Bond rating agency Morningstar DBRS says while the European Union’s invitation to Canada to become an “associate member” appears to be primarily symbolic, it fits well into Canadian Prime Minister Mark Carney’s efforts to diversify trade alliances.
Canada already has a free trade agreement with the EU, though not all member countries ratified the agreement.
Morningstar DBRS says it’s unclear what associate member status would include and some member countries may balk at creating such an option for Canada.
Mark Carney at the EU (via Mark Carney on Facebook)
The bond rating agency say at the very least, the negotiation and ratification of any agreement would likely take several years.
A summit is planned in late October that could help to flesh out the scope of a future agreement.
In the meantime, Morningstar DBRS says a diplomatic flare-up involving the U.S. could have “real-world consequences” Additional tariffs would increase economic costs for the both Canada and the U.S. though it considers further immediate escalation unlikely.
The government of Canada is currently rated at AAA with a Stable trend, with no credit rating implications at this time.
