CETA will add billions to Canada’s goods exports to Europe, but…

Ottawa – Canada’s trade agreement with Europe will see the country’s goods exports grow exponentially.

According to a new publication from the Conference Board of Canada, the reduced tariffs that are part of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) will see Canada’s goods exports grow by $1.4 billion by 2022.

The publication is called Stronger Ties: CETA Tariff Elimination and the Impact on Canadian Exports.

Danielle Goldfarb, associate director of Global Commerce Centre, which produced the research, says the removal of tariffs is only one part of CETA – but they’re often the most visible feature of any trade agreement.

She warns that companies and industries in Canada can’t sit back and wait for the tariffs on their own to boost sales.

“The greater gains from CETA are likely to come from the reduction of non-tariff barriers and liberalization of services trade,” says Goldfarb.

“Those companies that proactively innovate and adapt their offerings for the huge EU market will get much more out of the deal.”

Here are some highlights from the report:

• Despite its recent economic troubles, including the deepening financial crisis in Greece, the EU is a more than $17 trillion market with high income customers.

• Eliminating duties under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) will result in about $1.4 billion being added to Canada’s merchandise exports to the EU by 2022.

• The potential gains available to Canadian firms extend beyond elimination of tariffs, to the reduction of non-tariff barriers and liberalization of services trade and investment.

• To take full advantage of CETA, Canadian companies will need to seek out opportunities and adapt their offerings to the highly competitive EU market.

The Conference Board says Canada’s merchandise exports to the EU totalled about $33 billion in 2013. Precious stones and metals (including pearls, coins and jewelry) accounted for about $10 billion of this total.

Canadian companies already pay relatively low tariffs on exports to the EU. However, tariffs remain high in sectors such as food, beverages and tobacco (9 per cent), motor vehicles and parts (6.5 per cent) sectors, agriculture (almost 5 per cent, and chemicals, rubber, and plastics (almost 5 per cent).

Not surprisingly, these sectors are expected to benefit the most from these (all figures are in 2007 dollars). For example:

• Agriculture: from $79 million in 2016 to $149 million in 2022.

• Food, beverage and tobacco: from $44 million in 2016 to $106 million in 2022.

The elimination of tariffs is only one component of CETA. Non-tariff barriers, such as regulations, product-testing, labelling requirements and certification requirements, can be even more restrictive on Canada-EU trade and investment than tariffs themselves.

In another report, For Innovators Only: Canadian Companies’ EU Export Experience, the Conference Board says companies find success in the EU when they introduce new products constantly, and tweak their offerings for different markets within the region.

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