Earlier this month, Canada and the European Union unveiled the Comprehensive Economic and Trade Agreement (CETA), a trade initiative designed to benefit Canadians — from individual workers and consumers to large scale corporations — by way of eliminating tariffs for Canadian goods entering the EU market and facilitating secure and preferential market access by Canadian service suppliers in the EU.

While CETA will not be in place until 2015, it will undoubtedly have widespread implications for most sectors of the Canadian economy. The EU is Canada’s second largest trading partner behind the United States, and it is believed that the trade deal will open up Canadian access to the EU’s 28-country market and $17 trillion economy.

The Honourable Ed Fast, Minister of International Trade, elaborated on the anticipated benefits of the trade agreement via news release earlier this week:

Canada will be one of the only developed countries to have preferential access to the world’s two largest markets: the European Union and the United States. The competitive edge and combined access to these markets—and their more than 800 million affluent consumers—will make Canada the envy of trading nations all over the world. It will also make Canada an even more attractive destination for investors and manufacturers, and this in turn will create thousands of new jobs and new opportunities for all Canadians.

While CETA covers the the full gamut of factors that impact international trade, of particular note in the M&A landscape is that CETA sets out rules regarding the direct investments that Canadian and EU companies may make in each other’s territories. In the context of foreign investments by EU countries coming into Canada, it is proposed that the threshold for government review be increased to C$1.5 billion, as opposed to the C$1 billion threshold applicable to other non-domestic takeovers.

The CETA Action Plan and Overview projects that taking measures such as increasing the governmental review threshold will promote Canada as a place to invest: revising the EU foreign investment criteria will eliminate much of the red tape that would otherwise be faced by EU investors who are prepared to make a significant financial investment in Canada, thereby making it easier for Canadian companies to attract foreign suitors.

This view was reinforced in recent article in Bloomberg Businessweek. According to Bloomberg data, raising the threshold to C$1.5 billion will remove approximately 212 Canadian-based publicly traded companies from the government’s automatic review list. Certainly, fewer entry barriers and less red tape for foreign investors will be good for business in Canadian M&A.