Free-trade pact with EU to create only ‘modest’ gains: PBO

The parliamentary budget office says, in a new report, that Canada’s free-trade pact with Europe will produce only “modest” economic gains.

The PBO estimates the trade deal would have lifted Canada’s overall economic output in 2015 by 0.4% or $7.9 billion, if it had been implemented. Its breakdown shows that, under that scenario, Canadian exports of goods to the EU would have increased $4 billion, while services would have been up $2.2 billion and investment would have grown by $3.1 billion.

This number falls short of previous estimates included in a joint Canada-EU study, which supported the launch of negotiations. That study concluded a trade agreement “could boost Canada’s income by $12 billion annually and bilateral trade by 20%.”

Read: Canada-EU trade deal could boost annual revenue by $12 billion

The PBO predicts some Canadian sectors will likely see slower growth under the agreement: some dairy and agricultural products will be affected, as well as textiles and some machinery and manufactured goods. On the other hand, sectors including transport and motor vehicles, and some metals and wheat, will likely show faster growth.

The report points out that strengthening business ties with the EU will make Canadians a little less dependent on their existing trade partners. It predicts Canada’s annual exports to the U.S. could decline by 0.4% or $1.4 billion, while exports to the rest of the world may fall by 0.7% or about $384 million.

Read: Trade agreement with EU will benefit investment industry: IIAC

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.