On September 21, 2017 the Canadian-European Union "Comprehensive Economic and Trade Agreement" or "CETA" came into force.
Some businesses may erroneously believe that this means they can ship anything they want beween Canada and the EU without paying any duties. While the reality is a little more complicated, CETA still represents a tremendous achievement for Canada, and provides Canadians with greater access to the massive EU marketplace of 500 million people!
Read the Statement by the Canadian Minister of International Trade here.
Tariff Rate Reductions
The headlines all focus on the Tariff rate reductions: As of today, 98.2% of Canadian tariff lines, and 97.7% of EU tariff lines, are duty-free where the imports/exports qualify under CETA.
Additional Tariff Reductions will be phased in over 3, 5, or 7 years, depending on the tariff line.
Some tariff lines (e.g. chicken meat, eggs) will remain subject to duty for the foreseeable future. Other tariff lines (e.g. cheese, textiles, and clothing) will be subject to quotas, and will be subject to duty if the annual import quota is exceeded.
Rules of Origin
In order to benefit from the tariff rate reductions discussed above under CETA it is important to remember that a product meet the applicable Rule of Origin. It is not sufficient that a product is simply "exported from" Canada or the EU – it must actually "originate" there.
As CETA's Rules of Origin are dependent on the underlying tariff classification of the goods, now is a good time to review tariff classifications and general trade compliance procedures - both from a compliance perspective, and from a potential duty savings perspective.
Not Just About Imports/Exports
CETA is not just a "Trade Agreement" it is also an economic agreement that does a number of different things including:
- giving Canadian and EU businesses unprecedented access to government procurement contracts;
- increasing mobility of investors and businesspeople; and
- protecting the use of certain EU "geographical indications" (e.g. Roquefort cheese, Lübecker Marzipan, Szegedi szalámi, etc.) in Canada.
Whether you have specific questions about CETA, or want a more general review of your current trade compliance procedures, contact Millar Kreklewetz LLP!
Read more about CETA on the Global Affairs Canada Website.