A free trade deal between Canada and the European Union would cost tens of thousands of workers their jobs, according to a new study.
The study — by CAW chief economist Jim Stanford — was released Wednesday by the Canadian Centre for Policy Alternatives.
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Stanford ran three simulations to see what a Canada-EU free trade deal would mean to the Canadian economy, and in every case Canada's bilateral trade deficit with the EU would worsen.
In the best-case scenario — one in which tariffs are mutually eliminated — Stanford foresees the loss of 28,000 jobs.
In the worst-case simulation — one in which tariff elimination takes place along with a further appreciation of the Canadian dollar versus the euro — the job losses could top 150,000.
Trade deficit would worsen: Stanford
"Free trade with Europe will take a bad situation for Canada, marked by large deficits and lost jobs, and make it much worse," Stanford argues.
Implementation of a free trade deal could cause Canada's GDP to drop anywhere from 0.56 per cent to almost three per cent, the study says.
Stanford says it would make more sense to tackle the current trade deficit with Europe by trying to lower the value of the Canadian dollar and more actively supporting Canadian company's efforts to export high-tech products.
Canada's exports to the EU tend to be much less technologically intensive than the EU's exports to Canada.
The findings of Stanford's study are at odds with an economic evaluation jointly done in 2008 by the Canadian government and the European Commission.
That study said a free trade agreement would result in an extra $12 billion a year in economic benefits to Canada by 2014 and a 20 per cent increase in total trade.
But Stanford said that study's findings are based on assumptions that he calls "extreme and far-fetched."
Pact possible in 2011
The fifth round of Canada-EU free trade talks took place in Ottawa last week. Federal officials say a pact could be ready to sign next year.
Business leaders have welcomed efforts to reach a trade deal with the EU. But many labour groups, farmers groups and nationalists are opposed.
The EU is Canada's second-largest export market, after the U.S. Two-way trade is worth more than $100 billion a year.
Canada has already signed bilateral free trade deals with the U.S., Mexico, Costa Rica, Colombia, Chile, Israel, Peru, Jordan, Panama and with the European Free Trade Association states of Iceland, Liechtenstein, Norway and Switzerland.
Canada is in free trade talks with almost 50 other countries.