The Government of Canada has released a Technical Summary of the Negotiated Outcomes: The Canada-EU Comprehensive Economic and Trade Agreement, that provides an outline of the Agreement-in-Principle. The document summarizes the following important negotiated outcomes of CETA:
- Non-agricultural goods
- Agricultural goods
- Services and investment
- Government procurement
- Intellectual Property
- Dispute settlement, institutional and horizontal provisions, and
- Sustainable development, environment and labour.
1. Non-agricultural Goods
Tariff Elimination
Canada and EU have agreed to fully eliminate duties on all non-agricultural goods, with 98% of tariffs on both sides of the Atlantic being set to 0% when CETA comes into force. CETA will also provide for a seven year period after coming into force to reach the goal of having 99% EU tariffs and 98.8% Canadian tariffs eliminated.
The Agreement-in-Principle further stipulates for three, five or seven year transition periods for sensitive products on the Canadian side, such as ships, autos and some agriculture goods.
Customs and Trade Facilitation
CETA provides for access to advance rulings on the origin or tariff classification of products, automated border procedures as well as an impartial and transparent system for addressing complaints about customs rulings and decisions.
National Treatment and Market Access
Agreed rules on national treatment obligations and market access will ensure that goods are not subject to discriminatory treatment by the other party and fees charged on importation or exportation must be commensurate with the cost of services rendered. There will be a general prohibition on import/export restrictions and a prohibition of duty drawback on bilateral trade.
Trade Remedies
Canada and EU have agreed to reaffirm the WTO rights and obligations for trade remedies and subsidies, while at the same time adding transparency and consultation mechanisms for subsidies to enable parties to exchange information and to discuss subsidy programs that may be adversely affecting their interests. There will be a bilateral prohibition of agricultural export subsidies conditional on tariff elimination.
Technical Barriers to Trade and Conformity Assessment
CETA will build on key provisions in the WTO Agreement on Technical Barriers to Trade. Procedures will be put in place for Canada and the EU to request that each other's technical regulations be considered equivalent. Interested persons are allowed to participate in public processes for the development of technical regulations. A Committee will be created to deal with trade irritants.
A Protocol will provide for the acceptance by Canada and the EU of test results and product certification by recognized bodies in the other Party which will reduce testing and certification costs and marketing delays. The text of the Protocol is "stable" but is still under negotiation.
Regulatory Cooperation Chapter
CETA will include the first regulatory cooperation chapter in any Canadian Free Trade Agreement, creating a mechanism aiming to facilitate joint initiatives between Canadian and EU regulatory authorities and earlier access to regulatory development processes.
2. Agricultural Goods
Tariffs
The Parties have agreed that 93.6 % of EU agricultural tariff lines and 92% of Canadian agricultural tariff lines will be eliminated when CETA comes into force.
Among the EU tariffs that will be eliminated immediately are tariffs for maple syrup (current duty 8%), certain fresh and frozen fruits, and various processed fruits and vegetables with current duties as high as 17.6%.
A seven year transition period will be put in place for grains. There will be an immediate duty-free in-quota access for 8,000 tonnes of sweet corn. The EU will make available duty-free, quota-free access to the EU dairy market and duty-free but quota limited access for beef, veal, bison, and pork.
With respect to supply-managed products, Canada will provide no reduction in over-quota tariffs. Poultry and eggs are excluded. There will be no tariff rate quotas other than for cheese. Canada will phase-out of the milk protein substances tariff. No additional access is provided for any other Canadian supply-managed product.
Sanitary and Phytosanitary Measures
The Parties agreed to reaffirm and build upon WTO sanitary and phytosanitary commitments and introduce SPS provisions subject to dispute settlement. CETA builds on the Veterinary Agreement. A key objective for Canada is to ensure that commitments are made to facilitate trade in red meats. Canada and the EU agreed to proactively determine equivalency of each other's inspection and certification systems. A Sanitary and Phytosanitary Measures Joint Management Committee of experts will be created.
3. Services and Investment
The Agreement-in-Principle reflects a recognition of governments' right to regulate and right to sovereign control over the development of natural resources. Health care, public education, and other social services are excluded, as well as culture. Additional exclusions will allow for preferential treatment of Aboriginal peoples and minority groups.
The EU will liberalize certain sectors and services activities such as research and development, mining, services related to energy, computer and information technology and professional services. At the same time, Canada will provide new market access for EU investors for commercial dredging, telecommunication and uranium investment. The Investment Canada Act will be exempted from dispute settlement but Canada has agreed to raise the threshold for the review of a transaction to $1.5 billion.
Labour Mobility
Another first for Canada's Free Trade Agreements is the introduction in CETA of provisions on licensing and qualification, as well as the mutual recognition of professional qualifications.
