Clearit.ca's Blog on Customs Brokerage and News Updates
Canada and the European Union signed the long-anticipated Comprehensive Economic and Trade Agreement (CETA) last Friday. The agreement won’t go into effect until it’s been ratified by the European Parliament and all EU member states, probably in 2016, but this seems like a good time to take a look at the basics:
Elimination of tariffs
Around 98% of current customs duties will be erased when CETA goes into effect, and within seven years no tariffs will remain on any manufactured goods. A number of agricultural and food products will still be subject to duties, but even in this sector over 90% of Canada-EU trade will be untaxed. The somewhat controversial Canadian tariffs on dairy products, poultry and eggs will be left in place, as will the EU entry price system for fresh fruits and vegetables. Consumers in both jurisdictions will benefit from lower prices and more shopping options; the Canadian seafood industry and European producers of processed agricultural products and alcoholic beverages look set to be some of the major corporate beneficiaries.
EU companies may be awarded Canadian government contracts
Businesses in the EU will become eligible to bid in tenders from Canadian government units at the federal, provincial and local levels. Total annual spending on such procurements is well over $100 billion, and the Europeans will be the only foreigners able to get in on the action. A new Canadian website will serve as a clearinghouse for tender announcements to make sure they don’t miss anything.
Increased collaboration on technical regulations
Better information exchange will lead to greater transparency on technical barriers to trade as the EU and Canadian agencies that set related standards work with each other more closely. Meanwhile, cooperation on conformity assessments (such as for labeling requirements) will also be upgraded. Streamlining these issues is expected to save over $4 billion a year.
Intellectual property protections
European copyrights, trademarks and patents will enjoy better protection in Canada, with the last category of particular importance to the major EU pharmaceutical companies. But it’s not just big business that will benefit: Canada has also agreed to recognize and protect European geographical indications, restricting their use to products that actually come from the regions they’re named for, which will mostly affect small farmers.
Trade in services
Increased trade in services will account for about fifty percent of GDP gains under CETA, over $8 billion per year in Europe alone. Banks, telecoms, energy companies, and shipping lines will reap most of the gains from this liberalization. A number of their employees are likely to have a temporary stay on the other side of the Atlantic in their future, as moving personnel back and forth will now be easier. Independent professionals including engineers, architects and accounts will also be able to travel to provide temporary consulting services, and plans are afoot harmonize recognition of diplomas and professional certifications.
Many of the present barriers to foreign investment between Canada and the EU will come down. Foreign investors will get the same rights as domestic investors, and receive a guarantee against any new restrictions on foreign equity ownership. For their further protection, CETA largely adopts EU practice on international arbitration, and implements a more transparent investor-state dispute settlement system. However, Canada and the EU will still have considerable power to regulate foreign investment to further their respective interests, and investors have no recourse against legitimate regulatory action.
Consumer & environmental issues
Strict EU food safety regulations will be unchanged, and Canadian foods sold in Europe will have to be fully compliant therewith. This means that Canadian agricultural businesses will be unable to incorporate growth hormones or genetically modified organisms into products for export to the EU. Nor are the regulations frozen; they (and their Canadian equivalents) may be modified or added to at any time.
CETA also addresses democratic protections, labor rights, and environmental issues such as sustainable development and provides for joint monitoring of the same.