Focus on the European Union
European Union Overview
Comprised of 27 Member States with a total population of over 500 million and a GDP of C $17.4 trillion, the EU is the world’s largest single common market, foreign investor and trader. The EU is also incredibly diverse, holding within its borders both large and small national economies as well as advanced and emerging markets. The EU offers Canadian companies a means to diversify their international activities and can act as a stepping stone to markets in Asia, Africa and the Middle East.
Seventeen EU member states have adopted the Euro, the EU’s common currency and more countries may join in the coming years. As one of the world’s major currencies, the euro provides stability for Canadian investors reduces transaction costs and allows for more transparent pricing.
In 2011, the EU economy accounted for 25.2% of world nominal GDP. However, the EU GDP growth has not been immune to the effects of the global financial crisis, and the ongoing sovereign debt concerns in Europe have weighed on 2011 GDP growth. Eurostat estimates the EU economy grew a modest 1.5% in 2011.
Canada-European Union Commercial Relationship
The EU is Canada’s second largest trading partner in goods and services. In 2011, Canada’s exports of goods and services to the EU totalled $55.3 billion, an increase of 12.6% from 2010. Imports of goods and services amounted to $61.1 billion. An important facet of the overall economic relationship, and indicative of its depth, are the two-way investment levels. The EU’s stocks of foreign direct investment in Canada amounted to $160.7 billion in 2011 and Canada’s stocks of foreign direct investment in the EU totalled $172.5 billion. According to European statistics, in 2010 Canada was the third largest investor in the EU after the United States and Switzerland.
Towards a Comprehensive Economic & Trade Agreement (CETA)
The already close Canada-EU relationship is expected to strengthen further in the coming years as both governments work to forge a comprehensive economic and trade agreement that will provide for liberalisation of trade in goods and services between the EU and Canada, enhanced market access, investment provisions and improved rules on trade-related issues. The launch of negotiations was announced at the Canada-EU Summit in Prague on May 6, 2009. Negotiators are continuing to make progress towards an ambitious agreement. You can find more information on the status of the negotiations as well as detailed information on the expected benefits of a CETA to various sectors and regions through our website.
The decision to begin wide-reaching trade negotiations followed the release of a Joint Study on Assessing the Costs and Benefits of a Closer EU-Canada Economic Partnership (PDF*, 131KB) in October 2008.
Key projections for possible growth through a comprehensive Canada-EU agreement include:
- A $12.6 billion (20.6%) increase in Canadian goods and services exports to the EU within seven years of implementation of an agreement, three-quarters of which would be goods and one-quarter would be services.
- An increase of total bilateral trade in goods and services by $38 billion (22.9%) within seven years of implementation of an agreement.
- 13 areas of cooperation where there is further scope for closer cooperation between Canada and the EU, including science and technology, regulatory cooperation, competition, transport, customs, education and fisheries.
Foreign Investment Promotion and Protection Agreements (FIPAs)
Canada has Foreign Investment Promotion and Protection Agreements (FIPAs) with six of the new European Union (EU) Member States (the Czech Republic, Hungary, Latvia, Poland and Slovakia and Romania). As new members of the EU, these FIPA partners have an obligation to bring their bilateral treaties into conformity with EU law, so Canada agreed to negotiate amendments to the treaties. Four of these revised treaties are now in force (Czech Republic, Slovak Republic, Latvia, and Romania). While negotiations with Hungary have successfully concluded, Hungary has indicated to Canada it will delay the decision on whether to sign the FIPA until forthcoming EU regulations on external investment protection agreements are in force and the CETA negotiations are concluded. Negotiations with Poland are ongoing.
The Trade Commissioner Service (TCS) operates on a country-by-country basis. However, in recognition of an increasingly integrated market and regulatory environment in the European Union, Trade Commissioners in the EU are working together in multi-country sector teams that work to integrate market intelligence along business lines, resulting in increased opportunities for Canada and improved client service in five key sectors.
The five sectors along with their respective areas of focus are:
- Information and Communications Technology (Software, Wireless)
- Contact: firstname.lastname@example.org
- Life Sciences (Biopharmaceuticals, Medical Devices, Services)
- Contact: email@example.com
- Renewable Energy (Bioenergy, Wind)
- Contact: firstname.lastname@example.org
- Aerospace and Defence (Avionics, Aerostructures)
- Contact: email@example.com
- Agriculture, Food, and Beverages (Shrimp and Seafood, Health and Wellness)
- Contact: firstname.lastname@example.org
Science & Technology Cooperation
The EU is a major, well-established player in global S&T through well-funded research programs, such as the Seventh Research Framework Programme (FP7). FP7 serves as an umbrella program for all the EU initiatives associated with scientific research. FP7 runs from 2007-2013 and has a total budget of more than 50 billion Euros. FP7 includes calls for proposals, some of which may address projects for scientific cooperation between Europe and Canada. Canada is actively participating in FP7, which continues to be an important tool for Canadian researchers. There are now more than 225 Canadians, from 34 universities, as well as government and private sector organizations, in FP7 projects. Collaboration through FP7 is an excellent way to leverage Canada’s resources, strengthen networks, work internationally and bring Europeans to Canada: broadening the capacity and impact of our research. Canadian participation is generally pursued on a self-funded basis although opportunities for support are available where a Canadian contribution is deemed essential to a project’s success.
The successor to the FP7 is the Horizon 2020 Framework Program for Research and Innovation which will be phased in at the end of 2013 and run until 2020. Horizon 2020 is proposed to have a budget of 80 billion Euros. Horizon 2020 is expected to have even more resources devoted to international collaboration. The Horizon 2020 proposal is awaiting the approval of the European Parliament and the European Council. The Commission is expecting to make an announcement on Horizon 2020 in fall 2012.
Canada and Europe have mutually benefited from S&T cooperation for many years. The Canada -EU Science and Technology Agreement (1996) provides a solid foundation for the collaborative relationship and continues to serve both Canada and the EU well in terms of reinforcing these linkages. Both Canada and the EU are committed to advancing the relationship.
Canada also has a number of FP7 National Contact Points (NCPs), for key sectors that can provide targeted advice. NCP contact information as well as additional information on FP7 opportunities can be found on the ERA-Can website. Canadian researchers and research organizations can also contact Canadian Trade Commissioners and Science and Technology Counsellors abroad, who focus on innovation, science, and technology.
Trade Commissioner Services in the European Union
Although part of a common market, each EU Member State has its own unique characteristics. While a pan-European strategy is useful, market entry strategies must be tailored on a country-by-country basis and Trade Commissioner Service’s resources by country can be accessed by following the links below:
Estonia (via Latvia)
Lithuania (via Latvia)
Slovenia (via Hungary)