04 Nov Celebrating 5 Years of CETA Bi-lateral Trade Growth
It's been just over five years since the Canada–European Union (EU) Comprehensive Economic and Trade Agreement (CETA) provisionally entered into force on September 21, 2017. Despite the pandemic‑related challenges of the past two‑plus years, two‑way merchandise trade between Canada and the EU has grown tremendously in the past five years, reaching a record high of $100 billion in 2021, according to a new report prepared by the Office of the Chief Economist at Global Affairs Canada to mark the fifth anniversary of CETA.
Canadian merchandise trade with the EU increased by 33.7% since CETA's implementation, outpacing the 18.6% growth in Canadian merchandise trade overall. Gains were widespread as trade with nearly every EU member improved over CETA's lifespan to date.
Canadian merchandise exports to the EU, meanwhile, reached a record high of $32.5 billion in 2021, an increase of 46.4% since 2016. While Germany and Belgium remain Canada's largest export markets in the EU, a number of smaller economies recorded significant growth in exports from Canada, including Latvia, the Czech Republic and Greece.
In addition to the impressive growth in trade values, more Canadian companies are exporting to the EU compared to the pre‑CETA period. A total of 538 net new Canadian companies started exporting to the EU from 2016 to 2019 (a 6.9% increase), the large majority being small and medium‑sized enterprises (SMEs).
One of the major advantages of CETA is the elimination of duties on almost all exports of Canadian goods to the EU. According to the new report, Canadian exports of products that enjoyed tariff reductions through CETA grew by 24.6% between 2016 and 2021, with products that saw the largest tariff reductions seeing the largest growth.
Thanks to CETA, it’s estimated that as much as $890.6 million was saved in duties in 2021 alone, which contributes to increased competitiveness for Canadian businesses and reduced prices for Canadian consumers. Nevertheless, there’s still room for improvement. In fact, businesses could gain as much as $415.5 million more in tariff savings by increasing their use of tariff preferences under CETA!
Consult the CETA@5 report for more information.