In February, the European Union (EU) voted to implement the Comprehensive Economic and Trade Agreement, known as CETA, with trade partner Canada. The act aims to increase trade between the countries by lowering tariffs, thus making goods easier to export between the two markets. Once fully implemented, CETA will eliminate tariffs on 99 percent of tariff lines1 and the countries believe that CETA will spur job creation and growth, stabilize competition, and create better prices for consumers3. With shippers having to pay General Rate Increases (GRIs) and Peak Season Surcharges (PSS’s) from ocean steamship lines, better prices and reduced costs can greatly affect their profits. To help navigate these changes, shippers can partner with a global logistics provider to determine the best carriers and what to expect when shipping internationally.
CETA’s Impact by Industry
Agriculture and Food Trade
Currently, tariffs on exported food products have prevented both European and Canadian food companies from maintaining profit levels. Laura Pierrisnard, the CEO of French confectionary company, Calissons Le Roy Rene, showed her support by explaining, “CETA will allow us to be more competitive in a market where price really matters3”. Popular food product imports such as Canadian maple syrup and European cheese are expected to drastically increase, as their tariffs are reduced from up to 8 percent to 0 percent 1. Exports of seafood and fish from Canada will benefit immensely as tariffs as high as 25 percent are eliminated 1.
The European Union is the second largest importer of automotive goods, accounting for around 11 percent of the world’s auto parts. Currently, Canada’s automotive industry has less than 1 percent of the market and will leverage CETA to increase their automotive market share in Europe 1. With Germany being the highest-value automotive exporter with brands such as Audi, BMW, and Volkswagen, this is a large opportunity for Canada to expand its automotive export industry in Europe2 . Other automotive parts such as tractors, tanks, and chassis will benefit as CETA reduces tariffs from up to 19 percent to 0 percent 1.
32 percent of the word’s total aerospace imports arrive into the European Union. With the growth of Canada’s aerospace exports into Europe increasing 70 percent since 2003, there is large area for expansion in this sector. This has the potential to take market share away from top exporters of aerospace parts into the European Union such as the U.S.1
CETA is a large step towards evening out the trade discrepancies between Canada and the EU. Canadian Prime Minister, Justin Trudeau, said in a speech to EU Parliament that “if we are successful, CETA will be the blueprint for all ambitious, future trade deals” 3. With changing requirements and documentation, shippers must ensure they are compliant when exporting. Those who utilize 3PLs can leverage their expertise to ensure compliance, while gaining visibility to better serve their customers.
Trade is evolving for many countries, especially for countries importing or exporting with the EU who is trending towards free trade deals across their global relations. They’ve recently come to an agreement with Japan to lower tariffs as well. As with CETA, the Sustainability Impact Assessment (SIA) is a mutually beneficial agreement, cutting taxes on popular Japanese exports such as cars and European exports like cheese and food products4. As trade continues to evolve, shippers can navigate the changes by communicating with their supply chain providers and partners. In light of changing political and economic climates, free trade is something that nations all over the world are continuously focused on adapting to and in response, 3PLs are working to adapt shipper’s supply chains to optimize operations.