Home /  Our experts speak / An update on the Comprehensive Economic and Trade Agreement (CETA)

An update on the Comprehensive Economic and Trade Agreement (CETA)

Jan 22, 2015
Angela Parkin, Manager, Trade Compliance The Canada – EU agreement (CETA) was five years in the making, and as we wait for the lawyers and the translators to finish their work, we have the opportunity to review the text of the agreement. While both Canada and the EU have stated tariffs will be eliminated when the agreement comes into force, it is important to note items must first qualify for the eliminated or duty reduction under the CETA rules of origin.The rules of origin are complex and exporters on both sides will have to ensure they have taken the correct steps in their qualifying process or have engaged service providers such as Livingston to complete the qualifying process on their behalf. As a starting point what follows are some specific sections within the text to be considered when qualifying an item and/or determining the duty rate.

Quotas – some products have quotas so regard must also be given to the quota rules in addition to other sections within the text. Areas covered under a quota are:

  • Agricultural Products
  • Fish and Seafood
  • Textiles and Apparel
  • Vehicles

Staging Categories – the staging categories determine the number of years over which an item is staged, before it will become duty free.

  • A – Duty-free on the date the CETA Agreement enters into force
  • B – Shall be removed in 4 equal stages beginning on the date CETA enters into force, and such goods shall be duty-free, effective January 1 of year 4
  • C – Shall be removed in 6 equal stages beginning on the date this agreement enters into force, and such goods shall be duty-free, effective January 1 of year 6
  • D – Shall be removed in 8 equal stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year 8
  • E – Are exempt from tariff elimination
  • S – Removed in 3 equal stages beginning on the fifth anniversary of the date of entry into force of this agreement, and such goods shall be duty-free, effective January 1 of year 8
  • AVO-EP – the elimination shall apply to the ad valorem duty only; the specific duty resulting from the entry price system applicable for these originating goods shall be maintained.

CETA is expected to come into force in 2016, and will provide significant benefits for imported goods qualifying under the rules of origin. Listed below are the percentage of tariff lines for product that qualify under the rules of origin when imported into Canada and the European Union will be duty free.

When the agreement comes into force:

  • 98.4% of Canada’s tariff lines will be duty free
  • 98% of EU tariff lines will be duty free

Seven years after the agreement comes into force:

  • 98.8% of Canada’s tariff lines will be duty free
  • 99% of EU tariff lines will be duty free

Livingston’s Global Trade Management group will continue to provide additional information about CETA and other trade agreements in future articles.