By helloDarwin
February 20, 2025
CanExport SME: Which Projects Will Be Subsidized?
In a rapidly changing global economic context, Canadian businesses must adapt to new realities in international trade. The CanExport SME program represents an opportunity for those seeking to diversify their markets and strengthen their competitiveness abroad. However, not all projects are eligible for this funding. Several factors, such as macroeconomic conditions, sectoral priorities, and trade agreements, influence the selection of applications. Discover the characteristics of the projects most likely to be financed by CanExport SME, based on data and tables graciously provided by the firm GoExport.
Socioeconomic Factors Determining Subsidized Projects
Macroeconomic Context and Issues
The current macroeconomic context plays a decisive role in selecting projects likely to be funded by the CanExport SME program. Canada, facing growing trade tensions, must contend with a global environment marked by uncertainty and volatility in exchanges. The potential imposition of new customs duties by the United States—Canada’s main trading partner—creates an economic instability that forces businesses to revise their export strategies. This context encourages market diversification and prompts the government to support, or at least encourage, initiatives aimed at reducing dependence on the United States, notably by exploring new commercial opportunities in Europe and Asia.
Rank | Country | Total Exported in 2023 (millions USD) | Category 1 (HS Code) | Category 2 (HS Code) | Other Imported Products |
|---|---|---|---|---|---|
2 | China | 22,599 | Oilseed crops – plants (HS 12) | Ores, slags – ashes (HS 26) | Mineral fuels – oils – bitumen (HS 27); Paper pulp – fibres (HS 47) |
3 | Japan | 11,732 | Mineral fuels – oils – bitumen (HS 27) | Ores – slags – ashes (HS 26) | Oilseed crops – plants (HS 12); Meats and offal (HS 02) |
4 | United Kingdom | 10,502 | Precious stones – precious metals (HS 71) | Mineral fuels – oils – bitumen (HS 27) | Aircraft – aviation parts (HS 88) |
5 | Mexico | 6,563 | Vehicles and their parts (HS 87) | Machines and mechanical appliances (HS 84) | Oilseed crops – plants (HS 12); Meats and offal (HS 02) |
6 | Netherlands | 5,503 | Mineral fuels – oils – bitumen (HS 27) | Ores – slags – ashes (HS 26) | Inorganic chemicals (HS 28) |
7 | Germany | 5,206 | Mineral fuels – oils – bitumen (HS 27) | Ores, slags, ashes (HS 26) | Reactors, machines, mechanical appliances (HS 84) |
8 | South Korea | 5,151 | Mineral fuels – oils – bitumen (HS 27) | Ores – slags – ashes (HS 26) | Meats and offal (HS 02) |
9 | India | 3,811 | Mineral fuels – oils – bitumen (HS 27) | Root vegetables – tubers (HS 07) | Fertilizers (31) |
10 | Hong Kong | 3,606 | Pearls – precious stones – precious metals (HS 71) | Electrical machinery and equipment (HS 85) | Fish – crustaceans – molluscs (HS 03) |
11 | Switzerland | 3,420 | Pearls – precious stones – precious metals (HS 71) | Machines and mechanical appliances (HS 84) | Ores – slags – ashes (HS 26) |
Total: USD 79 billion among these 10 countries, representing 13% of the total exports recorded in Canada in 2023.
Canada’s trade balance illustrates this dynamic, with an excess of $8.2 billion with the United States, but significant deficits with other trading partners. In 2023, Canadian exports reached approximately $814 billion, with significant trade outside the United States, notably to China ($22.6 billion USD), Japan ($11.7 billion USD), and the United Kingdom ($10.5 billion USD). However, these flows are counterbalanced by substantial imports from countries such as China ($66.1 billion USD) and Mexico ($34.1 billion USD), thereby creating trade imbalances.
Within this context, it is possible to predict that the projects most likely to be supported by the CanExport SME program will be those that contribute to diversifying Canadian exports toward strategic markets, in line with current trade agreements. Initiatives that enhance the competitiveness of Canadian businesses on the international stage—while accounting for risks associated with currency fluctuations and new regulations—should be particularly favored. These predictions highlight the importance of a proactive approach in transforming the challenges of international trade into opportunities for development.
