Article: CETA & Manufacturing – unlocking Europe’s potential in Canada

What does CETA mean for the thousands of EU manufacturers, many of which are small to medium-sized enterprises? In Spain, CETA’s labour mobility provisions make it easier for Hiperbaric’s workers to install and maintain their High Pressure Processing (HPP) equipment for the Canadian food industry. Faster customs procedures helps Finland’s Framery increase their Canadian sales of soundproof pods by 50% since 2014. Furthermore, tariff reductions come as a general boon for many European exports: from Estonia’s pianos to Poland’s yachts to Italy’s ties. This shows that CETA is working on a massive scale across Europe’s industries.

While the EU-28’s manufacturing output was a staggering 900+ billion EUR in 2017, Canada’s manufacturing market is approximately 134 billion EUR[1]. Nonetheless, Canada is a highly promising and vibrant market for manufactured European goods.

In 2017, EU manufactured exports to Canada totalled over 30 billion EUR, representing a trade surplus of approximately 17.5 billion EUR.[2]

EU-Canada: Trade in goods [3]

Trade in goods 2015-2017, € billions
Year EU imports EU exports Balance
2015 28.0 35.1  7.1
2016 29.2 35.2 6.1
2017 31.4 37.7 6.3

Manufactured products account for nearly 80% of the EU’s goods exports into Canada.

 

So how exactly will CETA benefit the EU’s manufacturers?

  1. Removal of customs duties and tariffs

Thanks to an across-the-board, 99% elimination of tariffs, EU manufactures will become cheaper and much more competitive in the Canadian market.

For Dr. Indrek Laul, owner of Estonia Pianos, ”The EU-Canada agreement will help to lower the cost of Estonia Pianos for Canadian consumers by around 7%. That makes us more competitive compared to makers from Asia.”  [4]

 

  1. Overcoming technical barriers to trade

Different regulations in the target market are often a hassle for exporters. CETA eases the red tape for European manufacturers, through its Conformity Assessment Protocol. Under these new measures, EU conformity bodies will be able to certify EU exports according to Canadian rules, therefore avoiding double-testing in Canada, both reducing costs for EU manufacturers and the time their products take to reach the market.

The EU’s electrical equipment and appliance, construction products and machinery manufacturers, among others, are those who will benefit from these reduced technical barriers into the Canadian market.

For the EU’s car and auto parts makers, Canada has agreed to recognize UN-ECE standards as part of its CETA commitments, which the EU currently uses, thereby reducing the barriers that the EU’s auto industry faces in Canada.[5]

 

  1. A new opportunity: government procurement

In 2014, Fronius Canada Ltd., an Austrian photovoltaics manufacturer and subsidiary,  equipped up to 350 public schools in Toronto with its string inverter technology. Thanks to CETA, EU manufacturers can now bid for Canadian government contracts on the federal, provincial and municipal levels, from across the Atlantic, without even having a physical establishment in Canada.[6]

To EU manufacturers: somewhere in Canada is a school, a hospital, a police force and a government building that could use your goods today!

The statistics are already showing the Canadian market’s new potential. Since CETA’s provisional implementation in September 2017, EU manufacturing exports to Canada are on a major uptick. Exports of machinery and transport equipment, which represent approximately 53% of all EU manufactured exports to Canada, [7] have increased by 14.2% and 15.5% respectively, between the periods of October 2017 to July 2018 from October 2016 to July 2017.[8]

Carole Tonello, from Spain’s Hiperbaric, is confident that: “CETA makes us more competitive in Canada and makes it easier for us to expand into the Canadian market. It allows us to rival our main competitor, a US multinational. Trade agreements are good for smaller companies like us, as we can now compete on an equal footing with large firms that have more resources to overcome the barriers to reaching foreign markets.”[9]

 

Thanks to CETA, the current and future opportunities for the EU’s manufacturers in Canada have never been greater, particularly for SMEs. For more resources, European manufacturers can look into upcoming trade fairs in Canada to secure partnerships and increase their visibility in this growing market under CETA.

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The CETA Market Access Program for EU Business is an EU funded project to help European companies to fully benefit from free trade agreement between the EU and Canada. The Program collaborates with the European Union Chamber of Commerce in Canada, which hosts the Program’s webpage. Please visit the Program’s YouTube page for EU business success stories and get in touch with the Program Team via email at: ceta.market.access@development-solutions.eu

 

[1] Canadian Manufacturing Sector Gateway, Government of Canada (2019): www.ic.gc.ca/eic/site/mfg-fab.nsf/eng/home

[2] Country Factsheet: Canada, European Commission (2018): https://webgate.ec.europa.eu/isdb_results/factsheets/country/details_canada_en.pdf

[3] Trade, Canada, European Commission (2018): http://ec.europa.eu/trade/policy/countries-and-regions/countries/canada/

[4] Exporters’ Stories,  Estonia Pianos, European Commission (2018): http://ec.europa.eu/trade/trade-policy-and-you/in-focus/exporters-stories/estonian-pianos-estonia/

[5] CETA – Summary of the final negotiating results, European Commission (2014): https://trade.ec.europa.eu/doclib/docs/2014/december/tradoc_152982.pdf

[6] Guide to CETA, European Commission (2017): http://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156062.pdf

[7] Country Factsheet: Canada, European Commission (2018): https://webgate.ec.europa.eu/isdb_results/factsheets/country/details_canada_en.pdf

[8] “CETA benefits already visible a year after its entry into force,” Government of Canada (2018): www.international.gc.ca/gac-amc/campaign-campagne/ceta-aecg/year_one-premiere_annee.aspx?lang=eng#toc2

[9] Exporters’ Stories,  Hiperbaric, European Commission (2018): http://ec.europa.eu/trade/trade-policy-and-you/in-focus/exporters-stories/spanish-pressure-hiperbaric/