Canada-EU Trade Agreement Signed; Implementation and Tariff Relief Expected in 2017

The primary focus and benefit of the Comprehensive Economic and Trade Agreement (CETA) is the elimination of tariffs on goods imported into Canada from European Union countries, and, in reverse, the elimination of tariffs on Canadian goods exported to EU countries. Most of these tariff reductions will occur immediately upon implementation.

Based on RCC’s review of the schedule, tariffs on apparel items such as tailored suits, knitwear and shoes would be eliminated immediately upon implementation. Due to differing treatment for individual products, officials are encouraging organizations to consult with a customs broker in order to confirm exact timing of elimination for specific products.

Process and Timing

After some well-publicized hurdles in obtaining approval in Belgium, the CETA deal was finally signed on October 30, 2016.

To come into effect, the trade agreement still requires the approval of the Canadian Parliament. To that end, the Government of Canada introduced a Bill in the House of Commons on October 31, titled: An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures. Hearings are expected to be held on the Bill and RCC intends to appear at those hearings in support of the agreement.

Final ratification is also required by the European Parliament and by the legislatures in each EU member country. However, once the treaty is approved by the European Parliament, the measures in the treaty will take provisional effect, which will mean that most of the important provisions will begin to operate right away.

Brexit Implications

Because the United Kingdom has signalled its intention to exit the European Union, the deal will not be put before the British Parliament and thus will have no effect on trade relations between Canada and the UK post-Brexit. The UK has however, indicated a strong interest in concluding a trade deal with Canada on terms similar to those in CETA.

Cheese Quota Issue

In addition to general tariff elimination, the CETA agreement also increases the amount of European Cheese that will be available to import to the Canadian market. The cheese provision of the agreement will provide an additional 18,000 metric tonnes of European cheese to the Canadian market for commercial purposes, in addition to the current 13,000 metric tonnes that is currently available. The agreement specifies that 30% of the additional allocation must be allocated to new quota holders. The existing quota is held by a limited number of large processors. This provides an opportunity for retailers who currently sell cheese to directly import and sell cheese to Canadian consumers.

RCC has engaged in extensive consultation to demonstrate and ensure that this new allocation of cheese is provided directly to retailers. The Minister has not finalized recommendations on how to distribute allocation, however it is anticipated that access to additional imports will be initiated in the spring of 2017.

If you have any questions or concerns, please don’t hesitate to contact: Karl Littler, Vice President, Public Affairs at: klittler@retailcouncil.org or 416-467-3783