EU and Canada sign free trade deal

After a week of intensive negotiation, the EU and Canada have signed a much-delayed Free Trade Agreement, the Comprehensive Economic and Trade Agreement (CETA). Earlier last week, the deal looked to be in trouble after the French-speaking Belgian region of Wallonia rejected the deal, leaving Belgium unable to ratify it. However, following intense negotiations, an addendum to the deal has addressed regional concerns. This allowed the deal to be signed on Sunday by Canadian Prime Minster Justin Trudeau and top EU officials. The revised deal still needs to be approved by the EU parliament, 28 EU Member States and by Canadian province. Subject to this, though, the agreement should enter into force next year.

The CETA agreement should offer some potential for UK exports to Canada with the lifting of trade barriers and AHDB Beef & Lamb recognises it as a potential new market. While Canada is not a large consumer of sheep meat, it is a sizeable consumer of beef. In the case of beef, and although more of an exporter, Canada does still import significant quantities; small volumes of sheep meat are also imported.

However, for beef in particular, the agreement could well offer market opportunities for Canadian beef across Europe. Canada is a major beef exporter to the global market, the seventh largest, although, unlike the United States, it has yet to send significant quantities to the EU. The small amount of Canadian beef shipped to the EU mainly consists of chilled boneless cuts, suggesting it is a premium product. Last year, it was mainly consigned to France, although in previous years, when volumes to the EU were higher, the United Kingdom, Italy and the Netherlands all received small shipments. In the current arrangements for CETA, the EU has designated beef as a sensitive product and tariff-free access will be limited by new tariff rate quotas (TRQs). While the European Commission notes that the quota amounts correspond to about 0.6 per cent of the total EU consumption in reality, for some cuts the percentage would be higher, as much of the trade could well largely consist of premium chilled beef. Therefore, the impact on the EU beef market could be substantially greater than the numbers suggest.

It remains unclear in the shorter term how much Canadian beef might be supplied to the EU now CETA has been agreed. While Canada has developed a scheme to supply hormone-free beef to the EU, there are still differences in abattoir practices, such as spraying of carcases, which may need to be addressed. In the longer term, Canada could well have intentions to increase its beef presence on the EU market just as the United States has already done.