The deal has been the focus of demonstrations in Europe, led by trade unions and protest groups.

An inflatable model of a "Trojan horse" with the slogan "Stop CETA" is placed in front of the European Parliament during a protest against the trade deal between the EU and Canada, in Strasbourg, France, February 15, 2017.
An inflatable model of a "Trojan horse" with the slogan "Stop CETA" is placed in front of the European Parliament during a protest against the trade deal between the EU and Canada, in Strasbourg, France, February 15, 2017.

The European Union and Canada secured clearance on Wednesday for their contentious free trade deal with Canada.

European Parliament lawmakers backed the trade agreement by 408-254, meaning large parts of the EU-Canada deal, notably tariff reduction, will finally enter into force some eight years after negotiations began.

The deal, commonly known as CETA, or the Comprehensive Economic and Trade Agreement, has been dubbed a milestone that is hoped will boost EU-Canada trade by 20 percent.

The EU is Canada's second-largest trading partner, with trade volume between the country and the union worth 63.5 billion euros in 2015, according to official figures.

CETA has been the focus of demonstrations in Europe led by trade unions and protest groups that say it 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's 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.

First trade deal with G7 country

For Canada the deal is important to reduce its reliance on the neighbouring 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 vote last June to leave the bloc.

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

Canada had signed the 12-nation Trans-Pacific Partnership trade agreement, which Trump has rejected, but remains in trade talks with fellow signatory Japan, as well as with India and Singapore.

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

Source: Reuters