FILE : CANADA-EU FREE TRADE
IMPACT of ceta : expected increase in cargo traffic
The Port of Montreal and other Canadian ports are expecting to handle more traffic in the future thanks to the new Comprehensive and Economic Trade Agreement (CETA) between Canada and the European Union.
CETA is regarded as the biggest and most ambitious trade deal that Canada has ever reached. It is the country’s most important trade accord since the North American Free Trade Agreement, signed with the United States and Mexico in 1994.
Prime Minister Stephen Harper and European Commission President José
Manuel Barroso announced an agreement in principle on CETA last October.
Canadian Prime Minister Stephen Harper and European Commission President José Manuel Barroso announced an agreement in principle on CETA last October. Canada’s provinces and all of the EU’s 28 member states, plus the European Parliament, still must ratify CETA before it comes into effect. For the Port of Montreal, the new bonanza should materialize within two to three years.
CETA will provide Canada’s economic sectors and geographic regions with better access to the world’s largest market of 500 million consumers and 28 countries with a combined gross domestic product of $17 trillion.
A federal report states that CETA could boost the Canadian economy by at least $12 billion annually and increase Canada’s trade with Europe by 20 %. The EU is Canada’s second-biggest trading partner. In 2012, Canada’s trade with the EU totalled $89.2 billion, comprising $38.7 billion in Canadian exports to, and $50.5 billion in imports from, the EU.
Among the main exports expected to benefit from the new agreement are agri-food products including pork and beef, fish and seafood products, certain finished and semi-finished products such as aeronautic parts, and pulp and paper. Meanwhile, certain imports of agri-food products, manufactured goods, machinery and equipment from the EU should increase as tariffs are reduced to zero.
Most of these goods move via the marine mode through Canada’s East Coast and St. Lawrence River ports, which stand to benefit from the increase in trade that CETA will bring.
The natural gateway for Europe
CETA is “made to measure” for the Port of Montreal,” said Sylvie Vachon, president and CEO of the Montreal Port Authority. “We already are the leading port on the North American East Coast for trade between Northern Europe and North America’s industrial heartland. With our strategic location between the world’s two largest economic blocs, the EU and NAFTA, the Port of Montreal is the natural gateway for Europe.”
Forty-four percent of the total number of containers handled at the Port of Montreal already go to or come from Northern European markets located within the EU. Another 20 %are destined for or originate in Mediterranean markets also within the EU. This means that 64 % of the port’s container traffic could benefit to some degree from CETA. Montreal handled a total of 1.4 million TEUs (20-foot equivalent unit containers) in 2013.
Only eight days
Among the port’s advantages, ocean transit time between Montreal and Europe is only eight days. In North America, the port provides access to 40 million consumers within one trucking day and another 70 million consumers within two rail days.
The province of Quebec accounts for 35 % of Canadian exports moving to Europe. These exports, in particular those transported by container, move for the most part through the Port of Montreal. Additionally, 98 % of Quebec importers and exporters and 93 % of Ontario exporters and importers choose the Port of Montreal to reach European markets.
Tremendous growth opportunity
“The EU represents a tremendous growth opportunity for Canada business, and CETA, which will reduce barriers to the movement of goods, services and investment between regions, will only enhance the ability of Canadian businesses to succeed in this important market,” Joy Nott, president of I.E.Canada (Canadian Association of Importers and Exporters), told PortInfo.
“Canada’s East Coast ports are well positioned to benefit from increased trade with Europe. Even without CETA, the EU is Canada’s second-largest trading partner, and much of that trade travels by ocean container. Montreal in particular will likely see gains from increased trade in the agriculture and agri-food areas, as well as in the area of some manufactured goods.”
“CETA is poised to boost shipping traffic to Europe from all Eastern Canadian ports,” said Jayson Myers, president and CEO of Canadian Manufacturers & Exporters. “Traditionally, St. Lawrence ports have accounted for the bulk of volume destined for that market (23 million tonnes in 2011, according to Statistics Canada). As a result of CETA, Canadian companies will have preferred access into the European market, so the expectation is that eastern ports will flourish, particularly the Port of Montreal.”
Claude Comtois, professor at the
University of Montreal and a membre
of the Interuniversity Research Centre
on Enterprise Network
CETA is “very positive news” for the Port of Montreal, said Claude Comtois, a professor at the University of Montreal and a member of the Interuniversity Research Centre on Enterprise Networks, Logistics and Transportation.
“CETA will generate new types of import and export traffic for ports on the St. Lawrence River,” Professor Comtois said. This includes more vehicles, transportation equipment and agri-food products from Europe, and various types of air transportation and rail system equipment from Canada, he said.
“One aspect of the agreement is that grains and various types of cereals, pulses and soybeans from the West and Quebec, and perishable products such as beef from Alberta and the Prairies and dairy products that are shipped in reefer containers, will gain new markets in Europe. This is very positive for ports on the St. Lawrence, and for the Port of Montreal as the only container port (on the river).” Professor Comtois said CETA might also accelerate investment in the Port of Montreal’s container facilities.
“This agreement looks fantastic for the Port of Montreal,” said Brian Slack, a geography, planning and environment professor at Concordia University in Montreal and an expert on maritime transport and intermodality. “Europe is the Port of Montreal’s main overseas trading partner, and the port is already reaping the benefits of trade with this market.
“This agreement can really only benefit Montreal. It will be a plus for attracting types of goods – western beef, for example – that could be exported out of Montreal.”
Federal Transport Minister Lisa Raitt told a SODES (St. Lawrence Economic Development Council) conference in Montreal last November that CETA could “significantly increase transatlantic trade, benefiting ports across Eastern Canada.” She said that given the location of the St. Lawrence-Great Lakes corridor, “ports in this region will become increasingly attractive, not only for shippers to reach Canada, but to reach destinations throughout North America.”
Moreover, she said an increase in trade with Europe will “generate not only activity at ports but investment in and around ports. ”