Canada Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Canada is a major trading partner of the EU and currently ranks among its top twelve export destinations, while the EU is Canada’s second largest trading partner. Canada recognizes the need to diversify its trade and promotes the benefits of the CETA trade agreement and its role in economic recovery. Thanks to the pandemic, mutual trade in goods fell by 11.4% year-on-year until 2020, but 2021 already marked a recovery and, compared to the pre-pandemic year 2019, mutual turnover was even 2% higher. This result was mainly driven by Canadian exports to the EU, although exports from the EU were lower than in 2019, but by only 3%.

  • Allcountrylist: Overview of major industries in Canada, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 32,197.30 35,214.40 38,323.50 33,493.90 37,244.00
Imports into the EU (million EUR) 18,173.40 19,658.50 20,996.60 20,444.90 23,452.50
Balance with the EU (million EUR) -14,023.8 -15,555.9 -17,326.9 -13,048.9 -13,791.6

Source: European Commission

Trade relations with the Czech Republic

Canada’s trade balance with the Czech Republic saw a revival in 2021 and grew by 11% compared to 2019. However, the structure of mutual trade remains almost unchanged. In 2021, the largest export items were tires, materials for the construction of railway tracks, parts of motor vehicles, equipment for automated data processing, jet engines and synthetic rubber. On the other hand, coal, aluminium, aircraft and medicine were the most imported from Canada. In 2021, the Czech Republic faced for the first time a deficit in trade in goods with Canada in the amount of CZK billion, mainly due to a significant increase in imports on the Canadian side, the import of medicines increased year-on-year by 63% compared to 2019 and by 51% compared to 2020.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 6.2 7,8 7.7 6.2 7,8
Imports to the Czech Republic (billion CZK) 7.1 8.5 9.2 6.6 10.2
Balance with the Czech Republic (billion CZK) 0.9 0.7 1.5 0.4 2.4

Source: CZSO

Trade relations with countries outside the EU

Canada is an open economy with an extensive network of agreements. Canada’s most important trading partner is the United States, with approximately 75% of Canada’s exports and 62% of its imports. After the EU, China is Canada’s third largest foreign trade partner. Trade with third countries is balanced, with a negative balance of only 1% of turnover.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 328 355.7 349 215.1 343 207.5 297 402.6 394,828.0
Imports to countries outside the EU (million EUR) 358 424.2 379,069.7 372 325.6 335,691.5 404 118.8
Balance with non-EU countries (million EUR) -30,068.5 -29,854.6 -29,118.1 -38,288.9 -9,290.7

Source: EIU, Eurostat

Foreign direct investment

The Canadian government actively attracts foreign direct investment, in the last ten years the amount of FDI into Canada has grown by an average of 8.1% year-on-year. In 2021, the volume of foreign direct foreign investment reached CAD 7billion (over CZK trillion), which is a record high for the past 15 years. The largest source of FDI was the reinvested profits of companies, and within the sectors, investments were mostly directed to production in the amount of CAD 19.3 billion, followed by energy and the mining sector in the amount of CAD 1billion. The main investments come from the USA, the Netherlands and Great Britain. At the same time, the Netherlands is the largest investor from the EU in Canada. The Canadian government strives to diversify investments, emphasizing the focus on innovative areas and R&D, which it also supports through incentives and support programs, which can be found on the Invest in Canada website. This agency was established in 2018 with the aim of further promoting the inflow of FDI and reducing barriers to market entry. Canada’s investment environment is relatively favorable and open, Canada is trying to dismantle existing restrictions, for example in the aviation sector. According to the WTO, the main obstacles to FDI are well summarized in the Trade Policy Review from 2019.

Czech investment does not contribute significantly to Canadian FDI, in 2020 it reached CAD 43 million, which is only 0.008% of foreign investment in Canada. However, individual projects are significant, the acquisition of the Canadian branch of Colt by Česká zbrojovka is worth mentioning, as well as investors in Canada including Draslovka, Precision Record Pressing, Control System, Lama Energy Group, Keboola, Brens North America, mcePharma, Berndorf Bäderbau, Stainless Steel Pool & Spa. Branches of Linet, AgroEcoPower, Principal North America were also opened.

FTAs and treaties

Treaties with the EU

The EU is a strategic partner of Canada, sharing common values ​​and a long history of close cooperation. The relationship with the EU is the oldest formal relationship the EU has with any industrialized country, dating back to 1959.

In 2017, the Strategic Partnership Agreement (SPA) came into provisional force, establishing a framework for bilateral relations between Canada and the EU in strategic areas of common interest. Areas of cooperation include climate, security and foreign policy. The Czech Republic ratified the agreement in August 2017.

In the same year as the SPA, Canada and the EU concluded the Comprehensive Economic and Trade Agreement (CETA). CETA is currently in provisional implementation and will enter into full force only after ratification by all EU member states. The Czech Republic ratified the agreement in October 2017. CETA is one of Canada’s most ambitious trade agreements, thanks to which 98% of tariffs were immediately removed, the services sector was opened up, access to public procurement, including at the provincial and municipal levels, and it also means better conditions for labor mobility.

