CETA – So What?

CETA (the Comprehensive Economic and Trade Agreement) will radically change trade between Canada and the EU. (And yes, the UK is still a member of the EU for at least another 2 years…) So who cares? Well, the Swedish Ambassador to Canada for one. Per Sjögren explained to me at a recent Kanata North event that, while Canada was not a huge export destination, his countrymen were very keen to take advantage of the drop in tariffs to establish a North American beachhead in Canada for clothing to furniture and everything in between. So what are Ottawa Companies going to do?

What is new?

The rules of engagement have significantly changed. This is the time to scope out the $17 trillion, 28-country EU market with 500 million citizens. Canada already sells over $49B worth of goods and services to EU countries and this is expected to increase by $10B in the coming years. CETA should be fully implemented within 2 years. Will you be ready?

Opportunity

Anytime there is a market change or disruption, it creates opportunities. The benefits from those opportunities usually accrue to the first movers. This is an excellent time to leverage your Canadian Brand power and expand in Europe.

Tariff Elimination

CETA calls for the elimination of tariffs on almost 99% of the goods and services Canada sells to EU countries. Today those tariffs range up to 22%. Some examples of today’s rates:

  • Processed foods and beverages (including Maple Syrup) – up to 8%
  • Construction equipment, rail products, medical devices – up to 22%
  • Auto Parts – up to 4.5%
  • Resins, plastic packaging, floor coverings 5% to 7%
  • ICT products – up to 14%

All of these will drop to 0% affecting almost every commodity.

Services

And if you are a services company, there is good news for you too. CETA provides easy access for consultants and service providers to work on projects in the EU for up to 12 months at a time.

Government Contracts

Canadian companies will now have equal access to EU government procurement opportunities. Of course the flip side to this is that EU companies will have access to Canadian governments’ purchasing opportunities as well so be sure to protect your Canadian base.

Some questions to answer

How big is your addressable EU market? How can it be segmented? Who else serves it? What trends are in play? How do they buy now? What is the best market position? What is the best channel to address it? How should I communicate with that market? What will my ROI be? How do I mitigate risk?

 

a-penny

 

Andrew Penny is President of Kingsford Consulting Ltd, an advisory firm based in Ottawa focusing on channels and growth. Kingsford has worked with hundreds of companies including manufacturers, service providers, distributors, dealers, re-sellers, VARs and retailers. Some local clients include LightSpeed Retail, the National Research Council, Industry Canada, You-I TV and Morbern. Andrew Chairs the Ottawa Chamber of Commerce’s Economic Development Committee and is an advisor to the Telfer School of Business’ MBA and EMBA programs.

 

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