Standing alongside his European counterparts in Brussels on Oct. 30, Prime Minister Justin Trudeau snatched victory from defeat by having the Comprehensive and Economic Trade Agreement approved at the 11th hour.
While much has been said about the seven years it took to negotiate the deal, absent from the commentary was that Trudeau, some 45 years later, has managed to fulfil a policy promoted by his father Pierre Trudeau’s government in the early 1970s. Known then as The Third Option, it aimed to promote more diversification of bilateral trade agreements with blocks such as Europe to lessen U.S. economic and cultural influence on Canada.
Given Donald Trump’s recent election as U.S. president and his protectionist musings about renegotiating NAFTA (although, hopefully, not the Canada-U.S. Free Trade Agreement that precedes it), the signing of CETA comes at no better time for Canada.
Key features of CETA include removing 98 per cent of customs duties, ending restrictions on open access to public procurement contracts, opening up of the services market, offering predictable conditions for investors and helping prevent illegal copying of EU innovations and traditional products, as well as removing requirements for visiting work visas.
As a result, Canada will be one of the only developed countries in the world with guaranteed preferential access to the marketplace of almost one billion consumers in North America and the EU — representing more than half of the world’s output of goods and services.
For feisty Canadian startups that would have previously defaulted to the U.K. pre-Brexit, there are myriad arguments to establish themselves in Ireland. For established Canadian companies in the U.K., they should be, at a minimum, planning to create a parallel EU structure to ensure continued access to the market post-Brexit — and there is no better place to do that than Ireland.
The benefits establishing operations in Ireland are many — English-speaking, common law system, competitive corporate tax regime and a geographic location almost between both continents. However, it is the young and educated workforce that makes it the most appealing for companies. Ireland is home to roughly 1,000 major corporations, including the likes of HP, LinkedIn, Facebook, Twitter and more — in fact, Facebook operates in 40 languages out of its offices in Dublin alone.
Since 2006, Canada and Ireland have been subject to a double-taxation treaty and Ireland provides unilateral relief on the payment of interest and dividends to tax treaty countries. As a result, any such payments from an Irish company to a Canadian parent can be made without withholding taxes. For payments from Canada to Ireland, while withholding taxes apply, credit for any Canadian tax withheld is available against any Irish tax liability.
The U.S. has always been the default for Irish companies looking to expand in North America. However, there are growing reasons why Canada should also be considered.
With new direct flights to Toronto, Vancouver and, hopefully, Montreal on the horizon, and Dublin Airport one of the busiest in Europe, connectivity is easy.
There are only certain areas of the world that provide the right mix of talent, R&D and capital that make high-tech clusters work. Whether it is the MaRS Discovery District and Ryerson DMZ in Toronto, Communitech in Kitchener-Waterloo, District 3 in Montreal or Vancouver’s Launch Academy, these Canadian innovation hubs mirror the same high-growth tech clusters that have been developed in Dublin — providing the foundation for innovative synergies.
Via a process of substantial transformation, EU companies can “add value” to European products imported to Canada, which can then be traded, tariff-free, with the U.S. under NAFTA and/or the Canada-U.S. Free Trade Agreement.
Finally, the public-funded health-care system combined with corporate tax rates — which have been consistently lowered over the past 15 years — make Canada competitive and attractive for employers.
Recent Ireland-Canada investment
The encouraging story over the past 24 months is that the investments made between Canada and Ireland are both large and small and span many sectors: whether it be the €450m acquisition of Topaz by Couche-Tard; the acquisition of Whitegate refinery by Irving Oil; the €41m acquisition of All Seasons Mushrooms by Fyffes; the €5.5m investment by Canadian firm Mark Anthony Brands in Glendalough Distillery; or the establishment of Canadian firm Shopify in Galway, creating 50 jobs.
The story continues with the acquisition by Canadian firm Greystone of a 51-per-cent stake in the Ballycadden Wind Farm and the acquisition of Dublin-based Brown Bag Films by 9 Story Media Group.
For Ireland and Canada, now is the time to reset our default positions.
Chris Collenette is a Canadian living in Ireland for nearly 10 years and is responsible for the Canada Desk at the Dublin law firm Philip Lee. Collenette previously worked as an advisor to former Canadian Prime Minister Jean Chrétien.