CETA UPDATE

Great news for Canadian & European manufacturers, exporters and importers: the long awaited provisional implementation of CETA, the Comprehensive Economic and Trade Agreement between Canada and the European Union (EU), has been confirmed for September 21, 2017.

This was announced by Prime Minister Justin Trudeau and Jean-Claude Juncker, the President of the European Commission, in Hamburg on July 8. On September 21, Customs duties on most goods will be lowered or eliminated, either immediately or over several years.

This agreement opens a huge market for Canadian & European exporters, whose products will be more competitive in both Canada and Europe. Consumers will benefit too, as most products will become cheaper.

Originally, the provisional implementation was scheduled to take place on July 1. Two issues created the delay: the new cheese quotas and how they will be allocated, as well as regulatory changes on pharmaceuticals, particularly for generic drug manufacturers.
Critics had said CETA would never happen, but not only is it happening for real, the final implementation process is going well, as the national Parliaments of Latvia, Denmark, Spain and Croatia have now approved it. For full implementation, in particular the dispute settlement and foreign investments chapters, approval by the national Parliaments of all 28 EU member countries is necessary.

Maybe it’s just as well that CETA didn’t happen July 1, as we already had so much to tackle: celebrate Canada’s 150th anniversary,and the internal Canadian Free Trade Agreement (CFTA) between Canadian provinces and territories that came into effect that day. It is also possible Canadian companies were not quite ready for it; maybe some didn’t even believe that CETA would come through, so the additional time is useful.

What’s coming next is that the CBSA will issue its traditional Customs Notice, likely at the end of August, advising of the technical information necessary to process incoming shipments from the European Union. It will confirm the implementation date; provide links to the text of the Agreement and the implementing legislation Bill C-30. It will also provide the new tariff treatment code (likely code 33) needed to obtain the preferential duty rate. The Customs Notice will also refer to the rules of origin and the origin declaration as well as the time-frame for refund of excess duties paid due to a missing origin declaration at time of importation. In this respect, CETA will provide a thre e-year period to make retroactive refund claims for goods imported on or after September 21, 2017. Formal amendments to Canada’s Customs Tariff and Customs Act will take place as a second step.

Canadian & European exporters should now familiarize themselves with the CETA rules of origin and select their market entry strategy, in order to capitalize on this opportunity. And, after re-evaluating their current supply chain, importers and manufacturers currently bringing in raw materials, components and/or parts from Asia or other distant lands, may find it advantageous to switch to European/Canadian suppliers, saving costs and transit time, for a more agile supply chain.

Canada and the EU are open for business and want to trade, in contrast to the protectionist winds blowing elsewhere.