Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada-EU CETA Implementation Act Passes Second Reading In Canada’s Senate

Posted in Canada-EU CETA

CETAOn March 7, 2017, Bill C-30 “An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures passed second reading in Canada’s Senate.  Bill C-30 is now being reviewed by the Senate of Canada Standing Committee on Foreign Affairs and International Trade.  After the Report is prepared by the Standing Committee on Foreign Affairs and International Trade, Bill C-30 returns to the Senate for third reading and debate.  After third reading, the Canada-European Union Comprehensive Economic and Trade Agreement (“Canada-EU CETA”) can be ratified.

On February 15, 2017, the Canada-EU CETA was ratified by the European Parliament.  This means that as soon as Canada ratifies the Canada-EU CETA, the market access provisions may be provisionally implemented.  The Canada-EU CETA covers virtually all sectors and aspects of Canada-EU trade.  Provisional implementation means greater market access.  Most customs duty rates will reduce to “free” or 0%.

According to Article 30.7 of the Canada-EU CETA, the Agreement can enter into force on the first day after the month of ratification by the parties. If the Senate passes Bill C-30 at third reading in March 2017 and Canada ratifies the Canada-EU CETA in March 2017, it is possible that the Canada-EU CETA will be provisionally implemented as at April 1, 2017.

Pursuant to Chapter 2 of the Canada-EU CETA, each party shall reduce or eliminate customs duties on goods originating in either party in accordance with the tariff elimination schedules in Annex 2-A.  The staging categories for Schedule 2-A are as follows:

  • Category A – duties on originating goods shall be eliminated on the date this Agreement enters into force;
  • Category B- duties on originating goods shall be removed in four equal stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year 4;
  • Category C – duties on originating goods in a Party’s Schedule shall be removed in six equal stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year 6;
  • Category D – duties on originating goods in a Party’s Schedule shall be removed in eight equal stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year 8;
  • Category E  – duties on originating goods are exempt from tariff elimination in a Party’s Schedule are exempt from tariff elimination;
  • Category S – duties on originating goods shall be removed in three equal stages beginning on the fifth anniversary of the date of entry into force of this Agreement, and these goods shall be duty-free, effective January 1 of year 8; and
  • Category AVo+EP – the ad valorem component of the customs duties on originating goods shall be eliminated upon the date of entry into force of this Agreement; the tariff elimination shall apply to the ad valorem duty only; the specific duty resulting from the entry price system applicable for these originating goods shall be maintained.

When you review Annex 2A, refer back to this reference on the staging categories. Also, where duties are eliminated according to Categories B, C, D or S, the starting point is the MFN rate of duty that applied on June 9, 2009.  When reviewing Canada’s Annex 2-A commitments for tariff elimination, refer to the Customs Tariff 2015 tariff codes.  This is when the Canada-EU CETA tariff elimination provisions were negotiated/finalized and the negotiators were using these H.S. Codes.

Most goods become duty free upon provisional application.  Belgian and Spanish chocolate will become duty free upon importation into Canada at the time of provisional implementation.  I can hardly wait.  Most products that are not agri-food, fish/seafood or automotive become duty free upon entry into Canada.

The Government of Canada has posted a helpful chart.

For more information about the Canada-EU CETA, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.  We have posted articles and presentations about the Canada-EU CETA on the LexSage web-site.