Contracts with the Czech Republic

In the economic and trade area, the most important agreements concluded between the Czech Republic and Canada, in addition to the aforementioned trade agreement, are the agreement on the avoidance of double taxation and the agreement on mutual protection and support of investments. The 2002 Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion in the Field of Taxes on Income generally limits the right of a Contracting State to require payment of tax in certain cases from an entity that is subject to tax in the same State under its domestic tax laws. The Agreement on the Promotion and Protection of Investments from 2012 promotes and facilitates investment in the territory of the contracting parties for investors from these countries. The countries also concluded the Treaty on Social Security, which mainly regulates the pension rights of migrants.

Note: A complete overview of contracts between the Czech Republic and Canada can be found here.

Developmental cooperation

The provision of foreign development assistance is an important part of Canadian foreign policy. The Official Development Assistance Accountability Act (current 2008) governing the delivery of development assistance requires that aid contribute to poverty reduction and be consistent with aid effectiveness principles and Canadian values. The development assistance agenda is managed by Global Affairs Canada. Canada’s spending on international aid increased by 27.0% to CAD 8.4 billion in 2021, up from CAD billion in 2020. International aid accounts for approximately 1.6% of federal budget spending in 2021 – which is significantly more than 1.0% of budget spending in previous years in 2020. More information on Canada’s development assistance in 2021 can be found here.

Prospective fields of study (MOP)

The growing Canadian population, accelerating digitization, new trends in the fight against climate change, including the development of the extraction of critical mineral resources, bring many opportunities for Czech companies as well.

Automotive sector

The automotive sector is one of Canada’s key sectors, accounting for roughly 12% of GDP, and in addition to traditional manufacturing, there is an increasing emphasis on related innovation. As part of the promotion of sustainability goals, the federal government mainly supports electromobility and autonomous driving, and strives for a leadership position in the field of battery production. The government’s goal of zero emissions for light and passenger trucks is set until 2035, and the state is currently investing heavily in a network of charging stations for electric cars and in hydrogen stations.

Civil aviation industry

Canada is the 5th largest aviation market in the world and the aviation industry is one of Canada’s strategic industries, but it has been significantly affected by the pandemic restrictions. But the efforts to support it and find new opportunities for its restoration are even greater. Government and private investments flow into the support of research and development of new technologies, especially in the field of digital technologies or carbon-neutral aviation. Canada also wants to focus on the development of unmanned aerial systems and space technology.

Mining, mining and oil industry

The mining and quarrying industry remains one of the key sectors of the Canadian economy, as the country is the 4th largest producer of oil, the 5th largest producer of natural gas, and the 2nd largest producer of uranium, as well as a significant producer of ores and has key reserves of rare earths. The further development of mining projects continues to provide opportunities for Czech suppliers of mining and mining technologies. Other major trends that offer interesting opportunities for Czech companies are the development of the extraction of critical mineral resources (the Canadian government has great ambitions in this area, which will be developed in the next period), sustainability (solutions for carbon capture, decontamination, sustainability of mine electrical networks, hydrogen economy) and digitization (AI, cloud computing, data analysis).

ICT

ICT is a constantly growing field in Canada, which significantly contributes to the growth of Canadian GDP by about 6 percent and which, at the same time, did not experience a significant decrease during the pandemic. Many opportunities for Czech companies result from the accelerating digitalization and virtualization of business and society, which are manifested in digitalization aspects even in traditional sectors such as agriculture, healthcare, banking and transport. Canada is placing a growing emphasis, supported by both government and private investment, on fields related to artificial intelligence and information technology related to robotics and advanced manufacturing, as evidenced, for example, by the superclusters for artificial intelligence (ScaleAI) and advanced manufacturing (Next Generation Manufacturing).

Healthcare and pharmaceutical industry

Canadian healthcare has long been responding to the aging of the Canadian population and the challenge of chronic disease, Canada’s medical device market is the eighth largest in the world, and Canada’s pharmaceutical sector is in ninth place. However, the COVID-19 pandemic has shown the weaknesses of the sector and the need for additional funding, especially for pharmaceutical research, Canada is seeking to produce vaccines against COVID-19 on the domestic market. At the same time, the pandemic has brought extensive use of remote care and telemedicine and corresponds to the government’s support for the digitization of healthcare, the use of data and precision healthcare, opportunities for Czech companies have also strengthened in the use of nanotechnology and in the field of medical devices.

Agricultural and food industry

Agriculture already accounts for roughly 7.4% of Canada’s GDP, and as Canada’s population grows, demand for agricultural products and technology will continue to increase. In connection with the emphasis on sustainability and a healthy lifestyle, opportunities are also expanding in areas such as plant-based products. There is also interest in new technologies (drones, smart agriculture) or research and scientific cooperation, Canada is also focusing significantly on, for example, plant protein research and has established a protein supercluster. At the same time, the coronavirus pandemic has subjected supply chains to a stress test, which is forcing some of their links to diversify their suppliers more and reorient themselves to the European market and its entities.

Canada Trade