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Celebrating one year of CPTPP opening doors for Canadians to the Asia‑Pacific

On December 30, Canada will celebrate the first anniversary of the entry into force of the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP). Over the past year, Canadians have been working hard to take advantage of this new trade deal by building relationships, signing new contracts and increasing their market share across the Asia‑Pacific.

word CPTPP

Key benefits for Canadians

The CPTPP establishes high‑standard rules and opens new opportunities for Canadians to access dynamic Asia‑Pacific markets. Canadians now benefit from enhanced market access to Australia, Japan, New Zealand, Mexico, Singapore, and Vietnam. Once remaining signatories ratify the Agreement, access will be expanded to include Brunei, Chile, Malaysia and Peru. When Canadian exporters explore opportunities in these markets, they should look to the advantages created by the CPTPP when formulating their business plans.

Reduced or eliminated tariffs when exporting goods

A major benefit of the CPTPP is the Agreement’s preferential tariff treatment. For exporters, this means that CPTPP countries are reducing or eliminating the tariffs on Canadian products. Upon full implementation, 99% of CPTPP countries’ tariff lines will be duty‑free. This makes Canadian exports more competitive than those coming from countries operating without a free trade agreement. The Canadian competitive advantage will also grow over time as these benefits improve gradually. Tariff reductions vary based on product and market. Visit the Canada Tariff Finder, a free on‑line tool, designed to help Canadians classify their products by identifying the correct Harmonised System (HS) codes and the corresponding tariff reductions.

It is important to remember that the products sent to CPTPP markets do not automatically receive preferential tariff treatment — tariff preferences must be claimed. Watch the video series in the CPTPP toolkit to learn about the steps that are required to receive preferential tariff treatment. By incorporating this process into their operations, Canadian exporters will be able to price their products more competitively and appeal to foreign buyers.

A comprehensive agreement for service suppliers

While tariff reductions are often the first thing that comes to mind when discussing the benefits of the Agreement (and other FTAs, in general), they are not the only way the CPTPP helps Canadian businesses compete abroad. Many Canadian businesses do not realize that this comprehensive Agreement also benefits service suppliers who are looking to diversify to CPTPP markets. In fact, a survey of Canadian small and medium‑sized enterprises revealed that many Canadians active in the service sector are not aware that free trade agreements apply to them. Service suppliers can benefit from more predictable access and greater transparency in CPTPP markets because of the obligations negotiated and agreed upon by the CPTPP countries.

CPTPP toolkit

Businesses that have supplied services to another country may know from experience that sending personnel to a market is often cumbersome. The temporary entry obligations within the CPTPP eliminate many barriers encountered at the border (e.g. economic needs tests) to facilitate business travel or relocation on a temporary basis for specific categories of business persons. Many aspects of the CPTPP are generally unknown to Canadian businesses. For more information on key CPTPP benefits such as the cross-border trade in services, temporary entry, government procurement, and investment, read the Guide for Canadian companies: How the CPTPP can help your business grow in the Asia‑Pacific.

Beefing up Canada’s market share

Canadians are already benefitting from the CPTPP. Canadian beef exports to Japan are a prime example of early success. As a result of the CPTPP, Japanese tariffs on fresh, chilled and frozen beef of 38.5%, as well as tariffs of up to 50% on certain offal, will be progressively reduced to 9% within 15 years of entry into force. In the first ten months since the CPTPP entered into force, Canadian beef exports saw an increase of 69% in value, and 58% in quantity when compared to the same period in 2018. Considering that 40% of Canadian beef is exported internationally and that Japan is Canada’s second largest beef export market, this is a big deal for Canadian producers and exporters.

According to the President of Canada Beef, Michael Young, Japan is not only a growing and reliable market, but also one of the best long‑term markets for Canadian beef producers and exporters. Since the entry of the CPTPP, he has observed that Japanese clients have been diversifying their orders and trying additional cuts of Canadian beef.

Thanks to the CPTPP, Canadian beef exporters are now able to compete on a level playing field in the Japanese market against imports that were already benefitting from preferential treatment, such as through the Japan–Australia FTA. This success is largely due to a combination of CPTPP tariff cuts and active and ongoing in‑market promotion.

Enabling competitive prices for award‑winning products

Japan is just one of the markets made more accessible by the CPTPP. For HUDSON Boat Works, an Ontario‑based employer of close to 90 people, the Agreement has also opened up new opportunities in Australia and New Zealand. The company manufactures world‑class rowing shells, which have contributed to 88 medals at the Olympics and World Rowing Championships. 85% of their boats are sold to buyers outside of Canada. According to HUDSON Boat Works Operations Manager Glen Burston, the company is able to leverage a 5% tariff reduction on Australian and New Zealand imports of its products, helping to make his company more competitive internationally.

Contact the Trade Commissioner Service

As CPTPP enters its second year, Canada’s Trade Commissioner Service (TCS) offers a variety of funding programs to help more Canadians take advantage of the favourable business environment this agreement creates in designated Asia‑Pacific markets.

The CanExport SMEs program provides up to $75,000 to help Canadian small and medium‑sized enterprises export their product or service to new international markets. The program assumes as much as 75% of costs for a variety of export marketing activities such as: business travel; participation in trade events; market research; intellectual property protection; and expert advice on business, legal or tax matters.

Since 2016, CanExport SMEs has distributed more than $67.5 million in funding to over 2,200 SME‑led projects across Canada, including over $4.7 million to 163 projects targeting CPTPP markets so far in 2019.

If your business sees opportunity in CPTPP markets, the TCS is here to assist, offering funding and support programs free‑of‑charge in 161 locations around the world, including the Asia‑Pacific.

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