CETA Issues and Opportunites Tim A. Reuss, President & CEOMercedes-Benz CanadaMay 12, 2014

Benefits of Free Trade• Increased trade results in increased economic growth

• Increased trade means increased employment, as well as higher salaries and

increased living standards

• Increased trade offers a greater variety of goods to consumers at more

competitive prices

• Reduced poverty

• Provides national and sub-national governments with access to the best

products and services internationally to better fulfill their procurement

requirements

• Trade and investment flows help spread new ideas and innovation

• Trade develops and secures economic ties between nations and contributes to

political stability

• Trade and investment increases competition and competitiveness

• Trade agreements can make it easier to do business

• Trade makes it easier to exchange innovative or high technology products

(Source: European Commission)

 

CETA Workshop, Carleton University, May 12, 2014, Ottawa2

CETA Highlights

• Estimated 20% increase in bilateral trade, generating $12 billion annual increase to Canada’s economy*

Economic Activity

• most comprehensive agreement the two parties have ever signedScope

• 98% of tariffs to be eliminated on day one – vs. 29% NAFTATariffs

• Simplified customs procedures to facilitate tradeBorders and

Customs• First ever negotiated regulatory cooperation

chapter - intended to allow Canada to get in on the ground floor of regulatory development with the EU

Regulatory Cooperation

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* Source: European Commission and Government of Canada Joint Study

CETA Workshop, Carleton University, May 12, 2014, Ottawa

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CETA – Automotive Status

The automotive package is complete and includes the following elements:

• Passenger cars - phased out over 7 years. • Commercial vehicles – phased out over the first

3 years.Tariffs

• 17 UN ECE standards to be accepted by Canada on day one.

• 8 additional standards have been selected for additional review for recognition (or not) within 3 years of CETA coming into force.

Regulations

• 50% content requirement until U.S. agreement, increasing to 55% with Canada-U.S. cumulation.

• 100,000 units per year quota for vehicles that don’t meet 50% (N/A if U.S.-EU sign deal).

Rules of Origin

CETA Workshop, Carleton University, May 12, 2014, Ottawa

Light Vehicle Sales Market Shareby Passenger Car Segment (2013)

Compact51.2%

Luxury Sport0.6%

Luxury9.4%

Luxury High1.7%

Intermediate20.0%

Sport3.7%

Subcompact13.5%

Canada United StatesSource: DesRosiers Automotive Consultants Inc., AIAMC, CVMA and Ward’s Automotive Reports

Compact32.9%

Luxury Sport0.8%

Luxury10.1%

Luxury High4.1%

Intermediate39.1%

Sport 5.2%

Subcompact8.3%

5 CETA Workshop, Carleton University, May 12, 2014, Ottawa

Canada remains a fundamentally different automotive market• Hatchback is not (and never has been) a dirty

word in Canada

• Station wagons remain a strong and enduring niche (luxury and non-luxury)

• Minivans are still alive and well in Canada

• “Smaller” works in Canada and is not equated with “Cheap” Compact Luxury has been where most of the luxury growth has been and will continue to be

• AWD is critical in all segments, but particularly luxury

• Diesel has been strong in Canada for several years

6 CETA Workshop, Carleton University, May 12, 2014, Ottawa

Features:

• Country mode illuminates the road shoulder more brightly and extensively than conventional low beam. This affords the driver better visibility and enables faster reactions.

• Highway mode increases the light output of the LEDs for better illumination of the road. As speeds increase beyond 110 km/h the range of the light beam is further increased.

• With a certain steering angle, a cornering light function improves road illumination on tight bends at night.

• An active light function is able to pivot the headlamps into curves by up to 15 degrees to illuminate the road surface much more effectively.

• The enhanced fog lamp function pivots the headlamps outwards while lowering its beam. This illuminates the outer edge of the road more effectively while reducing the glare due to light reflected by the fog.

Mercedes-Benz LED Intelligent Lighting System

Availability:

CETA Workshop, Carleton University, May 12, 2014, Ottawa8

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Key principles of MB Canada advocacy position

• The Canadian vehicle market is significantly different than the US market

• European and Canadian standards both ensure state-of-the-art protection of citizens and the environment

• Canadian regulations largely fail to recognize UN ECE standards and this is a barrier to trade that impacts the market in two key ways- Blocking specific models from entering the Canadian market (eg. A-Class)

- Blocking certain advanced technologies from the Canadian market (eg. intelligent lighting systems)

• Canada should move to accept UN ECE safety and emission standards This would be a win-win for Canada as consumers would benefit from a greater selection vehicles and advanced vehicle technologies, while state-of-the-art protection of its citizens and the environment would be assured.

CETA Workshop, Carleton University, May 12, 2014, Ottawa

Thank you