Positive implications of CETA on the wood industry sector in the EU and CANADA

Positive implications of CETA on the wood industry sector in the EU and CANADA

The Comprehensive Economic and Trade Agreement between EU and Canada promises to create a better business environment on both sides of the Atlantic. When applied, the CETA will strive to remove customs duties, open up to the services market, end the restrictions on access to public contracts and support future investors. Moreover, the agreement is designed to support standards, especially those that Europeans are sensitive about such as food safety and worker’s rights.

Even though the agreement hasn’t got as much attention as TTIP for example – probably due to the fact that Europeans and Canadians are quite alike, the importance of the agreement shouldn’t be called into question – it is simply enormous. The agreement is expected to increase trade in goods and services between both parties for almost a quarter! According to the European Commission, CETA will contribute to EU economy with around €12 billion a year – which certainly goes in line with the current ’’Europe 2020’’ aiming to improve EU economy, predominately by making it more competitive.

Nevertheless, as any other free trade agreement, CETA has been criticized for almost anything and everything. At least, the content of the agreement is available and transparent for everybody who’s keen on reviewing it (unlike in the case of TTIP). Most of the public concerns relate to the introduction of the new legal system open only to foreign corporations, hindering the efforts to fight the climate change problem, financial deregulation etc. Certainly, there are negative sides, but what are the positive ones? Even though they are rather difficult to predict, let’s try to focus on the implications of CETA for the European and Canadian forest industry and wood manufactures.

When thinking about Canada most of us would probably think about vast forest landscapes, right? Indeed, almost 9% of the world’s forests is growing in Canada! Obviously, forestry and wood industry are essential contributors to the national economy, as a matter of fact, Canada has the world’s largest forest product trade balance – 19.3 billion dollars. On the other side, EU numbers are slightly lower. In terms of the world’s forests EU accounts for 5% and the size and productivity of forestry-related industries is diverse, being the leaders in this field Finland and Sweden.

It is clear that the business without tariffs, as imposed by CETA, would certainly facilitate trade by reducing the costs for companies on both sides of the Atlantic. Moreover, this could be a good opportunity for companies of all sizes to enter the market in an easier way and start their businesses across the ocean, but it would be especially beneficial for small and medium-sized manufacturers.

Even though Canada is an extremely big country size-wise, if we take into account the  extremely low population of only 36 million, the Canadian market might be already well covered which would, to a certain extent, limit the future EU exporting manufacturers willing to do business in Canada. On the other hand, some claim that diverse cultural communities in Canada, especially those having roots in the EU, could facilitate the future trade in terms of connecting with the partners and starting a business. If this happens to be the case, it would certainly have a positive impact on the European business, at the same time contributing to improving the image of this trade agreement. On the other hand, if we consider the extremely densely populated Europe (only France alone has a population around 64 million) it is crystal clear that the CETA opens the opportunity for wood producing companies in Canada to more easily enter the market in Europe.

The improvement of the regulatory environment under this agreement will bring Canadian and EU businesses opportunity for new partnerships and access to new markets, moreover, we should not forget that the major part of this agreement lies also in the investment aspect. Both Canada and EU are important foreign investors to each other. With a high degree of certainty we can assume that the very low exports of wood furniture from EU to Canada (only 1.9% of total export) are going to increase as soon as CETA comes into force.

After all the scrutiny and negative criticism from the public and research community, there seems to be an excessive aversion towards the recent big trade agreements which sometimes blinds us from seeing their positive sides. But as the saying goes, every cloud has a silver lining. As a matter of fact, these encouraging words towards the future implications of CETA are stated since this agreement is not just in favor of big players, but small and medium businesses might benefit as well.

Reasoning from this fact, it is crucial to insure the visibility of the positive aspects of CETA to allow those in the reach of the agreement to be ready for its entry into force – especially the financially smaller industry players in the EU. For this reason, or simply because of it’s enormous importance, it is indispensible to highlight the potential positive changes which might lead to accelerated economic growth in the EU and Canada.

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