Following seven years of negotiations and an additional year working through a sometimes fraught ratification process, on September 21, 2017, the long-awaited Canada-European Union Comprehensive Economic and Trade Agreement (CETA) entered into effect provisionally. As of that date, over 98% of Canadian goods are now able to enter the EU without tariffs, which the federal government and industry groups say will improve export opportunities for a wide range of Canadian producers, processors and manufacturers.
Touted as the most comprehensive bilateral trade agreement signed to date by either Canada or the European Union, CETA provides Canadian companies with much greater access to a $20 trillion market of 500 million consumers that according to some estimates will boost the country’s exports of goods and services by more than $8 billion a year.
While a few outstanding issues have yet to be finalized, most notably the accord’s Investment Court System that would allow foreign investors to sue governments over allegations of unfair discrimination or expropriation, with provisional application, almost all of the “non-controversial” aspects of CETA are now in effect.
As a result, virtually all tariffs on goods have been eliminated, meaning that over 99% of the non-agricultural tariffs and over 92% of the agricultural tariffs are now zero rated. Prior to CETA’s provisional application, only about a quarter of EU’s more than 9,000 tariff lines on Canadian goods were duty-free. Tariffs on the remaining items will be phased out over time; up to 7 years for the most sensitive goods. Some agricultural goods (cheese, dairy, beef, veal, pork, etc.) will be subject to origin quotas and others will be subject to tariff rate quotas.
For Manitoba companies, CETA opens up new opportunities for exporters of canola oil, common wheat, alfalfa seed, frozen potato goods, oats, and pork to expand their presence in the EU, the world’s largest importer of agriculture and agri-food products (accounting for over 17% of global agricultural imports in 2016).
In addition to making goods manufactured by Manitoba companies more competitive in the EU market by eliminating EU tariffs on a wide range of industrial products, including electrical boards and panels, and agriculture machinery and equipment, exporters will now be able to have certain goods (such as machinery and parts and electrical installations) tested to EU standards by a certification body in Canada, and the results of the tests will be automatically recognized by the EU, thereby avoiding testing duplication and reducing compliance costs.
For Manitoba service providers, CETA aims to increase labour mobility through a binding and mutual recognition of certain professional qualifications. Barriers to international services trade such as citizenship, residency requirements and ownership and investment restrictions are reduced through the CETA. This arrangement will create temporary travel or relocation positions for short-term business visitors, investors, transferees and professionals.
These provisions facilitate the ability of professionals in areas such as the province’s thriving life sciences sector to conduct business in the EU, for example, to attend meetings and consultations, participate in trade fairs and exhibitions, and deliver specialized services (including technical testing and analysis services and research and development services).