Local companies urged to exploit CETA opportunities

Free-trade deal with EU offers market diversification and paths to global growth

George (Bud) Ivey, founder of Ivey International Inc.: B.C. companies need to be patient and work at establishing relationships if they want to succeed in Europe – even with CETA in place | Rob Kruyt

B.C. companies with European business links are ramping up their efforts to push local firms to capitalize on the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), noting that it might be the country’s most stable global trade link in the coming years.

That was the message at a number of recent Euro-centric events in Metro Vancouver, including a “Europe Day” panel discussion at Simon Fraser University’s VentureLabs in late April focused on tech startups and entrepreneurship, as well as a clean-tech event on the sideline of March’s Globe 2018 conference.

CETA came into effect last September, and its direct impact on the Canadian economy is not yet known. But, traditionally, Canada has trade deficits with the European Union in goods, services and investments. The shortfall is especially noticable in service trade: in 2016 Canadian service exports to the EU amounted to $18 billion versus imports of $28.2 billion, for a $10.2 billion deficit.

At his appearance in March in Vancouver, Karsten Mecklenburg, head of the economic, commercial and trade section with the EU delegation to Canada, admitted that trade balance is an area of concern as Europe looks to boost its trade with B.C.

But he added that CETA – with its environmental and labour sections – might hold the key for a more balanced future trade relationship.

Mecklenburg said that – while a majority of clean-tech companies will not benefit significantly from post-CETA tariff reduction – the increased opportunities for technical professionals from either side of the Atlantic to work in the other’s market allows for the development of new innovations, which would not only improve the economic efficiency in Canada and Europe, but could open the door to a co-operative entry into a third market like Africa.

“That’s a multibillion-dollar market,” Mecklenburg said. “So it’s not just an altruistic choice – of being a tree hugger and not caring about business – to pursue sustainability and revenue simultaneously. It’s about caring for the business of the future. If you don’t jump on the train, you’d miss the train.”

There are a few small and medium-sized business in B.C. that are already ahead of that curve. Surrey-based Ivey International Inc., a maker of chemical solutions to remediate contaminated air, soil and groundwater, signed a deal last year with Italy’s BAW Environmental Engineering to sell and distribute Ivey products throughout the Italian market.

In addition, company representatives said they are now working on a similar agreement in Belgium.

Speaking from the company’s 3,000-square-foot office/warehouse facility in Surrey, company founder and president George (Bud) Ivey said CETA’s most immediate effect appears to be psychological, because he saw about 50 companies attending the Europe Day event in Vancouver and many said they were driven by the increased attention heaped on the European market given the establishment of CETA.

Ivey said that was good to see but added that more concrete proof of sustained interest will take time.

Another firm, Vancouver’s Vanderbeken Enterprises Ltd. – and its Drycake brand of mechanical separation technology (used in sectors such as food-waste reduction and waste-water treatment) – is also making inroads in Italy and northern Europe, and president Cedric Vanderbeken said the company is now exporting Canadian-made technology into the European market.

In that sense, Vanderbeken said the most valuable part of CETA for Drycake isn’t tariff reduction, but the possibility of allowing European technical expertise to work in B.C. for extended periods of time and vice versa. That would allow his company to upgrade its products through an amalgamation of innovative approaches from two drastically different markets.

“The most effective way of knowledge transfer is to have someone bring that knowledge with them, in person, to a new market,” he said. “The possibility of having them work side by side with locals, that’s the most exciting thing for us.”

But he added that a common pitfall for Canadians looking at Europe is an oversimplified approach, a view that Europe is one homogeneous economic block. To maximize the possibility of success, Vanderbeken said, companies must look at the country they want to enter.

“There’s no singular European TV channel or a European language,” he said. “You can’t really look at it as having access to Europe; you have to learn about the market you want. For example, Spain is a very different labour market than France, and they are both hugely different from Italy. You have to realize the diversity the regions have to offer.”

Ivey agreed. He said B.C. companies that want to reap the gains have to be keen on building personal relationships (as in markets like Asia and Latin America) because it plays a much bigger role in business in markets like Italy.

“I’m really surprised by the sheer number of family members [of partners] I’ve met and gotten to know,” he said. “It’s like you are an extended relative now; when you meet, it’s all hugs and kisses like you would have at a family gathering. That’s why I say the most important possession I have for my business is my computer, because it has all my contacts on it. If I lose it, I’d cry.”

But while officials admit CETA is not a panacea to all that ails Canadians looking to export to Europe, it is nonetheless a crucial element of furthering Canada’s economic diversification, a fact stressed by Celso Boscariol, president of the EU Chamber of Commerce in Canada West.

“This is a very important step for Canada, because – if you look at the uncertainty in the NAFTA [North American Free Trade Agreement] renegotiations with the United States right now – we have to look at other market relationships that are more reliable and more long-term. Traditionally, there have been a lot of exchanges between Canada and Europe because of historic and cultural linkages that make us natural trade partners. But we need to build upon this relationship and exploit the opportunities.”