CETA – Canada’s trade with Europe one year later

It’s a great tool for Canadian businesses to expand their export markets as well as their supplier base

Signed in October 2016, CETA, the Comprehensive Economic and Trade Agreement between Canada and the European Union has now been in effect a year, as it was provisionally implemented on September 21st, 2017.

Most of its provisions are in effect since that date, particularly the reduction of tariffs or Customs duties, the opening of government procurement, the mutual recognition of standards and the facilitation of the movement of professionals. It’s a great tool for Canadian businesses to expand their export markets as well as their supplier base, thereby lessening our dependence on the United States.

While its overall impact, particularly on services and investment is hard to measure at this relatively early stage, looking at our statistics on the trade of goods with the EU should tell us how popular CETA is with Canadian exporters. There are different ways to calculate exports but the figures commonly quoted by Global Affairs Canada indicate European exporters have been faster than us, as up to July 2018, Canadian exports to the EU have grown by a mere one per cent while our imports from the EU have increased by a whopping 12 per cent.

Of course, Canadian businesses have their eyes riveted on what’s happening with NAFTA, since so much of our trade is with the U.S. and this explains why they have not yet rushed to the conquest of the European market. Ironically, for European businesses, the Canadian market is small but still has good potential, as we are so close to the huge U.S. market.

Whatever the reason for the current imbalance, it is interesting to look at what’s happening at the individual country level. Canadian exports to the UK, by far our first European market, were down three per cent, as we exported $15.240 billion worth of goods there from September 2017 to July 2018, compared to $15.789 the year before. Exports to our third European market, France, were down eight per cent from $3.085 billion to $2.827 billion and to Belgium down five per cent from $2.674 billion to $2.537 billion.

On the plus side of the ledger, exports to our second European market, Germany, were up six per cent, from $3.358 billion to $3.556 billion. Exports to the Netherlands were up 23 per cent from $2.420 billion to $2.965 billion, and those to Italy climbed by 19 per cent from $2.120 billion to $2.536 billion.

Canadian exports with notable growth included aluminum, automobile parts, chemicals, cranberries, and maple syrup. Most of these products are exported by ocean and the Port of Montréal, Canada’s gateway to Europe, reported a four per cent growth in its European container traffic from January to August 2018 versus the same period in 2017.

As to CETA’s final implementation, twelve European countries out of 28 have ratified it, the latest one being Austria in June 2018. The process continues, albeit slowly. Its only provisions that are pending final ratification of all EU member parliaments concern investor-state dispute settlement and portfolio investment.

Meantime, trade remains wide open under CETA’s provisional implementation and our exporters should bring Europe closer to the top of their agenda.