Earlier this month, Canada and the European Union unveiled the
Comprehensive Economic and Trade Agreement
(CETA), a trade initiative designed to benefit Canadians —
from individual workers and consumers to large scale corporations
— by way of eliminating tariffs for Canadian goods entering
the EU market and facilitating secure and preferential market
access by Canadian service suppliers in the EU.
While CETA will not be in place until 2015, it will undoubtedly
have widespread implications for most sectors of the Canadian
economy. The EU is Canada's second largest trading partner
behind the United States, and it is believed that the trade deal
will open up Canadian access to the EU's 28-country market and
$17 trillion economy.
The Honourable Ed Fast, Minister of International Trade,
elaborated on the anticipated benefits of the trade agreement via
news release earlier this week:
Canada will be one of the only developed countries to have
preferential access to the world's two largest markets: the
European Union and the United States. The competitive edge and
combined access to these markets—and their more than 800
million affluent consumers—will make Canada the envy of
trading nations all over the world. It will also make Canada an
even more attractive destination for investors and manufacturers,
and this in turn will create thousands of new jobs and new
opportunities for all Canadians.
While CETA covers the the full gamut of factors that impact
international trade, of particular note in the M&A landscape is
that CETA sets out rules regarding the direct investments that
Canadian and EU companies may make in each other's territories.
In the context of foreign investments by EU countries coming into
Canada, it is proposed that the threshold for government review be
increased to C$1.5 billion, as opposed to the C$1 billion threshold
applicable to other non-domestic takeovers.
The CETA Action Plan and Overview projects that
taking measures such as increasing the governmental review
threshold will promote Canada as a place to invest: revising the EU
foreign investment criteria will eliminate much of the red
tape that would otherwise be faced by EU investors who
are prepared to make a significant financial investment in
Canada, thereby making it easier for Canadian companies to attract
This view was reinforced in recent article in Bloomberg
Businessweek. According to Bloomberg data, raising the
threshold to C$1.5 billion will remove approximately 212
Canadian-based publicly traded companies from the government's
automatic review list. Certainly, fewer entry barriers and less red
tape for foreign investors will be good for business in Canadian
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