Posts Tagged ‘Free Trade Agreements’


 

What is CETA?

CETA Agreement

CETA is the Comprehensive Economic Trade Agreement between Canada and the European Union (EU).  It is the 14th trade agreement that Canada has entered into. CETA received Royal Assent on May 16, 2017, and has been provisionally applied on September 21, 2017.

 

The European Union is (currently) comprised of 28 countries:

  •  Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Ireland
  • Italy
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Poland
  • Portugal
  • Romania
  • Slovak Republic
  • Slovenia
  • Spain
  • Sweden
  • United Kingdom

This agreement will allow Canadian importers and exporters improved access to these markets through reduced or eliminated duties.

 

This agreement intends to break down trade barriers between the signatory nations and create both jobs and economic growth through new opportunities for importers and exporters.  Since the Comprehensive Economic Trade Agreement between Canada and the European Union is now in force, it will provide sweeping tariff reductions for almost all sectors of industry immediately.  Approximately 99% of products will be eligible for reduced duty rates immediately, and after 7 years all customs duties on industrial goods will be eliminated.   

 

With that in mind, CETA does have provisions for Canada and the EU to protect certain commodities from duty reduction or elimination, such as chicken and turkey imports into Canada and beef into the EU.   

 

For items to take advantage of the Comprehensive Economic Trade Agreement between Canada and the European Union preferential treatment, the commercial invoice or another commercial document must identify the originating product(s) in the shipment and  include the statement for originating goods such as the below:

 

(Period: from___________ to __________)

The exporter of the products covered by this document (customs authorization No …) declares that, except where otherwise clearly indicated, these products are of Canada/EU preferential origin.

 

……………………………………………………………………………………………………

(Place and date)

…………………………………………………………………………………………………

(Signature and printed name of the exporter)

 

The “Period from ___ to ___”  field can be left blank, or if it is completed, it cannot be for a period of greater than one year.  It is important to note that although a blanket period may be indicated, the origin statement must still accompany each shipment. The “customs authorization No” is only to be completed by approved EU exporters, otherwise, it can be omitted or left blank.

If the product being exported from the EU contains non-originating materials the supplier should also provide the following statement:

 

I, the undersigned, supplier of the goods covered by the annexed document, declare that:

The following materials which do not originate in the European Union/in Canada (1) have been used in the European Union/in Canada to produce the following supplied non-originating products.

Any other materials used in the European Union/in Canada to produce these products originate there.

 

I undertake to make available any further supporting documents required.

…………………………………………………………………………………………………………………………

(Place and Date)

…………………………………………………………………………………………………………………………

(Name and position, name and address of company)

…………………………………………………………………………………………………………………………

(Signature)

 

Unlike NAFTA, there is no CETA certificate of Origin, and therefore a certificate is not required for imports into Canada to utilized the CETA tariff treatment.

 

The products must also meet the origin and transshipment requirements applicable to them.  For the most part, this means the items, must be shipped directly from any EU Country or remain in customs control when in transit through a third country.

 

Already Canadian cheese importers can apply for tariff rate quota from Global Affairs Canada to enjoy reduced duty rates upon enforcement (without quota, cheese from the EU, as with other countries, will be subject to prohibitively high duty).  

 

The text of the agreement can be found on Canada Border Services Agency’s website here.

 

Are you an importer who is interested in Importing EU goods or already do so and want to know if your items will qualify for reduced duty under CETA?  Ask us a question below, and I will be happy to answer.

 

 

 

Video: Drop Shipping, Part 3 – Leveraging Free Trade Agreements and Non-Resident Importing

In the final video of a three part series, we take a look at the two major advantages of becoming a dropshipper – Free Trade Agreements and Non-Resident Importing. We also go over the benefits of each in the global marketplace.

Watch the rest of this series:

 

Related Blog Articles:

 

Has your business benefited from Free Trade Agreements? Do you have questions about being a Non Resident Importer? We welcome your comments below or email Ask Your Broker.

 

Drop Shipping, Part 3 – Leveraging Free Trade Agreements and Non-Resident Importing

gold-globe-600In our last blog posts, we discussed the benefits of drop shipping and the responsibilities and obligations of a buyer under the Incoterms®.

Advantages of becoming a drop shipper:

Let’s now take a moment and discuss two compelling advantages in becoming a drop shipper.

  1. Free Trade Agreements
  2. Non-Resident Importer

1. Free Trade Agreements (FTA)

Free Trade Agreements or FTAs have proven to be one of the best ways to open the world market and increase trade. FTAs allow for preferential duty treatment to items that qualify from certain countries. The North American Free Trade Agreement (NAFTA) for example, consists of the United States, Canada and Mexico and makes up one of the largest trading blocs in the world.

The United States and Canada currently have over 20 Free Trade Agreements in place with various trading partners.

How can you benefit from Free Trade Agreements?

  • FTAs can significantly reduce your landed costs by eliminating duties and taxes. So, for example, if you source a product from a country with an FTA and pay no duties or taxes, you now own an advantage over your competition that sources from say, China. You also benefit by having more than one market to choose from which gives you more flexibility when sourcing products. In addition to the current FTAs in place, the United States and Canada also offer preferential duty treatment to lesser developed economies under the Generalized System of Preferences (U.S.) and the General Preferential Tariff Regime (Canada), adding hundreds of more sources for international trade. As previously stated, you are not limited to the company down the street.

