Prime Minister Stephen Harper, left, and President of the European Commission Jose Manuel Barroso have reached a political agreement on key elements of a comprehensive and economic trade agreement in Brussels on Friday, Oct. 18, 2013. Adrian Wyld/The Canadian Press
Canada and the European Union have reached a "political agreement" on free trade that the federal government says could boost Canada's annual income by as much as $12 billion annually, and bilateral trade by 20 per cent.
While the deal is not expected to be ratified for at least two years, it is expected to remove 98 per cent of EU tariffs on a wide range of Canadian products.
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Here are five ways the Canada–EU Trade Agreement (CETA) will affect Canadians:
1. Cheaper goods
When CETA comes into force, Canadians will pay less for items including food, wines and spirits, and even high-end European cars — if retailers and European manufacturers pass on the savings from the elimination of tariffs.
For example, the 10 per cent EU tariff on passenger vehicles will be eliminated, as will tariffs on auto parts which run up to 4.5 per cent.
Michael Hatch, the economist for the Canadian Automobile Dealers Association, applauded the elimination of tariffs on EU-imported cars and parts, saying in a written statement it "will translate into lower prices for Canadians."
While Canadian documents make no mention of alcohol, a memo by the European Union says tariffs on wines and spirits from the EU will also be eliminated. About half of Canada's wine imports are from the EU, the memo notes.
Once the deal is in effect, most of the EU tariffs on agricultural products and seafood as well as other many other goods will be eliminated right away, and seven years later 95 per cent of products will be duty free, according to the documents outlining the deal released Friday.
2. More Canadian beef, pork and bison
CETA will significantly raise the quotas for Canadian beef, pork and bison, giving producers much greater duty-free access to the EU market. The potential increase in annual sales is estimated at $1 billion.
Manitoba expects the deal will provide significant market access for its agricultural producers including beef, pork and canola, as well as its manufacturers and other businesses.
Agriculture Minister Gerry Ritz refuted the suggestion that Canada made gains in the beef, pork and bison industries at the expense of dairy farmers.
"Not true, not at all," Ritz said on Friday.
Ritz said while the Europeans will be able to sell Canadians more cheese, Canadians will be able to sell them other dairy products such as milk, yogurt, and ice cream — on top of cheese.
"Our dairy industry has complete, unfettered access for all dairy products into the European market."
3. More European cheese
EU cheesemakers will be allowed to sell Canada 29,000 tonnes of cheese, up from the current 13,000 tonnes.
While the federal government insists CETA will not affect Canada's supply management system, which it says will remain "as robust as ever," it is considering compensation for Canadian dairy farmers if they lose money because of the agreement. It’s not clear whether compensation is being considered for small cheesemakers.
"Personally, I don't think there will be any hurt," Ritz said on Friday.
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But Ron Versteeg, the vice president of the Dairy Farmers of Canada, told CBC News on Friday they are concerned about giving the EU greater access to "one of the jewels" in the Canadian dairy industry.
"It's a bit discouraging to see something that we've put a lot of blood, sweat, and tears into developing — to have it sort of eroded and given away to the Europeans," Versteeg said.
Both Ontario and Quebec have asked the federal government for a guarantee that their dairy farmers will receive compensation for any negative impact resulting from the trade deal.
4. Intellectual property rights and drugs
Intellectual property rights and patent protection was a key area of concern for the Europeans during negotiations, particularly in the area of pharmaceuticals.
While the text of the agreement in principle is not yet available, the government was claiming Friday it strikes "an appropriate balance between rewarding innovators and ensuring Canadians are able to reap the fruits of such innovation."
Canada’s Research-Based Pharmaceutical Companies (Rx&D), the organization that represents brand-name drug manufacturers, welcomed the deal, saying "a more level playing field in intellectual property protection can lead to more investment in the research and development of new medicines and vaccines here at home."
According to Rx&D, the CETA will potentially allow drug makers to recover up to two years lost on a drug patent as a result of red tape, and will give patent-owners the right to appeal court decisions where a patent has been ruled invalid.
Phil Upshall, executive director of the Mood Disorders Society, also applauded the trade deal saying "CETA will ensure continued innovation in medicines and improve the health of all Canadians, including those with mental illness."
Upshall pointed out that the last time Canada reformed its IP policy was 25 years ago. "The rest of the world has evolved since then and Canada must keep pace," he said.
But there are concerns about the effect the deal will have on the cost of drugs, if generic drug makers are forced to wait longer before being able to bring less-expensive drugs to market. The provinces have been increasingly relying on generic drugs to help keep health care costs down.
Ontario Premier Kathleen Wynne said on Friday her province supports the deal but has a few concerns around its provisions on pharmaceuticals, among other areas.
"We'd like to make sure that there is compensation if any of our pharmaceutical industry is adversely affected," Wynne said.
5. Provincial and municipal contracts
Wynne also said she supports the deal because it gives its manufacturers and service providers more access to European markets.
Ontario estimates the deal will create an estimated 30,000 jobs across the province.
But it would also allow European companies greater access to bid on local and provincial contracts.
A memo by the European Commission says "CETA covers new ground, as it is the first time that all sub-federal levels of government in Canada have committed themselves to bilaterally opening their procurement markets."
An EU-Canada study put the overall value of contracts awarded by the Canadian government at up to $19 billion per year, while the value of contracts by Canadian municipalities was estimated at $112 billion.
According to the Canadian government, CETA procurement rules will only apply to "high-value" contracts to ensure that municipalities are still able to support local interests.
Claude Dauphin, the president of the Federation of Canadian Municipalities, welcomed the agreement in principle saying it was the result of two years of collaboration between the municipalities and the federal government.
Dauphin said "while some important details remain to be confirmed," the FCM was "more optimistic than ever."
The federal government notes that excluded from the Canada–EU trade deal, as in all of Canada's free-trade agreements, are sectors such as education and health-care services.