The Commission said that its president, Jose Manuel Barroso, and Canadian Prime Minister Stephen Harper had reached a "political agreement on key elements of the Comprehensive Economic and Trade Agreement," after months of intense negotiations.
The agreement will eliminate more than 99 percent of tariffs between the two economies and expand market opportunities for both parties, the Commission said in a statement.
The trade deal, the commission said, strengthens intellectual property rights and sets out to increase bilateral trade by 23 percent or by $35.5 billion.
"The overall benefits of the agreement are expected to raise the level of the EU's annual gross domestic product by approximately $16.4 billion, the commission said.
"Canada is one of the most advanced economies in the world. This agreement will provide significant new opportunities for companies in the EU and in Canada by increasing market access for goods and services and providing new opportunities for European investors," Barroso said.
He described the accord as "highly ambitious."
EU Trade Commissioner Karel De Gucht said the deal was beneficial to both parties. It was also "a real challenge," to hammer out the accord, he said.
The Commission said Canada was its 12th largest trading partner in 2012, accounting for 1.8 percent of the European Union's external trade. On the flip side, the EU in 2011 was Canada's second most important trading partner after the United States.
Notable deaths of 2014 [PHOTOS]