2. Non-Resident Importer (NRI)

So now that you have sourced products and found clients to sell the goods to, how will you deal with Customs? The last thing you want is to lose a sale because your client has to deal with customs. The most effective method is to remove Customs from the equation, well at least in the eyes of your client.

How can you benefit from being a Non-Resident Importer?

By acting as the Importer of Record, you can meet all the Customs obligations and have the goods delivered to your client as if they came from right down the street. One of the benefits of NAFTA is that you can act as the importer even if you are not physically in the country you are importing to. Customs recognizes this as a Non-Resident Importer, or the NRI.

Let’s say that you reside in Canada and have sourced product from Singapore to be delivered to a client in the United States and you have purchased the goods under CIF (Cost, Insurance and Freight) Incoterms®. Since the seller is obligated to deliver the goods to the port of destination of your choice, you would simply coordinate with your customs broker to clear the goods on your behalf and since the U.S. has a free trade agreement with Singapore you also benefit from duty free treatment on the items.

 

Becoming a Non-Resident Importer and benefiting from free trade agreements is an efficient way to join the global marketplace and benefit from global commerce.

The Final Analysis on Drop Shipping

Remember, the world is your oyster. You just need to make sure you have the right customs broker in place.

 

Has your business benefited from Free Trade Agreements? Do you have questions about being a Non Resident Importer? We welcome your comments below.

 

Related Blog Articles:

Related Videos:

Before You Buy From A Foreign Supplier – Check With A Customs Broker

Checklist imageAre you planning to import goods into Canada or the U.S.?   Maybe it’s your first time, or maybe it’s a new product that you have not purchased before.   A word of advice – consult with a customs broker prior to making your purchase decision and NOT when the goods are already in transit. Otherwise, you could be in for a costly surprise!   A customs broker will be able to inform you of all the added importation costs – including shipping, duties, certificates, permits, etc.   The information provided to you will also assist in determining whether the foreign goods being purchased will be profitable for you or not.   Here are a few considerations when importing goods from a foreign country:

  • Customs duty:   Duty rates have fallen considerably over the past 20 years, however, there are many situations where they still apply.   It can be a startling surprise when purchasing goods under the assumption that they’re U.S. or Canadian made (usually duty free) and later discover the goods were actually made overseas and are dutiable.   Recently, we received a call from a company importing milk powder. The purchaser assumed that they had made a correct assessment and determined the milk powder was duty free under NAFTA.   Unfortunately, milk products fall into a special category and the duty rate was over 200%.   In this example, the importer should have reviewed the situation with a customs broker before making a purchasing decision.   For more information about the importance of proper tariff classification (which leads you to the duty rate!), please see our previous blog –   https://blog.pcb.ca/2011/03/determining-the-correct-tariff-classification-how-important-is-it/710
  • Countervailing or dump duty: Countervailing and dump duties are additional duties imposed by a country in order to protect their domestic industry by counteracting foreign government subsidies, and from unfair foreign competition due to goods sold to Canada or the U.S. below normal prices.   These have become more common in the last ten years and have made importers take note as the duty rates can be extremely high.
  • Other government departments/agencies:   If your imported goods involve other government departments besides Canada and U.S. Customs, there may be other regulations that you need to consider.   There are many other government departments/agencies but these are the primary ones that you might encounter: the Canadian Food Inspection Agency, Health Canada, the U.S. Food & Drug Administration, the Department of Transportation, and the U.S. Department of Agriculture.   In many cases it involves applying to these agencies well in advance of importing.   This also brings us to…
  • Special documents and certificates:   Planning to import plants, meat, fruit & vegetables?   How about snake skin boots?   Items like these require special certificates as determined by the respective government department or agency.   In some situations these must be original documents.   Also, if you are purchasing from overseas suppliers, it is may be imperative that your foreign vendor secures the necessary documents before the shipment leaves their country, as it may be very difficult to obtain them after the fact.
  • Free Trade Agreements:   How do these agreements affect your goods?   As noted above, do not assume that just because your goods are U.S., Mexican or Canadian made that they will qualify under the North American Free Trade Agreement (NAFTA) and be duty free.   What about other free trade agreements?   Are you purchasing from Chile, Panama, Colombia, Peru, or Israel?   Canada also has free trade agreements with these countries which could affect the duty rate paid on goods.   Hopefully, this will reduce your duty rates, however, you will need to have a specific free trade certificate of origin completed and signed by your vendor.   More about the completion of a NAFTA Certificate of origin can be found at   https://blog.pcb.ca/2011/04/5-top-mistakes-when-completing-a-nafta-certificate-of-origin/798
  • Export procedures: Are you planning to purchase a used vehicle from the U.S. and import it into Canada?   Please note that U.S. Customs requires prior notification of 72 hours before the vehicle can leave the U.S.   In addition, please note that this requirement applies to all used self propelled vehicles which means that golf carts, tractors and even Segways are included.

When considering a foreign purchase, take the time to first consult with a customs broker. This could save you time, money and frustration. After all, your ultimate goal is to achieve   maximum profit potential.