FIVE THINGS ONTARIO BUSINESSES NEED TO KNOW ABOUT THE CANADA – EU TRADE DEAL

This OCC Rapid Policy Update presents the top takeaways from the discussion.

1. CETA is not a done deal… yet

The timing for the CETA’s implementation is still unknown, though most experts agree that the deal is at least half a year away from implementation. While there is an agreement in principle between Canada and the EU, there is much left to do before the deal can come into effect. First, the governments of Canada and the EU need to hammer out the details of the deal and make them public. Second, the federal government must seek the approval of the House of Commons. The federal government will be tabling the tentative free trade agreement in the House of Commons tomorrow, October 29th. Finally, provinces need to sign onto the deal, though it is unclear whether provincial legislation will be necessary.

2. In terms of scope and depth, the CETA is bigger than the North American Free Trade Agreement (NAFTA)

In many ways, CETAs are much more comprehensive than free trade agreements (FTAs). Unlike some FTAs Canada has signed onto, including NAFTA, the Canada-EU CETA includes provisions on agriculture and provincial procurement. Importantly, unlike NAFTA, the Canada-EU CETA includes the free trade of services. Finally, unlike NAFTA, the Canada-EU CETA puts regulatory coordination on the table. This is welcome news for Canadian businesses, who often face non-tariff regulatory barriers that stifle trade.

3. Canadian businesses have a 2-3 year window to establish a first-mover advantage in the European market

Experts predict that the American government will likely strike a trade deal with the EU in the coming 2-3 years. Until that time, Canadian companies’ goods and services will receive preferential treatment in Europe, relative to American companies’ goods and services. Trade experts are urging Ontario firms to evaluate their European strategies so that they might capitalize on the narrow timeframe before American goods and services flood the European market.

4. If you provide goods or services to the government of Ontario, you will soon face stiffer competition

Once the Canada-EU CETA is ratified, European businesses will be able to compete on a level playing field with Ontario businesses. Given that the Canada-EU CETA includes provisions around sub-national procurement, Ontario businesses will face stiffer competition for government procurement contracts, for both goods and services. The full implications for Ontario businesses that participate in government procurement are unknown, but the OCC will take a hard look at the fine print of the deal, once it is available to us, in order to assess its potential impact.

5. If you are in the manufacturing sector, the CETA is going to make your goods much more attractive in Europe

The Canada-EU CETA will eliminate many tariffs altogether. This includes the existing 10% tariff on Canadian-made passenger vehicles imported into Europe, the 8% tariff on Canadian medical devices, the 2-8% tariff on Canadian machinery and equipment, and the 7-8% tariff on Canadian-made iron and steel.