Mr. Speaker, I am pleased to rise in the House today to take part in the debate on the agreement between Canada and Europe. More specifically, I would like to talk about the benefits it will bring to small businesses and to the agricultural sector.
In my riding, highly specialized agricultural ventures and small businesses play a vital role.
The comprehensive and economic trade agreement, or CETA, is one of the most ambitious trade agreements that Canada has ever negotiated. It will open doors and guarantee access for SMEs and agricultural exporters throughout the EU, the world's second-largest economy and import market.
This agreement will generate significant benefits for all Canadians. I want to speak, first, about the important of SMEs to the Canadian economy and why this agreement is essential to the success of our SMEs in global markets. In Canada, SMEs employ some 10 million Canadians, the equivalent of nearly 90% of Canada's total private sector workforce. SMEs clearly have a significant role to play in Canada's future prosperity. Our government firmly believes in supporting our hard-working SMEs in succeeding in this role.
In a recent profile by Innovation, Science and Economic Development Canada on Canadian SMEs and their export characteristics, it was found that about 10% of our country's SMEs exported goods and or services in 2011, with export sales accounting for 4% of total company revenues. Notably, the report highlights the superior financial performance by exporters compared with non-exporters. SMEs that export generated, on average, higher sales, pre-tax profit margins, and returns on assets compared with non-exporters.
The report also found that exporters were more research-and-development intensive than non-exporters, spending 8% of annual revenues on R and D on average, compared with 6% for non-exporters. Exporters were more growth-oriented than non-exporters with about 10% growing sales by 20% or more per year over the 2009-11 period compared with 8% for non-exporters.
These findings are indicative of the importance of global markets to Canadian SMEs' success. One way to support our SMEs is by ensuring they have accessible opportunities abroad and creating advantageous conditions with these markets for them to compete. The negotiation of CETA furthers such an aim.
The European Union and its 28 member states are an important market for Canada. I have to say that this is an access to a market of 500 million people for our SMEs. The EU is Canada's second most important destination for SME exports behind the U.S., and key for global supply chains with more Fortune 500 companies than anywhere else in the world.
This important access to supply chain is an important avenue of opportunities for the global ambitions of many Canadian SMEs. CETA aims to lift barriers that have held our SME exporters from taking full advantage of accessing this lucrative market. CETA's comprehensive tariff elimination will result in many Canadian products as supported by SMEs to become more competitive in the EU.
Of the EU's more than 9,000 tariff lines, approximately 98% will be duty free for Canadian goods when CETA comes into force. Almost all of the remaining tariff lines will be eliminated when the agreement is fully implemented.
For Canadian SME service suppliers, CETA will provide the best quality market access that the EU, the world's largest importer of services, has ever provided in a trade agreement. As well, it is the most ambitious commitment on temporary entry the EU has ever granted.
Furthermore, CETA will open new opportunities for Canadian SMEs in the EU's estimated $3.3 trillion government procurement market. Once CETA enters into force, Canadian firms will be able to supply goods and select services to all levels of EU government, including the EU's 28 member states and thousands of regional and local government entities.
CETA also includes other innovations that will save time and money for Canadian businesses, such as the protocol on conformity assessment that will allow Canadian manufacturers in certain sectors to have their product tested and certified in Canada for sale in the EU. This can be particularly useful for SMEs. CETA addresses many of the barriers noted by SME exporters head-on and will create advantageous conditions for SMEs to pursue new opportunities in the EU.
Our government is committed to supporting the dynamics and export preparedness of our Canadian businesses, particularly SMEs. CETA is a landmark initiative that furthers this goal.
The other important part of my riding is agriculture. The Canadian agriculture and agrifood sector is also a vibrant and important facet of our economy.
We are the fifth-largest exporter of agricultural and agrifood products in the world, and renowned as a reliable supplier for safe and high-quality products. As a medium-sized economy, our economic prosperity is built on open trade, and this is especially important for agricultural and agrifood exporters.
It is estimated that approximately half of the value of primary agricultural production in Canada is exported, either as a primary commodity or processed food and beverages product. The EU is an important market for Canada in this sector and holds strong potential for our agricultural exporters. Preferential market access to the EU, the world's second-largest importer of agriculture and agrifood products, will foster growth and create new opportunities for Canada's producers and processors.
CETA reduces tariffs and non-tariff barriers to create a more stable and transparent export environment for our agricultural sector. To give members an example, it is estimated that, because of CETA, $1.5 billion of potential exports will happen for our agricultural sector: $600 million for our beef sector; $400 million for our pork producers; $100 million of grain and oil seeds; and $300 million in processed foods, fruits, and vegetables. This is good news for our farmers.
Currently, Canadian agricultural exports to the EU face prohibitively high tariff rates, with average EU agricultural tariffs of 13.9%. Key Canadian exports, such as durum and high-quality common wheat currently face maximum tariffs of up to 148 euros per tonne. When CETA is fully implemented, most of these tariffs will be eliminated, making Canada's agricultural products more competitive and attractive to the EU's half a billion consumers.
CETA will also create new opportunities for the food processing and beverage industry. On the day of CETA's entering into force, all EU tariffs on Canadian processed foods, with the exception of sweet corn and refined sugar, will be immediately eliminated. This comprehensive tariff elimination across the board will directly benefit Canada's processed food and beverages sector to generate more opportunities, which will lead to more jobs, higher wages, and greater long-term prosperity for Canadians.
CETA also recognizes that barriers to trade extend beyond import tariffs. The agreement will establish mechanisms to address key issues of importance to our producers, including committees and regulatory co-operation.
CETA also includes provisions to address non-tariff measures in the EU, such as those related to animal and plant health, and food safety.
The Canada-European Union comprehensive economic and trade agreement is a good deal for our farmers and our small businesses. Access to a market of 500 million consumers is very good news for our country. At the end of the day, this agreement is good for small businesses and farmers.
