Canadian companies are not making the most of CETA, and Canada’s imports are rising faster than exports. If Canadian businesses don’t take full advantage of CETA, hopes for meaningful economic growth may be dashed, a CBC analysis said.
The Comprehensive Economic and Trade Agreement (CETA) is a free-trade agreement between Canada, the European Union and its member states. It has been provisionally applied, so the treaty has eliminated 98 per cent of the tariffs between Canada and the EU. CETA cuts tariffs and makes it easier to export goods and services, benefitting businesses in both the EU and Canada.
According to reports, early data suggest European businesses may have been faster to capitalise on CETA than Canadian ones. Canadian imports from the EU are increasing. Similarly, Canada’s biggest market in the EU is the United Kingdom; however, due to BREXIT related uncertainties, there are some issues there which seem to be hindering Canada’s growth story.
European Exports Take Early Lead
European import growth to Canada has exceeded global import growth; however, the growth of Canadian exports is lower than global export growth. However, more imports from Europe are not a negative thing for Canadian trade. Consumers can enjoy more choice, lower prices, now that duties have been cut. And Canadian businesses that use European suppliers may become more competitive.
There are other reasons too. For example, beef and pork both of which are Canada’s export products are not going into Europe due to on-going scientific reviews and food safety reviews.
The European ratification process to finalise the full deal is still underway, with some countries, like Italy, again voicing concerns. Some Canadian businesses might hesitate to make a significant European gambit as a result.
The way Canadian companies approach expansion could also be a reason, some experts said.
[pullquote align=”normal” cite=”Jason Langrish, Executive Director, Canada Europe Roundtable for Business”]Canada talks a lot about diversification, but only a small number of Canadian businesses are truly global operators. By contrast, the Europeans are “hunters” when it comes to finding new markets.[/pullquote]
“We remain a fairly parochial place in the business world,” he said. “Policymakers have been wringing their hands for years.”
One of CETA’s goals was to penetrate new European markets beyond Canada’s traditional trading relationship with the U.K. Canadian companies can hope to reap benefits soon if they step up their game.
Experts hope to see positive changes from various sectors and an increase in exports of Canadian products to different member countries of the EU. The Trump administration’s view of free trade with other countries is also expected to help Canadian exports.