February 15, 2017 / 11:34 AM / 6 months ago

EU, Canada secure clearance to kickstart free trade deal

FILE PHOTO: The European flag flies outside of the La Canada shopping centre in Marbella, Spain January 23, 2013.Jon Nazca/File Photo

STRASBOURG (Reuters) - The European Union and Canada secured clearance on Wednesday for their contentious free trade deal and the removal of import duties that supporters say will boost growth and jobs on both sides of the Atlantic.

The two parties can claim success for their open markets policy following months of protest and uncertainty as well as the actions of U.S. President Donald Trump, who withdrew from the Trans-Pacific Partnership (TPP) and wants to rework the North American Free Trade Agreement.

European Parliament lawmakers backed the Comprehensive Economic and Trade Agreement (CETA) by 408-254, meaning large parts of the deal, notably tariff reduction, will finally enter into force some eight years after negotiations began.

European trade unions and protest groups complain the pact will lead to a race to the bottom in labour and environmental standards and allow multinational corporations to dictate public policy.

The chief point of contention is the deal's system to protect foreign investors, which critics say can lead to cases such as Philip Morris International's (PM.N) challenge, albeit unsuccessful, of plain tobacco packaging in Australia.

Supporters say the right to regulate is enshrined in the treaty and CETA has replaced closed arbitration panels with transparent and independent courts to settle disputes.

In Ottawa, Canadian Prime Minister Justin Trudeau told reporters that "when you put forward a progressive trade deal that takes in account the responsibility of governments to create ... inclusive growth, we can move forward on globalization".

FILE PHOTO: Canada's Prime Minister Justin Trudeau attends a news conference after the signing of the Comprehensive Economic and Trade Agreement (CETA) at the European Council in Brussels, Belgium, October 30, 2016.Eric Vidal/File Photo

Trudeau, who met Trump on Monday, is due to address the European Parliament on Thursday.

Canada's House of Commons on Tuesday passed legislation to adopt CETA. The upper Senate chamber will now study the proposed law and officials say they expect final approval next month.

Full implementation of CETA, including investment, will only ensue after clearance by more than three dozen national and regional parliaments, which is by no means a certainty.

A sign against the Transatlantic Trade and Investment Partnership (TTIP) and Comprehensive Economic and Trade Agreement (CETA) is pictured on a bench outside the European Council in Brussels, after farmers sprayed powdered milk to protest against dairy market overcapacity, Belgium January 23, 2017.Francois Lenoir

Backers say CETA will increase Canadian-EU trade by 20 percent and boost the EU economy by 12 billion euros ($12.7 billion) a year and Canada's by C$12 billion ($9.18 billion) annually.

For Canada, the deal is important to reduce its reliance on the United States as an export market.

For the EU, it is a first trade pact with a G7 country and a success at a time when the bloc's credibility has taken a beating from Britain's 2016 vote to leave the grouping.

The EU also recognises EU-U.S. trade talks are frozen, but wants CETA to be one of a series of ambitious trade deals it plans with countries, including Japan, Vietnam and Mexico.

($1 = 0.9481 euro; $1 = 1.3076 Canadian dollars)

Additional reporting by David Ljunggren in Ottawa, editing by G Crosse

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