Business survey on
conditions to access to the Canadian market
Final report
Franklin Dehousse / Katelyne Ghémar / Tsonka Iotsova
CENTRE D’ETUDES ECONOMIQUES ET INSTITUTIONNELLES - CEEI
Brussels, 2 December 2002
Business survey on
conditions to access to the Canadian market
Final report
Franklin Dehousse / Katelyne Ghémar / Tsonka Iotsova
CENTRE D’ETUDES ECONOMIQUES ET INSTITUTIONNELLES - CEEI
This Report was prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Consultant,
and do not represent any official view of the Commission
TABLE OF CONTENTS
Executive Summary
PART 1: 8
RESULTS OF THE SURVEY WITH THE EU INDUSTRY 8
§1. Objectives of the study and methodology 9
1.1. Objectives of the survey 9
1.2. The methodology 9
§2. The industry assessment regarding the access 13
to the Canadian market 13
2.1. The questionnaire to the EU industry 13
2.2 Sectors not experiencing serious difficulties on the Canadian market 14
2.3. Sectors interested in the Canadian market 15
2.4. Sectors less interested in exporting or investing in Canada 16
§3. The problems identified 16
3.1. General overview 16
3.2. List of identified obstacles 17
PART 2: 24
IN DEPTH ANALYSIS OF THE ACCESS TO THE CANADIAN MARKET IN SOME KEY SECTORS 24
§1. Introduction 25
§2. Foodstuffs 25
2.1. Food standards 25
2.2. Authorisation for products of animal origin 33
2.3. Inspections conducted by CFIA 34
2.4. Cheese quota and other import procedures 36
2.5. Quotas and authorisations for other products 38
2.6. Container integrity 39
2.7. Container size 40
2.8. Labelling 41
2.9. Intellectual property and practices deceptive to the consumer 43
2.10. Rules at provincial levels 45
§3. Wines and spirits 47
3.1. General overview of the wines and spirits issue 47
3.2. Importation and distribution of wines and spirits in Canada 48
3.3. Monopolies management 49
3.4. Problems for the EU companies regarding the existing rules 52
3.5. The problems for the EU companies regarding the new rules 55
3.6. Intellectual property 58
3.7. Analysis and recommendations 59
§4. Other consumer goods 61
4.1. Tariffs 61
4.2. Customs formalities 62
4.3. Technical standards 63
4.4. Sanitary and phytosanitary requirements 66
4.5. Labelling requirements 67
4.6. Respect of industrial property 67
§5. Industrial products 68
5.1. Technical standards 68
5.2. Labelling requirements 68
5.3. Trade defence measures 69
§6. Services 70
6.1. Foreign participation in some services sectors 71
6.2. Social insurance requirements 74
6.4. Recognition of diplomas 76
6.5. Others 76
PART 3: 78
CONCLUSIONS AND RECOMMENDATIONS 78
§1. Introduction 79
§2. Specific recommendations 80
2.1. Trade in goods 80
2.2. Trade in services 87
§3. Industry assessment regarding a possible FTA with Canada 88
3.1. Industries non-supportive of a FTA 89
3.2. Industries considering a FTA as neutral 89
3.3. Industries considering a FTA as beneficial 90
§4. Conclusions 94
ANNEX 1: Questionnaire for the EU operators (export of goods and investment)
ANNEX 2: Questionnaire for the EU operators (services supply and investment)
EXECUTIVE SUMMARY
· The consultant has been contracted by the Market Access Unit of the Directorate General for Trade of the European Commission to produce a business survey on conditions for access to the Canadian market. The views expressed herein are those of the consultant and the operators interviewed. They do not represent any official view of the European Commission.
· The survey aims to perform an in-depth analysis of the conditions of, and obstacles against, market access of EU goods, services and investment opportunities for EU companies in the Canadian market. The general objective of the survey is to identify options to allow greater market access, trade and investment opportunities into the Canadian market. The same analysis has been carried out by the Canadian side concerning the EU market.
