Working Together for a Competitive Economy
Unlocking the full potential of German-Canadian partnership
March 2025
Executive Summary
▪ Germany and Canada are not only important economic partners, the two countries also share key values. This is particularly important in times of geopolitical and geoeconomic uncertainty when economic resilience and the defense of our shared value system and the rules-based trading system are of growing importance. The economic ties between Germany, the European Union (EU), and Canada should therefore be further deepened.
▪ Trade and investment: CETA must finally be ratified by all EU member states. This would be an important and much needed contribution to a proactive EU trade policy with key partners, which would advance the diversification of supply chains and the reduction of dependencies. Moreover, trade must be further simplified – for example by further reducing non-tariff barriers to trade and in public procurement.
▪ Raw materials: Canada should be given more strategic consideration when it comes to securing raw materials for German industry. In-depth cooperation along the value chain, including circular economy approaches, could be achieved primarily with expertise, technology and skilled workers from Germany, as well as the raw materials from and the experienced mining industry of Canada When it comes to raw materials, Germany and Canada should cooperate more closely at the political level. This includes training, industry-relevant research and technology development, and supporting private-sector activities – for example regarding financing and risk mitigation Furthermore, trilateral and plurilateral cooperation abroad, as well as industry-relevant cooperation in the context of the EU-Canada Raw Materials Partnership should be promoted Best regulatory practices should also be aligned. Relevant issues include the classification of critical and strategic raw materials, measures to strengthen domestic mining and its public acceptance as well as improvements with regard to energy costs, technology-open approaches (CCS), planning and approval procedures, and transport logistics.
▪ Energy and climate: The activities of the Canada-Germany Energy Partnership are to be welcomed, with companies and research institutions being involved at an early stage to implement industry-related projects. The planned transatlantic hydrogen export to Germany and the EU and the creation of joint financing mechanisms should be specified quickly. A strategic partnership in
Anna Kantrup | External Economic Policy | T: +49 30 2028-1526 | a kantrup@bdi.eu | www.bdi.eu
the areas of CCS, CCU and CDR, as well as bilateral formats such as a “Bilateral Climate Panel”, could create synergies. The promotion of green technologies on both sides of the Atlantic requires regular evaluations and an exchange of best practices to ensure the effectiveness of the different approaches and to coordinate new projects.
▪ Digitalization and technology: German-Canadian research cooperation in the field of AI and other emerging technologies must be further consolidated and expanded Canada and Europe should work together towards mutual recognition – and ideally full harmonization – of productrelated cybersecurity certifications. Furthermore, Canada and Europe should expand the exchange regarding current cyber threats – such as malware and vulnerabilities in hardware and software – to increase cyber resilience.
▪ Healthcare: In the health sector, collaborations between German companies and Canadian partners have already produced successful projects and offer valuable potential for future cooperation. Promising areas for deeper cooperation include research, telemedicine and digital innovations. However, regulatory hurdles such as the MDSAP represent a significant challenge for market access, especially for small and medium-sized companies.
Introduction
Germany and Canada are not only important economic partners, but the two countries also share key values. This is particularly important in times of geopolitical and geoeconomic uncertainty – when economic resilience and the defense of our shared value system and the rules-based trading system are of central importance. The cooperation between Germany, the European Union (EU) and Canada should therefore be further deepened and expanded – bilaterally, plurilaterally, as well as in international organizations. Global challenges in politically uncertain times require close cooperation and joint solutions, not only at the political level but also between companies. Intensified transatlantic cooperation at all levels between Germany, the EU, and Canada – for example in the areas of raw materials, energy and climate, digitalization, and healthcare – can not only increase resilience on both sides of the Atlantic but also lead to further growth opportunities 1 Given the challenges that Canada, Germany and the EU will face with the new Trump administration, both the European Commission and the new governments in Berlin and Ottawa – after the respective elections – should aim to deepen cooperation at all levels and promote economic exchange.
Canada is an important economic partner of the EU and Germany. The country's gross domestic product (GDP) was roughly 2.2 trillion US dollars in both 2022 and 2023. This made the country the ninth largest economy in the world in 2022 and the tenth largest in 2023. In 2022, the Canadian economy grew by 3.8 percent and by 1.1 percent in 2023 2 The EU was Canada's second most important trading partner after the United States in 2023, with a trade volume of over 86 billion euros.3
For years, Germany has been Canada's most important trading partner in the EU and economic cooperation with Canada is becoming increasingly important for Germany.4,5 In 2022, the bilateral trade volume between Germany and Canada reached a new record. Based on 2021, it increased by 28 percent to 20.8 billion euros, due in part to a greater export of German motor vehicles, machinery, and electrical engineering.6 In 2023, the trade volume with Germany fell slightly to 19.7 billion euros, but Canada was still Germany’s ninth most important non-European trading partner.7
German companies mainly export motor vehicles, machinery, and chemical products to Canada Canada exports mostly raw materials but also machinery and chemical products to Germany.8 Trade with
1 In addition to the issues included in this paper, there are many other areas in which Germany, the EU, and Canada can intensify their cooperation – for example in the fields of agriculture or biotechnology.
2 World Bank, GDP (current US$) - Canada, <https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?most_recent_value_desc=true&locations=CA> (retrieved July 30, 2024) and World Bank, GDP growth (annual %) - Canada, <https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CA> (retrieved July 30, 2024).
