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CETA: Opportunities for Canada and Slovakia

BOTH Slovak and Canadian entrepreneurs should be aware of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). 

Montreal(Source: Courtesy of the Embassy of Canada)

CETA is Canada’s and the European Union’s most ambitious trade agreement ever, covering the full range of elements that shape modern international trade, including goods, services, investment, intellectual property, government procurement, regulatory cooperation, non-tariff measures, and more. CETA will encourage increased trade and investment between Canada and Slovakia, creating jobs, prosperity, and growth for Slovakian businesses and ordinary citizens.

In 2014, CETA negotiations were completed. The EU and the Government of Canada are committed to bringing CETA into force as quickly as possible. The continued support of the Slovak business community is important in ensuring CETA is ratified as soon as possible.

The agreement is at the centre of the most ambitious trade agenda in Canada’s history. This agenda includes reducing tariffs, pursuing smart deregulation, simplifying customs procedures, and upgrading trade-related infrastructure. This agenda will cement Canada as a top trade and investment partner for Slovak businesses. Canada has also concluded its first free trade agreement in Asia with South Korea, which will came into force on January 1, 2015. Canada is also negotiating free trade agreements with Japan, India, and the countries comprising the Trans-Pacific Partnership, among other countries. CETA will increase the attractiveness of Canada as a gateway to the North American and Asian markets for Slovakia. 

On the day of entry into force of the agreement, 98 percent of Canada and the EU tariff lines will be duty free, rising to 99 percent after seven years. This means that Slovak businesses will be able to import inputs and raw materials more cheaply, and Slovak retailers will be able to import goods from Canada and sell them on the local market at more competitive prices.  This also means that Canadians can get access to more Slovak goods at better prices. 

To provide some practical examples, Slovakia exports millions of dollars’ worth of cars and autoparts to Canada every year. Canadian tariffs on these automotive products go up to 11 percent. When CETA is implemented, tariffs on cars will fall to zero after seven years and tariffs on autoparts will be eliminated immediately. In 2014, Canadians bought close to 110,000 pairs of shoes produced in Slovakia even though the tariffs on footwear add up to 20 percent to the cost of each pair. All tariffs on footwear will be eliminated immediately under CETA. Canadian homes are filled with furniture manufactured in Slovakia and when the tariffs fall from 15.5 percent to zero, Slovak tables, chairs and sofas will be even more competitive in Canada.

A Slovakian-based company called JPlus, imports a popular powdered beverage from Canada into Slovakia – Hot Apple drink and Hot Maple drink are favourites during the cold winter months. Thousands of hotels and restaurants throughout Slovakia offer this product to their customers but EU tariffs add to the cost of importing these products from Canada. When CETA enters into force, there will be no tariffs on this product, benefiting Slovak businesses and consumers. 

Procurement is a hot news topic in Slovakia. Entrepreneurs may already be participating in Slovakia’s new electronic marketplace. When CETA enters into force, Slovak companies can also compete with other bidders for Canada’s estimated $177 billion government procurement market at all levels of government. Small and medium-sized Slovak firms will have a competitive edge in strong knowledge-based sectors including engineering, architecture, computer, software and database services, as well as marketing consulting, human resources and production management consulting, machinery and equipment repair. Canadian firms will also be interested in offering competitive prices to the benefit of Slovak taxpayers through Slovakia’s procurement market, estimated at $10.8 billion in 2012.

Trade and investment are linked and contribute to the prosperity of Canadians and Slovaks. New investment creates jobs and greater competition leading to more jobs, greater opportunities, and economic growth.

There are Slovak companies that have benefited from investing in Canada, such as the Slovak IT security firm ESET. ESET opened a research and development operation in Montreal in 2011 and benefits greatly from the high-quality professional environment which is offered by the Canadian society.

Other Slovak companies have invested in Canada in sectors including real estate and advertising services. Conversely, there are also a number of Canadian autopart manufacturers in Slovakia. For example, Martinrea Slovakia Fluid Systems (which is a subsidiary of Martinrea International Inc., a TSX-Listed company), based in Svätý Jur, produces fuel and brake lines for many makes and models of vehicles. CETA will promote further two-way investment by establishing predictable rules, protecting investment, ensuring that government can regulate in the public interest, and facilitating the temporary entry of business persons so they can follow their investments and take advantage of new opportunities. 

Finally, all business people know about red tape. Doing business in any place in the world involves paperwork including certification processes and meeting standards for new markets. CETA seeks to reduce technical barriers and reduce the costs for business. For example, CETA’s Protocol on the Mutual Acceptance of the Results of Conformity Assessment will reduce costs and marketing delays by allowing recognised bodies in Canada and the EU to accept each other’s test results and product certifications in certain specified sectors. This will allow EU and Canadian companies to have their products certified for the export market in their own country, saving businesses both time and money.

With so many potential benefits for Slovaks and Slovak businesses, Canada looks forward to Slovakia’s continued support in ensuring the ratification of CETA as soon as possible.

Kathy Bunka is Canadian Chargé d’Affaires in Slovakia

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