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Nov 16, 2017

CETA: Canada and the European Union Oceans Apart but Closer Than Ever

Cristina Guida and Peter Salerno

New free trade union provides open marketplace for Canadian and European companies 

The subject of free trade in Canada is increasingly garnering front page headlines. Not since the implementation of the North American Free Trade Agreement (NAFTA) in the early and mid 1990’s has the subject triggered such a response from the Canadian public. Even former Canadian Prime Minister Stephen Harper has emerged out of the shadows of the public eye to accuse the current government in a very public way of “napping on NAFTA” as the renegotiations of the free trade agreement unfold. Harper’s comments stem from his concern that President Donald Trump may very well follow through with his threat to terminate NAFTA and that the Liberals under current Prime Minister Justin Trudeau are letting it happen. Trudeau’s Liberal party responded, naturally, reproaching Harper that he would have Canada capitulate to American demands and abandon our national interests to save NAFTA. But the question remains: will Trump follow through with his threat?  

This question has businesses on edge. And it should. NAFTA in its current form is responsible for trillions of dollars of cross-border trading annually between Canada, the United States, and Mexico.

In stark contrast to the uncertainty and acrimony surrounding free trade on the North American continent, people are optimistic about the new Comprehensive Economic and Trade Agreement (CETA) between Canada and the 28-member states of the European Union (EU) and the potential it has to create a stable trade environment for Canadians and Europeans. The EU is the world’s second largest market while Canada has led all G-7 countries in economic growth over the past decade. Even prior to CETA in 2015, the EU imported $936 billion in services of which $16.5 billion of which were from Canada. These numbers are anticipated to jump exponentially. As a reference point, NAFTA has at least tripled trade between the United States, Mexico and Canada. CETA is ripe to have an enormous positive impact on all of its member states’ economies.

Understanding CETA: Key Points

Put simply, CETA is all about creating better, faster access to markets. It enhances procedures and simplifies them where possible to ensure quick processing of goods, services, and labour. 

CETA came into force between Canada and the European Union provisionally on September 21, 2017, and will radically reduce tariff and non-tariff barriers. Prior to CETA, 25 percent of EU tariff lines on Canadian goods were duty-free. Now, 98 percent are duty free. Agri-food exports alone are expected to jump $1.5 billion per year according to Ottawa.

Who can bid on projects in Europe and Canada has also changed. For instance, the agreement allows Canadian companies to bid on EU government procurement projects by local contracting authorities, bodies governed by international law, and public utilities, along with other projects with specified value thresholds. Ottawa has said the procurement market is worth an estimated $3.3 trillion annually.

Key Canadian sectors that are expected to benefit from the major market of 510 consumers in Europe are aerospace, agriculture, automotive, clean tech, fish, forestry, information and communication technologies, infrastructure, medical devices, metals, mining, oil, gas, and pharmaceuticals.

As companies in both marketplaces seek to gain an upper hand, making use of the business migration options outlined in CETA is one way for companies to seize the new opportunities, differentiate from competitors, and reap the rewards.

How businesses can benefit from CETA: New Immigration Options

CETA carves out new provisions that are predictable and transparent for businesses to rely on, including easier business immigration options that allow temporary movement of Canadians and Europeans workers, and business visitors.

For instance, Canadian and European businesses can now create subsidiary sister companies in overseas marketplaces and moreover, send over senior personnel, specialists, and graduate trainees to temporarily work in the overseas subsidiary branch. Depending on the duration of their work assignment in Canada, this opens up the possibility of business migrants to qualify for permanent residence under Canada’s current Express Entry system given their Canadian work experience. 

Investors from Canada and Europe are another group that will be pleased to know that CETA affords them with more protection than ever before, eases investment restrictions, and provides preferential access. In addition to the option of entering Canada as a visitor for investment purposes, a one-year duration work permit will be provided to applicants who will establish, develop, or administer the operation of an investment. The work permit may be issued to applicants whether they are, of course, the investor, but the work permit may also be issued to a person serving in an executive role or as an employee of an enterprise that has committed substantial capital.

Contractual service suppliers and other skilled professionals entering Canada and Europe will also have an easier time working in Canada with a work permit for up to twelve months. This allowance under CETA will be particularly useful for Canadian and European enterprises that offer services in countries where they do not have physical premises.  

​In light of the wider definition of short-term business visitors under CETA, it will also be easier for the Canadian or European business owner, for example, to make an exploratory trip overseas, attend meetings and consultations, or, conduct research and commercial transactions.

Business migration options under CETA provide a welcome alternative to the uncertain Labour Market Impact Assessment (LMIA) work permit process which is typically required to allow foreign workers to engage in work in Canada.  The onerous LMIA process involves a minimum of 4 weeks advertising and even longer processing times. Even if a Canadian employer can demonstrate a labour market need, the processing times alone often deter Canadian employers/customers from engaging in business with Europeans as production would be stalled until the foreign worker obtains the necessary work authorization. Companies interested in gaining the upper hand should make use of CETA’s new allowances for business migration. ​Toronto may seem far from Rome, Paris, and Madrid, but CETA has opened new doors that will bring Canada and the countries of the EU closer than ever before.

If you are interested in seeking more information regarding CETA or any other kind of corporate immigration advice, please contact us directly. Further information about CETA, and specific criteria, can also be found here.

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