The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) provisionally entered into force on September 21. It has provided Quebec companies to access to a market of 500 million consumers and 98% of EU tariff lines are now duty-free. According to experts gathered in November at the seminar on business opportunities in Western Europe, Quebec companies must take advantage of this growth opportunity. However, they need to make sure they are informed and they need to seek advice on how to avoid unpleasant surprises.
Why pierce the Western European market?
There are many advantages to a market this size:
- The European Union is the world’s third largest trading block
- The free movement of goods within about 20 members states
- The Euro is the single currency for most member states
- It’s a mature and niche market, ripe with business opportunities
- It is a springboard to other countries in Europe
The advantages of CETA for Quebec companies:
According to Marc Fillion. Coordinator, Europe at the Department of European, African and Middle Eastern Markets for the Ministry of the Economy, Science and Innovation (MESI), in this economic climate where we produce more than our absorption capacity can handle, CETA is a great opportunity for Quebec businesses on several fronts:
- Competitive advantage compared to other countries, such as the United States and Japan, who don’t benefit from this type of agreement.
- Easier customs procedures: 98% of duties on Canadian goods have been eliminated and 99% of industrial goods are now duty-free.
- Better access to various European markets, especially for government contracts (regional and municipal).
Sectors of interest[1]
- IT and communications
- Lumber industry
- The food industry
Tips for successfully piercing this kind of market
Be aware of regulations
“CETA is not an automatic free pass for companies,” said Marc Fillion. You need to know what laws are in force or your products or services might be refused entry into Europe. And even if you have access to all the information available, “you still need specialists to decode it,” said Christian Sivière, President of Solimpex.
Here are a few points you should keep in mind:
- You should know your Harmonized System (HS) code.
If you are unsure, contact customs authorities.
TARIC is a tool that can help.
- You need to find out if your product is considered a Canadian-origin good to take advantage of the Agreement’s tariffs preferences.
If that is the case, don’t forget to get an “origin declaration”.
Canadian organizations can help you with this process.
- Document the steps of your production, specifically regarding inputs.
- Understand the limits of workforce mobility. In fact, there are restrictions on certain professions such as teachers, dentists, etc.
Draft contracts that can be understood by everyone
The contract is the cornerstone of your project to export your product or service. You should make sure the right person is in charge of writing and proofreading it. According to Marc Bélanger, partner at DS Avocats, your Canadian document should ideally be reviewed by a European office.
Pay special attention to certain clauses, such as the choice of applicable law, the non-compete clause, and intellectual property.
Make sure to focus on the logistical aspects of your export project
According to Christian Sivière, our companies are skilled in marketing and sales, but are sometimes neglectful when it comes to logistics. This represents a risk. You wouldn’t want your merchandise to be refused or penalized.
Be aware of how your merchandise is packaged. For instance, did you know that Canada and Europe have different standards regarding the pallets on which the products are placed?
Make sure you have financial leeway
As mentioned above, the European market is a more mature and costly market. In this context, Marc Fillion says it’s important for a company to be financially strong before undertaking an export project. A belief supported by Jean-Manassé Theagene, entrepreneur and President of 360Medlink: financial leeway allows companies to deal with delays in payment.
Finally, Marc Fillion recommends that companies only attempt to set foot in the European market if they have experience in international trade.
Business opportunities in Quebec
CETA also means that European goods and services will be available in Canada. It’s a source of competition, but also an opportunity for innovation and business growth, according to Marc Fillion. His advice is for companies to take part in meetings with European companies that are on a trade mission in Canada.