Canada’s largest trade partner is, not surprisingly, the United States. However, it is becoming clear to experts that there are rewards to exporting to other countries, especially emerging markets. Here are a few of the reasons why you should consider diversifying your export markets:
Canada has Free Trade Agreements with 14 countries other than the U.S.
Free Trade Agreements (FTA) are treaties that reduce trade barriers between Canada and another country. Issues covered under a Canadian FTA range from traditional trade issues like tariffs to areas such as intellectual property.
The Comprehensive Economic Trade Agreement (CETA) between Canada and the European Union has been ratified but is not yet in force. Countries with FTA already in force are:
- Costa Rica
- Iceland, Liechtenstein, Norway, Switzerland (Canada-European Free Trade Association)
Trade is possible even with countries not covered by an FTA
In fact, according to an article by The Canadian Trade Commissioner Service, more Canadian firms are trading with China, the United Arab Emirates, and Vietnam, along with other non-U.S. markets.
There are agreement types other than Free Trade Agreements that facilitate trade with foreign markets. For example, China and the United Arab Emirates have Foreign Investment Promotion and Protection Agreements (FIPA) in force. FIPAs protect foreign investors and ensure that they have full control over capital and returns. Vietnam, on the other hand, is included in a World Trade Organization agreement. WTO agreements help businesses function in the international marketplace.
Is yours a Small or Medium-Sized Enterprise? You’re in good company!
According to Statistics Canada, the majority of exporters in Canada are SMEs; 97.4 per cent, to be precise. Nearly 41 per cent of Canadian merchandise exports by value are exported by these SMEs. According to smallbusiness.alberta.ca, small businesses make up 95 per cent of all businesses in Alberta. An article by the Canadian Press states only 4 per cent of Canada’s small and medium-sized enterprises are exporting; imagine the impact if more of these businesses were to start exporting. It can start with you.
Diversifying markets can improve your bottom line
According to this piece by Policy Options, SMEs that export to emerging markets perform better on average than those that export to other foreign destinations. There is higher risk associated with emerging markets, so be cautious. Do your research and seek advice.
On the flip side, if emerging markets are too risky for your tastes at the moment, you can start closer to home. The Canadian Free Trade Agreement (CFTA) is coming into force. In a statement released June 30th, 2017, Economic Development and Trade Minister Deron Bilous stated the CFTA “is a crucial piece that will help create a more open and stable marketplace across our country.” If stable is more your speed, think about expanding into other provinces.
If you are ready to start exploring new markets, domestic or foreign, contact us for more information about our International Business Development (IBD) Program. We will give you the contacts, expert advice, tools, and training you need to export your products or services.
Investment Attraction Officer
Central Alberta: Access Prosperity