The Canada-European Union Comprehensive Economic and Trade Agreement (“Canada-EU CETA”) is a free trade agreement between Canada and the 28 countries of the European Union. The Canada-EU CETA is Canada’s largest free trade agreement since NAFTA. There are opportunities for Canadian importers to save the customs duties on goods that they are currently importing (that is, goods that will be subject to duty elimination or duty reduction) and/or find new goods to import.
Provisional application of the Canada-EU CETA will take place on the first day of the month following Canada’s ratification of the Canada-EU CETA and Canada’s notification to the European Union that the Canada-EU CETA has been ratified (which will likely take place on the same day as Canada passes Bill C-30 into law). On February 15, 2017, the Canada-EU CETA was ratified by the European Parliament. This means that Canada completing the Canadian legislative process and formally ratifying the Canada-EU CETA is all that stands between Canadian retailers and their new and improved opportunities.
On 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-EU CETA can be ratified.
The current thinking is that the Canada-EU CETA will be provisionally implemented in Spring 2017. My best guess is provisional implementation will be May 1, 2017 or June 1, 2017. Are you ready?
What does “provisional implementation” mean?
“Provisional implementation” means that all or almost all of the market access provisions for goods and services will be implemented as soon as the European Parliament and the Government of Canada have ratified the Canada-EU CETA. The effect of provisional implementation is that the non-controversial provisions (96% of the Canada-EU CETA provisions) go into effect even though there are outstanding issues relating to the investment chapter to resolve. There are EU Members who have concerns about the investor-state dispute mechanism and the competency of the EU Parliament to enter into a free trade agreement (rather than requiring EU Members Parliamentary approval).
From which countries may Canadian importers purchase CETA goods?
Canadian importers may benefit from the Canada-EU CETA duty relief commitments made in respect of imports originating in the 28 European Union countries, which 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.
Iceland, Liechtenstein, Norway, and Switzerland are not EU Members. Iceland, Liechtenstein, Norway, and Switzerland signed that Canada-European Free Trade Association Free Trade Agreement (the “Canada-EFTA FTA”) and it has been in effect since July 1, 2009. Most EFTA-origin goods already enter Canada duty-free under the Canada-EFTA FTA.
What Questions Should Canadian importers be asking to get ready for provisional application?
Canadian importers should get ready to take advantage of the Canada-EU CETA benefits. It is time to start asking questions, such as:
- What goods do I currently import from an EU Member?
- What new goods would I like to import from an EU Member?
- Do those goods that I currently import or would like to import from an EU Member meet the rules of origin in the Canada-EU CETA?
- What is the H.S. classification of the good to be imported from the EU? (you need the answer to this question in order to review Canada’s commitments for duty elimination/duty reduction)?
- Are the goods that I import/wish to import within Canada’s Schedule of duty elimination/duty reductions commitments in the Canada-EU CETA? (If the answer is yes, then the goods may not be duty free immediately, if the answer is no, you still must ask questions about origin before knowing if the goods are duty-free immediately upon implementation)
- What is the rule of origin in the Canada-EU CETA applicable to that good based on that H.S. classification number?
- Do the goods originate in an EU Member according to the Canada-EU CETA rules of origin? (you may need more information or assistance from customs counsel to answer this question)
- What is the applicable duty rate of the goods?
- Who within my organization must update computerized records and databases so that customs documentation will be correct after provisional implementation?
- What changes need to be made within our computerized record keeping programs and databases?
- Has there been a meeting with the customs broker and freight forwarded to make sure that they have updated computerized records and databases?
- Do I have the necessary Certifications of Origin from suppliers of EU-origin goods?
- What is the value for duty for customs purposes of the goods to be imported? (This would be a good time to revisit the issue and consider whether kits comprise EU-origin goods and non-EU origin goods)
- What documentation do I need before I can import this good?
- Do I require other governmental certification approvals for the goods I import/plan to import from the EU?
- Are there any Canadian labelling or marking requirements for the goods?
- What record keeping requirement do I have to implement under Canadian law to maintain Canada-EU benefits that I claim?
- Do I require quota to import the goods?
- Do I import any goods (foodstuffs, wines, spirits, beer) from a non-EU country that would be affected by the Canada-EU CETA geographic indications restrictions (for a list of products subject to Canada-EU CETA restrictions, please refer to the GI List)?
- Are the goods subject to antidumping or countervailing duties?
There are many other important questions to ask – hopefully this gets you started asking questions. If you require any assistance, please contact Cyndee Todgham Cherniak at 416-307-4168 or Cyndee@lexsage.com. There are many useful articles posted on the LexSage website.