Why European Businesses Ought to Enter the Canadian Market

CETA (the Canada-European Union Comprehensive Economic and Trade Agreement) is a bilateral agreement between Canada and the European Union covering virtually all aspects of trade between the two. The agreement, signed February 29, 2016 and implemented September 21st the following year, served to reduce barriers to trade between Canada and the EU. One major way the agreement accomplished this was by eliminating 98% of tariffs applied to goods moving between the parties. An additional 1% of the tariffs is expected to be eliminated within 7 years of the treaty’s implementation. The elimination of these tariffs puts EU businesses on, in this respect, near-equal footing with domestic Canadian businesses, enabling them to better compete in Canadian markets. These businesses now suffer one fewer cost disadvantage relative to their Canadian counterparts and are much more able to price their products competitively.

With this substantial hurdle eliminated, EU businesses may want to consider entering the Canadian market. The Canadian market substantially resembles markets in the EU, with similarly affluent and educated consumers, and has a close relationship with the US, both geographically and economically. Canada also has a strictly regulated banking sector, which makes it stable and a top choice for investors. Further, Canada is known for its multiculturalism, particularly in its major cities. These cities, for example, Toronto, Montreal, and Vancouver, are home to many expatriates from European countries. Consider that each of these three cities have entire neighbourhoods made up largely of these individuals. In Toronto, for example, Roncesvalles is home to a large Ukrainian and Polish community, and Little Italy, as the name suggests, is home for many Italian expatriates.

These individuals tend to be very proud of their heritage and eager to maintain ties to their home countries. They may shop in specialty stores, buy imported products wherever available, and enjoy supporting businesses based in their countries of origin. In the Toronto area, the European supermarket Starsky™ attracts even those European expatriates living substantial distances from the store. Thus, EU businesses may benefit from an almost immediate customer base in these regions full of high-converting consumers and anywhere else their expatriates live (which, in Canada, is virtually everywhere). Established, long-standing EU businesses may also have existing customers in Canada, familiar with their products from their time in the EU.

With EU businesses being better positioned to enter the Canadian market, it may come as no surprise that another notable aspect of the agreement is an entire chapter dedicated to intellectual property. Whether EU businesses have immediate plans for expansion into Canada or not, obtaining Canadian intellectual property rights can be of substantial value.

EU businesses absent from the Canadian market may be surprised to find their products being copied by businesses in Canada. Even worse, if a business has not secured intellectual property protection in Canada, these products may imitate the business’ brand, enabling the Canadian seller to piggyback on its reputation to generate sales.

Remember that intellectual property rights are territorial. If an EU business hopes to be protected in Canada, they’ll need to register their rights in Canada. For all of the same reasons intellectual property rights are instrumental to protecting their products and brands at home, they will be instrumental to these businesses in Canada as well. However, intellectual property rightsholders in the EU can take comfort in knowing that Canada’s intellectual property regime is quite similar to that of the EU and is similarly robust. Pursuant to CETA, Canada has adopted multiple multinational intellectual property agreements. These include the Hague Agreement, Patent Law Treaty, Madrid Agreement, Nice Agreement and Singapore Treaty. The adoption of these agreements more closely aligns the intellectual property regimes of the two parties and facilitates applications for intellectual property rights in Canada by EU businesses – for example, by enabling them to designate Canada in their Madrid and Hague applications for trademarks and industrial designs, respectively.

With it still being early, CETA having come-into-force just over 5 years ago, businesses entering the Canadian market now may capture a larger share of that market for European goods than may be possible once more and more EU businesses recognize the appeal of selling in Canada. Trade between Canada and the EU is on the rise, and businesses are urged to act quickly. Three years following CETA, bilateral trade between the parties had increased by 24 and 25% for goods and services, respectively.

Note, however, that due to the UK’s exit from the EU, CETA does not govern trade between the UK and Canada. Businesses located in the UK can rest assured that “Brexit” did not harm the preferential market access they received under CETA since on April 1, 2021, Canada and the UK ratified the TCA (the Canada - UK Trade Continuity Agreement) to ensure trade continuity between the two parties. The TCA replicates the main benefits provided by CETA, namely eliminating 98% of tariffs applied to goods moving between Canada and the UK. Further, an additional 1% is expected to be removed, bringing the total elimination to 99%, by January 1, 2024. Given Canada’s historical ties to the UK, the preservation of trade relations between the two countries presents a lucrative opportunity for UK businesses to enter the Canadian market.

Whether coming from the EU or the UK, businesses should be aware of provincial differences in the Canadian market. While many of Canada’s intellectual property laws apply nationwide, there can be differences in IP protection when it bumps up against provincial statutes or the common law. For example, Quebec’s new Bill 96, which will come into force on June 1, 2025, carries with it French language requirements that are unique to Quebec. Retaining a registered trademark agent can help businesses coming from the EU or UK to ensure they are aware of provincial nuances.

Unsure where to start? A common first step for any business looking to expand into Canada will be to register one or more trademarks. Businesses shouldn’t assume that their protected EU or UK trademarks will be available in Canada. To avoid investing time and money into an application for a trademark that may not succeed, many businesses and individuals opt to conduct a trademark search. A thorough search and opinion from an experienced Canadian trademark lawyer can help confirm that your trademark is available and registrable in Canada before you file.

If you’re an EU or UK business owner wanting to capitalize on CETA or the TCA and the diverse Canadian market it makes accessible, and want to ensure your intellectual property is protected, contact us today for a complimentary and confidential telephone appointment.