3 European Commission, Trade in goods with Canada, < https://webgate.ec.europa.eu/isdb_results/factsheets/country/details_canada_en.pdf> (retrieved August 2, 2024).
4 Eurostat, Rekordüberschuss der EU im Warenverkehr mit Kanada in Höhe von 7 Mrd. Euro im Jahr 2015 < https://ec.europa.eu/eurostat/documents/2995521/7718364/6-30102016-AP-DE.pdf> (retrieved October 6, 2023).
5 Eurostat, Canada-EU international trade in goods statistics <https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Archive:Canada-EU_-_international_trade_in_goods_statistics#Trade_with_Canada_by_Member_State> (retrieved October 10, 2023).
6 GTAI, Deutsch-kanadischer Handel wächst kräftig – Februar 2023, < https://www.gtai.de/de/trade/kanada/wirtschaftsumfeld/deutsch-kanadischer-handel-waechst-kraeftig-960168#:~:text=Deutschlands%20Ausfuhren%20in%20das%20zweitgr%C3%B6%C3%9Fte%20Fl%C3%A4chenland%20der%20Erde,Milliarden%20Euro%20%20ein%20Plus%20von%2029%20Prozent> (retrieved October 10, 2023).
7 Statistisches Bundesamt, Rangfolge der Handelspartner im Außenhandel der Bundesrepublik Deutschland (endgültige Ergebnisse) 2023, <https://www.destatis.de/DE/Themen/Wirtschaft/Aussenhandel/Tabellen/rangfolge-handelspartner.pdf?__blob=publicationFile> (retrieved January 27. 2025).
8 GTAI, Deutsch-kanadischer Handel wächst kräftig, < https://www.gtai.de/de/trade/kanada/wirtschaftsumfeld/deutsch-kanadischer-handel-waechst-kraeftig-960168> (retrieved July 30, 2024).
Canada has a long tradition. For example, Germany has consistently ranked second among Canada's suppliers of chemical products – behind the United States – for over 20 years.9
In addition, there is a good climate for foreign investment between the two countries. Germany is the fourth largest foreign investor in Canada with an investment stock of 41.5 billion US dollars in 2023. The stock of German direct investment in Canada has thus increased by 522 percent since 2018.10 In return, Germany is the sixth largest recipient of Canadian direct investment in Europe, with 14.5 billion euros. There is also close cooperation in the fields of science, technology and innovation between the two countries, with over 1,000 joint scientific projects since 1971.11
In the following, the German industry makes suggestions as to how and in which areas German-Canadian economic cooperation should be further deepened.
Trade & Investment
Promoting full ratification of CETA in the EU
The Federation of German Industries (Bundesverband der Deutschen Industrie – BDI) supports the implementation of the EU and Canada’s Comprehensive Economic Trade Agreement (CETA) and calls for its full ratification by all EU member states. The agreement significantly facilitates access to the Canadian market for European companies and promotes bilateral trade. In the first six years since the start of its provisional application, mutual trade in goods and services has increased by 65 percent 12 Companies on both sides of the Atlantic are already benefiting from this. In a joint statement in December 2022, Canadian Trade Minister Mary Ng and former EU Trade Commissioner and Executive Vice-President of the European Commission Valdis Dombrovskis emphasized CETA’s role as the cornerstone of economic, trade, and investment relations between the EU and Canada. The agreement strengthens cooperation, promotes innovation, increases competitiveness, creates jobs, and contributes to the resilience of shared supply chains.13
CETA entered into force preliminarily on September 21, 2017. Since then, the provisions that fall under the sole responsibility of the EU have been implemented. This includes most of the agreement, such as provisions to reduce import tariffs or to open the respective public procurement processes. Since the agreement also contains provisions that fall within the competence of the member states – such as investment protection – ratification by all 27 member states is required. Only then can the agreement enter into force fully. The BDI expressly welcomes the fact that the German federal parliament (Bundestag) and the Federal Council (Bundesrat) finally ratified CETA in December 2022, thereby advancing European trade policy The ten EU member states that have not yet ratified CETA must follow soon so that the agreement can finally enter into force fully However, the ratification currently seems
9 GTAI, Kanada (noch) kein strategischer Handelspartner für Deutschland, < https://www.gtai.de/de/trade/kanada/wirtschaftsumfeld/kanada-noch-kein-strategischer-handelspartner-fuer-deutschland-802680#:~:text=Kanada%20%28noch%29%20kein%20strategischer%20Handelspartner%20f%C3%BCr%20Deutschland%201,3%20Kanada%20gewinnt%20als%20Rohstofflieferant%20an%20Bedeutung%20> (retrieved October 6, 2023).
10 Invest in Canada, FDI Report 2023, <https://www.investcanada.ca/FDIReport2023> (retrieved July 30, 2024).
11 Government of Canada, Canada-Germany relations, < https://www.international.gc.ca/country-pays/germany-allemagne/relations.aspx?lang=eng#a2> (retrieved July 30, 2024).
12 Council of the European Union, Handel EU Kanada, < https://www.consilium.europa.eu/de/infographics/eu-canada-trade/> (retrieved July 31, 2024).
