Canada: Impact Of CETA On European Companies Doing Business In Canada

Last Updated: November 1 2016
Article by Richard Leuce

The Canada-European Union: Comprehensive Economic and Trade Agreement ("CETA") was intended to be signed on Thursday, October 27, 2016. Resistance from Wallonia, a Belgian province, regarding protectionism over agricultural imports could see the signing delayed. Prime Minister Trudeau still intends on making the trip to Brussels to sign the agreement, which would allow the 28 signatory countries (including the United Kingdom) additional immigration categories to facilitate trade and business. This article explores the additional options for gaining temporary resident status in Canada, with a focus on benefits and demonstrative case scenarios for the additional categories.

Article 1 (Scope) of CETA defines the aim to create an environment of preferential trading relationship intent on trade facilitation. More specifically, CETA seeks to improve mobility for company key personnel, contractual service supplies, independent professionals and short term business visitors. The focus is clearly on facilitating temporary entry into the market only, and distinctively specifies it is not applicable to measure of permanent residence or citizenship.

Work authorization in Canada is granted under two main programs, the Temporary Foreign Worker Program (TFWP) and the International Mobility Program (IMP). The CETA exemptions will fall under the IMP program, alongside other trade deals such as the NAFTA. Eligible natural persons of the signatory Party will receive consideration under CETA. Natural persons will include (1) key personnel (business visitor for investment purposes, investors, and intra-corporate transferees), (2) contractual services suppliers (CSS) & independent professionals (IP), and (3) short-term business visitors (BV).

1. Key Personnel (KP)

As aforementioned, the KP category will include business visitors for investment persons which is simply identified as a foreign national working in a (1) managerial or (2) specialist position responsible for setting up an enterprise. These would be either senior managers and directors, or the subject matter experts or know-how positions, incorporating a branch or subsidiary in Canada, and who would help kick-start the operations locally. However such positions would not engage in direct transactions with the general public, nor would they be paid from a source in Canada. Requests under this category will allow for stays of up to 90 days within any six month period. There will be no work permit issued in this situation.

By contrast, the category defined only as investor, would allow temporary entry to those persons establishing, developing or administering the Canadian operation of a foreign entity in either a (1) supervisory or (2) executive capacity. This category would allow the temporary entry of individuals seeking entry to establish a business, and also temporarily manage the newly-formed entity. Another important requirement is that either the investor, or the enterprise employing that person, has committed a substantial amount of capital. It remains to be seen what Immigration, Refugees and Citizenship Canada (IRCC) will use as the amount qualifying as "substantial". Applications made under this sub-category can receive consideration for one (1) year duration, with a possible discretionary extension.

Lastly, and perhaps most important and accessible of categories within KP, is the intra-corporate transferee (ICTs). Compared to previous international agreements with similar ICT requirements, CETA will allow senior personnel, specialists and graduate trainees to make applications for entry. This move represents a clear intention of allowing knowledge transfer at all corporate levels (entry-, mid-, and senior-levels). With respect to senior personnel, the eligibility requirements remain fairly similar as those found under GATS, for example. Namely, such individuals must primarily direct the management of the enterprise, or the enterprise itself, or a department or sub-division thereof and exercise wide latitude in decision making such as hiring and firing. Entry can be requested for the lesser of 3 years or the length of the contract, with a possible and discretionary extension of up to 18 months.

Moving forward through the ICT sub-categories, specialists (analogous to Specialized Knowledge worker sub-category within GATS) will require (a) uncommon knowledge of the enterprise's products/services or an advanced level of expertise/knowledge of the enterprise's process and procedures. The key difference is that the requirement under CETA only requires one of the two levels of knowledge, while applications made under GATS require both in order to be admitted into the class. These changes imply that on a practical level, it will be easier to demonstrate specialized knowledge for specialists under CETA for nationals of Germany and Austria for example, compared to demonstrating the same under GATS for nationals of India and China. Similar to senior personnel, entry can be sought for the lesser of 3 years or the length of the contract, and an additional extension for 18 months.

2. Contractual Service Suppliers (CSS)

The underlying agreement or service contract must specify the provisions or services to be provided by CSS applicants, for a period of one (1) year. Even if the service agreement is longer than one (1) year, CETA will only apply for the initial twelve (12) month period. Should a new work permit be required as CSS, a new contract for either new or similar services must exist. The typical applicant would need to be employed for at least one (1) year in the preceding three (3) year period, by the entity supplying the services. Additionally, foreign nationals must also possess at least three (3) years professional experience in the appropriate sector, in addition to relevant academic credentials.

The eligibility requirements for the CSS category do not preclude the natural person from obtaining appropriate permission from local Relevant Authorities, as well as compliance with the laws, regulations and other legal requirement of the Party where the contract is executed. In practical terms, professional and regulated titles such as Engineer or Architects can only be used following recognition agreements with the appropriate regulatory body. The maximum length of stay is intended to be no more than twelve (12) months in any twenty-four (24) month period or for the duration of the contract, whichever is less.

