Celebrating the second year of CETA
September 21st, 2019 marks the two‑year anniversary of the entry into force of the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA. For the past two years, businesses across Canada have been using CETA to expand their global footprint and access new markets. Small‑and‑medium sized businesses, women‑owned, and indigenous‑owned enterprises have been exploring CETA’s benefits through reduced or eliminated tariff rates, more transparent business environments, access to government contracts, and more.
This trade agreement opens up the European Union’s 28 markets to Canadians. For example, 2018 saw an increase in Canada’s overseas exports to the European Union, notably in exports to the Netherlands (+37%), Italy (+28%), and Germany (+11%). Meanwhile, in July 2019, Montreal hosted the EU‑Canada Summit where both sides reaffirmed their commitment to CETA and protecting a rules‑based multilateral trading system.
At the end of the day, trade deals are negotiated for those who drive the economy—businesses. For Canadian enterprises, CETA brings stability, transparency, and comfort when operating in European markets. The Trade Commissioner Service (TCS) is available to help prepare companies as they venture to new lands.
Addressing modern business needs
Over the past two years, CETA has provided Canadian companies with a series of tools to become more competitive in European markets. Exporters can take advantage of CETA’s tariff reduction, which has eliminated 98% of tariff lines and will increase to 99% over the next several years. Canadian businesses can visit the Canada Tariff Finder to begin classifying their product and watch the “Let CETA Open Doors” video series to learn about the process of applying for tariff reductions.
CETA’s outcomes in areas such as services, investment, labour mobility, and government procurement are more ambitious than any previous agreement negotiated by Canada. CETA also provides investors with greater openness, stability, transparency and protection for investments in the EU. Canadian services providers can benefit from the greatest access the EU, the worlds’ largest importer of services, has ever provided in a trade agreement, as well as the most ambitious commitments on temporary entry that the EU has ever granted. CETA enables Canadian service providers to operate in European markets, with the same or better treatment as other competing foreign suppliers.
Canadian businesses have spent the past two years taking advantage of the agreement’s government procurement chapter, which allows Canadian enterprises to bid on public contracts through the Tender Electronic Daily System (TEDS). The temporary entry chapter allows Canadian businesses to spend more time in these markets exploring opportunities, meeting with clients and making the most of the opportunities CETA provides.
Another year of growth
Over the two‑year span that CETA has been in effect, Canadian businesses have increasingly been taking advantage of the eliminated tariff costs. In the first twelve months of CETA’s entry into force, EU imports of Canadian products for which tariffs dropped more than 5 percentage points rose by 25.2% compared to imports of products without tariff reductions, which fell 4.3%. During this period, employers such as the Port of Montréal saw a significant increase in cargo—55% of which connects to Europe—more than doubling the average annual historical growth. To keep up with overall growth, the Maritime Employers Association increased its labor force by 20%, adding approximately 200 members to work on the docks over the past year.
In the 21 months since CETA’s provisional application, Canadian merchandise exports to the EU have grown by $6.5 billion (9.1%) to a total value of $77.6 billion. In Q4 2018 and Q1 2019, exports in services to the EU increased 8.6% and imports from the EU increased 8.3% over the pre‑CETA period. Trade in services is increasing on both sides while CETA establishes more stable and transparent conditions for business. As the Agreement matures, its benefits will increase and trade between Canada and the EU is expected to grow.
Sailing past barriers
Building stronger relations in European markets is important for many Canadian businesses. For example, Biscay Seafoods Canada Ltd. has greatly benefitted from CETA since its entry in force. Located in Atlantic Canada, the fish and seafood company captures, produces, and commercializes seafood products, with a focus on salted fish.
Prior to CETA’s entry into force, the 13% tariff rate on its salted fish exports restrained Biscay Seafood’s competitive advantage in the EU. Due to the nature of the fishing industry, these barriers lead to lower margins and limited sales.
However, Biscay Seafoods Canada Ltd. has benefitted from duty‑free exports to the EU since CETA came into force in 2017.
Silvia Ayestaran, Financial Manager of Biscay Seafood, says that CETA has increased awareness of Canadian fish to EU customers. This awareness has resulted in increased demand from the company’s main export markets, such as Portugal, Spain, France and the Netherlands.
Trade Commissioner Service
The Trade Commissioner Service (TCS) is available to help prepare companies venturing to new markets. There is room for more Canadian businesses to expand their presence in Europe, and Canada’s Trade Commissioner Service is there to assist, offering free services in 161 locations around the world.
The TCS offers a variety of programs for eligible businesses targeting EU markets to become export‑ready. CanExport contributed over $7.4 million in funding to 296 projects targeting the EU during the 2019 Fiscal Year. The last year has seen the TCS lead 96 businesses on trade missions with its Business Women in Trade (BWIT), Indigenous, and LGBTQ2 programs. As CETA enters another year of provisional application, the TCS will continue to leverage the agreement in its efforts to help Canadian businesses diversify their markets.
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