Todd J. Burke
Partner
Member, International Board
Co-Leader, International Arbitration
Article
As trade tensions boil over in North America, more and more Canadian businesses are reassessing their international trade and investment strategies. Against this backdrop, Europe presents a compelling opportunity, one that Canadian companies can’t afford to overlook. But navigating a new market—particularly one as vast and complex as Europe—requires careful planning, the right resources, and a clear understanding of regulatory and trade frameworks.
To explore these challenges and opportunities, Gowling WLG recently hosted a lively and instructive webinar, part of four-part series exploring opportunities abroad. Moderated by Wendy Wagner, Head of Gowling WLG’s International Trade & Customs Group in Canada, and featuring industry leaders and trade experts from both the private and public sectors, the discussion surfaced a number of practical insights to help businesses consider their next move.
Home to an affluent population of 500 million, the European Union boasts a safe and stable business environment with strong consumer demand and access to a highly skilled workforce. Europe also serves as an important gateway to other global markets, making it a natural destination for Canadian businesses considering expansion.
These intrinsic advantages are underpinned by one of the most advanced trade agreements in the world. Since taking effect in 2017, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) has not only eliminated tariffs on 98% of goods traded between Canada and the EU, but it has also helped foster greater regulatory cooperation, opened the door to cross-border procurement opportunities, and forged new pathways for research and development across key industries.
Morgan Larhant, Head of the Regional Economic Service at the French Embassy in Canada, stressed that CETA is also a dynamic framework, forever evolving: “It keeps adapting,” he said, noting the expert committees in Canada and the EU charged with responding to changes in regulation or issues raised by exporters.
There are other, more pragmatic, reasons businesses may consider the move overseas, as well. “I think it’s important to be close to our customers,” offered Pierre Pyun, Vice President of Government Affairs at Bombardier, in discussing the Canadian aerospace manufacturer’s broad European operations.
So, where should your business start? From identifying the right market entry strategy to building local partnerships, the panel offered several tips for Canadian companies looking to take their first steps toward European expansion.
Before entering the European market, businesses must first determine whether they plan to export goods and services or establish a local presence—a decision that will shape the regulatory and operational considerations before them. In either case, the next step is invariably to assess market potential: Is there demand for your product or service? If so, where and how much?
Factors to evaluate include the competitive and regulatory landscape, trade barriers, consumer preferences, and supply chain feasibility. While CETA has eased many trade restrictions, sector-specific regulations may still apply. Thorough market research and feasibility assessments will help you decide the best approach and develop a playbook for long-term success in Europe.
A strong network is an essential ingredient for cross-border expansion—both for effective market analysis and to enable a smooth transition. The panel emphasized the importance of engaging early and often with chambers of commerce, foreign trade commission offices, and embassies, all of which can provide useful insights into local business environments, regulatory requirements, and industry trends. Export Development Canada (EDC) was highlighted as another valuable resource, offering financing solutions, risk management tools, and market intelligence to help Canadian businesses assess their options.
Once a company decides to move forward, local connections become particularly critical. Barbara Carmona Venancio, Chief Representative Officer in Canada, Caixabank S.A. and Vice President of the Spanish Chamber of Commerce in Canada, referenced sector-based trade shows as good venues to meet potential partners, distributors, and industry contacts who can provide on-the-ground support and insights. Establishing a relationship with a European bank is no less vital, and is typically a prerequisite for financial transactions, securing credit, and handling day-to-day business dealings.
Determining the right legal structure is a decision that can impact everything from taxation to regulatory compliance and operational flexibility. Dr. Lars-Gerrit Lüßmann, Partner & Co-Lead, Gowling WLG Germany, emphasized that there is no one-size-fits-all approach—companies must assess their goals, risk tolerance, and long-term strategy before selecting the best path forward.
Businesses expanding into Europe have several ways in—including acquisition, joint partnerships, the opening of a branch office, or the establishment of an independent subsidiary—each with its own benefits and challenges. Acquisition offers immediate market access but requires due diligence, while partnerships or joint ventures provide local expertise with shared risk. A branch office maintains ties to the Canadian parent company but may have tax and liability limitations, whereas a subsidiary grants full autonomy but comes with added regulatory obligations. As always, the best approach depends entirely on your company’s circumstances and objectives.
Europe “tends to be seen as a little bit bureaucratic from an outside perspective,” admitted Lüßmann, while noting that the European Commission is working to cut red tape in targeted areas with a view to courting more global investment.
Such reforms notwithstanding, businesses operating in Europe must have their eyes open to the intricacies and rigidities of the EU’s regulatory regime, with data protection, environmental protection and employment being particularly important areas to plan for. Lüßmann also called attention to the EU’s foreign direct investment screening framework meant to protect critical industries like infrastructure, defence and financial services. Navigating these areas requires research, foresight and local expertise, but for businesses willing to adapt, Europe remains a highly rewarding market.
With the right approach, Canadian businesses can build a lasting, successful foothold in one of the world’s most dynamic markets. With offices located across Canada, as well as in Germany and France—combined with deep, sector-focused legal expertise—our team can help you optimize your opportunity overseas. Contact the authors today to begin a conversation.
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