Canada to see some gains from trade deal with EU

OTTAWA — Canada’s free-trade pact with Europe is poised to produce “modest” economic gains that work out to an average annual income boost of $220 per Canadian, the federal budget watchdog says in a new report.

The parliamentary budget officer released a study Tuesday that estimates the trade deal would have lifted Canada’s overall economic output in 2015 by 0.4 per cent or $7.9 billion, had it been implemented at the time.

Canadian exports of goods to the EU would have increased $4 billion, services would have been up $2.2 billion and investment would have grown by $3.1 billion, the analysis found.

But the report did put the overall projected improvement into perspective by noting that Canada boasts a $2-trillion economy.

“CETA will lead to some gains for Canada, but they will be modest,” the report said, referring to the deal’s full name: the Comprehensive Economic and Trade Agreement.

“The work outlined in this report projects a small, but positive, overall effect on Canada’s economy ... Starting from relatively low levels, exports of goods will increase by 9.3 per cent and services by 14 per cent.”

The PBO based its analysis on 2015 because projecting into the future would have been more difficult. It was also the most recent year for which a complete set of economic data was available.

The budget office predicted some Canadian sectors will likely see slower growth under the agreement, including some dairy and agricultural products, textiles and some machinery and manufactured goods.

On the other hand, the report predicts sectors including transport and motor vehicles, some metals and wheat will likely grow more quickly. The report focused on the parts of the agreement that it said could be studied analytically.

The areas analyzed included tariff reductions on goods, reduction in trade barriers for services and intellectual property as it relates to royalty payments for patented drugs. The report also examined the overall impact that the deal might have on Canada’s gross domestic product through investment.

Last year, Canada exported about $39.8 billion worth of merchandise to the EU.