· The methodology, aiming at defining the main features of trade between EU companies and their customers in Canada, favoured the development of direct contacts with industry associations and operators in the EU and in Canada (field mission in Canada). The work has been divided into four phases: (1) the survey with the EU industry in the EU, (2) the survey with operators in Canada, (3) an in-depth analysis of the problems identified and (4) the drafting of the final report.
· The report presents the information received until 2 December 2002. It summarizes the EU industry position on market access issues in the EU and in Canada (problems identified in questionnaires, interviews with industry associations and individual companies, importers of EU products and Member States trade representatives). It also gives the industry's assessment on the possible solutions to the difficulties identified. For the most important problems identified by the industry, a legal assessment is given by the consultant.
· The majority of EU industry associations contacted has supported the business survey by answering positively to the exercise. According to the information in questionnaires and interviews, the Canadian market is reported to be of interest for our companies and globally open to EU investment and exports, even if a limited number of difficulties have also been mentioned by EU companies and their customers. Part 1 of the report gives a global overview of the perception of the access to Canada, sector by sector.
· The difficulties to access the Canadian market have been investigated with EU companies, Canadian importers and EU Trade Representatives. These difficulties are presented in detail in Part 2 of the report. Even if their number is limited, it has to be stressed that some of them are considered to be very important for EU exports. This is particularly the case for issues concerning wines (new management rules by the monopolies), or some foodstuffs products for which exports to the Canadian market have been completely blocked (e.g. meat products or eggs). In other sectors, the level of EU exports could be dramatically increased by the removal of identified barriers, given the potential increased demand for these EU products (e.g. cheese and caffeinated soft drinks).
· The difficulties can be basically classified into two categories: traditional market access difficulties and other problems.
Traditional market access issues:
Foodstuffs
Problems to obtain sanitary authorisation for meat, cheese, eggs and fish have been reported. Foodstuffs exports are also affected (in limited cases) by labelling and packaging requirements (e.g. container integrity for canned fish products, container size for jams, etc…). In addition, quota volumes and management issues were stressed by certain importers as significant obstacles (e.g. cheese, butter). Finally, differences in foodstuffs standards are alleged to affect the export of various products (e.g., cheese, caffeinated soft drinks, fruits and vegetables, “foie gras”, etc…).
Wines and Spirits
The marketing of wines and spirits by the monopolies at provincial level is quoted as a crucial issue by industry associations, agents of EU producers in Canada and EU Member States. The high number of complaints, their variety, the quality and the volume of information provided to the consultant, as well as the overall strong concern regarding ongoing changes in management rules, have prompted a detailed description.
According to the information collected, there is a real risk that EU exports of wines and spirits to Canada could decrease. New policies in Quebec and in Ontario could favour the consumption of domestic and new world wines, at the expense of EU products (which still constitute the bulk of imports and consumption into Canada).
Other consumer goods
Tariffs peaks have been quoted for several products (e.g. textiles, footwear, electrical products and recreational boats). For consumer goods, there are some complaints regarding technical standards (e.g. motorcycles, glasses), protection of industrial property and additional labelling requirements (e.g. cosmetics).
Industrial products
Technical and safety standards are mentioned to be the main concern for exporters of industrial products. Key issues are the lack of transparency and the differences between EU and Canadian standards at federal and provincial levels. However, given the difficulty to obtain precise data from the operators and Member States on the products concerned, a proper assessment of the problems encountered is difficult.
Services
According to the information gathered, in the services sector, there are only a few problem areas. The replies to questionnaires and interviews with industry associations and Member States resulted in few complaints (i.e. distribution services, such as books, videos and newspapers distribution).
Member States Trade Representatives and EU investors in Canada have insisted on the importance of other types of problems: such as those related to the recognition of diplomas, professional accreditations, social insurance requirements for EU temporary workers, visa requirements, bank account and credit card approvals, driving licence recognition for EU businessmen, etc.
These issues are considered as important or more important than traditional market access obstacles. Some Member States have insisted these problems must be urgently taken into account in any negotiation between Canada and the EU (in particular, the recognition of diplomas and professional accreditations).
