Canada: The Canada-European Union Comprehensive Economic And Trade Agreement — Part 2

Last Updated: October 28 2013
Article by Richard G. Dearden, Wendy J. Wagner and Anca M. Sattler

Most Read Contributor in Canada, October 2018

The Government of Canada has released an Overview of how CETA will benefit Canada's key economic sectors and will Open New Markets in Europe. Today, The Canadian Government announced that ministers, members of Parliament, business and industry leaders and other key stakeholders will be holding events across Canada, highlighting the benefits of the CETA. The government also launched a website to draw attention to the benefits of CETA for Canada's small and medium-sized enterprises. The cross-country benefits blitz aims to educate Canadians on how the elimination of 98 per cent of all EU tariffs will lead to increased profits and opportunities from the first day when CETA comes into effect.

CETA, an historic free trade agreement for Canada, is expected to come into effect in 2015 and will cover virtually all sectors of Canada-EU trade . Below are some highlights from Canada's overview of CETA found in Opening New Markets in Europe.

Trade in Goods

CETA addresses tariffs and customs procedures, as well as product certification and technical standards. On the day CETA comes into force, about 98 percent of the EU's tariff lines will be duty-free for Canadian goods. Another 1 percent of tariffs will be eliminated over a period of up to seven years after CETA comes into force.

CETA includes specific rules of origin for all products assuring that only goods made in Canada or the EU will benefit from preferential duty rates. CETA aims to reduce processing times at the border and make the movement of goods between Canada and the EU members less expensive, faster, and more predictable.

Technical barriers ensure that unnecessary or discriminatory regulatory requirements do not diminish the value of new market access. CETA aims to streamline the process for regulations or other requirements on labelling, product testing, and certification, and through regulatory cooperation that will facilitate dialogue between regulatory authorities in Canada and the EU. The agreement will also include a mechanism that will provide for the acceptance by the EU of test results and product certification by designated Canadian bodies.

Investment

Canadian investors in the EU will benefit from greater certainty, stability, transparency and protection. The investor-state dispute settlement process in CETA, like NAFTA Chapter 11, aims to ensure that investors and investments are treated fairly, equitably and no less favourably than domestic or other foreign investors. The investors and their investments will also be protected from discriminatory or arbitrary government actions and will receive compensation for expropriation. The investor-state arbitration mechanism under CETA will allow for greater public participation and transparency compared to the NAFTA Chapter 11 process. CETA will also include provisions to guard against frivolous claims in order to ensure that the process will not be abused.

CETA will protect the Government of Canada's right to use the Investment Canada Act to conduct reviews of high-value investments to ensure that they are of net benefit to Canada. The ministerial decisions on whether to permit investments under the Investment Canada Act, including for national security reasons, will not be subject to CETA's dispute settlement provisions.

Services and Related Matters

CETA covers all cross-border trade in services, subject to specifically excluded fundamental services such as health care, public education and other social services.

The increased transparency in licensing and qualification criteria will facilitate gaining access to the EU market for Canadian service providers. CETA will streamline the development of agreements between Canadian and EU regulatory bodies for the recognition of professional qualifications and it will include substantive and binding provisions on the mutual recognition of professional qualifications, in particular for professional associations, such as accountants, engineers, architects and foresters.

Expanding on existing WTO access, CETA will also facilitate temporary entry for highly skilled professionals and businesspeople, such as engineers and senior managers, to work in the EU. As a result, Canadian firms and independent professionals will have greater certainty when establishing branches in the EU, bidding on EU service contracts and providing installation and maintenance services for goods sold in the EU market.

With respect to telecommunication services, CETA will ensure that all players have fair access to networks and services, and ensure that regulators act impartially, objectively and in a transparent manner. Service providers and investors will benefit from increased transparency and predictability of the regulatory environment and secure, competitive marketplaces.

Canadian financial services providers will enjoy new and better access to the EU market and CETA will encourage financial-sector regulators to communicate with each other to avoid or resolve unnecessary barriers to entry into the financial services sector. CETA will contain dispute settlement provisions specific to financial services.

CETA's competition provisions will make the trading environment fairer and more predictable for Canadian firms, which will ultimately benefit consumers and will encourage fair market competition to protect Canadian businesses and their investors. Businesses engaged in electronic commerce will also benefit from greater certainty, confidence and protection, under CETA.

Government Procurement

Canadian companies will be able to bid on opportunities in the lucrative EU government procurement market. The Agreement applies only to high-value procurement contracts in order to ensure that governments can continue to use procurement to support local development, with a threshold-value for procurement contracts ranging from 130,000 to five million special drawing rights. Certain exceptions are built into CETA's government procurement rules, including exceptions for cultural industries, Aboriginal businesses, defence, research and development, financial services, and services in the fields of recreation, sport and education as well as social and health-care services.

Intellectual Property

CETA addresses copyright issues by providing support for advances in technology and international standards and providing the ability of copyright owners to benefit from their work while at the same time allowing Internet service providers, educators, students and businesses the tools they need to use new technologies in innovative ways.

With respect to the pharmaceutical sector, CETA will provide extended protection for innovators while ensuring that Canadians continue to have access to the affordable drugs they need. CETA reinforces the Government of Canada's commitment to attracting and retaining investments that support high-paying jobs in Canada as well as rewarding innovators and ensuring that Canadians are able to reap the fruits of such innovation. This helps keep Canada as an important destination for research and development and supports Canadians' access to the most innovative medical breakthroughs. Specifically, eight years of data protection will be mandated by CETA. Up to two years of additional patent protection will be granted to innovative pharmaceutical companies to restore patent protection lost due to delays arising from the regulatory approval process. An export exemption for generic companies will be authorized during this period of patent term restoration. Lastly, innovative pharmaceutical companies will be provided a right to appeal Federal Court decisions under the Patented Medicines (Notice of Compliance) Regulations.

CETA will also include a wider recognition of EU geographical indications for foodstuffs, such as certain meats and cheeses.

CETA contains provisions aimed at combatting trade in counterfeit goods in a simple, fair, equitable and cost effective manner.

Dispute Settlement

CETA will provide for a streamlined dispute settlement process. The agreement will provide for the use of an agreed third party to facilitate resolution and minimize costs. These provisions are based on the WTO Dispute Settlement Understanding model with improvements such as the inclusion of a voluntary mediation mechanism. Parties are also free to choose arbitration over mediation. In addition, an accelerated arbitration procedure will also be included in CETA, to facilitate the determination of cases requiring urgent resolution, such as those involving live animals and perishable or seasonal foods.

Sustainable Development, Labour and Environment

CETA will encourage businesses to adopt practices that promote economic, social and environmental objectives and includes a commitment to review, monitor and assess the impact that the Agreement's implementation has on sustainable development in both Canada and the EU.

Canada and the EU have also committed to protect and respect the rights of workers, by seeking high levels of labour protection, enforcing labour laws and not waiving or derogating from these laws in order to promote trade or attract investment.

CETA's environment provisions reinforce Canada's commitment to strengthen the link between trade, investment and the environment. Thus, CETA will encourage Canada and the EU to continue developing our natural resources in a way that is environmentally sustainable.

Ratification

The CETA negotiations are not yet completed but an agreement has been reached on all substantive issues. Once a final text has been agreed to it will go through a "legal scrub", be translated into over 20 languages and then ratified by Canada and the EU. The ratification process could take 18-24 months but the Canadian Government has indicated that it wants CETA in effect prior to the 2015 federal election.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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