Canada: What Might Be The First Trade Issues Under The Canada-EU CETA?

Last Updated: August 1 2017
Article by Cyndee Todgham Cherniak

The Canada-EU Comprehensive Economic and Trade Agreement (the "Canada-EU CETA") will come into provisional effect on September 21, 2017.  Sometimes, disputes that have arisen prior to the implementation of a free trade agreement, which are left unresolved at the time of implementation, turn into full disputes between the parties. What could those disputes be? The first place to look is areas where both parties, Canada and the EU or an EU member or territory, have overlapping preferred industries.  The best place to look for potential problems is at the World Trade Organization ("WTO") disputes (existing and past problems) and recent or historical trade irritants to predict where Canada-EU CETA consultations may arise.


The Canada-EU CETA provision implementation has been delayed (it was to start on July 1, 2017) due to a disagreement between the EU and Canada concerning the allocation of new entrant cheese quota in the Canada-EU CETA.  In the Canada-EU CETA, over a 5 year gradual increase period, Canada has agreed to grant more quota for cheese over and above the WTO commitments.  Canada has made commitments regarding the allocation of the new cheese quota.  In Annex 2-B, "Declaration of the Parties concerning tariff rate quota administration", Canada has agreed to allocate cheese quota using an import licensing system on an annual basis.  The EU cheese quota allocation method must allow for new entrants each year. During the phase-in period from Year 1 to Year 5, at least 30 per cent of the tariff rate quota will be available to new entrants every year. After the end of the phase-in period from Year 6 and in subsequent years, at least 10 percent of the tariff rate quota quantity will be available for new entrants.

However, in June 2017, it was leaked that Canada planned to grant 60% of the new entrants quota to cheese producers in Canada, who might prevent the importation of the European cheese into Canada or not make the quota available to consumers. This upset the European Union who negotiated the new entrants quota to ensure European cheese will have improved market access in Canada.

If Canada does not resolve this issue to the satisfaction of the EU, this could very well be the first dispute under Canada-EU CETA Chapter 29 "Dispute Settlement".  If the Canadian allocation program does not result in the desired market access (because it is used in a protectionist manner), a trade dispute could arise. The focus will be on implementation and effect, rather than legislative changes or restrictions.


Canada and the EU both have important wine producing regions.  The EU and Canada produce wines and market wines domestically and internationally.  Canadian provincial measures have become a point of contention. Provinces have set up liquor monopolies (such as the Liquor Control Board of Ontario) through which marketing and sales activities occur. The provincial liquor monopolies in British Columbia and Ontario have come under criticism by promoting local wines over imported wines.  In addition, provincial programs that allow wineries to sell wines at farmer's markets, at retail stores, at wineries and directly to local restaurants creates a trade issue because all imported EU wine must be sold through the liquor monopolies.

The EU joined the consultations in WTO dispute DS520 "Canada: Measures Governing the Sale of Wine in Grocery Stores", which was filed by the United States against Canada in January 2017.  This case involves regulations in British Columbia that are alleged to discriminate against imported wine.  The British Columbia regulations are:

  • BC Liquor Control and Licensing Act [RSBC 1996] Chapter 267;
  • B.C. Reg. 42/2015, deposited March 17, 2015, under the Liquor Control and Licensing Act [section 84] and the Liquor Control and Licensing Amendment Act, 2014 [section 48]. Order in Council 121/2015, approved and ordered March 16, 2015. The British Columbia Gazette, Part II, Volume 58, No. 6 (March 24, 2015);
  • Policy Directive No. 15-01, issued by the BC Liquor Control and Licensing Branch, re: Liquor Policy Review Recommendations #19 and 20: Phased-in Implementation of Liquor in Grocery Stores, dated February 26, 2015; and
  • "Wine Store Terms and Conditions, A Guide for Liquor Licenses in British Columbia," BC Liquor Control and Licensing Branch publication, updated September 2015.

These British Columbia regulations and policies are argued to provide advantages to BC wine through the granting of exclusive access to a retail channel of selling wine on grocery store shelves.

The European Union has similar concerns about placement of Ontario wines in Ontario retail stores.  The regulations are drafted to appear to allow both domestic and foreign wine sales in grocery stores. However, the regulations grant special access to small producers, which happen to be local Ontario wineries.  The Ontario concerns have not developed yet into a WTO dispute. The Ontario and British Columbia concerns may turn into a dispute under the Canada-EU CETA if the EU believes that they will see quick political action to resolve the disputes since the provinces were at the Canada-EU CETA negotiating table.

It also is worth noting that in 2008, the European Union filed a request for consultations at the WTO concerning Canada's excise taxes against wine and beer. DS354 "Canada – Tax Exemptions and Reductions for Wine and Beer" was resolved between the parties.


Similar concerns arise in respect of beer as with wine. Micro-breweries and craft breweries sell beer at their production facilities and to local restaurants without having to go through the provincial monopoly.  This may result in preferential treatment being granted to local beer producers over EU producers.

