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Origins, Business, and Politics The Canada-EUTrade and the Transatlantic Marketplace Operating Structure -

The Canada-EU Marketplace

The EU is the world's biggest trading block and largest single market. Goods and services exports accounts for more than forty percent of Canada's gross domestic product, with trade responsible for one out of every three jobs.

Economic relations between Canada and the EU are characterized by strong two-way trade and investment flows. Two-way trade in goods and services are over $100 billion, with steady growth in Canadian exports in recent years. The EU market is destination for 10% of Canada's exports. Conversely, Canada is the destination for 1.5% of EU exports placing it amongst the EU's top 10 trading partners.

The value of bilateral trade in services between the two partners amounted to over $41 billion in 2015. Examples of often traded services between Canada and the EU are transportation, travel, insurance and communication.

However, investment is the true story of the Canada EU relationship. In the globalizing 90's, companies in Europe and North America began to rely less on selling to each other's market, and increasingly on selling in each other's market. The EU is the second largest investor in Canada (after the US), while Canada is the fourth investor in the EU (after the US, Switzerland and Japan). Two-way investment now accounts for four times the amount of bilateral trade in goods and services, and is regularly increasing.

The stock of Canadian direct investment in the EU reached $210 billion in 2015, representing more than one quarter of all Canadian direct investment abroad. The EU represents the second largest source of foreign direct investment in Canada, with investment stock amounting to almost $340 billion in 2015, or 30% of foreign direct investment into Canada. The result is that sales in each other's market by wholly-owned affiliates are more than four times the value of exports.

As the world moves towards greater economic integration, Canada and Europe are bound to draw still nearer together. As part of this, CERT is working with government to help pave the way for an enhanced Canada-EU free trade agreement. Released on October 16, 2008, the study Assessing the Costs and Benefits of a Closer Canada-EU Economic Partnership shows that the results of economic modeling indicate a lower bound of potential GDP gains from liberalizing goods and services trade of a minimum of $12 billion for Canada and $18 billion for the EU in the first seven years after liberalization.

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