CETA is Not NAFTA
What is CETA?
CETA is the pending free trade agreement that was recently signed by Canada and the EU. It covers virtually all sectors and aspects of Canada-EU trade in order to eliminate barriers. Upon CETA’s entry into force, the EU will remove tariffs on 98 percent of their goods. The final ratification date for this free trade deal is currently unknown.
You might think that the Comprehensive Economic and Trade Agreement (CETA) is just a modified version of NAFTA for Europe, but it is more complex than that. Apart from the obvious geographical differences, there are also new release requirements and key differences in terminology.
Here are the some of the important differences:
Key Differences in Terminology
In CETA, the term “De Minimis” which is also found in other trade agreements, is referred to as “Tolerance” but otherwise, means the same. However, an important difference is that NAFTA de minimis it is 7% while tolerance under CETA is 10%.
Another key difference is that an Importer requires a ‘NAFTA Certificate of Origin’ to claim preferential tariff treatment whereas under CETA, the ‘Origin Declaration’ is a statement on an invoice or document that describes the good, as opposed to a separate document.
There are regulatory concerns regarding beef and CETA, one of which is the use of antimicrobials. Canada, along with the U.S., uses antimicrobials like citric acid on beef to ensure the product is safe for human consumption, but in Europe, fewer antimicrobials are used. Many within the beef industry feel the additional cost of maintaining two separates systems will not be recovered.
CETA’s ‘focused value’ considers only the value of specific, key non-originating components, when determining the originating status of a finished product. This differs from NAFTA’s “regional value content” approach that requires producers to take the value of all non-originating parts and materials into consideration for origin.
The use of this focused value approach will benefit traders by minimizing the number of materials that must be tracked, reducing the administrative burden and ultimately facilitating trade.
Release Document Requirements
At this time we do not know how blanket ‘Origin Declarations’ will work, or how LVS shipments will work. We will update this page once we have updated information.
It is important to recognize and understand these differences, as your company will be in a better position to reap the benefits that CETA will bring. These benefits include a 98% overall elimination of tariffs from 28 European countries, and increased exportation opportunities for key industries, such as mining and automotive.
Is your organization prepared for CETA?
Contact Farrow's trade experts if you want your business to have a competitive edge with a thorough understanding of this new free trade agreement.
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