What are Canada’s Free Trade Agreements

Canada currently has 15 trade agreements in force with 51 different countries around the world, and more in varying stages of negotiation. Together, these agreements cover 1.5 billion consumers worldwide. A Free Trade Agreement (FTA) is a treaty between two or more countries that encourages international trade by reducing or removing tariffs and other barriers to trade.

The Group of Seven (G7) is an informal grouping of seven of the world’s advanced economies, including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union. Canada is the only G7 economy with comprehensive free trade access to the entire G7 and European Union. According to the Government of Canada, Canada’s 15 FTAs cover 61% of the world’s GDP and open markets to 1.5 billion consumers worldwide. In addition to lowering and eliminating duty rates on certain products and services, FTAs also address modern trade challenges in areas such as labour, environment, certification, and intellectual property.

We provide more information below on Canada’s major trade agreements as well as a list of the FTAs currently in force. In addition, we have combined all of Canada’s trade and investment agreements and sanctions into an easy reference guide for download

Download

Canada-United States-Mexico Agreement (CUSMA)

The Canada-United States-Mexico Agreement (CUSMA) is trade agreement between Canada, the United States, and Mexico that replaced the North American Free Trade Agreement (NAFTA) on July 1, 2020. The largest free trade region in the world, in 2019, total trilateral merchandise trade (the total of each country’s imports from one another) reached just over CAD $1.3 trillion.

CUSMA maintains the key aspects of the trade relationship between Canada, United States, and Mexico. It also incorporates new provisions to address current trade challenges and continuing to promote opportunities for North Americans.

Note: In the United States, the agreement is referred to as the United States-Mexico-Canada Agreement (USMCA).

We provide more information on CUSMA and what its entry into force means for Canadian importers and exporters in the following article

Canada-EU Comprehensive Economic and Trade Agreement (CETA)

The European Union (EU) is Canada’s second largest trading partner. The Canada-EU Comprehensive Economic and Trade Agreement (CETA) is a bilateral trade agreement between Canada and the EU that entered into force on September 21, 2017. In its first three years in force, CETA increased annual trade of goods and services between Canada and the EU by over 21%.

CETA takes a phased approach to removing tariffs. Duties were removed on 98% of products and services upon entry into force. Over a seven year period, a further 1% of tariff lines will be phased out. By 2024, 99% of all Canadian goods entering the EU market duty-free.

The EU is the second-largest export destination and trading partner for the provinces of Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Prince Edward Island. Therefore, these provinces benefit greatly from preferential access to the EU market.

Canada-UK Trade Continuity Agreement (CUKTCA)

On January 31, 2020, the United Kingdom (UK) formally left the EU and entered a transition period ending December 31. Subsequently, the countries reached a post-Brexit agreement on December 30, 2020, ensuring continued trade in goods without tariffs or quotas.

To minimize trade disruptions, Canada and the UK signed a transitional agreement. The Canada-UK Trade Continuity Agreement (CUKTCA) came into force on April 1, 2021.

Largely replicating CETA, the Canada-UK TCA ensures continued preferential access to the UK market for Canadian businesses. Similarly, 98% of Canadian products will continue to be exported to the UK tariff-free.

On March 24, 2022, Canada and the UK announced they will begin negotiations toward a comprehensive bilateral free trade agreement. The first round of negotiations will begin on March 28, 2022. The CUKTCA will remain in place during negotiations.

Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP)

Canada-ASEAN Free Trade Agreement

On November 16, 2021, Canada and the Association of Southeast Asian Nations (ASEAN) agreed to proceed with free trade agreement (FTA) negotiations. Canada’s sixth-largest trading partner, ASEAN is a regional intergovernmental organization that includes the following countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

In 2020, merchandise trade between Canada and ASEAN reached $26.7 billion. An FTA would boost GDP and exports to ASEAN countries, create new market opportunities for Canadian goods and services, and support a more predictable environment for trade and investment.

Canada and ASEAN are currently discussing next steps, including a first round of negotiations.

Canada-India Comprehensive Economic Partnership Agreement Negotiations

In June 2022, Canada and India will begin a second round of negotiations toward a free trade agreement that aims to strengthen economic ties between the two countries.

Negotiations between Canada and India toward a Comprehensive Economic Partnership Agreement (CEPA) began in 2010. The most recent full negotiating round was held in August 2017. Discussions included cross-border trade in goods and services, e-commerce, telecommunications, and technical barriers to trade. Since then, Canadian and Indian officials have held several meetings, with the most recent in June 2021.

In May 2023, Canada and India released a joint statement reaffirming their commitment to strengthen trade and commercial ties through enhanced partnerships and cooperation.

Two-way merchandise trade between Canada and India was $12 billion in 2022. India’s economy offers extensive opportunities for Canadian companies in natural resources, defence, mining, oil and gas, clean energy technology, and renewable energy. Specifically, Canada is expected to seek greater market access for agricultural products, such as pulses.

