Canadian Manufacturing

Tariff elimination under CETA could add $1.4 billion to Canadian goods exports to Europe by 2022

Agriculture, food and beverage, and chemicals likely to see the greatest export gains from tariff elimination

OTTAWA—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, according to new Conference Board of Canada report. And the benefits are unlikely to end there.

“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 of the Global Commerce Centre, which produced the research for the report.

“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,” she added.

The report pointed to the fact that 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.

Though Canadian companies already pay relatively low tariffs on exports to the EU, according to the Conference Board of Canada, tariffs remain high in sectors such as food, beverages and tobacco, motor vehicles and parts, agriculture, chemicals, rubber, as well as plastics. Not surprisingly, these sectors are expected to benefit the most from CETA.

Report Projections:

  • Chemicals, rubber and plastics — from $252 million in 2016 to $826 million in 2022.
  • 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.

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