Lastly, only those positions listed under level "0" and "A" of Canada's National Occupational Classification (NOC) code will qualify under this category in certain sub-sectors.

3. Independent Professionals (IP)

A natural person can seek entry as an IP provided that (s)he has been engaged in the supply of a temporary service, for a period not exceeding one (1) year. Similar to the CSS category, the CETA will only cover the initial 12 months of any such contract, even if the contract is set for a longer period of time. The professional must possess at least six (6) years of professional experience in their respective sector, and must possess either (a) a university degree or qualification, and (b) all required professional qualifications to exercise an activity pursuant to the law. Also similar to the CSS requirements, the use of professional titles (such as P.Eng) will only be allowed through authorization from the appropriate regulatory body, either through application or through mutual recognition agreements.

Also similar to the CSS, the maximum length of stay intends to be restricted to the lesser of either the cumulative period of not more than twelve (12) months in a twenty-four (24) month period, or duration of contract. Additionally, only positions listed under level "0" and "A" of Canada's National Occupational Classification (NOC) code will qualify, again in certain sub-sectors.

4. Short-Term Business Visitors (BVs)

Unlike the aforementioned categories, BVs will be exempt from the requirement to obtain a work permit. Rather, it is anticipated that BVs will continue to be allowed into Canada based on either Visitor Records, or simply stamped into the Country. The eligibility requirements are similar to those found under GATS, namely that (a) they are not engaged in selling goods or services to the general public, (b) no remuneration is received from any Canadian source, and (c) they are not engaged in the supply of a service, except as provided in Appendix D of CETA.

Specifically, this category only applies to those services in the following activities:

  1. Meetings and Consultations à attending meetings or conferences, or engaged in consultations with business associates;
  2. Research and Design à applicable to technical, scientific and statistical researchers performing independent, or enterprise sponsored, analysis;
  3. Marketing research à for market researchers and analysts conducting research;
  4. Training seminars à entry of personnel employed abroad coming to Canada to observe, get familiarized, and receive classroom instruction only, from other companies or organizations operating in Canada;
  5. Trade Fairs and Exhibitions à personnel entering to attend a trade fair for the purpose of promoting company products or services;
  6. Sales à representatives taking orders or negotiating the sale of services or goods or entering into agreements for same, without actually being involved in the delivery of the goods/services themselves. Cannot engage in making direct sales to the general public;
  7. Purchasing à related to buyers purchasing goods or services for an enterprise from a Canadian supplier;
  8. After-Sales or After-Lease Service à relating to installers, repair and maintenance personnel, and supervisors, all whom must possess specialized knowledge essential to a seller's contractual obligations. Such services must be performed during the life of the warranty or service agreement;
  9. Commercial Transactions à management, supervisory personnel, and financial services personnel engaging in a commercial transaction for an enterprise located outside of Canada;
  10. Tourism Personnel à will allow for entry of tour and travel agents, tour guides or tour operators attending/participating in conventions, or accompanying a foreign tour;
  11. Translation and Interpretation à translators/interpreters performing services as employees of an enterprise located outside of Canada.

Notable Exemptions

There are several exemptions which Canada has chosen to remain unbound by. Across all sectors, Appendix C regarding Technologists will apply. This Appendix stipulates the interpretation regarding the equivalent qualifications for Engineering and Scientific Technologists. The new rules will favour applicants with a completed three (3) years post-secondary degree, in engineering and other disciplines, holding them equivalent to a university degree.

While the above exemption is applied to all sectors, Canada is also unbound from CETA with respect to the following sectors: Accounting and bookkeeping services (IP only); Taxation advisory services (IP only); Medical (including psychologists) and dental services; Veterinary services; Midwives services; Services provided by nurses, physiotherapists and paramedical personnel; Advertising (IP only); Technical testing and analysis services (IP only); Related scientific and technical consulting services (IP only); to name a few.

Lastly, not an exemption, CETA would also facilitate the issuance of open spousal work permits, for those transferring under the intra-corporate transferee (ICT) category. This would also be specifically advantageous for those seeking to come to Canada, as the OSWP category would also available to those in common-law partnerships. Specifically, to unmarried applicants which have cohabitated together for one (1) year or more.

Conclusion

Should the CETA be signed this week, new opportunities become available for foreign service suppliers with respect to Canadian work permits. CETA will provide new avenues for obtaining work permits. This will also make matters easier for Canadian employers wishing to hire foreign personnel, thereby avoiding the costs associated with LMIA applications. However it favours certain categories and certain sectors as more opportunities will become available for CSS applications compared to IP applications. While limited entry is envisioned for IP applications, applications in the Computer and Related Services, and Management Consulting Services will be available for direct individual contracting with Canadian clients.

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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