Trade deal benefits firms on both sides of Atlantic
When CETA is implemented, 98 per cent of trade will be duty free
Air travel is one of the few remaining places where you are pretty much forced to unplug from the flood of texts, tweets and e- mail messages — time I often use to sit back and reflect on bigger picture stuff.
I was afforded a few moments of reflection on recent overseas flights, when the German Canadian Association in Berlin and the Canada- Belgium- Luxembourg Chamber of Commerce in Brussels invited me to speak about opportunities for small businesses in Canada- European Union trade through the Comprehensive Economic and Trade Agreement ( CETA).
Most people, when they think about overseas trade, think about big companies doing business with big companies. Yet, more than 40 per cent of Canada’s international exports come from small businesses. Half of CFIB’s 109,000 members say they are involved in international trade: 50 per cent have purchased directly from abroad and 21 per cent have sold products or services internationally.
After meeting with key players involved in Canada- EU trade, I am even more convinced the agreement offers huge benefits to employers and employees on both sides of the Atlantic. When implemented, 98 per cent of trade would be duty free. There are substantial opportunities for service businesses under CETA, as well as a more open EU government procurement market.
Canada’s main trading partner is the United States. And why not, with the giant market right on its doorstep? While this may have worked to Canada’s advantage for many years, the severe impact of the 2008 recession provided evidence of the risks of putting all your eggs in one basket. Canada was hit by a double whammy when a weak U. S. economy — in particular a struggling housing market — coincided with a high Canadian dollar.
The European Union is the secondlargest market for Canadian small- to mid- sized businesses, or SMBs. A total of 13 per cent of CFIB members have sold to the EU, and another 17 per cent have purchased products from there. Germany is at the top the list, followed closely by Britain. The Netherlands, Italy and France each represent significant trade opportunities, as well.
CFIB’s surveys show small firms see trade with the EU as an important buffer against economic fallouts in the U. S. Canadians have long discussed developing trade relationships with new markets, but action is needed.
When you consider the loonie has dropped considerably against the U. S. dollar, added to a growing U. S. economy, I fear Canadian SMBs may again choose the tried and true, instead of continuing their efforts in Europe and elsewhere.
While a draft agreement has been reached, I am concerned about ratification in parts of Europe. CETA appears caught in the crossfire of initial negotiations on a free- trade agreement between the EU and U. S.
Listening carefully to media, various officials and some small business groups in Europe, I was reminded of the national debate on Canada- U. S. free trade back in the 1980s. The current worry over such provisions as Investor-State Dispute Settlement recalls some of the arguments used to oppose free trade. I’m old enough to recall ads with a disappearing Canada- U. S. border and the fear Canada would be required to ship its fresh water to the U. S.
I met with European small business groups to share our experience and to make the case for CETA to be reviewed on its own merits. I also informed them that 54 per cent of Canadian SMBs are preparing to increase trade with the EU in the next three years.
I’ve heard plenty of stories from small business owners on their struggles with trading with EU countries. CETA is expected to address many of the key priorities for small businesses, including harmonization of regulations, simplification of border procedures and reductions of paperwork and tariffs.
Some of the main concerns of small firms that have increased trade with the EU are: the importance of having local representation, and hence local knowledge and insight, on trade matters on everything from language to laws to regulations; and that the most productive forms of networking are often informal and personal.
Many small businesses are unaware of the awesome help that is available through trade commissioners in Canada and abroad. One of these commissioners has been embedded in CFIB’s Ottawa office to help connect and promote the service to small businesses.
The CFIB is also optimistic about the potential of the new Enterprise Canada Network and cost- sharing for trade shows through the Small Business Export Market Development Program.
On my return flight, I had plenty to reflect on. I am nervous about the prospects for CETA ratification, given the timing of the EU- U. S. negotiations, as well as Canadian SMBs ability to look past enhancing U. S. trade at the expense of investing in the EU market.
However, with enough hard work, I believe CETA will go ahead and Canadian businesses will again come out big winners in a growing world market.
The European Union is the second- largest market for Canadian smallto mid- sized businesses.