“Group to warm up” under Trump's tariffs? EU proposes Canada as first “associate member country”

The Zhitong Finance App learned that European Commission President Ursula von der Leyen proposed Canada to become the first “associate member country” of the European Union. Von der Leyen issued this invitation during a speech delivered in Strasbourg, France on Wednesday. Canadian Prime Minister Mark Carney attended the speech. Von der Leyen said, “In this new world, we must urgently reimagine our partnerships and forge global alliances to strengthen our resilience and preserve our democratic system. I look forward to working with you to open the door for Canada to become the first associate member of the European Union.”

By establishing a specially tailored identity for Canada, the EU, as a trading group, is sending a strong signal that after Brexit causes this economic powerhouse to leave the EU, the EU can break through its own borders to further expand and reinvent itself.

But what this proposal means in practice is another matter; negotiations may take years. It is worth noting that this also provides a path for Britain to restore its relationship with the European Union, but Canada will take the lead in determining what exactly an “associate member country” means.

Becoming a full member of the EU requires a lengthy process of accession, and also comes with a range of rights, such as access to the single market, as well as fiscal, tax, and legal obligations. There is currently no precedent for associate member countries. Earlier this year, a proposal to provide Ukraine with a “lightweight membership” was strongly opposed by many member states.

However, some countries, such as Iceland, Norway, Liechtenstein, and Switzerland, have established special arrangements with the European Union in areas such as the free movement of goods and people. Two weeks ago, Iceland refused to restart negotiations with the European Union on full membership.

Carney warned earlier this year that the “rules-based international order” is actually dead, and has repeatedly called for so-called middle powers to join forces to resist pressure and intimidation from the world's major economies. Earlier, it was reported that these transatlantic allies are in talks to establish a new alliance to ensure mutual security.

Von der Leyen also discussed strengthening cooperation with Canada in the fields of manufacturing, technology, defense, and energy, and called the Arctic region the “flagship joint project” of the two sides.

After the economic impact of the trade war with the US, the Canadian government has made deepening relationships with the EU and other partners a top priority. After the US and Canada concluded negotiations last month, US President Trump imposed a new 50% tariff on goods worth 20 billion US dollars imported from Canada. Canadian Prime Minister Carney then quickly took retaliatory measures and imposed roughly the same amount of tariffs on American-made products. The US also waved a “tariff stick” against the EU before. Although the two sides reached a trade agreement in July last year, the agreement is widely regarded as seriously favoring US interests.

People familiar with the matter said that Canada's current focus is on completing the EU-Canada Comprehensive Economic and Trade Agreement (CETA) approval process. The agreement was negotiated 10 years ago, but according to people familiar with relevant discussions, 10 European countries have yet to formally ratify the agreement.

Unresolved issues between Canada and the EU also include reconciling differences between the two sides over carbon pricing tools for imported goods from the EU, EU anti-deforestation regulations, and pesticide regulations.

Earlier reports said that EU officials believe there is potential to establish a closer relationship with Canada than with Britain. The EU believes that Canada is successfully implementing the so-called “sovereignty agenda” in economic and defense matters — an action that may provide an example for the EU's own efforts to reduce its dependence on foreign countries. Furthermore, Canada does not have the burden of Brexit on the UK.

Unlike the UK, Canada has been approved to participate in the SAFE program. The plan is an EU defense procurement loan project worth 150 billion euros (173 billion US dollars).

People familiar with the matter said that Canada and the European Union are expected to make progress before the summit is held in Montreal in October. At that time, the two sides may sign a digital trade agreement that is currently being prepared. Von der Leyen said, “Both Europe and Canada believe in democracy. Power doesn't belong to the most powerful, richest, or loudest person.”