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What to Expect From CETA

June 22, 2017

The agreement is our most ambitious ever. Canadian businesses will see virtually all tariffs removed on their exports to Europe, and be better able to compete in global value chains. Canadian consumers will be able to get better deals on European products like food or fashion.

CETA will strengthen the investment between Canada and the EU which already supports over half a million jobs – as well as opening services markets and cutting the red tape that poses such a burden for small business. Open public procurement will enable more efficient use of scarce public resources – with public authorities able to shop around more widely.

 

To which countries may Canadian exporters sell CETA goods?

Canadian importers may benefit from the Canada-EU CETA duty relief commitments made in respect of imports originating in the 28 European Union countries, which are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

What Are the Rules?

As a general rule, EU-origin goods must be shipped directly from an EU Member to receive Canada-EU CETA preferential tariff treatment. There are a number of fields on the B3 Canada Customs Coding Form that communicate information about the place of direct shipment and the country of origin.

An exception to the general rule is contained in Article 14 of the Protocol on rules of origin and origin procedures, which permits certain transshipment. Article 14 provides that:

1. A product that has undergone production that satisfies the requirements of Article 2 shall be considered originating only if, subsequent to that production, the product;

(a) does not undergo further production or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the product to the territory of a Party; and

(b) remains under customs control while outside the territories of the Parties.

2. The storage of products and shipments or the splitting of shipments may take place where carried out under the responsibility of the exporter or of a subsequent holder of the products and the products remain under customs control in the country or countries of transit.

What this means is that if EU-origin goods are maintained by a U.S. distributor in a bonded warehouse, they may be able to enter Canada duty-free under the Canada-EU CETA.

What Are the Documentary Requirements?

Canadian importers of EU-origin goods must have an origin declaration. There isn’t a certificate of origin like in NAFTA. However, there is a certification requirement. Annex 2 of the Protocol on rules of origin and origin procedures sets out the language to be used in the certification of origin.

It will be very important to verify that the U.S. or other non-EU warehouse was a customs bonded warehouse and that the EU-origin goods were imported into that warehouse and maintained in that warehouse while outside the EU. It will be important to obtain a certification from the vendor of the goods. If this evidence is not available to provide to the Canada Border Services Agency, CETA tariff treatment may be denied.

 

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