and health and life sciences.
In addition, New Brunswick companies are taking advantage of EU investment opportunities in a wide variety of sectors, including agriculture, forestry, manufacturing and aerospace.
Snapshot of investment
The stock of known foreign direct investment by Canadian companies in the EU totalled $180.9 billion at the end of 2012, representing 28.5 percent of Canadian direct investment abroad. The same year, the stock of known foreign direct investment from European companies in Canada totalled $171.5 billion, representing 24.1 percent of total foreign direct 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 province’s prosperity as EU and New Brunswick firms increasingly sell through affiliates in each other’s markets. As a result, New Brunswick’s economy benefits from greater foreign direct investment, regardless of whether investment is outward or inward. 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 New Brunswick will stimulate economic growth and job creation, provide new technologies and increase competition in the marketplace, ultimately benefiting New Brunswick 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 government procurement markets in Europe to world-class New Brunswick companies
Government procurement is a major source of economic activity. The market for EU government procurement is estimated to be worth about $2.7 trillion annually. CETA will provide New Brunswick suppliers of goods and services access to EU procurement processes 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 New Brunswick’s economy, such as ICT and environmental goods and services.
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 2012-2013 cycle, in Canadian dollars, the thresholds are $315,538 for goods and services (in CETA, 200,000 SDRs); $631,077 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.