Elimination of tariffs under CETA to add $1.4 billion to Canadian goods exports to Europe by 2022

Industries such as agriculture, food and beverage, and chemicals likely to see the greatest export gains from tariff elimination

OTTAWA, July 7, 2015 /CNW/ - Canada's goods exports are expected to grow by $1.4 billion by 2022 due to reduced tariffs through the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), according to new Conference Board of Canada publication, Stronger Ties: CETA Tariff Elimination and the Impact on Canadian Exports.

"While the elimination of tariffs on goods is usually the most visible feature of any free trade agreement, it is only one part of CETA. Canadian industries and firms will get only modest benefits from the deal if they sit back and wait for lower tariffs to boost their sales," said Danielle Goldfarb, Associate Director, Global Commerce Centre, which produced the research.

"The greater gains from CETA are likely to come from the reduction of non-tariff barriers and liberalization of services trade. Those companies that proactively innovate and adapt their offerings for the huge EU market will get much more out of the deal."

HIGHLIGHTS

• Despite its recent economic troubles, including the deepening financial crisis in Greece, the EU is a more than $17 trillion market with high income customers.
• Eliminating duties under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) will result in about $1.4 billion being added to Canada's merchandise exports to the EU by 2022.
• The potential gains available to Canadian firms extend beyond elimination of tariffs, to the reduction of non-tariff barriers and liberalization of services trade and investment.
• To take full advantage of CETA, Canadian companies will need to seek out opportunities and adapt their offerings to the highly competitive EU market.

Canadian companies already pay relatively low tariffs on exports to the EU. However, tariffs remain high in sectors such as food, beverages and tobacco (9 per cent), motor vehicles and parts (6.5 per cent) sectors, agriculture (almost 5 per cent, and chemicals, rubber, and plastics (almost 5 per cent).  Not surprisingly, these sectors are expected to benefit the most from these (all figures are in 2007 dollars).

• Chemicals, rubber and plastics -- from $252 million in 2016 to $826 million in 2022.
  and motor vehicles and parts.
• Agriculture -- from $79 million in 2016 to $149 million in 2022.
• Other consumer goods (including pharmaceutical products, perfumes, cosmetics, soaps, textiles, glassware, jewelry) -- from $34 million in 2016 to $107 million in 2022.
• Food, beverage and tobacco -- from $44 million in 2016 to $106 million in 2022.
• Motor vehicles and parts -- $0 in 2016 to $38 million in 2022.

The elimination of tariffs is only one component of CETA. Non-tariff barriers, such as regulations, product-testing, labelling requirements and certification requirements, can be even more restrictive on Canada-EU trade and investment than tariffs themselves. As detailed in the Conference Board report, For Innovators Only: Canadian Companies' EU Export Experience, companies find success in the EU when they introduce new products constantly, and tweak their offerings for different markets within the region.

Watch Danielle Goldfarb discuss the impact that tariff elimination under the Canada-European Union Comprehensive Economic and Trade Agreement could have on Canada's key goods exports.

The Global Commerce Centre aims to help Canadian leaders understand global economic shifts and their practical implications. With over 50 widely read, evidence-based publications, the Centre promotes informed solutions for improving Canada's global business performance. The Centre's private and public sector members also meet regularly to hear new research, policy and business insights.

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SOURCE Conference Board of Canada