What's going on?
The European Parliament announced its approval of the (long-awaited) trade agreement between the European Union (EU) and Canada. It has implications not just for those countries, but pretty much all countries engaged in trade.
What does this mean?
The idea is to boost trade in goods and services between Canada and the EU. Like other “free trade” agreements, the plan is to reduce or eliminate taxes on imports (a.k.a. tariffs), and give many service suppliers (in this case shipping, telecoms, engineering and accounting) more open access to each others’ customers. The European Parliament’s approval was expected, so it’s not a big surprise, but this is a topical issue globally (see below)…
Why should I care?
For markets: Free trade should be good for business.
Trade agreements tend to make it easier to sell stuff because of the reduced restrictions – that’s usually good news for businesses. While the impact of “free trade” is sometimes controversial, it’s generally thought that it helps economies grow. Most European and Canadian businesses will be applauding the passage of this agreement.
The bigger picture: There’s currently a big question mark over future trade policies globally.
The US has been withdrawing from, or looking to renegotiate, its own trade deals. Britain is in the process of withdrawing from the EU, but is maintaining a commitment to free trade and also wants new trading partners. Global trade has been slowing (relative to economic growth) and there are certainly political challenges to it, so the EU/Canada deal acts as a topical counterpoint. But it remains to be seen what the political appetite for trade is going forward: from Trump, from Britain and from any potential new leaders of EU countries.