Canada and the EU will make commitments for contract service suppliers and independent professionals to be taken on a reciprocal basis, on a sector and member-state basis, with a minimum stay equal to both Canada and the EU.
Financial Services
The financial services chapter in CETA will build on Canada's existing model for trade in financial services, with the exception that it will protect reasonable measures taken for prudential reasons.
Investors in the financial sector will have recourse for breach of national treatment, most-favoured nation and treatment of investors in addition to expropriation and limits on transfers.
Investment Obligations
Canada and the EU committed to treat investors from Canada and the EU fairly and equitably and in a non-discriminatory manner. The Parties also agreed on investment protection rules with provisions on expropriation, including indirect expropriation. An Annex will clarify that non-discriminatory, good faith measures to protect health, safety and the environment do not constitute indirect expropriation.
CETA will contain a "robust and innovative" provision on minimum standard of treatment. There will be a new format for this provision but it will be substantially the same as NAFTA's customary international law minimum standard of treatment.
Investor-State Arbitration
The investor-state dispute settlement (ISDS) chapter of CETA will contain clear and detailed rules of procedure to promote an efficient resolution of investor-state disputes, within a transparent process. The investor-state arbitration procedures will include:
- enhanced consultations and new mediation provisions to encourage early settlement of disputes without recourse to arbitration
- a transparent ISDS process, making submissions to the arbitral panel public and generally opening hearings to anyone interested
- amicus curiae interventions (non-disputing individuals and organisations may seek leave to submit briefs to the arbitral panel)
- provisions to allow for the early dismissal of frivolous and stale claims to ensure that the process will not be abused
- a standing provision adjusted for the Convention on the Settlement of Investment Disputes between States and Nationals of other States (the "ICSID Convention"). On November 1st Canada deposited its Instrument of Ratification of the ICSID Convention with the World Bank. The ICSID Convention will enter into force for Canada on December 1, 2013.
- an investor must file a waiver abandoning any other parallel claim it may have seeking damages related to the same measure(s). If the ISDS claim is dismissed in its early stages, such as on procedural or jurisdictional grounds, then an investor may pursue its claim elsewhere. If the ISDS claim is withdrawn within 12 months, the investor may pursue its claim elsewhere.
- an ISDS tribunal cannot order the repeal of the host state's measure. The tribunal may order an award, separately or in combination, for damages or restitution of property, as well as costs.
- when calculating a damages award, a tribunal must consider, amongst other factors, whether a measure has been voluntarily repealed or modified. This may serve to discount the amount of damages awarded to the investor.
- Canada and the EU may adopt interpretations of a provision in the investment chapter that are binding on investor-state dispute-settlement arbitration tribunals. Such interpretations can be used to clarify the Parties' intent when the obligations were negotiated.
Monopolies and State Enterprises
Canada and EU agreed to ensure monopolies and state enterprises (MSE) operate in a non-discriminatory manner and in accordance with commercial considerations. The disciplines of the MSE chapter will only apply to purchases with a view to commercial resale or with a view to use in the supply of goods and services for commercial sale, excluding procurement by a Party for goods and services purchased for governmental purposes.
4. Government procurement
CETA will maintain the Parties' ability to give preference to domestic companies, especially for procurements below a threshold value.
Canada and EU will be able to maintain broad exceptions for national security, measures necessary to protect public morals, order or safety; human, animal or plant life or health; intellectual property; and Aboriginal businesses.
The EU will commit to provide Canada preferential access to its $2.7 trillion government procurement market, while Canada will offer broad coverage at the federal, provincial and municipal levels.
5. Intellectual property
Pharmaceuticals – Data Protection
Canada agreed to lock in its current data protection of eight years of market exclusivity for new drugs.
Pharmaceutical – Patent Linkage / Right of Appeal
Canada agreed to ensure that litigants are afforded effective rights of appeal, which gives scope for Canada to end the practice of dual litigation. No specific details have been publicly disclosed about how this issue will be resolved.
Pharmaceuticals - Patent Term Restoration
Canada agreed to provide additional (sui generis) protection for pharmaceutical products protected by eligible patents in Canada. Canada's patent term restoration of up to two years will not be retroactive – pharmaceutical products that are already approved and on the Canadian market will not receive this additional patent protection. The period of protection will not exceed two years in Canada while the EU will provide patent term restoration for five years.
The Parties negotiated exceptions to allow for Canadian-made generic medicines to be exported during the period of additional protection. The Canadian government agreed to address incremental cost impacts if concessions to the EU generate additional costs on provincial and territorial governments. Canada predicts that any costs impacts are not likely to be felt until the year 2023.
Copyright
CETA will contain a copyright system following the 2012 Copyright Modernization Act. CETA reiterates existing aspects of the Canadian copyright regime, such as term of protection, broadcasting, protection of technological measures, protection of rights, management information, and liability of intermediary service providers.
