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

The Date Has Been Set: CETA Provisional Implementation To Happen September 21, 2017

Posted in Canada-EU CETA

We now have official word of the provisional implementation date for the Canada-EU Comprehensive and Economic and Trade Agreement (“Canada-EU CETA”) – September 21, 2017.  On July 8, 2017, Prime Minister Justin Trudeau and Jean-Claude Juncker, president of the European Commission, issued a Joint Statement after meeting at the G20 meetings in Hamberg, Germany.  The Joint Statement included the following two sentences:

“Meeting at the G20 in Hamburg, reconfirming our joint commitment to the rules-based international trading system, we agreed to set the date of 21 September 2017 to start the provisional application of the agreement, thus allowing for all the necessary implementing measures to be taken before that date.

The agreement will now be provisionally applied and will enter definitively into force once the Parliaments in all Member States of the EU ratify the text according to their respective domestic constitutional requirements.”

Over 90 percent of the Canada-EU CETA will come into effect upon provisional implementation.

The Canada-European Union Comprehensive Economic and Trade Agreement (the “Canada-EU CETA”) creates opportunities for Canadian manufacturers and exporters to sell into the European markets. On the date of provisional implementation, 98% of Canadian-origin goods will be able to enter European Union Members tariff free, compared to just 25 per cent today.  We have prepared a chart of the European Union tariff elimination and reduction commitments in Annex 2-A of the Canada-EU CETA,

100% of non-agricultural goods (other than autos and auto parts) exported from Canada to European Union Members become duty free immediately.  Most (94% of EU tariff lines on agriculture products) Canadian-origin agricultural goods become duty free immediately upon provisional implementation. This is true for many agricultural products, including everything from maple syrup to apples to cranberries. Some agricultural goods are exempted from tariff elimination, meaning that those limited items will enter the European Union at MFN rates of duty.  Other agricultural goods (cheese, dairy, beef, veal, pork, etc.) will be subject to origin quotas and others will be subject to tariff rate quotas. Canadian beef and pork producers will benefit gradually, over a five-year transition period, from greater market access in the EU.

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 EU-origin 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.

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:

  1. What goods do I currently import from an EU Member?
  2. What new goods would I like to import from an EU Member?
  3. 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?
  4. 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)?
  5. 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)
  6. What is the rule of origin in the Canada-EU CETA applicable to that good based on that H.S. classification number?
  7. 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)
  8. What is the applicable duty rate of the goods?
  9. Who within my organization must update computerized records and databases so that customs documentation will be correct after provisional implementation?
  10. What changes need to be made within our computerized record keeping programs and databases?
  11. Has there been a meeting with the customs broker and freight forwarded to make sure that they have updated computerized records and databases?
  12. Do I have the necessary Certifications of Origin from suppliers of EU-origin goods?
  13. 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)
  14. What documentation do I need before I can import this good?
  15. Do I require other governmental certification approvals for the goods I import/plan to import from the EU?
  16. Are there any Canadian labelling or marking requirements for the goods?
  17. What record keeping requirement do I have to implement under Canadian law to maintain Canada-EU benefits that I claim?
  18. Do I require quota to import the goods?
  19. 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)?
  20. Are the goods subject to antidumping or countervailing duties?

There are many other important questions to ask – hopefully this gets you started asking questions.

What questions should EU exporters be asking to get ready for provisional application?

  1. Are the goods that I want to export to Canada originating in the EU according to the Canada-EU CETA rules of origin?
  2. Can I provide a certification of origin with respect to the goods?
  3. What is the tariff classification number under Canada’s Customs Tariff for the goods I will ship to Canada?
  4. Do I have to register for Canadian GST/HST purposes?
  5. Do I have to register to collect any provincial sales taxes (will I sell into British Columbia, Manitoba or Saskatchewan)?
  6. What Incoterm should I use with respect to shipments to Canada (if I do not want to get into the Canadian tax system)?
  7. Do my goods meet Canada’s regulatory standards or do my goods meet mutual recognition requirements in the Canada-EU CETA?
  8. Do I need testing certificates or are the standards certified by the manufacturer?
  9. Do my goods meet Canada’s labeling requirements?
  10. What paperwork is required for the importer to easily import the goods into Canada?
  11. Does Canada impose any import restrictions with respect to the goods?
  12. What do I need to do to ensure that the Canada Border Services Agency will release the goods in a timely manner?
  13. What is the Partners in Protection Program? Are there steps I can take to become an approved exporter in a FAST program so my goods will be considered to be low risk?
  14. What volume of goods do I expect to export to Canada – should I operate in Canada via a branch office or a Canadian subsidiary?
  15. Are there Canadian income tax consequences to my normal way of selling into markets?
  16. Should I register my trademarks in Canada?
  17. How can I protect my intellectual property in Canada?
  18. Do Canada’s consumer protection laws apply to my goods?
  19. What reporting requirements are there for goods in Canada with respect to recalls in Canada and outside Canada?
  20. Will sales representatives who wish to travel to Canada need to obtain a visa?

There are many other important questions to ask – hopefully this gets you started asking questions.

If you require further information, please contact Cyndee Todgham Cherniak at 416-307-4168 or email cyndee@lexsage.com.  There are many other articles posted about the Canada-EU CETA on the LexSage website.