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Free Trade Agreements

Canada Free Trade Agreements

Canada has free trade agreements with many countries. It is important to know what they are and how they work in order to utilize them to their fullest. The following is basic information on all of Canada’s free trade agreements:

The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement between the U.S. and Canada. In terms of combined GDP of its members, as of 2010 the trade bloc is the largest in the world.

The North American Free Trade Agreement (NAFTA) has two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

The goal of NAFTA was to eliminate barriers to trade and investment between the US, Canada and Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate elimination of tariffs on more than one-half of Mexico’s exports to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all US-Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico that were to be phased out within 15 years. Most U.S.-Canada trade was already duty free. NAFTA also seeks to eliminate non-tariff trade barriers. It also seeks to protect the intellectual property right of the products.

The Canada–Colombia Free Trade Agreement is a trade agreement between the countries of Canada and Colombia which was originally proposed during August 2002 and implemented on August 15, 2011.

Canada and Colombia enjoy good commercial and investment relations as the presence of Canadian companies, particularly in the mining, oil exploration and printing sectors, continues to grow. In 2010, two-way merchandise trade between Canada and Colombia totaled more than $1.4 billion.

The Canada Central American Free Trade Agreement is a proposed free trade agreement between Canada and the Central American states of Guatemala, El Salvador, Honduras, and Nicaragua, collectively referred to as the CA4. Canada already has a bilateral FTA with Costa Rica.

The U.S. has negotiated and ratified a similar treaty with these countries, called the Central American Free Trade Agreement. In a referendum on October 7, 2007, the voters of Costa Rica narrowly backed the free trade agreement with the U.S., with about 52 percent of “Yes” votes.

Canada–Chile Free Trade Agreement (CCFTA) is a trade agreement between Canada and Chile. It was signed on December 5, 1996 in Santiago, Chile and came into effect on July 5, 1997. Tariffs on 75 percent of bilateral trade were immediately eliminated. It was Canada’s first free trade agreement with a Latin American nation (other than Mexico), and was Chile’s first full free trade agreement. Over the first decade, trade between Canada and Chile increased by 266%, with the trade of goods rising from $718 million in 1996 to $2.34 billion in 2006. Bilateral service trade increased to $164 million by 2005. Canadian investments in Chile reached $5.17 billion in 2006.

The Canada-Costa Rica Free Trade Agreement (CCRFTA) is a free trade agreement between Costa Rica and Canada. It was signed on April 23, 2001 in Ottawa, Ontario, and came into effect on November 1, 2002. It is the first bilateral free trade agreement to include innovative stand-alone procedures on trade. 87% of all tariffs on agricultural products were eliminated, either immediately, or over a 7-14 year period. Tariffs on many other industries like automotive goods and goods were also eliminated. Several sectors of agriculture were excluded from the treaty; eggs, dairy, poultry and beef being excluded, and Costa Rica decided to leave potatoes out of the FTA. Both nations agreed to use the World Trade Organization rules for sanitary and phytosanitary issues(known as the SPS agreement).

The Canada-European Free Trade Association Free Trade Agreement is a free trade agreement between Canada and the European Free Trade Association (Iceland, Norway, Switzerland and Liechtenstein). Signed in Davos, Switzerland on January 26, 2008, it came into effect on January 1, 2009. The agreement is aimed at eliminating all tariffs on goods.

In 1999, Canada entered into free trade negotiations with the EFTA. Negotiations concluded successfully in June 2007, and the FTA between Canada and the EFTA States was signed on January 26, 2008. Bilateral Agreements on Agriculture between Canada and each EFTA State were appended to the CEFTA. Both came into effect during the Summer of 2009. The agreement eliminates almost all tariffs, with certain agricultural and fishery products being excluded from immediate tariff elimination.

The Canada–Israel Free Trade Agreement (CIFTA) is a free trade agreement between Canada and Israel. It was signed on July 31, 1996, and came into effect on January 1, 1997. It was Canada’s first free trade agreement outside of the Western Hemisphere. 80% Tariffs on most manufactured and agricultural goods were eliminated. However, CIFTA does not affect certain agriculture sectors like poultry, dairy and eggs.

CIFTA was amended twice, in 2002 and 2003. The first amendment allows certain products like textiles to undergo some levels of processing in the United States without losing their status while in transit. The second amendment further reduced agricultural tariffs.

The Canada–Panama Free Trade Agreement is a planned free trade agreement between Canada and Panama; the agreement was signed on August 11, 2009 by Canadian Prime Minister Stephen Harper and Panamanian President Ricardo Martinelli. The agreement will need to be approved by both countries’ parliaments before the agreement comes into effect. The agreement will eliminate Panamanian tariffs on 90% of goods from Canada. The remaining 10% will be phased out within the next 10 years. Canada will remove 99% of its tariffs on goods from Panama. Canada will keep tariffs on some imports of sugar, poultry, eggs and dairy products. Panama will end its ban on beef from Canada, which was initiated after cases of mad cow disease were found in Canada in 2003.


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