13 European Commission, Joint Statement: CETA at five years – the cornerstone of Canada/EU economic relations, 02.12.2022, <https://policy.trade.ec.europa.eu/news/joint-statement-ceta-five-years-cornerstone-canadaeu-economic-relations-2022-1202_en> (retrieved August 28, 2023).
uncertain in France. The French National Assembly had already voted in favor of CETA in 2019 but the French Senate – which must also approve ratification – voted against it in March 2024. The National Assembly will therefore have to vote on CETA again This time, however, the renewed approval appears unlikely considering recent farmer protests and the general political uncertainty in the country. Italy – the third-largest economy in the EU – has also yet to ratify the agreement.14
The full ratification of the agreement with Canada would be an important signal for a proactive EU trade policy with key partners, making an important contribution to the diversification of supply chains and the reduction of dependencies.
Canada's integration into the North American market is also a crucial aspect for German industry, as German companies have invested heavily in North American value chains and production sites. The United States Mexico Canada Agreement (USMCA) is therefore an important regulatory framework for the activities of German and European companies. Its review in 2026 will hence be followed closely by German industry.15
Further removal of non-tariff trade barriers
CETA eliminates tariffs for all industrial goods, over 90 percent of all tariffs for agricultural goods, and reduces non-tariff trade barriers. However, there are some areas in which trade between the EU and Canada can be further deepened and simplified beyond the free trade agreement:
- Technical barriers to trade: CETA includes a protocol for the mutual recognition of the results of conformity assessments for many industrial sectors – the Mutual Recognition Agreement (MRA). The MRA reduces technical barriers to trade in those sectors.16 The EU and Canada must ensure that the MRA is extended to other sectors in the future.
The EU and Canada should also work closely together in international standards organizations and develop common standards in collaboration with other partners – especially regarding emerging technologies. That would alleviate the burden and reduce costs for companies.
- Public procurement: The EU and Canada have agreed to substantially open their respective procurement markets via CETA. For example, European companies can participate in public tenders at all levels of government in Canada (federal states, provinces, territories, and certain companies and institutions such as energy suppliers). Canada and the EU should develop a shared understanding of common basic approaches to Green Public Procurement (GPP) in close consultation with companies and businesses. Due to the high volume of public procurement, GPP can make an important contribution to the green transformation of public infrastructure and the economy. A joint approach could also help to set standards for cooperation with third countries. GPP activities could include a common set of best practices and a shared understanding of the basic principles of green procurement.
14 The parliament in Cyprus has also voted against ratification. However, the Government of Cyprus has not yet notified the European Commission of the non-ratification and is planning to conduct another vote in parliament.
15 USMCA was negotiated under the Trump administration and came into force on July 1, 2020. The agreement includes a joint review by the three parties every six years and a sunset clause. During the review, the parties decide on whether the agreement will be continued for the following 16 years. The first review is due in 2026.
16 EUR-Lex, Abkommen über die gegenseitige Anerkennung zwischen der EU und Kanada, <https://eur-lex.europa.eu/DE/legal-content/summary/eu-canada-mutual-recognition-agreement-mra.html> (retrieved February 6, 2024).
Cooperation in international fora
Germany, the EU, and Canada are also important partners in international organizations, such as the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), as well as in plurilateral fora – such as the G20 or the G7. Cooperation takes place not only among governments but also among economic actors. Together with the Canadian Chamber of Commerce (CCC), BDI is involved in developing business recommendations for the OECD – for example within the framework of the Business and Industry Advisory Committee (BIAC) to the OECD. In addition, the BDI and CCC are active in Business 7 and Business 20 (B7/20), the leading business and industry associations of the G7 and G20 countries.
In times of increasing international fragmentation of trade blocs, the B7 is one of our most important international platforms to consolidate the interests of the G7 economies and to develop specific and actionable recommendations for the G7 governments. From the perspective of the B7 members, market democracies are in the position to jointly establish standards – for example with respect to strategic technologies. This objective should not exclude other actors – such as the G20 member countries –but rather invite them to join. BDI therefore calls on the German government and the EU to use the alliances with like-minded partners – including Canada and the other G7 countries – to achieve the greatest possible success in negotiations at the G20 level.
The multilateral trade order based on WTO rules are imperative for German and European industry, as well as for Canadian industry. Geopolitical tensions are currently intensifying trade disputes and noticeably restricting the functions of the WTO. That is why BDI, the CCC, and the B7 group of countries are committed to a comprehensive reform of the WTO. As B7 members, BDI, the CCC, and their partners are calling on the G7 governments to exert greater influence on the G20 states and the other WTO members to achieve a comprehensive reform of the WTO in defense of the rule-based multilateral trading system. Bilateral, plurilateral and multilateral negotiations should be conducted to address the competitive neutrality regarding industrial subsidies and the role of state-owned enterprises.
Raw Materials
Canada as major natural resource exporter with untapped potential
Canada plays an important role in the supply of raw materials to German industry. The country is one of the major suppliers of raw materials on the world market and is among the top three producers of several raw materials. According to the German Mineral Resources Agency’s (Deutsche Rohstoffagentur – DERA) list of raw materials from 2023, Canada was even among the top three producers worldwide of the following raw materials: diamonds (13.3 %), germanium (8.6 %), mica powder (5.2 %), potash (31.7 %), cobalt mattes (2.1 %), nickel mattes (34.6 %), niobium (9.4 %), ferroniobium (9.6% production, 10.1 % trade), and platinum (6.8 % in waste and scrap).17
According to a report on the status of raw materials in Germany in 2022 from the Federal Institute for Geosciences and Natural Resources (Bundesanstalt für Geowissenschaften und Rohstoffe – BGR),
17 The raw materials and refined raw materials included in the highest risk group by DERA are marked in bold. According to DERA, commodities in risk group three “can react particularly sensitively to market changes. Due to the high concentration of suppliers, market power can be exercised by dominant countries or suppliers. This can lead to distortions of competition with disadvantages for Germany as a manufacturing location. Even small production losses or the mere expectation of a drop in production can unsettle the players in particularly concentrated markets and thus influence prices”.
Germany imported the following raw materials from Canada: 25 % iron ore, 14.7 % ferroniobium, 24 % cobalt, 26.5 % nickel powder, 11.4 % tungsten powder, 92.1 % cadmium and 45.6 % tellurium.
In addition, there are regions with raw material reserves in Canada that have not yet been fully explored. For example, the world's largest chromium reserve and reserves of nickel as well as platinum group metals are suspected to be located within the so-called Ring of Fire in Ontario
Canada’s Critical Minerals Strategy was adopted in 2022 and provides funding of up to 3 billion Canadian dollars by 2030 to enhance the value chains for critical minerals. In 2023, the Canadian government also set up a Critical Minerals Infrastructure Fund with a volume of 1.1 billion Canadian dollars over seven years to connect remote mining projects with the national and international markets In addition, the Canadian government is planning to accelerate approval procedures and provide more funding for regulatory authorities. According to the government, the country features a total of 31 critical minerals, including cobalt, copper, and lithium.
Canada aims to establish itself as a global provider for critical minerals, which sets itself apart from the international competition due to its high social and environmental standards Especially Québec is known to promote electrification and to fundamentally drive the battery materials industry (including lithium, copper, and graphite). The political support for the sector is expected to be accompanied by private investments along the entire value chain from inside and outside Canada. For example, Canada has already begun to extract rare earths within its territory The Canadian government and industry especially hope for greater involvement of foreign companies in respect to the exploration of natural resources. However, three Chinese companies were ordered to abandon their investments in Canadian mining companies at the end of 2022 in the context of stricter Canadian guidelines for investments by foreign state-owned enterprises.
Canada's processing industries for critical minerals have much potential but need to be further developed. Currently, mainly nickel, vanadium, and cobalt as a by-product of nickel processing are refined within the country. Other raw materials mined in Canada are processed abroad, particularly in China and the United States. However, access to affordable and renewable energy is making the development and extension of refining efforts within the country more attractive – especially considering increasing geopolitical risks and sustainability requirements. The extraction of secondary raw materials through battery recycling is also becoming more important – and recycling technology from Germany becoming highly considered by Canadian companies
Canada is very active in the field of mining research. Research institutions throughout the country are working with industry on technologies to make the mining and processing of raw materials more efficient and environmentally friendly. Green mining plays a major role in this context as Canada is very successful regarding the use of renewable energies in the mining sector Canadian experts are also in contact with German research institutions For example, in February 2024, a Canadian delegation consisting of research and production experts for battery cells visited the battery research center at the University of Münster (MEET) and the Fraunhofer Research Facility for Battery Cells (FFB)
Initiatives at government level – in close cooperation and with other partners
Germany already has close ties with Canada in the natural resources sector. As early as 1983, the BGR signed a Memorandum of Understanding (MoU) with the Geological Survey of Canada (GSC). Since 2012, the Canadian German Chamber of Industry and Commerce (Deutsch-Kanadische Industrie- und Handelskammer – AHK Kanada) has operated a center of excellence for mining and raw materials.
The EU and Canada have launched a strategic partnership on raw materials in June 2021. The partnership is designed to boost trade and investment within a safe, sustainable, and robust raw materials value chain. Its purpose is also to enable better cooperation in the fields of science, technology, and innovation.
In June 2022, Canada and Germany formed a partnership for the supply of critical minerals together with the United States, Australia, Finland, France, Japan, South Korea, Sweden, the United Kingdom, and the European Commission. The Minerals Security Partnership (MSP) is designed to ensure access to raw materials that are essential for various technologies – including e-mobility and renewable energy generation. The partnership covers production, processing, and recycling. The partnership is centered primarily around Canada and Australia, which possess large quantities of critical minerals The objective of the MSP is to enable private and public investments according to high ESG standards Germany and Canada are also working closely together within the G7 context
Initiatives of German companies – slightly increasing
German companies have been operating in the mining industry primarily as suppliers of machinery, equipment, and services, in the potash business – such as K+S AG –, as well as via investments in mining companies in Canada. Other German companies are now increasingly looking to Canada. The engagement of German companies in Canada should also be considered in the context of USMCA The region is so appealing to German companies because of the combination of the raw materials in Canada, the cheap labor in Mexico, and the US market size However, US and Canadian business interests regarding raw materials are also competing to some extent.
In the context of the US government's Inflation Reduction Act (IRA), Mercedes and Volkswagen signed letters of intent with the Canadian government already in 2022 to source more critical battery materials such as graphite, cobalt, lithium, and nickel from Canada. BMW plans to source cathode material from a new Umicore factory in Canada – although Umicore paused its plans over the summer – as well as low-carbon and traceable aluminum from Rio Tinto. Volkswagen’s battery subsidiary PowerCo plans to build a factory for battery cells in St. Thomas in the province of Ontario – with production scheduled to begin in 2027. The Canadian government is providing up to 9 billion euros in funding for the project. BASF is currently in the process of evaluating a production site for cathode materials and battery recycling in North America – including Canada. The German-Canadian start-up company Rock Tech Lithium plans to produce high-purity battery-grade lithium hydroxide for electric car batteries in Guben in Brandenburg.18 The company aims to create the world's first closed lithium cycle. Rock Tech owns the Georgia Lake lithium project in Ontario. By 2030 around 50 percent of the raw materials used are supposed to come from used batteries recycling. Li-Cycle is another Canadian company that is investing in Germany to be able to recycle lithium-ion batteries on an industrial scale using new recycling methods. German companies in Canada are supported by AHK Kanada’s Competence Center for Mining and Mineral Resources.
From the perspective of the Canadian mining industry, Germany is a preferred partner and increased German engagement has been well received Moreover, German engineering expertise and technologies and machines made in Germany have an excellent reputation in Canada. This also applies to German solutions and applications for the separation of rare earths into their individual elements and
18 Karow, Cornelius, Rock Tech erhält Genehmigung für Lithium-Anlage in Guben, <https://battery-news.de/2024/06/04/rocktech-erhaelt-genehmigung-fuer-lithium-anlage-in-guben/#:~:text=%E2%80%9ERock%20Tech%20Lithium%E2%80%9C%20gewinnt%20den,dem%20Recycling%20von%20Altbatterien%20stammen.>, 04.06.2024 (retrieved October 25, 2024)
subsequent processing into special alloys. Canadian companies also emphasize the potential for increased cooperation with advantages for both countries.
A call for closer cooperation along the value chain
Canada should be attributed more weight in strategic considerations for securing and establishing value chains. An important aspect in this context is that Canada and Germany conduct mining and raw material extraction according to the highest standards – including security, social, environmental, and climate standards. In-depth cooperation along the value chain – including initiatives for a circular economy – could be achieved by combining know-how, technology, and skilled workers from Germany with Canada's raw materials and its experienced mining industry. The global market for mining equipment alone is expected to reach a volume of 285.5 billion US dollars by 2026. Market opportunities for German companies in the Canadian raw materials sector can be expected primarily in the areas of automation, smart solutions, and recycling technologies.
When it comes to raw materials Germany and Canada should cooperate even more closely at the political level. This includes training, industry-relevant research and technology development, and supporting private-sector activities – for example regarding financing and risk mitigation. This should include trilateral and plurilateral cooperation abroad as part of foreign trade and development policy, as well as industry-relevant cooperation as part of the raw materials partnership between the EU and Canada. The German government's raw materials fund (Rohstofffonds), launched in October 2024 and managed by KfW, can provide support for these initiatives. Best regulatory practices should also be aligned Relevant issues include the classification of critical and strategic raw materials, measures to strengthen domestic mining and its public acceptance as well as improvements with regard to energy costs, technology-open approaches (CCS), planning and approval procedures, and transport logistics.
Taking the circular economy into account
A circular economy is a prerequisite for future sustainable economic growth in Canada and Germany, as well as in North America and Europe. For circular raw materials, products, technologies and services to be scalable internationally, a common understanding and common standards must be developed through cooperation. For example, companies need reporting and accounting standards for measuring the effects of greenhouse gas emission savings through circular economy, a future-proof understanding of when products and raw materials are considered waste or not, and internationally compatible digital infrastructures and solutions for product-specific data storage (e.g. digital product passports). This is the only way to successfully establish cross-border circular business models.
Energy & Climate
Energy and climate policies in Canada
Canada is a party to the Paris Agreement and is committed to the goal of limiting the temperature increase to 1.5°C. In 2022, the Canadian government adopted the 2030 Emissions Reduction Plan – a plan for the Canadian economy that aims to reduce emissions to 40-45 % below 2005 levels by 2030 and achieve net-zero emissions by 2050.
Energy partnership and international cooperation
An energy partnership between Germany and Canada has been in place since 2021 with the aim of promoting joint activities and projects in the following areas:
- Cooperation on hydrogen will focus primarily on the maritime transport of hydrogen and its derivatives, standardization and certification, B2B networking, and the decarbonization of industry. In 2023, both countries also agreed to explore joint financing mechanisms to support transatlantic hydrogen trade and to establish a joint financing window within the framework of H2Global in 2024.
- In the area of security of supply for critical raw materials, the focus is on promoting bilateral trade and investment partnerships, collaborating on research and development, and promoting Environmental, Social, and Governance (ESG) standards along supply chains.
- Areas of energy security collaboration include the expansion of renewable energy production – especially offshore wind parks – and short-term collaboration on liquefied natural gas (LNG) with a focus on developing H2-ready infrastructure.
- The promotion of green technologies is also part of the energy partnership. There should be a range of bilateral activities focusing on the use of green technologies in sectors such as industry, transport, and energy.
BDI supports the activities of the energy partnership, although both sides should strengthen their cooperation and provide the necessary resources to do so. Only when announcements and signed declarations of intent are backed up with concrete steps will country partnerships generate real added value. Furthermore, companies and research institutions must be involved in projects at an early stage wherever possible in order to ensure from the outset that they are of interest to industry on both sides of the Atlantic and can be implemented. To this end, bilateral cooperation formats should be expanded
Germany, the EU, and Canada should work together in multilateral forums and jointly promote international initiatives – such as a climate club – beyond the bilateral energy partnership. Here, too, industry should be involved at an early stage whenever possible to ensure early acceptance and feasibility.
Hydrogen
Canada is already one of the world's larger hydrogen producers with an annual output of around 3 million tons. By 2050, Canada aims to significantly increase production and become one of the three largest hydrogen producers in the world. The plan is to consume up to 20.5 million tons of the domestically produced hydrogen and to also export large quantities. Small quantities are already exported to the United States. In Canada, hydrogen is used primarily in chemical production and in oil refineries. In the future, hydrogen is also expected to play a leading role in the transportation sector. Canadian companies have been developing hydrogen technologies since the 1980s, particularly in the field of fuel cells. Canada has significant potential for renewable energies. Because of its favorable wind conditions and its hydropower, the country will be able to cover its entire energy needs with renewable energy in the long term and use considerable surpluses for the export of renewable hydrogen.
Canada is an important and politically stable economic partner for Germany and the EU. Future export of hydrogen to Germany would further deepen the relationship. The establishment of a hydrogen alliance during German Chancellor Scholz and German Minister of Economic Affairs Habeck's trip to
Canada in August 2022 was an important step towards deeper cooperation between Canada and Germany. The alliance's primary goal is to create a transatlantic supply chain for green hydrogen. The first deliveries of green ammonia are already planned for 2025. In addition, there is potential for cooperation in the export of German hydrogen technologies and know-how to produce renewable hydrogen as well as synthesis processes to produce ammonia, methanol, and other derivatives such as dimethyl ether (DME). Cooperation regarding certification is also relevant in view of Canada's hydrogen plans, which include green and blue hydrogen
Germany, the EU, and Canada should use existing projects – for example, within the framework of the Hydrogen Alliance or the Energy Partnership – and establish new projects to further deepen the existing cooperation on hydrogen. A continuous exchange between politics, business, and academia is important to ensure that projects receive the appropriate funding. Furthermore, it is important that the necessary resources are made available on both sides of the Atlantic and that appropriate incentives for companies to participate in projects are created.
There is growing concern in German industry that the development of the hydrogen market is not progressing quickly enough. The challenge is not a lack of energy partnerships, exchange formats or targets in the individual sectors, but the far too slow implementation of announced government measures and a lack of incentives. The signing of a declaration of intent to establish a joint H2Global financing window is a positive signal, but here, too, policymakers must move swiftly to implement the self-imposed targets and meet industry demand
Promoting green technologies
There is increasing discussion regarding the promotion of green technologies that are important for achieving climate targets in Germany, the EU, as well as in Canada – especially since the enactment of the Inflation Reduction Act in the United States.
Various programs and laws designed to support the expansion of manufacturing capacities for relevant key technologies have been enacted on both sides of the Atlantic. An example of such legislation is the EU’s Net-Zero Industry Act (NZIA), which was passed in March 2024 However, the NZIA does not include a subsidy program and does therefore not provide any funding. Its purpose is rather to accelerate approval procedures for net-zero technologies and to reduce the administrative burden for related projects. In addition, new resilience and sustainability criteria in public procurement and in auctions for renewable energy projects are intended to reduce dependence on imports of such technologies from individual countries. NZIA’s still falls considerably short of expectations and does not represent a breakthrough despite its well-intended approach
In June 2024, the Canadian government introduced a new law creating a series of tax credits for green technologies following the IRA model – the Clean Economy Investment Tax Credits (ITCs). The tax credits are intended to attract investment and support innovation in the following four areas: (1) clean/green technologies, (2) carbon capture, utilization, and storage (CCUS), (3) clean production technologies, (4) green hydrogen. 93 billion Canadian dollars are to be made available through this tax credit by 2034/35 19 Technologies for carbon dioxide removal (CDR) should also be considered as part of long-term research and innovation project within the four areas mentioned before.
19 Government of Canada, Government of Canada Launches the First Clean Economy Investment Tax Credits <https://www.canada.ca/en/natural-resources-canada/news/2024/06/government-of-canada-launches-the-first-clean-economy-investment-tax-credits.html> (retrieved August 8, 2024).
CDR, CCS, and CCU are part of Canada's strategy to meet climate targets.20 Canada can play an important role internationally in the field of CDR, CCU, and CCS due to its large surface area, its considerable share of hydropower, and its significant geological CO2 storage capacities. A strategic partnership between Germany and Canada in the field of CDR, CCS, and CCU should be established within the context of joint industry-related research and development, as well as within the joint project development for CO2 removal, storage, and use.
Since both sides of the Atlantic are pursuing different approaches to promoting green technologies, it is important that the effectiveness of the respective approaches be regularly evaluated and that both sides establish an exchange of best practices. In addition, both sides should keep each other informed of new projects planned so that synergies can be created wherever possible. Such an exchange of information could be organized via a permanent Bilateral Climate Panel with representatives from government, business, and science
Digitalization & Technology
Digital and innovation policies in Canada
Canada is strong on innovation and a strategic partner for Germany regarding joint digital and innovation policies. Canada's research centers – especially in Montreal and Toronto – are important and internationally recognized players in the field of artificial intelligence (AI). Germany and Canada have been successfully cooperating in science and technology for over 50 years.
Artificial intelligence
AI and its regulation has been a much-discussed topic – not only since the publication of ChatGPT. The EU Artificial Intelligence Act (AI Act) is intended to provide a legal framework for the trustworthy application of AI. The implementation of the Canadian Digital Charter 2022 is intended to strengthen Canada’s data protection law and introduce new rules for the responsible development and use of AI The Canadian AI and Data Act (AIDA) aims to identify and mitigate risks and possible discrimination through AI. Both, the AI Act and the AIDA, seek to establish a framework that takes into account the risks as well as the opportunities of the use of AI within industries The two pieces of legislation are therefore similar. However, both laws will only be able to have a positive effect on innovation once they have been fully implemented. In June 2022, the Canadian government also launched the second phase of its Pan-Canadian Artificial Intelligence Strategy, which provides funding of 443 million Canadian dollars for the development of AI In addition, the Canadian government has recently announced the funding of 2.4 billion Canadian dollars via Innovation, Science and Economic Development Canada (ISED) to advance the development and implementation of AI. The use of AI systems in an industrial environment and the practical application and research of AI systems in industry are key factors for the competitiveness of European and Canadian companies. Both, Germany and Canada, are hence investing more in AI research and development and launched a research partnership in 2020 for the use of innovative AI solutions in the area of Industry 4.0.21 The goal of the German government should
20 Government of Canada, Canada’s Carbon Management Strategy <https://natural-resources.canada.ca/climate-change/canadas-green-future/capturing-the-opportunity-carbon-management-strategy-for-canada/canadas-carbon-management-strategy/25337#a3> (retrieved October 23, 2024).
21 Announcement of funding under the Federal Government's strategy for the internationalization of education, science and research. Regulations governing funding for research projects with Canada involving science and industry (2 + 3 projects) of June 4, 2020.
be to further deepen the German-Canadian partnership in the area of AI. BDI recommends the following to achieve this objective:
- The German-Canadian research cooperation in the field of AI must be further consolidated and expanded. An exchange of best practices for the education and training of IT specialists – especially regarding key and future technologies – could be an important building block. The demand for AI experts and specialists in computer science is high and can currently not be met in Germany. Germany and Canada should engage in intensive knowledge transfer to develop best practices for social, political, and economic conditions to better accommodate foreign professionals in that field.
- A joint EU-US policy framework for trustworthy AI applications within the context of the EU-US Trade and Technology Council must be designed to include Canada and other international partners. The G7 Hiroshima Process is providing an adequate foundation for such a framework. AI terminology should be aligned with existing international definitions – such as the one provided by the OECD. Bureaucratic hurdles must be minimized to enable innovation-oriented AI applications.
- Access to high-performance computing infrastructure increasingly determines the competitiveness of AI ecosystems. Germany and Canada should establish close partnerships that support joint access to AI computing infrastructure for research and development organizations and initiatives
- Germany and Canada should work together in international fora to promote trustworthy and human-centered AI that prioritizes human rights and sustainability objectives. In addition to the recent improvements in statistical methods such as ChatGPT, explicit representations – such as knowledge graphs – should also be considered to maximize the overall efficiency and reliability of AI. The focus should be on the combination of robotics and AI and robotics for applications in the manufacturing industry
Strengthening cooperation regarding research – especially with respect to emerging technologies – and the exchange of skilled workers
For over 50 years, Canada has been a significant partner in the field of research into emerging technologies – including in the areas of digitalization, artificial intelligence in production technology, hydrogen technologies and industry 4.0. Both countries have promised to provide comprehensive support for young scientists and to jointly provide opportunities and an enhanced environment to conduct research BDI supports the joint initiatives and suggests to further deepen the cooperation – for example within the context of Germany and Canada's joint chairmanship of Eureka in 2025.
- Joint research initiatives, knowledge sharing, and the mobility of talent should be further promoted to meet the growing demand for highly qualified specialists – especially within the STEM disciplines (science, technology, engineering, and mathematics) An example of such specific measures are internship exchanges.
- The exchange of best practices to improve the teaching of digital skills should be intensified –throughout primary school, vocational training, university studies, and continuous learning for employees.
Cybersecurity
Canada declared cybersecurity a priority with the publication of its 2018 National Cyber Security Strategy and the provision of over 500 million Canadian dollars in funding until 2023. Cybersecurity is an important economic factor as Canadian companies spent an average of 11.1 % of their IT budgets on cybersecurity measures.22 In In 2020, Canadian cybersecurity companies contributed 2.4 billion Canadian dollars to the country’s GDP.23 In late May 2023 – against the backdrop of Russia's war of aggression against Ukraine – Canada and the United States agreed to jointly establish an aligned cybersecurity certification framework for the defense sector. In light of this development, the German economy calls for the following:
- Canada and Europe should work together towards mutual recognition of product-related cybersecurity certifications. Both should strive for full harmonization of cybersecurity requirements and strategies and, if possible, agree on a set of internationally recognized standards which are underpinned by the respective national legal frameworks.
- Reporting requirements in the event of cyberattacks should be aligned to alleviate the compliance burden for companies. The United States should also be part of this initiative
- A rapid exchange of information on new attack and threat vectors is of the utmost importance for an effective and timely response to new cyber threats. There are various platforms for exchanging information on cyber incidents and vulnerabilities on both sides of the Atlantic. However, there is currently no transatlantic exchange between these platforms. This creates so-called “information silos” that hinder the improvement of the cyber resilience of companies and states. This gives malicious cyber actors a significant advantage. German industry, therefore, calls on the European Commission, the Canadian government, and the US government to establish digital interfaces between existing information-sharing platforms by 2025 to enable rapid information sharing between national cybersecurity agencies and companies.
Healthcare
Projects and experiences
Various projects and collaborations have already been carried out between German companies and Canadian partners in the healthcare sector. These include initiatives such as the introduction of a distribution system for medical hygiene keyboards and mice, participation in international events such as HIMSS and ipac, and the development of partner networks in the healthcare sector. These measures have helped to facilitate market access and establish valuable contacts with major clinics and public administrations in Canada.
The achievements of the existing projects and collaborations are positive, particularly with respect to the partnerships that have been established and the specific outcomes that have been achieved. However, challenges remain regarding the different certification requirements, complex market entry, and the regulatory hurdles resulting from differences in healthcare systems and national legislation.
22 Cyber Crime Statistics in Canada for 2023 - Made in CA
23 Government of Canada. 2022. State Of Canada’s Cybersecurity Industry <https://ised-isde.canada.ca/site/aerospace-defence/en/state-canadas-cybersecurity-industry> (retrieved October 24, 2024).
Potential and ideas
Promising areas for deeper cooperation in the healthcare sector between Germany and Canada include research and clinical studies, 3R methods in medical research, telemedicine and e-health, longterm care and aging, emergency preparedness and disaster medicine, reducing bureaucracy, and prevention and hygiene. These fields offer potential for innovation and joint initiatives.
Joint initiatives could be useful in areas such as research into infectious diseases and pandemics and the promotion of digitization and artificial intelligence in healthcare. Strengthening bilateral partnerships between companies, research institutions, and public authorities requires the exchange of expertise, the promotion of collaborative projects, the creation of networks, the facilitation of regulatory processes, the establishment of joint innovation centers, and the promotion of talent mobility. Furthermore, there is an opportunity in the mutual safeguarding of sensitive value chains in the pharmaceutical and medical technology markets. Here, it should be determined to what extent the respective value chains can be mutually supplemented or duplicated to achieve a higher level of resilience.
Challenges
Regulatory and legal obstacles – such as data protection, drug approval and medical devices, professional licensing and recognition, as well as patent law and intellectual property – could affect cooperation and require careful planning and coordination.
Canada introduced the Medical Device Single Audit Program (MSDAP) in 2019. Compliance with and registration for this program is mandatory for manufacturers wishing to sell in Canada. Canada is the only market worldwide that has such a mandatory requirement, which consequently represents a hurdle to market entry. This is particularly true for medium-sized companies as the application of the MSDAP is associated with additional costs for German manufacturers and prevents them from investing in innovations to access the Canadian market
We suggest implementing a process that would improve the quality systems for approval and facilitate the market access opportunities for medical technology products in Canada. MDSAP registration could be integrated in the TÜV process as a measure to increase the efficiency of the procedure, for example.
Imprint
Bundesverband der Deutschen Industrie e.V. (BDI)
Breite Straße 29, 10178 Berlin www.bdi.eu
T: +49 30 2028-0
German lobby registry number: R000534
Authors
Matthias Krämer
Head of Department, External Economic Policy
T: +49 30 2028-1562
m.kraemer@bdi.eu
Anna Kantrup
Senior Manager, External Economic Policy
T: +49 30 2028-1526
a.kantrup@bdi.eu
Alexander Boxler Director, German Health Alliance (GHA)
T: +49 30 2028-1484
a.boxler@gha.bdi.eu
Cedric von der Hellen
Senior Manager, External Economic Policy
T: +49 30 2028-1602
c.hellen@bdi.eu
Polina Khubbeeva
Senior Manager, Digitalization und Innovation
T: +49 30 2028-1586 p.khubbeeva@bdi.eu
BDI document number: D 2033
Anne Lauenroth
Deputy Head of Department, International Cooperation, Security, Raw Materials and Space
T: +49 30 2028-1405
a.lauenroth@bdi.eu
Claas Oehlmann Director, BDI Initiative Circular Economy
T.: +49 30 2028-1606 c.oehlmann@ice.bdi.eu
Eberhard von Rottenburg Deputy Head of Department Energy and Climate Policy
T: +49 30 2028-1542 e.rottenburg@bdi.eu
Stefanie Stündel
Senior Manager, Digitalization und Innovation
T: +32 27921015
s.stuendel@bdi.eu