The Implications of CETA on Canadian Importers & Exporters

Trade Talk Blog • October 19, 2021

he Comprehensive Economic and Trade Agreement (CETA) is an agreement between Canada and the European Union (EU) to increase trade opportunities between the two parties. The opening of trade relations between Canada and the EU will have an immense effect on Canadian businesses. If you’re a Canadian importer or exporter, this article will help you understand the highlights of this Canadian-European trade agreement and its possible effects on your trade business.

What is CETA?

The Canada-EU Comprehensive Economic and Trade Agreement (CETA) is a bilateral agreement that aims to promote new economic opportunities and facilitate trade between Canada and the 28 member states of the European Union. CETA is the biggest trade deal Canada has signed since CUSMA/USMCA/T-MEC.

The Agreement, which came into effect as of September 21, 2017, will provide tariff reductions for most goods at the time of implementation and eliminate duties on all goods after 7 years.

What are the main benefits of CETA?

With the elimination of duties, CETA is set to provide fewer barriers to investment and minimal regulatory hurdles—providing more trade opportunities for both established businesses and entrepreneurs in Canada and the EU.

The Agreement also delivers several benefits to businesses operating in Canada and Europe, including:

• Increased market access for goods, services, and investment
• Improved rules for international commerce
• New opportunities to promote sustainable development

How will CETA impact Canadian Importers and Exporters?

For Canadian exporters to the EU, CETA will significantly reduce – and ultimately eliminate – tariffs on their exported goods. This will help Canadian businesses increase their profit margins, provide more cash flow, and free up more resources to increase their investments.

For Canadian importers of goods originating in the EU, CETA will reduce the cost of their imported goods from the EU. With reduced duties under the CETA Schedule of Commitments, a valid Origin Declaration, and a valid import permit, where the goods are subject to an import quota, Canadian importers will immediately benefit from the provisional implementation of CETA.

What should I do when I have Reason to Believe?

Once an importer has Reason to Believe, they are required to self-correct their declarations within 90 days of receiving the information that gave them the reason to believe. If this was a change in value based on a re-issued vendor invoice, then the date the invoice was received is the start of the 90 days.

Section 32.2 of the Customs Act only covers declarations where the correction or adjustment will result in either a NIL amount or a payment due to CBSA (duties & taxes).

Full duty-free access for Canada’s exports will not be implemented until 2024 at the earliest. So, for Canadian businesses looking to take full advantage of CETA, it is important to remember that some of the Agreement’s provisions will not come into effect until several years down the road.

The main trade changes with CETA

On September 14, 2017, CBSA issued Customs Notice 17-30, “Implementation of the Canada-European Union Comprehensive Economic and Trade Agreement“, which sets out important administrative details for Canadian importers before duty-free imports are processed. The main highlights of this notice are:

Proof of Origin

Unlike other trade agreements where a prescribed Certificate of Origin is required, there is no CETA Certificate of Origin. Instead, importers must have an Origin Declaration (OD) to claim preferential tariff treatment under CETA.

The OD must be completed by the exporter in the EU country and include a detailed description that enables the identification of goods. It can be provided through an invoice or any other commercial document. The wording and accepted languages of the OD are outlined in Annex 2 of the Protocol on Rules of Origin and Origin Procedures.

Shipping

Goods may be shipped directly from an EU country or beneficiary with or without transhipment to Canada. If the goods are transiting through a third country, they must remain in Customs. Conditions of transhipment are outlined in Article 14 of the Protocol on Rules of Origin and Origin Procedures.

Tax Refunds

As of September 21 2017, importers may apply for refunds under CETA under paragraph 74(1) (c.11) of the Customs Act within 4 years from the date the goods were accounted for to CBSA.

Customs Notice 17-30 should be read in conjunction with the CETA text and the various federal and provincial regulations to bring CETA into effect.

What countries are entitled to preferential tariffs under CETA?

Entitlement to the CETA preferential tariff treatment is determined according to the rules of origin set out in the CETA Protocol on Rules of Origin and Origin Procedures. The following countries are eligible for preferential tariffs under CETA:

• Andorra
• Austria
• Belgium
• Bulgaria
• Croatia
• Cyprus
• Czech Republic
• Denmark, excluding the Faroe Islands and Greenland
• Estonia
• Finland, including the Åland Islands
• France, including French Guiana, Guadeloupe, Martinique, Mayotte, Réunion, Saint Barthélemy and Saint Martin, and excluding French Polynesia, the French Southern and Antarctic Territories, New Caledonia and Dependencies, Saint Pierre and Miquelon and the Wallis and Futuna Islands
• Germany, including the island of Heligoland and the territory of Büsingen
• Greece, including Mount Athos
• Hungary
• Ireland
• Italy, including the municipalities of Livigno and Campione d’Italia and the Italian waters of Lake Lugano
• Latvia
• Lithuania
• Luxembourg
• Malta
• Monaco
• Netherlands, excluding Aruba, Curaçao, Sint Maarten and Bonaire, Sint Eustatius, and Saba
• Poland
• Portugal, including the Azores and Madeira
• Romania
• San Marino
• Slovakia
• Slovenia
• Spain, including Ceuta and Melilla and the Canary Islands
• Sweden

Our Global Trade Services (GTS) team can guide you through CETA’s procedures and rules if you’re looking to leverage new trade opportunities between Canada and the EU.