A free trade agreement between Canada and the European Union may be lost, costing Canadian automakers and parts suppliers a chance to expand their businesses overseas.
Canadian Trade Minister Chrystia Freeland spent much of the week meeting the president of Wallonia, a Belgian state that opposes the Comprehensive Economic and Trade Agreement (CETA).
Belgian broadcaster RTBF reported Freeland “walked out” of talks Friday.
"Over the past months, we have worked with the Commission and the Member States. But it seems clear that the EU is not able now to have an international agreement,” Freeland is quoted as saying on the broadcaster’s website. “Canada is disappointed. I am personally very disappointed, I worked very hard. We decided to go home. I am very very sad, really.”
The EU can still save the pact if it can convince the Belgian state of Wallonia to approve it. All of the EU’s 28 countries must agree on the free trade deal and nearly all 28 EU governments do. However, under Belgium's complex federal political system, all of its states must agree on the pact in order for the country as whole to approve the agreement.
Flavio Volpe, head of Canada’s Automotive Parts Manufacturers’ Association, said if the deal can’t be saved, it will be a blow to the suppliers and assemblers in Ontario, in particular.
“If it’s dead, it’s a disappointment and an opportunity lost,” Volpe told Automotive News Canada moments after the reports of Freeland walking out.
“Canadian assembly footprints were excited about access to Europe. Honda publicly pivoted its Alliston plant to be the global lead for Civic and CR-V so it could access that market.”
Honda announced in 2015 that its Canadian factory in Alliston, Ont., would produce the new CR-V model for the European market, marking the first time its Canadian arm would export vehicles to Europe.
“Suppliers were excited, too. Even if it wasn’t a big volume increase, at least the diversification of the destination of that product made that supply contract even more stable,” he said.
When it comes to assembly, Ontario automakers currently ship about 14,000 vehicles to the EU every
year. That number would increase to 100,000 tariff-free under a CETA.
While that’s an increase, 86,000 units remains a small percentage of overall Canadian production.
The agreement would also position Canada ahead of the United States, which doesn’t yet have a free trade agreement with the EU, Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, told Automotive News Canada on Oct. 18.
“We anticipate with this new agreement, along with existing and future mandates, that we can grow those numbers even more,” Nantais said of Canadian exports.