Companies say CETA to give them a competitive advantage
Canadian companies making inroads in the European market will benefit from CETA.
From eliminating tariffs and addressing non-tariff barriers to improving labour mobility and allowing for competition in government procurement at all levels, Canadian exporters say the agreement will open doors to the EU like never before.
“CETA will certainly help us compete even more effectively in Europe and allow us to get into more segments of the market there,” says Eli Gershkovitch, the owner of Steamworks Brewing Company, a Vancouver craft brewery with sales in Germany, Austria, Switzerland, and Italy.
Eli Gershkovitch, owner of Steamworks Brewing Company
(Photo credit: Kent Kallberg)
Gershkovitch founded Steamworks 21 years ago, and now has 425 employees. Last year, the company started exporting bottles, cans and kegs of its craft brews to Europe, which now represents about five percent of its market. Gershkovitch hopes 20 percent of its products will eventually be exported—a large part going to Europe—which he says represents “growth and reward” for the company.
While Europe has a long, undisputable beer-making tradition, Gershkovitch says Steamworks is tapping into the EU market with pure ingredients from B.C. including hothouse cucumbers to Fraser Valley raspberries. With the assistance of the Canadian Trade Commissioner Service, and with the opportunities CETA will bring, Steamworks expects to appeal to ever-greater numbers of the region’s beer lovers.
“Canada is a great brand in foreign markets. We have something unique to offer,” he says, while noting that Europeans have sophisticated tastes and are experts at making products such as beer, “so you’d better be damn good at it.”
Corinex Communications Corp. of Vancouver is also making a splash in the European market with a leading-edge product. Its new information and communications technology (ICT) is used in smart meter infrastructure projects that help electrical utilities manage energy better. It is the first company to offer equipment, software and services dealing with the low-voltage part of the electricity grid.
“You don’t go and enter the European market unless you have a unique solution. It isn’t an easy market to penetrate,” says Peter Sobotka, CEO and founder of the 16-year-old company, noting that with some 300 million customers in Europe in the low-voltage market, “we are in a unique position.”
The company does 95 percent of its business outside of Canada, about half of that in Europe, says Sobotka. While currently studying the provisions of CETA to learn more about the benefits it will bring, Sobotka says the fact that it promises to simplify and streamline the certification of Canadian products made for the European market, even allowing for testing to happen in Canada using European standards, “is good news” for Corinex. Labour mobility measures that would allow the growing company to send staff from Canada to establish new offices in Europe are “beneficial for sure…that would definitely have a positive impact on us,” he adds.
“CETA will enhance cooperation in the technology sector, it will allow us to bid and compete for contracts and to provide our services to EU clients as a Canadian company,” Sobotka says. “Tariff elimination on ICT products will assist us in increasing our sales, therefore allowing us to create more jobs and to increase our revenues.”
Corinex has benefited from assistance from the TCS in several countries, the Czech Republic. The TCS helped the company hold a workshop earlier this year, involving education seminars with representatives of utilities from countries such as Germany, Poland, Romania, and the Czech Republic.
Canadians have a thing or two to teach Europeans, Gershkovitch says: despite the fact that Europe has been brewing beer for hundreds of years, for example, Canada has more experience in the craft beer scene, which is now emerging in Europe.
“CETA will certainly help us compete even more effectively and allow us to get into more segments of the market,” Gershkovitch says. While Canadian beer imported in Europe is already tariff-free on a “most-favoured nation” basis, he expects CETA will eliminate the Canadian duties Steamworks pays on some of the equipment and ingredients, like malt, which it imports from Europe to produce its beers. This will incrementally lower costs and help render Steamworks more competitive.
The TCS has been helpful in introducing Steamworks to important players and partners in the beer industry in Europe, and in facilitating events and providing regional intelligence, he says. “They’ve been our eyes and ears on the ground. They are part of the communities in which they work.”
Nora Grütters, a trade commissioner in Düsseldorf who promotes Canadian agriculture and agri-food products, says the beer market in Germany is highly-developed and competitive, and consumption is declining—although the market for specialty beers has grown.
“Steamworks has hit a trend and entered the market at a time when craft beers are gradually becoming known and increasingly popular,” she says. The TCS helped the company with everything from information on market trends to holding a craft beer promotion event in Berlin.
Grütters notes that Europe can be a demanding market with low price points. Steamworks could face competition from other craft beer imports as well as regional or local craft brewers, although European consumers are generally “prepared to pay more for high-quality, premium, specialty foods.” Steamworks should continue to position its beer in this market and promote it as a Canadian product, “as Canada benefits from an extremely positive image in Germany,” she says. Promotion in social media and specialized trade and consumer events such as trade fairs, beer festivals and gourmet shows also helps companies like Steamworks.
The TCS continues to help Steamworks on an expansion strategy that could include other regions of Germany as well as neighbouring countries, she says. The company’s beers could be showcased alongside others at Canadian pavilions during international trade shows.
Sobotka says the TCS has been helpful to Corinex in introducing local contacts, setting up events and offering analysis of the market. “I’m amazed by the Trade Commissioner Service,” he says. “It gives us credibility.”
Martina Taxová, a trade commissioner in Prague who covers sectors including ICT and aerospace in the Czech Republic, says that CETA has much to offer companies like Corinex. For example, those selling sophisticated technologies require a presence close to clients—at least in the same time zone—and an ability to communicate in the local language, means having staff travel from Canada to the EU market to set things up. “CETA will facilitate this kind of mobility by removing work visa requirements for temporary professionals,” she says.
Corinex is also likely to have clients from the public sector, Taxová notes. Currently, Canadian companies only have access to government procurement projects tendered by institutions and national governments, but CETA will open up procurement above specified thresholds in all levels of government, including regions and municipalities as well as utilities.
Canadian companies working in Europe should be patient when pursuing such opportunities, she advises. “Have a good strategy, good local contacts, a reliable local partner and be aware that the business environment is different in Europe.”
Meanwhile, Corinex is part of an effort to establish standards in its relatively nascent field. As a large roll-out of smart grid systems continues, utilities providers and governments face challenges relating to cyber security, for example.
“If you have a disruptive technology and you're a Canadian company, they're pretty open to give it a try,” Sobotka says. “They look at your technology and they evaluate it on technical and business merits.”
Gershkovitch notes that while the EU is a common market, regulations can vary country-by-country on issues such as labelling and recycling. There are also subtle differences in market tastes and preferences among the various regions, and especially when compared with Canada.
“What works in Canada is not necessarily going to work in Europe,” he says, noting that persistence is critical. “Europe is not a market where you can just fire off an email and forget it; it requires a real investment.”
Sobotka says his company faces different certification and other rules in the individual countries in Europe. “It’s not so unified and united as Canada and the U.S. It’s not a piece of cake,” he says, although Europe is further advanced in areas such as energy conservation. He hopes CETA will strengthen Corinex’s position in the complex field. “Anything that improves relations between Canada and Europe is welcome.”
Gershkovitch hopes that CETA will “change the mindset” in the trade relationship between Canada and Europe.
“I think there will be unforeseen, intangible benefits to CETA in terms of opening minds and raising possibilities that at this point can’t be fully-imagined,” he says. “If Canadian products can obtain a critical mass, we can go beyond being a curiosity and be perceived as a source of innovative and quality consumer goods, and in my case, food and beverage products.”
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