Export, Innovate, Invest - The Canadian Trade Commissioner Service
Focus on the European Union
European Union Overview
Comprised of 28 Member States with a total population of over 505.7 million and a GDP of C $18.5 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.
Nineteen 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 2013, the EU economy accounted for 23.5% of world nominal GDP. Because of the depth of the crisis and persistent structural issues in some Member States, economic recovery in the EU has been slow and continues to be uneven, with high unemployment in countries most-affected by the crisis such as Greece and Spain. Inflation has been persistently low for the past two years, hitting a new low of -0.2% in December 2014, remaining well off the European Central Bank (ECB) target of just under 2%. The threat of deflation, low growth and the effect prolonged high unemployment is having on European society is the predominant concern of European leaders. Acting to ward off deflation, the ECB announced in January 2015 an expanded asset purchase program of investment-grade sovereign debt that brings monthly purchases to ?60 billion. Most importantly, the ECB said it would continue the program until there is “sustained adjustment” toward the 2% inflation target. In an effort to address the loss of investment in the EU since the crisis (down 15-20% in the region), the European Commission proposed a European Fund for Strategic Investment that would leverage guarantees from the EU and European Investment Bank to finance projects worth over ?300 billion between 2015-2018. Significant reforms in the Banking Sector and in many Member States should start to have a positive impact on private sector credit flows and public finances. The January 2015 International Monetary Fund update expects growth to be 1.2% in the euro area in 2015 and 1.4% in 2016. The European Commission forecast has EU growth at 1.7% in 2015 and increasing modestly to 2.1% in 2016.
Canada-European Union Commercial Relationship
In 2013, Canada was the EU28's twelfth most important trading partner. In 2014, Canada’s exports to the EU totalled $38.6 billion and merchandise imported from the EU amounted to $57.8 billion. Canada’s trade deficit with the EU narrowed from $ 20.0 billion in 2013 to $19.2 billion in 2014. Canadian exports to the EU28 increased 16.4% in 2014 over 2013 and Canada’s imports from EU28 increased 8.7% in 2014 over 2013.
In 2013, Canada was the EU’s 8th largest services trading partner. Canada exported $14 billion in services to the EU and imported $17 billion in services from the EU. Canada’s services exports to the EU represent 16.3% of its total services exports.
As a collective partner, the EU is currently Canada’s second largest source of foreign direct investment (FDI) with a known stock valued at $191 billion at the end of 2013 or close to 28% of FDI stocks in Canada. The amount of EU FDI in Canada has been gradually rising since 2010. At the end of 2013, the known stock of Canada's direct investment in the EU totalled $187 billion, or nearly a fourth of Canadian Direct Investment Abroad (CDIA).
Comprehensive Economic & Trade Agreement (CETA)
On September 26th, 2014, Prime Minister Harper, Herman Van Rompuy, former President of the European Council, and José Manuel Barroso, former President of the European Commission formally announced the conclusion of negotiations toward a Canada-EU Comprehensive Economic and Trade Agreement, also known as CETA. This marked a historic moment for both Canada and the EU, and a major milestone in the evolution of our relationship. CETA will create vast new opportunities across the EU and Canada, opening new markets for our exporters, generating high-quality jobs for our workers, and forging closer links between our economies. Work is now ongoing expeditiously to proceed with legal review and translation of CETA text in advance of ratification.
Foreign Investment Promotion and Protection Agreements (FIPAs)
The Canada-EU CETA contains a comprehensive investment chapter similar in scope to Canada’s existing FIPAs with EU Member States. While Canada currently has FIPAs in force with 7 of them (Croatia, Czech Republic, Hungary, Latvia, Poland, Romania, and Slovak Republic), the CETA Investment Chapter will apply to all 28 Member States. In this context, the CETA Investment Chapter will replace the existing FIPAs upon entry into force. For a period of three years after the entry into force of the CETA, however, investors will still be able to submit a claim regarding treatment accorded while a FIPA was in force pursuant to the rules and procedures established in that FIPA.
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
- Life Sciences
- Clean Tech
- Aerospace and Defence
- Agriculture, Food, and Beverages
Science & Technology Cooperation
The EU is a key partner in science, technology and innovation for Canada and a major source of new technologies, helping to further Canada's goal of becoming a world-leading knowledge-based economy.
The Canada-EU Joint Science and Technology Cooperation Committee (JSTCC) is the overarching mechanism responsible for cooperation between Canada and the EU. It operates under the Canada-EU Science and Technology Agreement (1996) and meets periodically to establish key priorities under areas of mutual interest and to review progress. Leading thematic areas for Canada-EU cooperation include: marine, arctic, health, ICT, agriculture, aeronautics, space and researcher mobility.
Under the European Union’s “Framework Programmes”, funding has been made available to support research priorities undertaken in the European Research Area. The current Program, the 8th such initiative has been branded as Horizon 2020 and has a budget of ?79 billion (2014-2020) with international cooperation, including by third countries, being one of its essential elements. It is based on three pillars: Excellent Science, Industrial Leadership and Societal Challenges.
In order to support collaboration and information dissemination about opportunities under Horizon 2020, Canada and the EU have established a joint project called ERA-Can +. Its mandate is to encourage and facilitate Canadian researchers and research organizations to collaborate with their European counterparts under Horizon 2020.
Canada also has identified and nominated a number of National Contact Points (NCPs), for key sectors that can provide targeted advice and support. NCP contact information as well as additional information on Horizon 2020 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.
Finally, in May 2013, Canada, the EU and the US signed the Galway Statement on Atlantic Ocean Cooperation establishing the Canada-EU-US Trans-Atlantic Marine Research Alliance. This initiative helps position Canadian researchers for enhanced collaboration under Horizon 2020 in the areas of Marine and Arctic research. Under Horizon 2020’s Blue Growth agenda, participation with Canadian research will be prioritized in several of the calls for proposal. These calls cover a range of thematic areas including: Food security, sustainable agriculture and forestry, marine and maritime and inland water research and the bio-economy.
Details on all calls under Horizon 2020 can be found on the Participant Portal from the EU website: http://ec.europa.eu/research/participants/portal/desktop/en/home.html.
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)
Luxembourg (via Belgium)
Malta (via Italy)
Slovenia (via Hungary)
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