· The final report also proposes a list of recommendations on the basis of the information collected by the operators interviewed. It presents a more detailed picture of the private sector position on possible remedies/solutions to the obstacles identified and ways to improve trade and investment performance. The legality of the most important measures is also examined by the contractor with regard to the applicable WTO Agreement(s) and bilateral Agreement(s) concluded between the EC and Canada.
Regarding the most damaging measures, EU operators and their customers expressed their desire to have these issues addressed urgently with Canada, with a view to having the restrictions removed. In other cases, the problems are considered less damaging and it is advised to further develop intergovernmental cooperation. Regarding problems not considered as traditional market access issues, it would be suitable to bring these matters up within the framework of dialogue between Canada and the EU. Finally, although some industries would theoretically welcome the eventual negotiation of a Free Trade Agreement with Canada, it has to be stressed that this objective was never mentioned as a key objective by the sectors interviewed. Their perception about the negotiation of such an Agreement remains quite vague, both in terms of its impact and of how it may improve their access to the Canadian market.
PART 1:
RESULTS OF THE SURVEY WITH THE EU INDUSTRY
§1. Objectives of the study and methodology
1.1. Objectives of the survey
The business survey aims to perform an in-depth analysis of the conditions of, and obstacles against, market access of EU goods, services and investment opportunities for EU companies in the Canadian market. The general objective of the survey is to identify options to allow greater market access to, and trade and investment opportunities in, the Canadian market. The same analysis has been carried out on the Canadian side concerning the EU market.
The survey intends to provide an analysis on three specific questions:
- Which Canadian measures are considered as restrictive for EU trade and investment? It presents an inventory and description of measures that EU business perceives as hindering trade in goods and services, as well as investment in the Canadian market (see Part 1 and 2)
- What is the impact of any restrictive measures on our operators? The survey points out sectors that EU business considers penetration of the Canadian market is below its potential and gives the EU business’ views on the reasons (tariff/non-tariff barriers, lack of interest in the Canadian market, etc.) for this underperformance. (See part 2)
- What can be done to improve the situation? (See Part 3) The final report also provides an overview of possible remedies/solutions to the obstacles and ways to improve trade and investment performance. It identifies sectors where governmental co-operation can significantly contribute to further develop trade and investment.
.
1.2. The methodology
Under the methodology adopted by the consultant, in agreement with the EU Commission services, the research has been divided into four phases:
Phase 1: survey with the EU industry representatives in the EU;
Phase 2: survey with private operators in Canada;
Phase 3: in depth analysis of problems identified in some sectors
Phase 4: drafting of final report.
a) Survey with the EU industry in the EU
Standard questionnaires were prepared for the EU industry. A questionnaire was devoted to the goods sector, the other to the services sector. These questionnaires were the basis of the survey. They aimed at identifying at first sight the problems encountered by exporters, investors and providers of services to Canada. In order to ensure the largest possible coverage of operators and sectors, the questionnaires have been sent to more than 200 Industry associations (see point 2.2). The deadline for sending replies to the questionnaires was 30 June 2002.
Meanwhile, the consultant arranged additional meetings with those European associations which had expressed interest in the survey (meetings and telephone contacts).
The objectives of these meetings were:
- to identify the problems encountered by their members companies
- to enlarge the contact names of the companies willing to participate in the individual meetings
- to establish a database of customers and EU companies in Canada to be interviewed during the first study trip.
During this period, the consultant also prepared the study trip to Canada. Contacts were established with the EU Member State Representatives in Montreal, Toronto and Ottawa in order to select companies having recently experienced difficulties on the Canadian market. Meetings were arranged with:
- Importers’ associations (such as Canadian Importers Association) and individual importers of the EU products and services.
- EU companies located in Canada.
- Individual retailers.
The EC Delegation kindly arranged a meeting with the Canadian authorities and informed the Member States about the mission.
b) Survey with private operators in Canada
Under the terms of reference of the study, it was foreseen that the consultant could organise up to 2 study trips to Canada in order to collect the necessary and practical information on the problems identified during the first phase. In this respect, the consultant has considered necessary to: