Poland
Market Access Plan 2015-2017

CapitalPopulationTotal AreaCurrency
Warsaw38.018 million312,685 km²Zloty

Why Poland Matters

Poland is:

  • a priority established market under Canada’s Global Markets Action Plan;
  • the eighth largest economy in the EU, joining in 2004, and with a population of just over 38 million, the sixth largest member of the EU;
  • the only EU economy to avoid contraction in 2009, with Poland’s economy not suffering as much from the first wave of the financial crisis; and
  • a model of good governance and economic development among the Central and Eastern European states.

Poland’s economic growth slowed  to 1.8 percent in 2012 and to 1.7 percent in 2013 before rebounding to 3.4 percent in 2014, and is projected to remain above 3.0 percent in 2015 and 2016, at 3.2 percent and 3.4 percent, respectively (winter European Commission, 2015 Forecast).

Poland has been ranked by Ernst & Young as the third most investor-friendly country in the EU, and first in Central and Eastern Europe. Poland has taken advantage of past EU funding to invest heavily in the development and modernization of its infrastructure. In the 2014-2020 EU Budget, Poland was allocated 105.8 billion euros from the European Structural and Investment Funds, the largest amount received by any European country, and this is being spent on hard and soft infrastructure. 

Poland has been a strong supporter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA).  It has made large investments in Canada and is looking for additional opportunities in the energy and extractive sectors.

Domestic Economic Environment

According to the Organisation for Economic Co-operation and Development’s (OECD) latest economic analysisFootnote 1, Gross Domestic Product (GDP) growth is projected to continue to rise, reaching 3.7 percent in 2016. The labour market will make further progress, and exports will benefit from enhanced international trade and faster growth in the euro area.
 
The Polish banking system is well capitalized and profitable. Effective supervisory measures have halted foreign currency mortgage lending, and reliance on funding from parent companies has declined. The non-performing loan ratio, while starting to edge down, has remained stable at around 8.5 percent.

External risks have abated somewhat but remain elevated. A protracted period of slower growth in the euro area could have large effects on Poland via trade and confidence channels. An abrupt surge in volatility in global financial markets, or a severe deterioration in external financing conditions could affect Poland’s economy given its relatively high external financing needs. Persistent geopolitical tensions in the region add to downside risks.

Poland’s financial system has remained resilient. The banking system is well-capitalized, liquid, and profitable. Effective supervisory measures have halted foreign currency mortgage lending, and reliance on parent funding has declinedFootnote 2.

Key Figures – Poland (2014)
GDP$606.1 billion
GDP per capita$15,943
GDP growth3.4%
Inflation0.1%
Unemployment9.0%
Canada’s merchandise exports$346.2 million
Canada’s merchandise imports$1,593.7 million
Canada’s service exports$115 million (2013)
Canada’s service imports$119 million (2013)
Foreign direct investmentconfidential
Canadian direct investment in Poland$264 million
Potential long-term export growth3.8%

Canadian Commercial Interests in Poland

Overview

With positive economic growth for the past several years, Poland has attracted the attention of the Canadian private sector. The Trade Commissioner Service in Warsaw has seen an increasing number of new-to-the-market clients and activity in many key sectors is increasing. 

There are commercial opportunities for Canadian firms, both large and small, in a variety of sectors including aerospace, information and communication technologies, sustainable technologies, agri-food and transportation. As well, there are opportunities for increased collaboration in sectors such as the extractive industries, energy and public and private partnerships.

CETA: Opportunities for Canada

Under CETA, comprehensive tariff elimination will enhance the competitiveness of Canadian exports to Poland, including:

  • machinery and equipment (tariffs up to 8 percent);
  • aluminum (tariffs up to10 percent); and
  • chemicals and plastics (tariffs up to 6.5 percent).

In the area of agriculture, Canadian exporters will benefit from duty-free access to Poland for products such as:

  • dog and cat food (tariffs up to $1,218/tonne);
  • sweet, dried cranberries (tariffs of 17.6 percent); and
  • frozen blueberries (tariffs of up to 14.4 percent).

Other exports where inroads into the EU market have been constrained by very high tariffs, such as fish and seafood (tariffs up to 25 percent), are set to rise in importance. Poland’s annual import market for fish and seafood was worth $2.3 billion in 2014. CETA will eliminate tariffs on key Canadian strengths in fish and seafood exports, notably:

  • prepared and preserved salmon (tariffs of 5.5 percent); and
  • frozen lobster (tariffs of 6 and 16 percent).

Beyond tariffs, Canadian exporters of goods and services will gain substantial new access to Polish government procurement opportunities, such as those below the national level (e.g., local governments) and public utilities. The Polish government was ranked as the ninth largest government procurement market in the EU in 2012.

In terms of services, CETA will provide Canadian service providers with greater business opportunities in Poland by ensuring that they can compete on an equal footing with domestic service providers and receive better treatment than most competitors from non-EU countries. In 2013, Poland was Canada’s 14th largest service export market in the EU and Canadian firms are active in a range of professional services.

Key Elements for Exporters to Consider

The business and investment climate in Poland has significantly improved, especially following Poland’s accession to the European Union. The very strong bilateral ties were further strengthened in 2014 by a number of high-level visits (including the Governor General, Prime Minister Harper, former Minister of Defence Nicholson, former Minister of Foreign Affairs Baird, and Minister of Finance Oliver) in support of events to commemorate significant anniversaries, including the 25th anniversary of Poland’s transition to democracy.

While Canada has been identified as one of seven strategic markets for Poland, the European Union as a whole is the main market for Poland, accounting for 77.0 percent of Poland’s exports in 2014. Polish exporters and importers particularly focus on countries that are close geographically, culturally and economically. Poland also has strong trade ties with Germany, Russia, the Czech Republic, and the Netherlands. Likewise, Germany, the Netherlands, France, Luxembourg, Spain, and Italy are the most significant foreign investors in the country and are also strategic partners for many industrial projects in Poland.

The launch of direct flights from Warsaw to the Middle East by Emirates Airline and Qatar Airways has built new linkages to the Middle East region. Poland recently signed a deal with Qatar for liquefied natural gas (LNG) to be delivered to Poland via its Baltic coast once the construction of a new terminal in Świnoujście is completed by mid-2015. Potential exports of Canadian LNG to Europe and Poland could be of interest for relevant Canadian companies.

Recently, the Polish Government launched dedicated programs (Go-Africa and Go-India) to support Polish companies in the development of stronger bilateral relationships with these emerging countries. These programs could open opportunities for Canadian companies to work with Polish companies on third-market initiatives.

While Poland is a strong and stable market, several companies that are active in the marketplace have noted that there is room for improvement, especially in the area of reducing red tape to speed up business transactions and improve governance in procurement.

More importantly, some of the key sectors of strategic importance remain dominated by fully or partially state-owned companies. As a result, some perceive there is protectionism in favor of domestic players. This concerns mainly the extractive (oil and gas and mining) and defense sectors, and to a lesser degree, the transportation and aerospace sectors.

Key Sectors

The Polish market offers many specific opportunities to Canadian business in fields as diverse as agri-food, manufacturing, and professional services that will be significantly improved by the entry into force of CETA (see box). Additional information is provided below on key sectors of broader potential for Canadian business.

Aerospace

Aerospace is one of the most active priority sectors in Canada-Poland commercial cooperation. An increasing number of international Original Equipment Manufacturers (OEMs) have established themselves in Poland (Pratt & Whitney, Sikorsky, AugustaWestland, etc.) creating opportunities for suppliers from all tiers of the global supply chain. There is a strong concentration of aircraft engine R&D and manufacturing in the region, especially in the Polish Aviation Valley industrial cluster in the south-east of Poland. This creates a range of opportunities for Canadian second tier suppliers both in (1) R&D, supply and production of new engine parts, components and sub-assemblies to the above-mentioned OEMs as well as (2) in Maintenance, Repair and Overhaul (MRO) of engines. Increased opportunities exist as well in the sub-sectors of landing gear and aero-structures. As there are no manufacturers of avionics (control panels, flight instruments) in the current aerospace cluster, there could be also opportunities for developing the avionics’ manufacturing industry, especially for the manufacturing of helicopters, light aircraft and unmanned aerial vehicles. Overall, there is potential for Canadian Direct Investment Abroad (CDIA) in the region, which is still relatively low-cost, possesses good R&D facilities and has skilled workers.

Polish regional airports are growing fast and there is a need to upgrade airport infrastructure and air-traffic control. Interest of local governments in urban rail systems connecting regional airports to the regional cities is the latest business opportunity.

Considering the past track record of light aircraft operations and an increased interest in aviation in Poland, there might also be opportunities for flight schools (for both general aviation planes and helicopters) and for providers of specialized training and training equipment (such as simulators).

There are also a number of challenges in this sector, particularly for large aircraft and defense contracts. Major decisions on purchasing aircraft by Polish state-owned airline LOT and its subsidiary Eurolot are highly political and are heavily influenced by relevant government authorities. The same applies as well for large military and defense contracts. Companies should therefore be aware of the key government decision-makers and advocate accordingly.

Education

As a young country with approximately 500,000 students entering university each year (555, 439 in 2011/2012), the number of Poles studying outside of Poland has significantly increased during the last five years. The majority of Polish tertiary-level students going abroad choose EU countries and a very small number attend schools in Canada. There are however opportunities for student recruitment at the post-secondary level, for language study as well as the development of partnerships leading to the promotion of Canada and Canadian curricula and study programs. Tuition fees and distance are important but not limiting factors. On the other hand, with over one million Canadians of Polish heritage, many Poles have close family ties with Canada, which attracts some Polish students to Canada.

Information and communications technology (ICT)

ICT continues to be an important element of the Polish economy. Canadian capabilities match Polish needs, especially in wireless, enterprise software, and digital media. Poland has widely recognised strengths in software development, BPO (business processing outsourcing) and R&D/competence centres. Furthermore, in 2012 Poland was among the very first EU countries to introduce LTE (Long Term Evolution) service.

There is a very strong competition coming from European and international ICT players who are well established or actively pursuing the Polish market. The fierce competition and saturation in the mobile sector provide opportunities for innovative and advanced solutions and give operators a competitive edge. Mobility remains a key element for Polish players in their future strategies.

There is also a shortage of ICT specialists in Poland which could provide additional business opportunities for Canadian companies.

Infrastructure

Canada's Public Private Partnership (P3) market is considered one of the most respected and well-developed in the world. As a result, Polish authorities and municipal officials have an appetite to learn about the Canadian expertise in P3 initiatives in areas such as transportation, healthcare, municipal waste management and municipal residential construction. Of all the EU member states, Poland will be the largest beneficiary of European Structural and Investment Funds in the 2014-2020 period, receiving 105.8 billion euros. A portion of these funds will be directed to finance P3 projects, called “hybrid” projects. The up-coming years could be pivotal for P3 initiatives in Poland based on the financial support that the Polish government has announced for P3 projects.

Oil and gas

A key national policy priority for Poland is the pursuit of greater energy security, by building domestic capacity and attracting foreign investment across the energy mix, most notably for the development of its estimated relatively considerable shale gas resources. On shale gas, several Canadian companies have been previously active in Poland; however some have decided to withdraw from the Polish market due to unsatisfactory geological exploratory results, regulatory uncertainty as well as their own corporate decisions to re-focus globally on the most beneficial markets.

Recently and after many delays, the Polish Government finalized a new hydrocarbons regulatory and fiscal regime. The new legislation has taken into consideration several concerns of the industry and is expected to influence positively the future development of the shale gas industry in Poland. The new legislation remains, however, not as attractive for foreign investors as was hoped. These regulatory and fiscal issues, added to a complex geology which renders shale gas exploration slow and expensive, could mean that the high expectations announced by the Polish government regarding its future shale gas production, will need to be somewhat tempered.

Even with the withdrawal of Canadian exploration companies, opportunities still remain for Canadian suppliers. The business opportunity in Poland is considerable as the country lacks many of the elements necessary for exploration, production and the subsequent distribution of shale gas. There is an acute lack of equipment and of properly trained crews. Most of the existing drilling rigs are old and inadequate for the production stage of shale gas development. There is a gap in technology both in equipment and in existing know-how. Fracking equipment is scarce even in Europe as a whole and is causing considerable delays in drilling even in the initial exploration wells. Environmental concerns provide additional opportunities for companies that provide environmental protection and remediation services to the oil and gas industry.

Poland also has a relatively old pipeline system with over 60 percent of pipelines being over 25 years old. This provides an opportunity for firms involved in all areas of pipeline construction, to get involved.

Sustainable technologies

This sector is highly driven by EU regulations and Poland's commitments to meet these requirements as a new EU member-state, in particular the 20-20-20 targets: this includes 20 percent reduction in EU greenhouse gas emissions from 1990 levels; raising the share of EU energy consumption produced from renewable sources to 20 percent; and 20 percent improvement in the EU’s energy efficiency.

In order to comply with the EU requirements, Poland developed a long-term strategy and has dedicated increasing domestic and EU budgets to environmental projects. A number of relevant new laws and programs have recently been approved: a low emission economy program, a new law on municipal waste, and a new energy efficiency law. Poland is also finalizing its new renewable energy sources law which is expected to provide a regulatory framework for the development of renewable energy sources and the quotas for energy purchases from renewable sources to make them comply with the European Union standards.

Although a growing number of Canadian companies are actively exploring business opportunities in Poland in such sub-sectors as waste management, waste-to-energy, solar energy and soil remediation, Canadian companies remain under-represented in the market relative to their capabilities. Despite competition from European and Polish companies and despite the complex and still uncertain regulatory framework, there is a keen interest in Canadian services and technologies in the sustainable technologies sector.

Sub-sectors to focus on in this area are waste management and waste-to-energy. Poland is the sixth largest producer of municipal waste in Europe and is engaged in modernizing its waste management practices and in reducing its share of landfilling solutions. Poland is looking for innovative but proven technologies and equipment such as waste-to-energy/waste gasification solutions, equipment for waste sorting stations (e.g. optical separators), installations for turning waste plastic into fuel and wastewater-sludge-processing solutions.

Clean coal technologies are another major focus. Poland continues to rely heavily on coal for its energy and electricity generation while trying at the same time to comply with the EU requirements for greenhouse gas emissions reduction. As a result, Poland is increasingly interested in foreign experience in carbon capture and storage and coal gasification.

Major Negotiations and Agreements

Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

Negotiations on this Agreement have concluded. Once CETA comes into force, the Agreement will open new markets to our exporters throughout the EU and generate significant benefits for all Canadians. Under CETA, world-class Canadian products will profit from preferential access to the EU, including Poland, and Canadian businesses will have the tools and support they need to succeed in this lucrative market. On the day CETA enters into force, 98 percent of all Canadian and EU tariff lines will be duty free. In addition, Canadian and EU businesses will benefit from provisions in CETA that significantly improve and secure market access for services and investments, as well as provisions that ease regulatory barriers, strengthen intellectual property rights, and ensure more transparent rules for market access. Canada and the EU have committed to bringing this agreement into force as quickly as possible so business and workers on both sides of the Atlantic can benefit from increased trade, opportunities and job creation.

Canada-Poland Foreign Investment Promotion and Protection Agreement (FIPA)

This Agreement has been in force since November 1990. Canada’s existing FIPA with Poland will be superseded by CETA’s more modern investment chapters. A FIPA is a bilateral agreement aimed at protecting and promoting foreign investment through the legally binding rights and obligations of the signatories and their investors.

Convention between Canada and the Republic of Poland for The Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income

A revised Canada-Poland Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed in Ottawa during Prime Minister Tusk’s visit to Canada in May 2012. It entered into force on October 30, 2013.

Development Perspectives in Poland

Canada does not have a development program for Poland. However, Canada and Poland work together to provide support to Ukraine, through joint funding to the Polish Solidarity Fund and the European Endowment Fund for Democracy. This funding will support projects on local government and media freedom as well as on assistance to human rights defenders and civil society/NGOs.

Selection of Upcoming Trade Initiatives

  • Aerospace
    • Farnborough Air Show, UK (every 2 years)
    • Paris Air Show (Salon du Bourget), France (June 15-21, 2015, every 2 years)
    • ILA Berlin, Germany (May 31-June 5, 2016, every 2 years)
  • Information and Communication Technologies
    • Mobile World Congress (MWC), Barcelona, Spain (February every year)
    • GamesCon, Cologne, Germany (August every year)
    • CeBIT, Hannover, Germany (March every year)
  • Oil and Gas
    • Global Petroleum Show, Calgary (June every year)
  • Infrastructure
    • Annual CCPPP National Conference, Toronto (every year)
    • Construct Canada, Toronto (every year)
  • Sustainable technologies
    • Poleko, Poznan, Poland (October of every year)
    • IFAT, Munich, Germany (May of every second year)
  • Education
    • Education Fair Salon Perspektywy, Warsaw, Poland (March every year)

Support Services

  • Trade Commissioner Service (TCS) in Poland: The TCS offers foreign market intelligence, introductions in key networks, cost- and risk-reduction advice, business problem troubleshooting and on-the-ground support.
  • Embassy of Canada in Poland: Canadian government offices abroad provide a variety of services, including consular services (http://travel.gc.ca).
  • Export Development Canada (EDC): With representatives in Dusseldorf, EDC services can include market knowledge, credit insurance, bank guarantees, foreign buyer financing, political risk insurance, foreign investments and foreign affiliate support.

Where not otherwise indicated, the information is provided by the Embassy of Canada to Poland. This document is not intended to provide specific advice and should not be relied on as such. It is intended as an overview only. No action or decision should be taken without detailed independent research and professional advice concerning the specific subject matter of such action or decision. While Foreign Affairs, Trade and Development Canada (DFATD) has made reasonable efforts to ensure that the information contained in this document is accurate, DFATD does not represent or warrant the accurateness, timeliness or completeness of the information contained herein. This document or any part of it may become obsolete at any time. It is the user’s responsibility to verify any information contained herein before relying on such information. DFATD is not liable in any manner whatsoever for any loss or damage caused by or resulting from any inaccuracies, errors or omissions in the information contained in this document. This document is not intended to and does not constitute investment, legal or tax advice. For investment, legal or tax advice, please consult a qualified professional.

Footnotes

Footnote 1

Poland - Economic forecast summary (June 2015): http://www.oecd.org/economy/poland-economic-forecast-summary.htm

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Footnote 2

IMF Report: Republic of Poland—Concluding Statement of the 2014 Article IV Mission. May 15, 2014 (http://www.imf.org/external/np/ms/2014/051514a.htm)

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