Most small Canadian companies not ready to take advantage of CETA, say experts

MONTREAL — While some Canadian companies are eager to boost exports to Europe, small firms that make up the vast majority of businesses lack the global ambition to take advantage of CETA, according to Canadian Manufacturers & Exporters. 

Few of these companies export and are probably not ready for increased access to the 16.5 trillion euro economy, the association’s senior vice-president Matthew Wilson says.

“While steps have been made, there’s not enough companies going global and doing international business,” he said in an interview.

“Those who are more internally focused I think are more ready for this agreement than they probably have been for any other agreement in the past.”

Governments of all stripes have been working for years to encourage businesses to harness their export potential.

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Yet only about 40,000 of Canada’s one million small- and medium-sized businesses are exporters and just 10,000 of them export outside the United States.

Craig Alexander, chief economist for the Conference Board of Canada, said it’s been a challenge to convince these companies to step up to the plate.

He hopes a pact like the Canada-Europe trade agreement, ratified Wednesday by the European Parliament, will raise awareness among Canadian businesses about the potential for more trade and investment in Europe.

“We need to encourage them to take advantage of those opportunities,” Alexander said from Ottawa.

He said CETA won’t be a “game changer” for the Canadian economy but he expects the elimination of tariffs will gradually lead to $1.4 billion more exports by 2023.

“I think CETA will help facilitate trade and investment but the impact is going to be felt incrementally over a long period of time.”

Alberto Wareham of Icewater Seafoods Inc. isn’t waiting.

The Newfoundland-based cod seller, who already sells 90 per cent of his catch to Europe, says he’s ready to sell more fish once tariffs fall and the species continues its path to recovery.

He estimates the elimination of a 7.5-per-cent tariff on frozen cod will save $1 million a year even before higher tariffs on fresh and smoked cod are gradually eliminated. Additional volumes will be directed to the European market.

Seafood is expected to be one of the winners from the trade deal, along with various manufacturing sectors, commodities and services such as engineering and construction.

Wareham says not all companies or seafood products have the marketing infrastructure in place to take advantage of the increased access. But Bruce Chapman, executive director of the Canadian Association of Prawn Producers, said most seafood producers are prepared to adjust and redirect exports from other countries to Europe.

Plastic tube maker Ipex Management hopes to increase its meagre sales to Europe gradually but must first convince potential customers to broaden their supplier base beyond local companies.

“We’re going to have to make inroads by breaking some of the old habits,” said Ves Sobot, director of corporate affairs.

Several large Canadian companies said they are looking forward to new business opportunities and labour mobility rules that will ease access to skilled workers.

Engineering and construction firm SNC-Lavalin says open markets should result in more jobs and economic growth by delivering engineering work in Europe. Global miner Rio Tinto added that the elimination of duties will make its products more competitive.

Transportation giant Bombardier said the agreement will support its European activities, which include more than 28,000 employees and 34 production and engineering sites.

“As a major investor in Europe, the provisions in the agreement aimed at facilitating business mobility and services, as well as the movement of goods between Canada and Europe, should be helpful,” said the company’s spokesman Simon Letendre.

Follow @RossMarowits on Twitter.

Ross Marowits, The Canadian Press