Priority Industries
Industries that could be prioritized for the CanExport SME program are those that meet Canada’s strategic needs for market diversification and export growth. Analysis of Canada’s main exports outside the United States in 2023 reveals several key sectors that might be favored. Among these, the agri-food industry plays an important role, with significant exports of oilseeds, meats, and agricultural products to China, Japan, and Mexico. These products, which are experiencing growing international demand, could be supported through initiatives aimed at enhancing their presence in new markets.
The natural resources and energy sector is also central. Mineral fuels, oils, and petroleum-derived products are among the main exports to partners such as the United Kingdom, Germany, and South Korea. With the ongoing global energy transition, projects related to renewable energy or sustainable energy solutions could have strong funding potential.
The technology and mechanical equipment sector also appears promising. Canada already exports machinery, reactors, and mechanical equipment to Germany, Mexico, and Switzerland, demonstrating recognized expertise in this field. Thus, companies offering technological innovations, particularly in industrial automation and artificial intelligence, might be well positioned to secure financial support.
Finally, specialized sectors such as aerospace and precious stones, which are widely exported to markets like the United Kingdom and Hong Kong, also show expansion potential. Companies aiming to conquer new markets by leveraging Canadian expertise in these areas could benefit from particular attention.
Regulatory Factors and International Agreements
Regulatory factors and international agreements could directly influence the selection of projects submitted to the CanExport SME program due to the constraints and opportunities they create for Canadian companies. With a multitude of free trade agreements in place—such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), and the Canada-United States-Mexico Agreement (CUSMA)—companies seeking to export to these markets benefit from favorable commercial frameworks. These agreements reduce tariff barriers and simplify export procedures, making some projects more viable and attractive.
Trade Agreement | Countries |
|---|---|
Trans-Pacific Partnership (TPP) | Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, Vietnam |
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) | Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam (United Kingdom pending) |
Canada-Chile Free Trade Agreement | Chile |
Canada-Colombia Free Trade Agreement | Colombia |
Canada-Costa Rica Free Trade Agreement | Costa Rica |
Canada-European Free Trade Association (EFTA) Free Trade Agreement | Iceland, Liechtenstein, Norway, Switzerland |
Canada-Honduras Free Trade Agreement | Honduras |
Canada-Israel Free Trade Agreement (CIFTA) | Israel |
Canada-Jordan Free Trade Agreement | Jordan |
Canada-United States-Mexico Agreement (CUSMA) | Mexico, United States |
Canada-Panama Free Trade Agreement | Panama |
Canada-Peru Free Trade Agreement | Peru |
Canada-Republic of Korea Free Trade Agreement (CKFTA) | South Korea |
Canada-Ukraine Free Trade Agreement (CUFTA) | Ukraine |
Canada-UK Trade Continuity Agreement (Canada-UK TCA) | United Kingdom |
In parallel, specific regulations in each country play a key role in determining the eligibility and feasibility of projects. Certain markets require strict certifications, particularly in the agri-food, pharmaceutical, and technology sectors, which can incur additional costs for Canadian companies. Consequently, projects that incorporate a proactive approach to regulatory compliance and adaptation to local requirements may be better positioned to receive support.
Finally, trade tensions and protectionist policies from certain trading partners, such as the United States, add an extra layer of uncertainty. This could favor projects that target emerging or underexploited markets, where trade agreements offer competitive advantages to Canadian exporters.
Characteristics of Subsidized Projects
Profile of Projects and Eligibility Criteria
According to the eligibility criteria for the CanExport SME program, Canadian companies that could have their applications accepted are those that meet the following requirements:
- Business Status: Be a for-profit entity, incorporated as a corporation, limited liability company, or cooperative in Canada, with an active business number issued by the Canada Revenue Agency.
- Company Size: Employ fewer than 500 full-time equivalents (FTEs).
- Annual Revenue: Have declared revenues between $100,000 and $100 million in Canada during the last fiscal year.
