|Angela Parkin, Manager, Trade Compliance||Welcome back to our ongoing series on CETA! Last time I discussed the agreement’s plans for tariff elimination, as well as its potential impact on the automotive sector. Today I want to take a look at the impact on a few other sectors, as outlined in technical summary released by the Canadian government: Industrial goods; chemicals and plastics; telecommunications; and agricultural goods.
In the case of EU imports, 99.3% of the tariff lines for industrial goods will be duty free when the agreement comes into force. For example; forestry products with current duties of 0% to 10% (average of 1.2%) will be duty-free. Chemicals and plastics with current duties of 0% to 6.5% (average of 4.9%) will also be all duty-free into the EU. As of day one, 99.6% of Canada’s industrial goods will be duty free.
Chemicals and plastics
Canadian exports of chemicals and plastics to the EU were worth an average of $2.0 billion per year between 2010 and 2012. These exports face average tariffs of 4.9 percent, with peaks of 6.5 percent.
When CETA comes into force it will immediately eliminate existing EU tariffs on chemical and plastic products. Canada will also eliminate their tariffs which can range from 0% to 6.5% for these products.
Canada’s Information and Communications Technology (ICT) industry includes the manufacturing of telecom equipment, and software development and services, digital media, web and microelectronics. Canadian exports of ICT products to the EU were worth an average of $1.7 billion annually between 2010 and 2012. These exports face tariffs as high as 14 percent on some goods. Upon entry into force, CETA will immediately eliminate existing EU tariffs on ICT products, including optical fibers, optical fiber bundles and cables, semiconductors and more.
CETA will allow foreign-controlled corporations to buy a majority stake in telecommunications companies holding up to 10 per cent of the Canadian market.
Cheese and beef both are two products that proved challenging for the negotiators, however an agreement was reached. Canada has agreed to increase the quota for EU cheese by 18,500 tons. This increase is comprised of two parts: 16,800 tons of regular cheese and 1,700 tons of industrial-use cheese. Second, Canada has agreed to phase-out its milk protein substances tariff. Canada has also secured the right to monitor the impact these measures will have and explore other methods of preventing companies from circumventing the import-control measures.
The EU has agreed to fairly substantial concessions in the beef and pork industry in exchange for the increased access to Canada’s cheese market. Canada will receive immediate duty free access for 50,000 tons of beef which will be divided into a quota for frozen beef (15,000 tons) and fresh chilled beef (35,000 tons). The EU will also eliminate the in-quota of 20% duty on 15,000 tons of “high-quality beef”; this will be over and above the other quota concessions.
There are also a number of products where the tariffs will be eliminated immediately. For example; imports into the EU of maple syrup (8%), processed fruits and vegetables which can range from 14.4 % to 17.6% will be duty free. Similarly, Canada will immediately eliminate all tariffs on fish and seafood.
Those are just a few of the main sectors that CETA will affect; its impact on additional industries will become clearer once the full text is released. For example, little information has been released pertaining to textiles and apparel except the agreement will include origin quotas. These details and more should come out in the next few weeks.
Hope to see you next time for the fourth installment of our CETA series, where I’ll be taking a look at more general economic provisions in CETA, including services and investment, labor mobility and geographical indicators.
Check out the other installments in our CETA series: