Canada

It is expected that the Canada-European Union Comprehensive Trade and Economic Agreement (“Canada-EU CETA”) will come into provisional effect soon (maybe as soon as April 1, 2017 or May 1, 2017 – not yet known). Canadian importers should start to consider what goods may enter Canada duty free when the Canada-EU CETA green light is turned on.

The 28 European Union countries are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

Most goods originating in the European Union (which is an important fact to determine before importing) will enter Canada duty free immediately. For example, a few of my favorite things will enter duty free:

• Chocolate from Spain and Belgium;
• Wine from Italy, Spain, France and Germany (in that order);
• Port from Portugal;
• Spanish ham;
• Italian shoes;
• British tweed jackets;
• Marks & Spencer’s crackers and Batenberg cake;
• Marks & Spencer’s socks (if made in the UK);
• French furniture.

The list is very long as to what enters duty free immediately.  If you import agricultural products, agri-food, cheese, pork, fish & seafood, vehicles or parts, ships, or flowers, you should review Canada’s schedule before importing as these items may be exempted from duty relief or may be subject to a staged elimination of customs duties in Canada. Canada maintained certain protections for supply-managed goods.

We have prepared a chart of the Harmonized Systems chapters and Canada’s market access commitments.  You must know the H.S. Chapter for the goods in order to read the chart and know whether the EU-origin goods that you plan to import will be duty-free immediately:

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; and
• 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.

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.

There are special rules relating to quotas for EU-origin cheese imported into Canada (other quotas are for imports into the EU). We will discuss cheese quotas in another post.

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.