Opportunities and Benefits of CETA for Canada’s Automotive Exporters
Why export to the EU?
Significant Market: The EU is the world’s second largest importer of automotive goods after the United States, with imports totalling $175 billion in 2018. The EU accounts for 11% of the world’s imports of automotive goods.
Real opportunities now and in the future: The European automotive industry is the single largest R&D investor in the EU with $57 billion in R&D in outlays annually.*EU commission, 2019
How does CETA benefit Canadian automotive sector exporters?
Under CETA, EU tariffs have been eliminated on all Canadian auto parts.
Tariffs have also been eliminated on some vehicles such as tractors and fire-fighting vehicles. Tariffs on all remaining types of vehicles will be phased out over the following 7 years.
CETA allows Canada to export up to 100,000 vehicles annually to the EU under more liberal rules of origin.
Canadian automotive companies also benefit from improved labour mobility provisions and expanded access to EU government procurement opportunities.
CETA allows the export of some Canadian automobiles under more liberal rules of origin that reflect Canadian supply chains and production patterns. The agreement includes an annual origin quota under which up to 100,000 Canadian automobiles that contain a value-added of 30% (transaction value method) or 20% (net cost method) will be eligible for preferential tariff treatment when exported to the EU.
CETA provisions make it easier for short-term business visitors, intra-company transferees, investors, contract service suppliers, and independent professionals to conduct business in many EU Member States.
This may include entry without the requirement of a work permit for 90 days in any six-month period for any of the following activities: meetings or consultations, research and design, marketing research, training seminars, trade fairs and exhibitions, sales, purchasing, after-sales or after-lease service, commercial transactions, translation and interpretation (some conditions apply in some Members States).
Under CETA, Canada gains new access at the sub-central level (regions and municipalities), to procurement by local contracting authorities, as well as bodies governed by public law (e.g. hospitals, schools, academic institutions).
CETA gives Canada 100% access EU public transport contracts while retaining the right for Ontario and Quebec to maintain a minimum local value requirement on the procurement of mass transit vehicles.
Non-CETA related factors to keep in mind when exporting automotive products to the EU
Prior to exporting to the EU, Canadian companies should become familiar with the relevant certification standards adopted by the local automotive industry. For example, German OEMs use the VDA 6.3 quality audit for production part procurement.
Top 5 Suppliers of Automotive Products to the EU
% of Import Market Share
Source: Eurostat (2018)
Under CETA, Canadian exporters of automotive products and services can now enjoy the advantages created by the agreement over competitors based in countries that do not have a preferential trade agreement in force with the EU.
For more detail on how CETA benefits your company, contact a Trade Commissioner today.