What the Free Trade agreement could mean for Hamilton

Jeff Doucet
MSU VP-Finance

Last week, Stephen Harper flew to Brussells to sign a Free-Trade agreement with the European Union. After Harper secured the support of all ten Premiers, Canada has reached an agreement in principle to sign the Comprehensive Economic and Trade Agreement with our viagra and canadian European peers. The full-text of the agreement has yet to be released, but the agreement has already been supported in principle by both the Liberal and New Democratic Party.

This is remarkable, as it was only twenty-five years ago that Free-Trade was a divisive election issue. However, since the Mulroney government’s implementation of the North American Free Trade Agreement brought nation-wide economic growth and diversification, all federal parties now support free trade.

While we have yet to find out the finer details of the agreement, we know enough to start talking about its benefits and what it means for our local economy in Hamilton. When hearing about government initiatives such as CETA, it is easy to hear large, broad statements such as “12 billion annually” or “80,000 new jobs” and not really know what it means.

While the industry has taken a hit, Hamilton has remained a local economy supported by a manufacturing sector. Contributing billions of dollars to the national economy, Hamilton’s manufacturing sector makes up roughly 4 per cent of the province’s GDP. Several major industries such as automotive parts dominate the local economy while other important industries are growing rapidly. Green automotive technology in particular has the potential to grow and produce innovative, exportable products. The federal government and McMaster University demonstrated this commitment to green automotive technologies with the recent opening of the McMaster Automotive Research Centre. The research centre will collaborate with the private sector to develop, design, and test innovative hybrid technology.

With our globally recognized research-intensive universities, Canada has the ability to pair local industry with Post-Secondary Education and deliver commercial and economic success.

We all know that large-scale, simplified manufacturing has left North America for good. Other countries with lower wages and lower environmental standards will continue to hold the advantage in mass producing simplified goods. Because of partnerships like MARC, Canada will continue to hold the comparative advantage is in the advanced manufacturing of complicated, innovative technologies. But here is the thing: on a global scale, the Canadian automotive sector is relatively small. If you are a company that is producing technology that will one day be hidden under the hood of a car, you need unrestricted access to the global market to truly prosper.

The EU is the world’s second largest producer of automobiles, producing over 16 million cars, trucks and vans in 2012. To put this in perspective, last year Canada nearly produced 2.5 million automobiles. While Canadian auto-parts companies can currently sell their product in Europe, they face barriers to entry. CETA will eliminate EU tariffs on auto parts, which currently run up to 4.5 per cent. With the implementation of CETA, local companies in Hamilton will have an important leg up over competitors in other countries. Volkswagen while assembling a car in Germany could can now use Canadian technology at a lower price.

This example of how our local economy will benefit illustrates the importance of CETA, and the impact it will have on other industries and local economies. As tariffs as high as 22 per cent are lifted on our industries, Canada will continue to grow as a world leader in the trade of our unique goods.

Whether these goods are lumber exports from Northern Quebec, shrimp from the coast of Newfoundland and Labrador, mineral production in Nunavut, or software technology in British Columbia, local economies across Canada stand to benefit from increased access to five hundred million consumers in the European Union.