Canada-EU CETA trade agreement opens doors on both sides of the Atlantic

Canada EU CETA

It was 4 years in the making, and the timing of the signing of the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA) in the light of the protectionist approach being promoted by the new Donald Trump administration should not be overlooked.  The timing for business expansion into new markets may be just right for you.

Yes, the USA is Canada’s biggest trading partner by far.  However, will October 2016 represent a milestone in Canada’s trade and investment relationships with the EU, or will the potential unraveling of the EU itself put a dampener on the agreement?  Only time will tell.  However, the potential tightening of relationships between Canada and Europe may have come at an opportune time.

With the Trump Administration’s strategy on trade (see what he has already done with TPP, and is talking in similar tones about NAFTA) likely to mirror his overall “put America first” approach, Canada and Europe would consider looking after their own interests first as well.  After all, if they don’t, Trump will likely create a changed playing field whether they like it or not.  So, “control your own destiny” is a rather pragmatic way for both partners in this agreement to focus on.  Business expansion into North America from Europe may be perfect to implement by using Canada as your base and “kick-off” point.

Business expansion via Canada

CETA is seen as a progressive trade agreement that, when implemented, will generate billions of dollars in bilateral trade and investment, provide greater choice and lower prices to consumers, and create middle class jobs in many sectors on both sides of the Atlantic.   In principle, from a Canadian perspective (time will tell if reality can match intent), these are some of the highlights of the agreement:

• CETA will provide Canada with access to the EU’s more than 500 million consumers.  This 28 country market generates $20 trillion in annual economic activity.
• The elimination of EU tariffs will assist sectors in every region of Canada, including advanced manufacturing, agriculture and agri-food, automotive, chemicals and plastics, fish and seafood, forestry and value-added wood products, metal and mineral products and technology.
• Canadian producers, manufacturers and exporters will have greater opportunities to export to the European Union (EU).  It will provide greater choice and lower prices to consumers, and create jobs in many sectors on both sides of the Atlantic.
• Currently, only about 25 per cent of EU tariff lines on which Canadian goods are exported enter the EU duty-free. On day one of CETA’s entry into force, 98 per cent of EU tariff lines will be duty-free for goods that originate in Canada. Another one per cent will be eliminated over a period of up to seven years. Once CETA is fully implemented, 99 per cent of EU tariff lines will be duty-free.  Canadian goods that face tariffs will become more competitive in the EU market, giving Canadian exporters an advantage over other exporters. It will also allow Canadian exporters to create new markets for their goods in the EU.
• Cost savings may also be achieved for businesses through CETA commitments on customs and trade facilitation, which are aimed at reducing processing times at the border and making the movement of goods cheaper, faster, more predictable and efficient.
• The Protocol on Conformity Assessment is designed to allow Canadian producers in certain sectors to have their products tested and certified for the EU market right here in Canada. This protocol is expected to reduce testing and certification costs and associated delays for manufacturers.
• CETA gives Canadian service providers greater market access than the EU has ever granted to any of its trade partners.
• The EU is the largest importer of services in the world.  Management, financial, and information and communications technology services are among the EU’s top services imports, and are also among Canada’s top services exports to the EU. Once CETA enters into force, Canadian services exporters will be treated the same way as those from the EU (with certain exceptions). Canadian services exporters will enjoy better predictability and transparency in a large number of service sectors, including architectural, engineering, and research and development services. Any future regulatory or legal changes which make it easier for Canadian service suppliers to access the EU market will automatically be locked in under CETA. The EU will also treat Canadian service suppliers no less favourably than it treats service suppliers from its existing or future free trade agreement partners.
• CETA’s chapter on temporary entry addresses administrative requirements at the border such as labour market tests or other numerical limitations that can impose time delays and administrative costs on prospective business employees entering Canada or the EU. A large number of EU Member States have improved their commitments for Canadian professionals such as architects and computer analysts, short-term business visitors, investors and technologists compared to the level of access granted by the EU to its recent trading partners.
• CETA establishes a streamlined process for the recognition of foreign qualifications in certain sectors, and a detailed framework through which regulators or professional organizations may negotiate mutual recognition agreements for other professions.
• Under CETA, Canada will gain new access to opportunities in EU regions and municipalities. That means access to procurement contracts offered by local government and public utilities in the areas of gas, electricity, heat and water distribution as well as the urban transit and rail sectors throughout the EU.

So, what can we really look forward to?  There will be a period of finding out whether this agreement can really take hold.  The more it is tested the sooner we will get the answer.  However, many parties on both sides of the Atlantic will likely look very favourably at this burgeoning relationship, and may find that they have worthwhile partners upon which to build a stronger trading relationship than ever before.  Like they say: Timing is Everything.  And the time is upon us now to see whether the brave and the bold can take advantage in this ever changing world!

Business expansion – can you do this on your own?

Well, you don’t need to. Mastermind Solutions can certainly open doors and help you expand your business on both sides of the Atlantic to enable you to launch efficiently and cost-effectively.  We are well positioned to facilitate your expansion with hands-on, on-the-ground resources.  Government advice only takes you so far – having a partner on the ground in your target jurisdiction allows you to get things done fast and properly by cutting through the red tape.  Use us as your local representatives to create a soft landing in the new market.

Contact Us or complete the form to find out more OR to get things started.