Canada Preferential Trade Agreements: Boosting Economic Growth and International Relations
As a global trading nation, Canada has been actively pursuing preferential trade agreements (PTAs) with other countries as a way to enhance its economic growth, competitiveness, and international relations. As of March 2021, Canada has 15 PTAs in force, covering 51 countries, and is negotiating or exploring several more. In this article, we will explore what PTAs are, why they matter, and how Canada is maximizing their benefits.
What are Preferential Trade Agreements?
A preferential trade agreement is a type of trade accord that aims to reduce or eliminate tariffs and other trade barriers between participating countries. Unlike multilateral trade agreements like the World Trade Organization (WTO), which involve many countries, PTAs are bilateral or regional and allow for more targeted and flexible trade liberalization. PTAs can also cover other issues such as investment, services, intellectual property, and regulatory cooperation.
PTAs can provide many benefits for the participating countries and their economies. For example, PTAs can increase market access, promote competition, attract foreign investment, reduce transaction costs, and enhance productivity and innovation. PTAs can also foster closer political and cultural ties between countries and contribute to regional economic integration.
Why Preferential Trade Agreements Matter for Canada?
As a small open economy, Canada depends heavily on international trade to sustain its growth and prosperity. According to the World Bank, Canada`s exports of goods and services account for about 31% of its GDP and support millions of jobs. Moreover, Canada is a trading hub with its North American Free Trade Agreement (NAFTA) partners, the United States and Mexico, and has strong economic and cultural ties with Europe and Asia.
PTAs are a key tool for Canada to diversify its trade relations, tap into new markets, and reduce its reliance on a few partners. PTAs can also help Canada to preserve its market share in the face of increasing global competition and protectionism. Furthermore, PTAs can support Canada`s foreign policy and diplomatic objectives by strengthening its ties with like-minded countries, promoting democracy, human rights, and environmental sustainability.
How Canada is Maximizing the Benefits of Preferential Trade Agreements?
Canada has been actively pursuing PTAs with various countries and regions around the world. Some of the most significant PTAs that Canada has signed or is negotiating are:
– Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): This agreement covers 11 countries, including Japan, Australia, and New Zealand, and represents a market of 500 million people and a GDP of $13.5 trillion. The CPTPP reduces or eliminates tariffs on many goods and services and includes provisions on labor and environmental standards, digital trade, and intellectual property.
– Canada-United States-Mexico Agreement (CUSMA): This agreement replaces the NAFTA and modernizes the trilateral trade relations between the three countries. CUSMA maintains tariff-free access to the North American market for many goods and services and includes new provisions on labor rights, environmental protection, and digital trade.
– Canada-European Union Comprehensive Economic and Trade Agreement (CETA): This agreement covers 27 countries and eliminates tariffs on many goods and services and includes provisions on investment, services, and regulatory cooperation. CETA is Canada`s most ambitious trade agreement to date and represents a market of 500 million people and a GDP of $22 trillion.
– Canada-United Kingdom Trade Continuity Agreement (TCA): This agreement maintains the existing trade relations between Canada and the UK after Brexit and provides certainty for businesses and consumers. The TCA eliminates tariffs on many goods and services and includes provisions on intellectual property and digital trade.
Besides these PTAs, Canada is also exploring PTAs with other countries or regions such as ASEAN, Mercosur, India, and the Gulf Cooperation Council. Canada is also updating its existing PTAs with its partners such as Chile, Colombia, and Israel.
In conclusion, preferential trade agreements are a vital tool for Canada to boost its economic growth, competitiveness, and international relations. Canada`s active pursuit of PTAs with various countries and regions reflects its commitment to an open and rules-based trading system and its strategic interests in diversifying its trade relations. By maximizing the benefits of PTAs, Canada can enhance the well-being of its citizens and contribute to global prosperity and stability.