Free Trade

How does CETA Facilitate your Expansion to North America?

The Canada – European Union Comprehensive Economic and Trade Agreement (CETA) is a bilateral agreement between Canada and the EU. This agreement facilitates economic ties between the EU and Canada and offers an array of benefits to European companies that choose to establish a local presence in Canada and, by extension, Ontario:

 

Significant tax and tariff savings for EU exporters investing in Canada over the US– A physical presence in Canada will allow EU companies to circumnavigate the extra costs associated with US-EU trade, which is governed by less favorable World Trade Organization tariff rules.

Simplified hiring – Simplified hiring with the mutual recognition of regulated professions (including architects,
accountants, and engineers).

Staff transfers – Easy short and long-term staff transfers between Europe and Canada.

Preferential access to the US and Mexican markets through a Canadian presence – Canada is the only G-8 country and one of the few industrialized countries in the world to enjoy preferential access to both the EU and the United States markets. Through the CUSMA trade agreement, which significantly reduces tariffs between the US and Canada, an investment in Canada will enable EU companies to easily and cost-effectively access both its domestic market and the US and Mexican markets by extension. This gives EU companies access to a trilateral trade network that accounted for nearly $1.1 trillion USD in merchandise trade in 2019.

Significant savings on duty payments – Anticipated annual savings of €470 million on industrial goods duty payments for EU exports to Canada (based on 2009-2011 data).

The EU and Canada have agreed to eliminate customs duties for the import of goods originating in the EU and Canada, either when CETA came into force, or gradually within 3, 5 or 7 years for almost all goods. Ultimately, the tariffs for almost 99% of all Canadian and EU tariff lines will be removed.

98% of Canadian tariff lines already eliminated.

STREAMLINED LABOUR MOBILITY

CETA removes many existing labour mobility barriers – CETA removes many existing labour mobility barriers for European companies that want to receive short-term assistance from their headquarters or move over senior personnel for longer periods.

Key corporate personnel able to enter Canada without a work permit – The agreement allows key corporate personnel to enter Canada without a work permit for 90 days in any six-month period for many work activities. This includes entry for meetings, R&D activity, market research, training seminars, exhibition attendance, sales, purchasing, and after-sales service.

Companies no longer need to prove they have attempted to hire locally – Companies will also no longer need to prove they have attempted to hire locally before bringing over key highly skilled personnel. This will help
companies cut months off the time it takes to build a local team, ensuring they can focus on cementing an uptick in their North American sales.

 

Rules of origin ensure that CETA preferential tariff rates benefit EU and Canadian production. In order to take advantage of CETA preferential tariff rates, companies will need to fulfil the rules of origin defined in the agreement and prescribed for each and every product.

 

More permissive rules of origin – CETA allows the export of automobiles and other industrial products under
more permissive rules of origin, enabling easier market access to Canada. Lower barriers to selling and the increased trade flow for EU companies make an investment in Canada more fruitful.

Based on the standard EU rules – The majority of CETA’s horizontal and the product specific rules of origin are
based on the standard EU rules, simplifying proceedings for EU companies.

Future cumulation of origin – The potential for future cumulation of origin with third countries, including the
US, should ease concerns over being able to use existing supply chains to support new facilities while maintaining necessary proof of origin.

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TRADE FACILITATION MEASURES

CETA has streamlined customs procedures to make them more transparent, efficient, and predictable. Customs requirements are now fully public, with information about them widely available online, making
pre-arrival processing possible and the examination of each individual shipment no longer necessary.

 

Simplified customs and trade facilitation processes make trading with Canada more straightforward and less costly.

Companies with a physical presence in Ontario will benefit, able to focus on growing a local customer base
rather than building a local supply chain.

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TRANSPARENT SUBSIDY INFORMATION

CETA’s subsidy transparency requirements ensure that companies have clear visibility of all available subsidies, giving European firms improved information on which subsidies they may be eligible for in Canada. This greater
transparency creates a level-playing field for Canadian and European firms and supports corporate decision-making.

The agreement also includes mechanisms that allow for regular re-alignment of subsidies to ensure enterprises from one region are not unduly impacted by local subsidies offered to their competitors. CETA’s non-binding consultation mechanism allows parties to request changes to existing subsidies, should they be deemed to adversely affect their interests. In such situations, the responding party is required to accord full and sympathetic consideration to the request and to make efforts to minimize the impact of the subsidy on the complaining party.

KEY FACTS ABOUT CETA

Canada and the EU enjoy a strong bilateral trade and investment relationship. In 2020, the EU was Canada’s second largest trading partner after the United States. Canada has steadily increased its importance in EU trade and has become the EU’s 11th most important trading partner.

EU-Canada merchandise trade had increased by 27% from pre-CETA levels, reaching a record high of €66.8 billion in 2019

EU-Canada goods exports increased by 28% from pre-CETA levels, reaching €46 billion in 2019

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CETA BY THE NUMBERS

38 MILLION CANADIAN CONSUMERS – CETA gives European companies preferential access to 38 million consumers across Canada and the world’s 9th largest economy by GDP ($1,645 billion USD).

458 MILLION NORTH-AMERICAN CONSUMERS – The CUSMA agreement gives European companies that produce goods in Canada access to a further 458 million consumers across the US and Mexico and a combined Canada-US-Mexico market with a GDP of $23,672 billion USD.

37% LARGER MARKET THAN THE COMBINED EU MARKET – The combined Canada-US-Mexico market is 37% larger than the combined EU market (Combined GDP of $15,292 billion USD).

46% LOWER TOTAL BUSINESS TAX COST THAN THE US – Canada has the lowest total business tax costs in the G7 at 46% lower than the United States.