Canada-Ukraine Free Trade Agreement (CUFTA)

As noted by the Government of Canada in April 2023, Canada and Ukraine concluded substantive negotiations of CUFTA to modernize the CUFTA. The modernized CUFTA creates new opportunities to maximize the agreement’s benefits for Canadian workers entrepreneurs and small and medium-sized businesses. Furthermore, it will work towards fair, inclusive, and transparent trade and support long-term security, stability, and economic development in Ukraine. The modernized CUFTA will also maintain the terms of market access for goods from the 2017 Agreement, and has been updated to include new and upgraded chapters, including on: investment, cross-border trade in services, temporary entry for business persons, financial services, digital trade, rules of origin cumulation with common FTA partners, trade and gender and, for the first time, a chapter on trade and Indigenous Peoples.

Free Trade Agreements Currently in Force

Sanctions

Canada imposes sanctions against several countries for violations against international laws and standards. These include violations of human rights, acts of corruption, and association with terrorism. For more information on Canadian sanctions and the countries upon which they are imposed, please visit Global Affairs Canada.

The post Canada’s Free Trade Agreements first appeared on PF Collins International Trade Solutions.

The Canada-EU Comprehensive Economic and Trade Agreement (CETA) is a bilateral free trade agreement between Canada and the EU. Entering into force on September 21, 2017, it reduces and eliminates duties across all sectors of the economy. But how is the importation of commercial vessels and ships affected? In this post, we take a look at importing vessels under CETA. 

Understanding CETA

CETA takes a phased approach to removing tariffs. 98% of products and services had duties removed as soon as CETA came into force. An additional 1% of tariffs will be eliminated over the next few years. As a result, 99% of all Canadian goods entering the EU market will be duty-free.

However, not all tariffs will eventually enjoy duty free status. Commodities are categorized into seven Staging Categories, “A” through to “E”, ranging from duty-free to exempt from tariff elimination. For instance:

Importing Vessels and Ships

Most commercial vessels and ships fall under staging categories B & D. For example:

Staging Categories for Importing Vessels under CETA

The following lists CETA staging categories for ships, boats, and floating structures:

Certificate of Origin

The exporter must include an origin declaration on the invoice to enable the importer to claim preferential tariff treatment under CETA. For example, this can be a simple statement indicating the goods meet the rules of origin.

Exporter Obligations

Customs officials in the export country have the authority to validate the claim for CETA tariff treatment. In addition, the exporter must notify the importer of any changes to an origin declaration by the exporter.

Importer Obligations

It is the importer’s responsibility to possess the exporter’s origin declaration at time of clearance. The importer must also correct declarations within 90 days of being notified of changes that affect origin status.

The importer can request a refund of duties in cases where they did not have an origin declaration. However, a request for refund of duties must be completed within a specified time period.

Canada Border Services Agency (CBSA) may also request verification that the goods remained under customs control if transshipped via a non-CETA country.

12 Key Sectors of CETA

The Government of Canada has identified 12 key sectors of interest to Canadian businesses that will benefit from CETA, such as Aerospace, Agriculture and Agri-food, Automotive, Fish and Seafood, and Oil & Gas. Visit Global Affairs for more information on the key sectors.

Finding Your Product’s Tariff Rate Reduction

For more information on CETA or to determine the EU Tariff Rate associated with your product or equipment, please visit the Canada Tariff Finder.

The post Importing Vessels Under CETA first appeared on PF Collins International Trade Solutions.

Prime Minister Justin Trudeau affixed his signature to the Comprehensive Economic and Trade Agreement (CETA) this past weekend. This deal is still not done and is dependent on the European Parliament’s approval and ratification by 28 EU countries, which could take years.

Approximately 200 reservations to CETA were made on behalf of Canada’s provinces & territories. One example is Newfoundland and Labrador’s rights to maintain and regulate the exploration and development of hydrocarbons, such as oil production. Other items controlled by Canada include forestry, gambling, natural resources, and alcohol.

Under CETA, duty will be relieved on an estimated 99% of goods. Beneficiaries, such as the textile and agricultural sectors, will obtain a huge advantage. Canada will be able to export larger quotas of pork, beef, and wheat to the EU countries. In turn, EU dairy producers will benefit by the ability to send more than double the amounts of the current quota of “high quality” cheeses to Canada.

CETA opens up major trade lanes for Canada to the EU countries, resulting in a reduced dependency on the USA. The EU market has a potential market to Canadian companies of 508 million consumers, representing an estimated trade boost for Canada of $12 billion Canadian dollars per year. For comparison, Canada’s population is currently 38+ million and the USA, 340+ million.

The post CETA Signing Just the Beginning first appeared on PF Collins International Trade Solutions.