Fast Promotes Canada Trade And Tax Benefits In Germany

by Robert Lee, Tax-News.com, London

13 December 2011

Canada's International Trade Minister has been promoting his country's pending free trade agreement with the European Union (EU) by stressing that it will create more jobs and prosperity on both sides of the Atlantic.

Making a pro-trade visit to France and Germany, Ed Fast, the Minister of International Trade and Minister for the Asia-Pacific Gateway, met with Canadian and German business leaders in Berlin to discuss the commitment to an ambitious trade agreement. During his trip, Fast will also assist Canadian companies seeking new economic opportunities in Europe and highlight what makes Canada a leading investment destination of choice.

Commenting on the ongoing FTA negotiations, Fast stressed that: “Our government continues to focus on jobs and economic recovery, and the potential benefits of a Canada-EU trade are enormous. With trade accounting for over 60% of Canada’s annual GDP and with one in five Canadian jobs linked to trade, a Canada-EU trade agreement would create almost 80,000 new jobs and provide the equivalent of a CAD1,000-boost to the annual income of the average Canadian family.”

The EU is Canada’s second-largest partner in trade and investment and a key partner in innovation. Two-way merchandise trade reached CAD82.5bn (USD80.4bn) in 2010, up from CAD75bn the previous year. In 2009, Canada was the EU’s fourth-largest source of foreign direct investment, and at the end of last year, Canadian direct investment in the EU totalled more than CAD145bn.

Negotiations toward an FTA began in October, 2009, and nine rounds of talks have been held since. According to the Canadian government, significant progress has been achieved across the board, including in the core market access areas of goods, services, investment and government procurement. A 2008 study, jointly published by Canada and the EU, argued that a stronger economic partnership could boost Canadian gross domestic product by CAD12bn annually and two-way trade by more than 20%.

Fast also met with business leaders from German companies with investments in Canada to highlight how the country's low tax rates make it an ideal location for new investment. He said that: "Of all G-7 countries, Canada offers investors the lowest overall tax rate on new business investments and is on track to having one of the lowest corporate tax rates."

In 2012, Canada is expected to have a combined federal-provincial statutory general corporate income tax rate of 26%, lower than most other G-7 countries and more than 13% less than that of the US. In addition, Canada is the first in the G-20 to make itself a tariff-free zone for manufacturers by eliminating tariffs on manufacturing inputs, machinery and equipment.

Germany is the 10th-largest foreign investor in Canada, with foreign direct investment totalling CAD10.2bn in 2010. “Our strong economic fundamentals and investment advantages clearly show why leading German companies are bringing prosperity-boosting investment to Canada. I am urging other business leaders to do the same," Fast concluded.

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