Three scenarios are presented: one in which tariffs are mutually eliminated; one in which EU-Canada trade expands in line with the historical experience of Canada’s previous FTAs; and one in which tariff elimination is combined with the appreciation of Canada’s currency (versus the euro) which has been experienced in fact since the two parties launched free trade negotiations. In every case, the bilateral trade balance worsens significantly (and in the third scenario, it worsens dramatically – since the higher Canadian dollar reduces Canadian exports, even as imports from the EU are surging). Based on average employment intensity across 23 goods-producing industries, the simulations suggest an incremental loss of between 28,000 jobs (in the first scenario) and 150,000 jobs (in the third). Direct losses in Canadian GDP range between 0.56 percent in the first scenario, and almost 3 percent in the third.
Dmitri Tkachenko on 30 May 11"The Canadian dollar gained 0.14 of a cent to $1.0232 (U.S.).The Canadian currency has drifted lower for the past four weeks, partly on signs of further weakness in the U.S. economy. Data from the U.S. Commerce Department, released Thursday, showed that the economy grew at a tepid annual rate of 1.8 per cent in the first quarter, lower than many economists expected. Higher prices for gasoline and weak consumer spending have held back the economy. The Labour Department also said more people applied for unemployment benefits last week. On Friday, the Commerce Department said that both personal income and spending rose 0.4 per cent in April, in line with what economists expected. But the rise in spending was the smallest in three months. Another report showed that the number of people who signed contracts to buy homes in April plunged 26.5 per cent from a year earlier."
