When International Trade Minister Chrystia Freeland walked out of Canada-EU trade deal talks on October 21, it was more than mere political posturing. The deal she was negotiating, known as the Comprehensive Economic Trade Agreement (CETA)—a trade agreement between Canada and 28 EU member nations nearly eight years in the making—was receiving pushback from Belgian region of Wallonia, whose Prime Minister, Paul Magnette, felt the accord had the ability to undermine the local farming sector. While Freeland claims to be “still hopeful” for a deal, her insistence that “Canada’s job is done” and that “the ball is in Europe’s court” suggest CETA may not come to pass any time soon.
This is bad news for many Canadian companies, who were looking forward to a deal that would further facilitate Canadian-European trade. CETA would give Canadian exporters preferential access to the EU, and would affect tariffs that the EU has been imposing on imported merchandise, as well as investment restrictions, automobile specifications and procurement rules.
“I think CETA would be great for our business,” says Jason Greenspan, CEO of Whoosh!, a Toronto-based company that produces cleaning solutions for computers and mobile devices. Greenspan says that if the accord doesn’t pass, it will likely impact his company’s growth rate. “It will impact us when it comes to our exports to Europe—our products are made in Canada, and we ship from here, so a big challenge we face is shipping costs,” he explains. “CETA would have helped with the costs of tariffs when it comes to international shipping.”
It’s a concern echoed by Chadi Saade, CEO of Dental Savings Club, a Montreal-headquartered manufacturer and distributor of dental equipment. “We sell in Europe, and the biggest problem is always finding the right distributors there, and then getting all the regulatory things approved,” he shares. Saade says that there’s a big chunk of work to be done jumping over regulatory hurdles before a company can begin exporting to Europe. “That’s where CETA comes in,” he says. Saade believes that if the accord does not pass, it will have a big effect on many Canadian businesses, especially the small ones. Both Saade and Greenspan say that their businesses will continue to sell to customers in Europe, regardless of the status of CETA. “We’re still going ahead, we’re just going to find a better way to position ourselves,” says Saade. “We won’t be discouraged.”
Regulatory hurdles are the top concern for Jason Martin, CEO of iotum, a Toronto-based company that provides web collaboration and conference calling service. Martin fears that in the absence of deals like CETA, companies, like his own, that trade in digital products might be subject to more duties. “We want to make sure that we can do our business around the world without getting afoul of different regulatory industries,” he says. “We don’t sell telecom equipment, we’re a software company, and the last thing we want to see is that starting to get overregulated.” He adds that CETA falling through would be “bad for general business,” as he feels the failure would be representative of a global trend towards protectionism.
That said, there is a possible upside. Martin admits that how it could even benefit his business. “From our perspective, we kind of benefit a little bit from those barriers,” he says. “That’s because people need more IT tools like ours to be able to communicate when it’s difficult to meet with people all over the world.”
MORE ABOUT CETA:
- CETA, Canada’s major trade deal with the EU, is close to dead
- Nine ways to improve Canada’s international trade strategy
- Five ways global trade will change for Canada in 2016
- CETA could be huge for Canada—if companies are ready to adapt
- What free trade to Europe means for entrepreneurs