The impact of the Comprehensive Economic and Trade Agreement (CETA) on the export of Machinery and Transportation Equipment (M&TE) from Canada to European Union (EU) countries

Abstract

After the signing of Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU), 99.6% of prevailing tariffs on Canadian goods entering the EU were eliminated. Machinery and Transportation Equipment (M&TE) is the biggest sector of the Canadian economy contributing 27% of its GDP and the EU is the world’s largest importer of M&TE at €555 billion. Yet, the EU receives only 1.31% of its M&TE imports from Canada. Therefore, it is important to examine its impact on the export of M&TE from Canada to the EU. This study has examined the impact of CETA on the Canadian export of M&TE to the EU by assessing M&TE comparative advantage using trade indicators. The results suggest that CETA will enhance the Canadian M&TE export potential to the EU for goods such as aeroplanes, gas turbines, electrical cabinets, turbojets, and turbo- propellers. This will give Canada a competitive price advantage over China, the USA, Singapore, Japan, the UAE and Brazil. This study will help Canadian exporters to identify the products that they should focus on under the M&TE sector for export to the EU.