Now that Canada has entered a new trade agreement with the European Union, the economic opportunities for SMEs are about to increase enormously. Once the Canada-EU Comprehensive Economic and Trade Agreement (CETA) is ratified, duties on a wide range of Canadian goods and services entering the EU will either be greatly reduced or removed altogether. According to Opening New Markets in Europe, a report put out this year by the Canadian government, CETA could add as much as $12 billion annually in new revenue to Canada’s economy.
But doing business with the EU will not be the same as doing business with the U.S. Canadian companies must be keenly aware that exporting to the EU raises logistical, language and regulatory hurdles, unique to the European marketplace.
Here’s what a small or mid-sized company must have in place to be best positioned to export to the EU:
1. Make friends with a freight forwarder: The world of shipping is a complicated one. Freight forwarders can help you with logistics, statutory compliance, risk management, and finance and payment terms. If this is your first time around, you’ll no doubt feel overwhelmed with questions: How high can I stack my goods? What size container should I use? Should we consider air freight? What will it cost? How long will it take to get there? Freight forwarders can answer these sorts of questions. You can get started with the Canadian International Freight Forwarders Association.
2. Read up on labeling and regulatory requirements: Some EU countries require that their national language be clearly displayed on packaging. Others, such as Denmark and Scandinavia, permit English language labeling. Many member countries also have regulatory requirements that are in addition to centralized EU regulatory requirements and can dictate, for instance, the nutritional content on food items. Some of this information can be found at www.ec.europa.eu. As well, the Canadian Trade Commissioner Service provides a list of experts who can assist you in navigating your way through various regulatory requirements.
3. Don’t exclude customers through minimum order requirements: Depending on the product, a manufacturer can inadvertently exclude potential EU customers by setting large minimum order requirements. Housing inventory in the EU allows you to offer sample fulfillment and small minimum order quantities, shipped quickly and inexpensively anywhere in the EU without further Customs clearance, as well as offer large inventory fulfillment. There are companies that specialize in stocking goods in the EU on behalf of non-EU producers. Several Canadian and non-Canadian agencies now have arrangements where initial shipments to the EU are consolidated thus lowering up-front shipping and other costs.
4. Get insurance on receivables and be aware of payment terms: Export Development Canada provides receivables insurance and a number of other export-friendly programs to assist Canadian manufacturers looking to expand their exports to new markets. Bear in mind that as of February 1, 2014, EU-based corporations must ensure SEPA (The Single Euro Payment Area) compliance. You can learn more about this requirement on the EU’s single market website.
5. Take advantage of trade shows and other marketing opportunities: The Canadian Trade Commissioner Service is an excellent source of information on upcoming trade shows and other events in various markets. It is not uncommon for there to be a Canadian Pavilion at shows where Canadian businesses can take advantage of support systems such as communal booths and translation services.
6. Make sure your website is EU friendly: True, you can’t realistically translate your website into the 24 official EU languages. But you should consider presenting your site in French, plus German or Spanish, depending on your target market. Be aware that you need to check the appropriate visibility guidelines for the EU logo if you intend to use it anywhere on your website or promotion materials.
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The CanadaEU Trade Agreement is a golden opportunity to lessen Canada’s reliance on the U.S. as our export market of choice. If Canadian producers plan ahead and consider key operational issues early on, then you, too, can have a slice of that $12 billion pie that CETA is forecast to deliver to our economy.
Pernille Fischer Boulter is the founder of Kisserup International Trade Roots Canada Inc., and Kisserup Europe. She has more than 25 years of international business experience and provides advisory services, project management, trade training and consulting services to public and private sector organizations worldwide.