CETA: What does the Canada-EU trade deal mean for your business?
Since the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union came into effect in 2017, it has had a major impact on Canadian business owners. Under CETA, 98% of Canadian goods are allowed to enter the EU duty-free. Gone are customs duties that were as high as 25%.
CETA also abolished many non-tariff barriers, such as rules of origin, import quotas and other technical barriers to trading with one of the world’s largest economies.
The agreement makes it easier for Canadian entrepreneurs to reach over half a billion new consumers.
Here’s an overview of what CETA means for your business.
1. What is CETA?
The Canada-EU Comprehensive Economic and Trade Agreement came into effect on September 21, 2017. Its main benefit for Canadian entrepreneurs is the significant reduction of tariffs on Canadian exports to the EU.
Before CETA, only one in four Canadian products exported to the EU was duty-free. After CETA came into effect, Canadian merchandise exports to the EU increased by 16.6%, or $6.6 billion annually, to an average of $46.6 billion per year, according to Global Affairs Canada.
Beyond tariffs, CETA also covers
- Rules of origin: Canadian exporters benefit from preferential tariff treatment for products that are “made in Canada.”
- Red tape: Procedures for the release of goods have been simplified. Goods can be released at the first point of arrival, and documentation requirements for low-values goods have been streamlined.
- Government procurement: CETA gives Canadian businesses access to European government contracts at all levels, creating new opportunities with regional and local governments.
- Increased mobility for company employees: CETA makes it easier for Canadian skilled professionals to work temporarily in the EU.
- Direct investment: CETA’s direct investment rules guarantee Canadian investors secure access to the EU. This should be of interest to the energy, mining and manufacturing sectors as well as financial services, automotive vehicles, aerospace, transportation, business services and professional services.
2. How does CETA affect Canadian entrepreneurs?
CETA has given a boost for businesses in the food and agricultural market, where Canada already has a strong international reputation. For instance, EU tariffs on frozen lobster and frozen crab have been removed under CETA, benefitting seafood exporters.
Food exports, such as sugar and confectionary, cereals and seafood, have seen some the highest CETA utilization rates. (As households in Europe spend comparatively more of their income on food than ones in America, Canadian food exporters have found increased opportunities there.
According to Export Development Canada, CETA has provided opportunities for businesses in these other sectors as well:
- high-tech manufacturing, such as electronic components, instrumentation and navigational equipment
- building materials, lumber and paper products
- industrial machinery and parts
- metal products, chemicals and plastics
For more information about industry-specific opportunities in key sectors, please consult Global Affairs Canada.
When CETA came into effect, around 98% of tariffs on all non-agricultural Canadian goods exported to the EU were eliminated.
Since then, eight out of ten provinces have increased their exports to the EU, except for Saskatchewan and Manitoba. Nine out of ten provinces have also imported more from the EU, except for Newfound and Labrador.
3. Will service providers have better access to the EU market?
Under CETA, Canadian services exporters are treated the same way as those from the EU, and vice-versa.
Service exporters benefit from the ability to bid on EU government procurement contracts. This means that Canadian companies in the fields of architecture, construction, environmental services, technology, marketing consulting and research and development, amongst others, have access to a three-trillion-euro (C$4.6 trillion) market.
However, European companies can also bid on Canadian government procurement contracts as well, making the market more competitive.
4. How do I know what tariff will be levied on my export?
You can use the Canada Tariff Finder tool to identify what tariff will be levied on your export. You can also ask the Canadian Trade Commissioner Service for information on specific products and services.
5. How does CETA affect labour mobility and professional qualifications?
CETA streamlines entry and visa procedures to make it easier for Canadians to do business in the EU and for Canadian companies to hire EU professionals. There are no import quotas on services or service providers, and business visitors can enter without work permits for investment purposes.
In addition, Canadian service companies no longer have to maintain a representative office in the EU to supply services to EU customers. This is especially helpful for smaller companies that lack the resources to establish permanent offices overseas.
Finally, the agreement provides a framework for professional orders and organizations in both markets to work out qualification equivalencies. This makes it easier for all parties to accept these standards and certifications.
6. How can Canadian business owners learn more about CETA?
You can learn more on Export Development Canada and Global Affairs Canada’s dedicated CETA website. If your business is considering an expansion, the Trade Commissioner Service also has a guide for Canadian businesses exporting to the EU.
BDC experts can also help you gear up to gain the maximum benefit from your export project.