Pasta/Durum Wheat

Earlier in 2017, the Government of Italy asked the European Commission to allow it to impose mandatory country of origin labeling (COOL) rules for Italian pasta.  Italy wanted the COOL rules to apply in all EU members.  On July 20, 2017, Italy signed a decree to impose COOL labeling requirements for pasta and rice.

The Italian government decree also included that pasta packaging must reveal where the wheat was grown and milled into semolina for pasta-making.  Canada is the world's largest exporter of durum wheat.  Canada is concerned about the proposed measures because the country of origin labeling is protectionist and could affect sales of durum wheat (an ingredient in pasta) into Europe and depress prices.

Canada and the United States have been in a contentious battle over country of origin labeling for beef. Canada was successful in challenging the U.S. measures at the WTO and the U.S. was required to reverse its protectionist measures.  The spectre of country of origin labeling rules has new life in the Trump Administration NAFTA Renegotiation objectives.  As a result, Canada will want to take a strong position on and challenge at the WTO or under the Canada-EU CETA any EU country of origin labeling rules for pasta.

A second issue is that the Italian government has stopped durum wheat imports from Canada on two occasions taking the position the Canadian wheat has higher levels of toxicity.  The wheat was found to not be contaminated, but this happened after news spread about the seized Canadian wheat.  There seems to be underlying protectionist sentiment that is limiting Canada-EU trade.

Refined Sugar

Canada imposes countervailing duties against refined sugar from the European Union (and antidumping duties against refined sugar from Denmark, Germany, the Netherlands and the UK).  The term "refined sugar" is defined to mean "refined sugar, refined from sugar cane or sugar beets, in granulated, liquid, and powdered form. Refined sugar is sold as white granulated, liquid and specialty sugars. Granulated sugar comes in a range of grain fractions (e.g., medium, fine and extra fine). Liquid sugar includes invert sugar. Specialty sugars include soft yellow sugar, brown sugar, icing sugar, demerara sugar and others and may be sold in granulated, liquid or powdered form."  A number of sugar products are excluded from the Canadian International Trade Tribunal Order.

However, the European Union ended its preferential sugar policies and ended export subsidies.  As at September 30, 2017, the EU will no longer impose sugar quotas.  The EU agricultural policy has undergone a profound reform, including in the sugar sector. Since 26 September 2008, Commission Regulations 947/2008 and 951/2008, export refunds in the sugar sector do not apply anymore. The new system, the basic payment scheme ("BPS") is in line with WTO commitments and qualifies for inclusion in the green box (i.e. it is not trade distortive) as defined in Annex 2 of the WTO Agreement on Agriculture, and in particular the decoupled income support described in paragraph 6 of this Article.

A fundamental goal of the reform was to limit production. The reform was very effective, as 5 million tons of production capacity was dismantled. Production has been reduced accordingly. EU production now varies between 15 and 19 million tons depending on weather circumstances. Before the reform EU production was around 22 million tons. As a result, EU production is now well below EU consumption and the EU has become, and is expected to remain, a net importer of sugar. The full implementation of the reform in the EU sugar sector will lead, as from September 2017, to the elimination of the EU sugar quota regime (Regulation (EU) No 1308/2013 of 17 Dec. 2013). As a result, the price differential between quota and out-of-quota sugar in the EU will disappear. In practical terms, there will no longer be minimum prices and no cross subsidy from quota sugar to out-of-quota sugar production.

Canada has not taken steps to terminate the CVD order imposing countervailing duties in light of the removal/termination of the offending program.  If Canada maintains the CVD duties, this may become a trade dispute.


The European Union has said that should President Trump impose steel tariffs, the EU will expedite a steel safeguard case.  While Canada may be excluded from the U.S. Section 232 tariffs, Canadian steel companies would be caught by the European Union safeguard case.  There is no provision in the Canada-European Union Comprehensive Economic and Trade Agreement (the "Canada-EU CETA") to exclude Canada from EU safeguard actions.

Chapter 3 of the Canada-EU CETA covers the agreement relating to trade remedies and does not establish an exemption for Canada. None of the provisions say that the EU must exclude Canada from definitive measures.  This means that Canada may be caught up in any EU safeguard action taken in retaliation to the U.S. steel tariffs.  Since global safeguards look at imports from all countries combined and not at imports from specific countries, there will be no preferential treatment even if Canadian steel imports into the EU did not cause serious injury to EU steel producers.

What this means is that the solution to this problem may be at the WTO.  Most challenges of global safeguards are successful.  While in Chapter 3 of the Canada-EU CETA, the Parties reaffirmed "their rights and obligations concerning global safeguard measures under Article XIX of GATT 1994 and the Safeguards Agreement" and agreed to impose global safeguard measures "in a way that least affects bilateral trade", it may be more risky challenging any steel safeguard under the Canada-EU CETA dispute settlement provisions.

Seal Products

There have been two WTO cases filed by Canada against the European Union concerning EU bans of seal products from Canada.  Canada was successful in DS400 "European Communities – Measures Prohibiting the Importation and Marketing of Seal Products".

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions