But USMCA is not the only major deal to play a role in reshaping trade for Canada. First conceived as long ago as 2007, the Comprehensive Economic and Trade Agreement (CETA) was designed to cut 98% of tariffs between Canada and the EU – amounting to expected savings of €590 million per year.1
Provisional application of CETA began on 21 September 2017,2 and the treaty has now been ratified by Canada and by a number of individual EU Member States. While tariff cuts are a major feature of the treaty, other key elements likely to benefit Canadian business include:
The implications of CETA vary across different industries. Some of the sectors already seeing the benefits include:
While CETA is not yet fully in force, figures published last year by the Government of Canada showed that the treaty was already beginning to deliver results. Between Q4 2017 and Q2 2018, two-way trade of goods and services was up 6.1% year-on-year to $110.6 billion.12 Much of this was the result of greater goods and services imports from the EU, with Canada importing $63.8 billion – 10.3% more than in the same period before CETA. The ability to import goods at lower prices comes as an advantage for Canadian businesses importing from European suppliers. For Canadian exports, progress has been slower with an 0.7% increase overall.13 That said, Canadian services exports to the EU increased by 4.8%14 to $13.3 billion between Q4 2017 and Q2 2018. Meanwhile, data from Global Affairs indicates that exports to EU countries excluding the UK have risen by 6.9%,15 suggesting that CETA is already playing a role in diversifying Canada’s trading relationships into additional EU markets. And certain goods have seen significant growth – such as aluminum exports, which have grown by 206%.
It is likely that more Canadian firms will seek to take advantage of the treaty in the coming years. Indeed, figures from TNS Kantar indicate that 42% of Canadian firms expect that CETA will have a positive effect on their businesses.16
Given the provisions of the treaty, companies across many sectors will be able to compete increasingly effectively with companies from markets which do not benefit from a similar trade agreement with the EU. This will give Canadian businesses the opportunity to export into a greater number of EU countries than in the past. Businesses also have much to gain as a result of new labour mobility provisions and the ability to bid on public procurement contracts.
Daniel Leslie, Senior Vice President, Head of Client Coverage & Deputy Head of Commercial Banking, HSBC Bank Canada, explains the relevance of the deal: “I see it as an extremely important trade agreement for Canada and the European Union. Consistently what we see is companies that do business abroad and internationally grow faster than other companies that maintain a domestic presence.”
With a distinct network in Europe, HSBC is committed to supporting Canadian firms as they seek to harness these opportunities for growth:
To learn more about how HSBC Bank Canada can support your expansion into European or other markets, please speak with your Relationship Manager today.
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Issued by HSBC Bank Canada ("HSBC")