Trademarks and Designs
With respect to trademarks and designs, Canada did not take on any specific commitments. CETA reflects the Parties' intention to make reasonable efforts to comply with international agreements (Singapore Treaty on the Law of Trademarks, The Protocol Related To The Madrid Agreement Concerning The International Registration Of Marks, and the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs) and standards to encourage more effective trademark and industrial design procedures.
Geographical Indications
Canada agreed to recognize 179 terms covering foods and beer. CETA's provisions regarding the protection of Geographical Indications include:
- preserving space for Canadian trademark holders and for users of commonly used English and French names for food products
- offering protection for GIs without prejudicing the validity of existing Canadian trademarks
- enforcement of GIs in the Canadian market remains a private matter to be argued before the courts.
- Some EU GIs were protected but with the caveat that they not impact the ability of producers to use specified English- and French-language terms that are commonly employed in Canada. For example, Canadian producers would be able to use English and French but not the German language for Black Forest ham. Terms that continue to be free for use in Canada include Valencia orange, Black Forest ham, Tiroler bacon, Parmesan, Bavarian beer, Munich beer.
- Limited GI rights provided to EU on: Asiago, feta, fontina, Gorgonzola and Munster. This won't affect ability of current users of these names in Canada to continued use. Future users will be able to use the names only when accompanied by expressions such as "kind," "type," style," "imitation" or the like.
- Canada preserves the ability to use the customary name of a plant variety or an animal breed. Producers can, for example, sell the kalamata variety of olive and use the variety name in their packaging.
- Canada maintains ability to use components of multi-part terms,
for example:
- "Brie de Meaux" will be protected, but the term "brie" can be used on its own
- "Gouda Holland" will be protected, but the term "Gouda" can be used on its own
- "Edam Holland" will be protected, but the term "Edam" can be used on its own
- "Mortadella Bologna" will be protected, but either "Mortadella" or "bologna" can be used separately.
- Canada did not agree to protect the French term "noix de Grenoble" (walnut, in English), meaning this term remains free for use in Canada.
- Budweiser beer : Canada will not protect the GI "Budejovicke," which prevents any potential conflict with the Budweiser trademark.
Plants and Plant Protection Products
CETA will provide certainty for data protection for plant protection products. The Parties have committed to co-operate in order to promote and reinforce the protection of plant varieties based on the International Convention for the Protection of New Varieties of Plants.
CETA will not change the "farmers' privilege" to save and replant seeds of a protected variety on their own land under the federal Plant Breeders' Rights' Act.
Enforcement
The Parties agreed to ensure simple, fair, equitable and cost-effective enforcement of intellectual property rights provisions on civil remedies and border enforcement in line with Canada's existing regime and federal Bill C-56 (Combating Counterfeit Products Act).
Commitments with respect to handling of geographical indications at the border are to be confirmed.
6. Dispute settlement, institutional and horizontal provisions
CETA will contain the most efficient and innovative process for state-to-state dispute settlement of any of Canada's FTAs, with provisions for voluntary mediations to facilitate an expedited resolution of disputes.
CETA will also provide for specialized rosters and specific dispute settlements provisions for certain sectors such as financial services, taxation, labour and environment.
Various exceptions for certain measures will be included in different chapters of CETA to protect national security, or to ensure the protection for existing taxation measures, or to protect and promote cultural industries, policies and programs.
The CETA Trade Committee will oversee and facilitate the implementation and application of the agreements. The Trade Committee will also supervise the work of other CETA committees and sub-committees, each with a specific mandate. Canadian delegation in committees will include representatives of provinces and territories.
7. Sustainable development, environment and labour
Trade and Sustainable Development Chapter
This is the first time Canada has agreed to a chapter on sustainable development in an FTA and the first time Canada agreed to chapters with substantive provisions on labour and environment in an FTA. All provinces and territories have agreed to immediate coverage under the sustainable development, environment and labour provisions. The trade and sustainable development chapter will set out commitments relating to sustainable development and enhanced coordination of environment, labour and trade policies, and creates a committee to oversee the implementation of the Trade and Sustainable Development, Trade and Environment, and Trade and Labour chapters.
Trade and Environment Chapter
Commitments in the Trade and Environment chapter aim to maintain high levels of environmental protection, to effectively enforce domestic environmental laws, not to derogate from environmental laws to attract trade or investment, to provide domestic sanctions or remedies for violations of environmental laws and to promote accountability and responsibility. Dispute resolution provisions will cover all obligations in the chapter.
Trade and Labour Chapter
The Trade and Labour chapter includes commitments to ensure that national labour laws and policies in Canada and the EU respect the ILO's 1998 Declaration on Fundamental Principles and Rights at Work. It will also establish civil-society groups and institutional mechanisms to implements and monitor compliance with these commitments.
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