Canada has long had an interest in enhancing its economic links with an increasingly affluent and united Europe, partly to provide greater diversity in its trade and partly for the broader geopolitical reason of becoming more active in the Atlantic community. During the past 50 years, Canada has sought those enhanced economic links through liberalized trade and investment, mainly in the multilateral General Agreement on Tariffs and Trade. In light of technological change, however, Canada decided that, with the Canada-U.S. free-trade agreement of 1988, it would also seek viable bilateral and regional deals while supporting the creation of the new World Trade Organization to succeed the GATT.
More recently still, the Doha round of trade talks has been suspended indefinitely after seven years of desultory debate. In light of the unfortunate fact that the multilateral route currently shows little promise, Canada has embarked on something of the same policy as the United States, the European Union and a host of other countries, developed and developing alike, in seeking “WTO-plus” bilateral agreements that can be seen as building blocks on the way to renewed multilateralism. Accordingly, having first joined the United States and Mexico in the North American free-trade agreement, Canada has more recently concluded bilateral deals with several Latin American countries and demonstrated the practicality of a transatlantic accord by agreements with Norway and Switzerland (in the context of the European free-trade area).
But a free-trade or other trade-enhancing agreement with the EU, now the world’s largest market, remains the major goal. In addition to being Canada’s second-largest trading partner, the EU is also Canada’s second most important source and destination for foreign investment. Yet Canada is one of only eight WTO members without preferential access to the European market (which Mexico, among others, enjoys). With the reduction or removal of remaining barriers to trade and/or investment, bilateral exchanges will grow substantially.