Canada-EU free trade agreement provides stability and opportunities for businesses on both sides of Atlantic
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) provisionally entered into force in September 2017. A new report from Global Affairs Canada says that Canada-EU merchandise trade in the 2018 to 2019 fiscal year grew by 21% compared to 2016, the last full year before CETA became applicable. That’s good news for businesses, workers and families on both sides of the Atlantic.
It’s safe to say that CETA—one of Canada’s most ambitious and progressive trade agreements—has benefited Canadian businesses from coast to coast to coast by giving increased access to diverse and lucrative European markets.
Canada is a trading nation. Before the pandemic, trade accounted for nearly two thirds of the country’s economy and supported approximately 3.3 million jobs. Canada remains the only G7 country with a free trade agreement with all other G7 countries. And our 14 free trade agreements with 51 countries open the door to more than 1.5 billion people worldwide.
Since CETA came into force on September 21, 2017, the majority of Canada’s provinces and territories have increased their exports to the EU. In fact, New Brunswick and Newfoundland and Labrador have actually doubled their pre-CETA numbers.
These are just some of the findings from Canada’s Merchandise Trade Performance with the EU after the Entry into Force of CETA, a report released by the Office of the Chief Economist of Global Affairs Canada.
The report provides historical comparisons of trade performances before and after CETA’s entry into force and paints a picture of how the agreement has helped to strengthen economic relations and promote new economic opportunities for Canadians and Europeans alike.
For starters, the report showed that in 2018, the first full year of CETA’s implementation, Canada’s trade in merchandise with the EU totalled $118.6 billion. That was an increase of nearly 10% over 2017 and of more than 17% over 2016.
The second year CETA was in force, merchandise trade grew an additional 6% to reach $125.7 billion.
That translates to thousands of good middle-class jobs and countless opportunities for Canadian businesses, entrepreneurs and exporters.
And with the Canadian Trade Commissioner Service, Canada’s exporters have access to tailored expertise, networking and on-the-ground support.
When Vancouver, British Columbia-based Steamworks Brewing Company began exporting beer to Europe in 2015, owner Eli Gershkovitch says the company—and Canadian beer in general—was treated as an unknown curiosity by European markets.
“The attitude back then was that European beer was, of course, superior to all other beers and, in particular, North American beers,” he says. “Since the introduction of CETA, we’re not so much a curiosity. We are part of the club now. They want to trade with us. We are now treated equally.”
While Steamworks had managed to tap into the European beer market 2 years before the entry into force of CETA, the benefits of CETA—namely, the elimination of tariffs on beer—were a huge boost to the company’s bottom line, helping to expand its sales in Germany, Austria, Switzerland and Italy.
And despite the significant global changes of the last few months, the report shows that the EU remains one of Canada’s most valued trading partners.
The report highlights some of CETA’s benefits:
- Canadian goods became more attractive because CETA helped to make them more affordable, especially those products whose tariffs were reduced by the biggest amounts, including aluminum (exports up 161%), plastics and articles (up 69%), motor vehicles and parts (up 51%), electronics (up 32%) and machinery (up 24%);
- Canadian exports are expanding in markets within the EU by taking advantage of the CETA preferences rather than having to pay most-favoured-nation tariffs (the standard tariffs applied to all imports); Latvia, Ireland and Italy bought more Canadian products, including aircraft (and parts), mineral fuels and oils, cereals and pharmaceutical products;
- Canadians bought more Belgian organic chemicals, motor vehicles and parts, French aircraft and German and Italian machinery.
And now more than ever, critical supply chains must remain open. Trade agreements like CETA help Canadian businesses protect themselves from shocks by diversifying their markets and establishing new opportunities.
Such agreements are also essential in helping EU and Canadian researchers fight the pandemic with countermeasures, vaccines, therapeutics and diagnostics.
Not to mention Canadian companies that are fighting the pandemic in other ways, such as Montréal, Quebec-based Hexoskin, whose “smart shirts” are attracting interest from around the world. Not only are they helping hospitals in Italy monitor COVID-19 patients, but top Spanish soccer team FC Barcelona uses them to study how sleep affects the performance of young athletes while climbers scaling Everest use them to monitor how the body performs with diminished oxygen supplies
Furthermore, Europe is placing a priority on the environment under the European Green Deal, and as the world looks to the future, CETA will open even more doors to innovative Canadian businesses specializing in clean, technology and the reduction of greenhouse gas emissions.
CETA also paves the way for transportation, insurance and communications-related industries: it increased trade in Canada-EU services nearly 8% over pre-CETA levels.
CETA benefits a broad cross-section of Canadian small and medium-sized enterprises (SMEs). In fact, the number of SMEs that recorded exports to the EU grew by 6% in fiscal year 2018 to 2019 compared to 2016 to 2017. That means more access to bigger markets for businesses owned by women, Indigenous peoples, young people, LGBTQ2 people, and other underrepresented entrepreneurs.
Despite CETA’s successes, challenges remain. This includes non-tariff barriers posed by EU regulations in agriculture and food. CETA positions Canada to engage with EU regulatory and trade officials and seek solutions on matters ranging from meat inspection protocols to crop protection products, to Italy’s mandatory country-of-origin labelling aimed at the durum wheat used in pasta production.
While Canada continues work to resolve non-tariff barriers, Canadians benefit greatly from CETA: our consumers have a wider choice of products from the EU, and our farmers, processors and exporters are bringing more Canada—duty-free—to more than half-a-billion European consumers.
As the world slowly recovers, this will be more important than ever for Canadian and European business looking to diversify and open more doors to profitable, long-term relationships.
So the next time you raise a glass of your favourite Canadian or European spirits you can thank CETA for bringing Canada and Europe a little closer and making life a little sweeter—and safer—on both sides of the Atlantic.
Interested in exporting to the EU? The Canadian Trade Commissioner Service has the connections, resources and expertise to help Canadian businesses open doors to markets in 161 countries worldwide.
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