On January 17, 2019, Nova Scotia’s Finance and Treasury Board (“NSFTB”) announced changes to the Province’s Equity Tax Credit program, a popular tax credit program that has been in place since 1994 and utilized by many Nova Scotia companies and investors in a number of different industries. The Province’s stated goal for re-working the Equity […]read more
Free Trade with Europe
Last month the government of Canada signed an historic free trade agreement with the European Union (“EU”), the world’s largest single market for goods and services. The Comprehensive Economic and Trade Agreement (“CETA”) is expected to come into force in 2016.
What does CETA mean for Atlantic Canadians?
Atlantic Canadians have historically had close ties to Europe. The hope is that CETA will renew and strengthen those ties. When the free trade agreement is fully in effect, Atlantic Canadians will have largely tariff-free trade with the EU.
The EU has 500 million people and annual economic activity of almost $18 trillion. According to the federal government, a recent study concluded that CETA may bring a 20-percent boost in bilateral trade and a $12-billion annual increase to Canada’s economy.
Keeping in mind Atlantic Canada’s economic strengths and unique geography, specific examples of the potential benefits of CETA are as follows.
Fish and Seafood
Fish and seafood exports to the EU were worth hundreds of millions of dollars to Atlantic Canada annually between 2011 and 2013. CETA will eliminate EU tariffs on the following:
- snow crab, from rates up to 8 per cent;
- live lobster, from a rate of 8 per cent;
- frozen lobster, from rates up to 16 per cent;
- processed lobster, from a rate of 20 per cent;
- frozen scallops, from a rate of 8 per cent;
- frozen shrimp, from a rate of 12 per cent;
- cooked and peeled shrimp, from a rate of 20 per cent; and
- dried and salted cod, from a rate of 13 per cent.
Forestry and Wood Products
CETA will also eliminate EU tariffs on forestry and value-added wood products. For example, EU tariffs will be eliminated on:
- plywood, from rates up to 10 per cent;
- fibreboard, from a rate of 7 per cent;
- veneered panels, from rates up to 10 per cent; and
- particle board and oriented strand board, from a rate of 7 per cent.
Metal and Mineral Products
EU tariffs will be eliminated on metal and mineral products, including the following:
- steel and iron tube or pipe fittings, from rates up to 3.7 percent; and
- steel and iron tanks, cans, and drums, from a rate of 2.7 percent.
Canada’s services exports to the EU were worth billions of dollars between 2011 and 2013. Atlantic Canada’s key interests in this sector include tourism, energy and other business services. CETA will allow for the following:
- Temporary entry provisions which will allow for easier movement between Canada and the EU of investors, contract service suppliers and independent professionals;
- Better access to the EU services market for professional services; and
- Improved recognition of professional qualifications.
Investment and trade go hand in hand. EU and Atlantic Canadian firms increasingly work through affiliates to reach each other’s markets. CETA will provide for the following:
- A more level playing field for Canadian businesses accessing European markets; and
- Reduced risk through CETA’s predictable investment rules..
Looking Ahead to 2016
CETA is expected to come into force in 2016. The time is ripe to begin planning how you can position your business to seize opportunities presented by this new free trade agreement.