Firms know little about trade deals as Canada pushes to diversify: federal survey
CETA who? Small- and medium-sized exporters have a low awareness of free-trade agreements. The exception is NAFTA
OTTAWA – Prime Minister Justin Trudeau urged European partners this week to finalize Canada’s trade deal with the EU, a push that came with his government facing a tough sales job at home: getting domestic firms to use it.
A recent government survey suggests the vast majority of small and medium-sized exporters, which are positioned to benefit from the Comprehensive Economic and Trade Agreement, could very well be asking: CETA who?
The survey said only seven per cent of the surveyed businesses were familiar with details of the Canada-EU deal, while fewer than three quarters had even heard of it. Only nine per cent said they took advantage of CETA and 17 per cent planned to use it.
The survey, commissioned by the Foreign Affairs Department, asked questions of 507 exporting companies online in March and April, and also involved 40 “in-depth” telephone interviews. It was delivered in June and cost more than $132,000.
Researchers asked questions on about a dozen of Canada’s free-trade treaties and found CETA wasn’t the only deal in need of a promotional boost.
“Among Canadian (small-to-medium-sized enterprises), there was fairly low awareness of Canada’s free-trade agreements,” said an analysis that accompanied the results.
“Few companies use any of these free-trade agreements; the exception is (the North American Free Trade Agreement).”
The survey’s objective was to gauge how many smaller firms were aware of Canada’s newest free-trade deals, to what extent they were taking advantage of them and the obstacles keeping firms from entering these overseas markets.
For years, federal governments – led by both Liberals and Conservatives – have struggled to get more companies to pursue fresh free-trade opportunities beyond the familiarity and convenience of the United States market.
Uncertainty around the critical Canada-U.S. trading relationship has grown since the election of President Donald Trump, making diversification a more urgent matter.
In addition to CETA, respondents were asked about Canada’s deal with Pacific Rim economies. That pact is known as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and includes Japan, New Zealand and Australia.
Similar to the numbers for CETA, only seven per cent were aware of the CPTPP’s details and just over 70 per cent had ever heard of it. About 30 per cent of respondents said they were at least somewhat likely to start trading with CPTPP partners.
The questions also took up other free-trade agreements. The majority of companies said they had never heard of Canada’s bilateral deals with Ukraine, Israel, Chile, South Korea, Jordan, Panama, Colombia, Costa Rica, Peru or Honduras.
When it came to factors keeping them from exploring faraway markets, the survey found that the high value of the Canadian dollar was seen as the top challenge, with 69 per cent of respondents describing it as at least a minor stumbling block.
The findings pointed to other problems, including uncertain regulations in other countries; lack of contacts; tariffs; a shortage of information on opportunities; linguistic and cultural obstacles; lack of financing; and Canadian export taxes and permits.
One-third of companies had no interest in other markets and, among those planning to sell abroad, the top targets were Australia, New Zealand and the United Kingdom – all English-speaking Commonwealth countries.
Trudeau talked up the benefits of the Canada-EU deal this week in Montreal, where he met with European Council President Donald Tusk and Cecilia Malmstrom, the EU trade commissioner.
CETA is supposed to give Canadian firms preferred access to a $24-trillion market and 500 million European consumers.
Canada has ratified CETA, but so far only 13 of the EU’s 28 member countries have done the same. More than 90 per cent of the deal came into force in September 2017 under what is known as provisional application but all the individual ratifications are needed for its full implementation.
Trudeau said CETA has already helped lift trade between Canada and Europe. He acknowledged, however, that Canada needs to do more to make sure it’s taking full advantage.
“Perhaps, the early numbers show that Europeans have been quicker to increase their trade towards Canada than Canadian companies have been able to engage with Europe,” Trudeau told reporters Thursday.
“But we have tremendous confidence that Canadian companies will continue to benefit and increase their opportunities to grow their businesses through selling more to Europe.”