In September 2021, the agreement is four years old. Time to recall why this agreement secures better market access and saves real money to businesses.
This series has three parts:
Part 3: Summary of the CETA agreement (S,P) + Download Rules of Origin and Interpretative Guidance (P)
Blog articles followed by S require a Starter Premium Support Plan subscription to access, blog entries followed by P require a Premium Support Plan subscription to access.
The European Union (EU) is one of the largest economies in the world and Canada’s second most important trading partner, after the U.S., with around 9.5% of Canada's total external trade in goods in 2015. In 2015 Canada was the EU's 12th most important trading partner, accounting for 1.8% of the EU's total external trade.
What is CETA?
The Canada-European Union or EU-Canada Comprehensive Economic and Trade Agreement (CETA) presents European and Canadian businesses with preferential access to and excellent opportunities for growth in the EU and Canada. Learn about CETA and what it can do for your business.
Does it actually apply already?
It entered into force provisionally in 2017, meaning that most of the agreement now applies. All national (and in some cases regional) parliaments in EU countries need to approve CETA before it can take full effect.
Progressive...
CETA features some of the strongest commitments ever included in an EU and Canadian trade agreement, including on promoting labour rights, on protecting the environment, and on sustainable development. CETA integrates EU and Canadian commitments to apply international rules on workers' rights, environmental protection and climate action. These obligations are binding.
Benefits
The benefits of CETA include the following:
It eliminates duties on 99% of all tariff lines, of which 98% were scrapped when it provisionally entered into force;
It defends the Canadian and EU’s Geographical Indications, and;
It improves and secures companies’ access to the Canadian and EU services market.
CETA means reduced or zero tariffs at Canadian customs for EU businesses and vice versa.
What does CETA cover?
CETA covers virtually all sectors and aspects of Canada-EU trade in order to eliminate or reduce barriers. CETA addresses everything from tariffs to product standards, investment, professional certification and many other areas of activity. The agreement’s broad scope—including improved access to EU / Canadian markets for goods and services; greater certainty, transparency, and protection for investments; and new opportunities in EU / Canadian procurement markets—translates into real benefits for businesses.
Why it matters to businesses...
Prior to CETA’s entry into force, only 25 per cent of EU/Canadian tariff lines on goods from the other market were duty-free. On the day that CETA entered into force, 98 per cent of tariff lines became duty-free for goods, and an additional one per cent will be eliminated over a seven-year phase-out period. Tariff elimination will provide enhanced export opportunities into the EU & Canadian market for producers, processors, and manufacturers, as well as for agricultural and agri-food products, fish and seafood, forestry goods, and the full range of industrial goods.
CETA’s most visible benefit is the ambitious obligation undertaken by Canada and the EU to eliminate tariffs.
Why do tariffs matter for Canada and the EU?
Tariffs are essentially taxes levied at the border that have the effect of increasing the costs to consumers of imported goods. These tariffs are applied to “tariff lines,” where each line represents a specific product. Some of these tariffs can be very high (for example, the pre-CETA EU tariff on frozen mackerel was 20 percent and the pre-CETA EU tariff on oats was around 51.7 percent), which made it more difficult for imported Canadian goods to compete in the EU market.
For producers, manufacturers and exporters, the progressive elimination of tariffs provides increasingly better competitive market access terms for their products over time. Tariffs that are subject to a phasing out by the EU will include, for example, those on some fish and seafood products, grains, and passenger vehicles. Once CETA is fully implemented, seven years after entry into force, approximately 99 per cent of all tariff lines will be duty-free.
Rules of origin
CETA’s rules of origin strike a good balance, respecting the real-world sourcing patterns of Canadian and European companies while encouraging production to take place in Canada or the EU. CETA provisions relating to autos and other areas, as well as language on cross-cumulation, potentially allow for third parties (with whom the EU and Canada have FTAs) to be brought into a single free trade area encompassing Canada, the EU, and the third party.
Access the Rules of Origin Hub: https://www.customsmanager.org/rules-of-origin
Customs and trade facilitation
Canada and the EU share a desire to keep customs procedures simple, effective, clear, and predictable so as to reduce processing times at the border and make the movement of goods cheaper, faster, more predictable and efficient.
CETA includes commitments that aim to:
provide importers/exporters with all the information they need on importing or exporting, including advance rulings on the origin of goods or tariff classification;
simplify and, where possible, automate border procedures;
respect the privacy of company information collected for customs purposes; and
provide an impartial and transparent system for addressing complaints about customs rulings and decisions where there may be differences of opinion.
Regulatory cooperation and conformity assessment
New Market Access
CETA helps to ensure that unnecessary or discriminatory regulatory requirements do not diminish the value of new market access to the EU and Canada. Cooperation and information sharing between Canadian and EU regulators result in more compatible regulatory measures that could make it easier for businesses to do business in the EU and Canada.
Regulatory cooperation
Cooperation in regulatory matters is forward-looking and promotes good regulatory practices and engagement early on as measures are being developed. By fostering cooperation earlier in the regulatory process, differences in regulatory approaches between Canada and the EU may be reduced, resulting in fewer barriers to trade once regulations are finally put in place.
CETA also includes a protocol on conformity assessment, which allows Canadian companies in a number of sectors to have their products tested and certified for the EU market right here in Canada. This is a significant innovation that saves companies time and money and is particularly useful to small and medium-sized enterprises.
Government procurement
Canadian and EU companies can bid on opportunities at all levels of the EU or Canadian government procurement market, which is worth trillions annually. People and companies are not the only ones active in the marketplace. Governments are also important participants, whether through the purchase of office materials or the construction of roads and bridges. CETA’s commitments expand and secure opportunities for Canadian firms to supply their goods and services to all levels of EU or Canadian government, including thousands of regional and local government entities, and a large array of entities operating in the utility sector.
Trade-in services and labour mobility
Canadian and EU service providers have more business opportunities in the EU or Canada. Furthermore, CETA makes it easier for certain skilled professionals to work temporarily in the EU or Canada. CETA gives Canadian and EU service suppliers great market access. This means that Canadian suppliers in most service sectors are on an equal footing with EU or Canadian service providers. CETA uses a negative list approach, meaning that all services sectors are covered unless explicitly listed as otherwise.
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About Customs Manager Ltd.
Working with us means having a Customs Advisor, Global Trade Expert and Export Controls Consultant, on speed-dial. If you are looking for a customs consultant UK and EU, let us help you trade effectively, efficiently and, of course, compliantly, wherever you want to go in the world.
Need to stay up-to-date with changing customs and global trade rules? We monitor legislation so our clients don't have to. Learn about all changes in our fresh expert blog, join exclusive briefings and ask any questions 24/7 through to the VIP hotline. Or sign up to our no-charge, insightful newsletter.
Entrust us with your training needs and help us to upskill you and your teams in English, German, French and Spanish. We offer pubic and private live, in-house and on-demand (study from anywhere and anytime) courses.
To complete our support for globally trading businesses, we are also a UK Customs Broker. We act as a customs clearance agent on behalf of many EU and UK businesses, assisting with customs documentation and all other formalities to ensure the customs clearance of our goods. Whether you’re seeking a long-term partner to look after your customs clearance or require support for a one-off shipment, please don’t hesitate to get in touch to discuss your requirements.
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