Projects submitted must target international trade development activities in foreign markets where the company has not yet established substantial sales. Initiatives focused on exploring new markets or expanding into regions where the company’s presence is limited might be particularly favored. Additionally, proposed expenses must be eligible according to the categories defined by the program, such as business travel, participation in trade shows, international business consulting services, and marketing activities adapted to the target markets.
It is also essential that projects demonstrate a differential impact, meaning they represent a new initiative or a significant expansion compared to the company’s current activities. Applications aligned with the strategic priorities of Global Affairs Canada and presenting notable potential to contribute to Canadian economic growth could have a higher chance of approval.
In summary, companies that meet the above criteria and propose innovative projects focused on expanding into new international markets could be well positioned to secure funding under the CanExport SME program.
Activities Funded and Strategic Planning
The strategic planning of projects submitted to the CanExport SME program is key to maximizing the chances of approval and ensuring effective implementation. This process involves several fundamental steps to align the project with the program’s objectives and the realities of the international market. These steps include:
- Selection and Validation of Target Markets: Conducting a thorough analysis of potential markets, assessing commercial opportunities, economic and political risks, and entry barriers such as regulations and certification requirements.
- Development of a Diversification Strategy: Not limited to geographic expansion, this may include exploring new market niches, adjusting business models, or adapting products to local requirements.
- Definition of Eligible Activities and Budget Planning: The program funds various export-related activities, including business travel, trade show participation, promotional material adaptation, international business consulting, and intellectual property protection. A detailed and realistic budget must be established, ensuring expenses comply with program limits and that the company can finance its share (50% of the costs must be covered by the company).
- Development of a Structured Operational Plan: A detailed timeline of activities, specifying implementation dates, milestones, and performance indicators to ensure the project’s long-term impact.
Discover how to build an export plan for CanExport
Example and Best Practices
To maximize the success of a project submitted to CanExport SME, several best practices should be followed. First, a thorough analysis of the target market is essential. The company must demonstrate that it has identified a real opportunity and that its project fits into a favorable context, taking into account current trade agreements and specific regulations. Next, a strategic diversification is an asset: it is not only about targeting a new market, but also adapting the offering to local expectations through adjustments in marketing, distribution, or product certification.
An exemplary project might be that of a Quebec-based clean technology company wishing to export its water filtration solutions to Southeast Asia. This project would rely on key elements such as:
- Participation in trade shows in Indonesia and Vietnam to meet local distributors and understand demand.
- International regulatory consultation to adapt products to local environmental standards.
- Translation and adaptation of promotional materials to meet cultural and linguistic preferences.
- Filing patents and obtaining certifications to ensure intellectual property protection and compliance with local regulations.
Thanks to rigorous planning and a structured approach, such a project is highly likely to be funded, as it meets CanExport SME’s criteria of diversification, innovation, and commercial viability.
Conclusion
The CanExport SME program represents a strategic opportunity for Canadian companies aiming to develop their exports and diversify their markets. In an uncertain economic context marked by trade tensions and U.S. dependence, this program favors projects that align with Canada’s priorities in export growth and international competitiveness. Companies that demonstrate a proactive approach, thorough market analysis, and rigorous strategic planning will have better chances of obtaining funding. By aligning with eligibility criteria and incorporating elements such as market diversification, regulatory compliance, and innovation, submitted projects can maximize their economic impact and ensure sustainable international expansion.
Key Takeaways
- Economic Context and Diversification: The need to reduce U.S. dependence pushes companies to explore new markets, particularly in Asia and Europe.
- Priority Industries: The agri-food, natural resources, technology, and aerospace sectors show strong export potential.
- Role of Trade Agreements: Markets covered by free trade agreements offer strategic opportunities to Canadian companies.
- Project Eligibility Criteria: Companies must be for-profit, have annual revenues between $100,000 and $100 million, and propose export projects for underexploited markets.
- Eligible Activities: Business travel, trade show participation, marketing adaptation, market studies, and intellectual property protection.
- Strategic Planning: A detailed market analysis, thoughtful diversification, and a rigorous budget are essential for success.
- Example of a Successful Project: A Quebec-based clean technology company exporting water filtration solutions to Southeast Asia, with a comprehensive approach including regulatory adaptation, trade show participation, and intellectual property protection.
Related Tags
Exportation
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