Impacts of the CETA Agreement on Developing Countries

16-02-2017

With the Comprehensive Economic and Trade Agreement (CETA) negotiations concluded and subsequently signed by both parties, the European Union and Canada’s most progressive trade agreement to date is set to provisionally enter into force soon. However, as developed countries move to negotiate preferential trade agreements between themselves (like the CETA), extending beyond current multilateral trade obligations, the improved market access, trade harmonisation and cross-cutting issues included in the agreements can have a much wider impact, affecting countries not party to them. As far as CETA is concerned, in our judgement those impacts are likely to be relatively small, and confined to a small group of vulnerable states, especially those with concentrated export structures, and notably of primary products in direct competition with Canadian exports to the EU. However, given the limitations of this paper the conclusion is fairly speculative, and so a key recommendation is that more detailed analysis of potentially vulnerable exporters be conducted to narrow down a subsequent mitigation strategy. That mitigation strategy mainly revolves around the impact of non-tariff measures (NTMs), focusing on product standards, and Rules of Origin. Essentially the focus needs to be on a targeted development assistance package referencing the need to upgrade product standards capacities in vulnerable states, in order to maximise the potential of trade to contribute to economic growth and, thereby, poverty reduction.

With the Comprehensive Economic and Trade Agreement (CETA) negotiations concluded and subsequently signed by both parties, the European Union and Canada’s most progressive trade agreement to date is set to provisionally enter into force soon. However, as developed countries move to negotiate preferential trade agreements between themselves (like the CETA), extending beyond current multilateral trade obligations, the improved market access, trade harmonisation and cross-cutting issues included in the agreements can have a much wider impact, affecting countries not party to them. As far as CETA is concerned, in our judgement those impacts are likely to be relatively small, and confined to a small group of vulnerable states, especially those with concentrated export structures, and notably of primary products in direct competition with Canadian exports to the EU. However, given the limitations of this paper the conclusion is fairly speculative, and so a key recommendation is that more detailed analysis of potentially vulnerable exporters be conducted to narrow down a subsequent mitigation strategy. That mitigation strategy mainly revolves around the impact of non-tariff measures (NTMs), focusing on product standards, and Rules of Origin. Essentially the focus needs to be on a targeted development assistance package referencing the need to upgrade product standards capacities in vulnerable states, in order to maximise the potential of trade to contribute to economic growth and, thereby, poverty reduction.