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Unformatted text preview: 133 Making choices: Prospects for a Canada-EU Free Trade Agreement With a population of over 500 million, the European Union (EU) is Canadas second-largest trading partner. In 2006, two-way merchandise trade between Canada and the EU was approximately $78 billion and two-way investment reached $263 billion. While these figures are far from marginal, they pale in comparison to the $626 billion in two-way mer- chandise trade and $497 billion in two-way investment with the United States. In light of these numbers, analysts have argued that there is room for improvement in the economic relationship between Canada and the EU. They believe that the relationship has been significantly under-traded and under-valued. In an attempt to bolster this claim, a Canada-EU Joint Trade Study commissioned by the European Commission and the Govern- ment of Canada (GoC) recently noted that Canada is the EUs 11th-largest merchandise trading partner, with only 1.8 percent of external EU trade in this category (GoC, 2008). In light of the financial crisis in the United States, discussions to revive talks of a Canada-EU Free Trade Agreement (FTA) have begun to garner attention. Although discussions of a Canada-EU economic partnership are not new going back to Pierre Trudeaus failed Third Option in the mid-1970s the current reincarnation seems radically different from the failures of the past. With a unanimity uncommon to most of its foreign policy issues, Canada is politically unified behind the idea of a transatlantic FTA, with the governing Conservative Party, the Liberal opposition, the provinces, and Canadian business leaders all indicating their support. In an even more surprising turn of events, the EU has also indicated its interest in pursuing a Canada-EU FTA. On October 23, 2008 the European Com- mission welcomed the formal adoption by European member states of Joe Blomeley is a Graduate Student at the Norman Paterson School of International Affairs, at Carleton University. He would like to thank everyone at the Centre for Trade Policy and Law at Carleton, for their expertise and support over the past two years. P OLICY E SSAY Joseph Blomeley 134 the negotiating mandate for an FTA with Canada. This is a sharp reversal from the EUs past disinterest and ambivalence in this respect. Accordingly, it seems that there is significant momentum towards the signing of a comprehensive Canada-EU FTA. Yet, is this the right move for the Canadian economy? Have Canadian officials properly analyzed the consequences of such an agreement, particularly the effect that it may have on Canadas economic relationship with the United States? It does not appear so. At this point in time, it does not make sense to pursue an agreement, particularly in its proposed form....
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