The European Union (EU) and Canada on Friday reached an agreement on their free trade deal, aimed at boosting the two sides' economic growth.

European Commission President Jose Manuel Barroso and Canadian Prime Minister Stephen Harper reached a political agreement on the key elements of the free trade agreement, the Comprehensive Economic and Trade Agreement (CETA), said a European Commission press release.

Barroso described the agreement as "highly ambitious" and "great importance" for the EU's economy.

"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.

"It will be the basis for gaining a strong foothold in the North American market and so provide a catalyst for growth and the creation of jobs in Europe," he added.

EU Trade Commissioner Karel De Gucht commented that it has been a real challenge to reach this agreement, and it's a real first when it comes to a comprehensive Free Trade Agreement between two mature economies.

It will be the first free trade agreement between the EU and a G8 country.

The negotiators will now be able to continue the process and settle all the remaining technical issues. Subsequently, the agreement will need to be approved by the Council and the Parliament.

According to the EU, the agreement is expected to increase bilateral trade in goods and services by 23 percent, or 26 billion euros (about 35 billion US dollars). The overall benefits of the agreement are expected to raise the level of the EU's annual GDP by some 12 billion euros a year. (1 US dollar = 0.73 euro)