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Legal Updates

Canada-EU Free Trade Agreement

30 June 2014 #Corporate

In October 2013, Canada and the EU concluded an agreement in principle on a Comprehensive Economic and Trade Agreement (“CETA”). It is envisaged that the Agreement will generate substantial new trade in goods and services as well as additional opportunities for investment. Once implemented, CETA is expected to increase bilateral trade in goods by 22.9% or E25.7 billion, which will foster growth and employment in both the EU and Canada.

The key elements of CETA are:

Eliminating tariffs

As soon as CETA comes into force, both sides will eliminate tariffs on more than 98% of all tariff lines on goods and services. This includes:

  • All advanced manufacturing goods, such as machinery and equipment, electrical equipment and medical devices
  • The majority of agricultural tariffs. There will be a tariff quota transition period of 3, 5 or 7 years on autos, certain fish and seafood products and certain agricultural food products
  • Wines and spirits – the EU is Canda’s major import source of wine, amounting to about half of its imports

Services and investments

It is envisaged that CETA will open up opportunities in sectors such as financial services, telecommunications, energy and maritime transports, by making it easier for firms to move staff temporarily between the EU and Canada; and by mutual recognition of professional qualifications such as engineers and accountants. CETA will also remove barriers to investment in specific sectors which it is hoped will improve legal certainty and stability to businesses.   

Government procurement

Transparency and legal certainty for operators will be enhanced. Both parties will gain from increased access to the respective public procurement markets. The EU will provide preferential access to its $2.7 trillion government procurement market while for the first time, all sub-federal levels of government in Canada will be open to European companies to engage in tenders. CETA will however maintain the parties’ ability to give preference to domestic companies, for instance, for procurements below a financial threshold value.

Non-tariff barriers

Whilst trade tariffs are generally declining, exporters occasionally face non-tariff barriers, including technical regulations such as product and performance standards, safety and efficacy requirements and packaging and labelling requirements. CETA eliminates these barriers by setting out a framework allowing each party to accept the other’s technical regulations as equivalent to their own, and further the same applies to testing and certification procedures, whereby they are accepted equally in both markets.   

Intellectual PropertyRights (“IPR”)

CETA aims to provide more of a level playing field between Canada and the EU, particularly in the pharmaceuticals field and contains high standards for IPR. It also includes provisions on trademarks, designs and copyrights.

Rules of Origin

CETA recognises the special status and offers protection to a list of products from a specific geographical origin, such as the once controversial Prosciutto di Parma and Prosciutto di San Daniele that will, under CETA be authorised to use their name when sold in Canada, and likewise to Canadian products, such as meats and cheeses sold in the EU.   

Dispute settlement, institutional and horizontal provisions

Intended as a last resort should the parties fail to agree by other means.

Sustainable development, environment and labour

CETA reaffirms a strong commitment by the parties that investment and trade relations should not develop at the expense of the environment or of social and labour rights.

It has taken some 5 years of negotiations to reach an agreement in principle on CETA, and there will be a further period of time, perhaps 18 months or so, before the agreement is ratified into domestic legislation. The time will however be soon on the horizon, and businesses in both Europe and Canada would be well served to start planning for its implementation now, to maximise the opportunities available under CETA. As part of the planning process, it is recommended that the advice of an experienced trade and procurement lawyer be sought on the provisions of CETA and the legal and procedural rules that will apply to entities of the respective new trading partners in the EU and Canada, upon CETA’s implementation.

Clarkslegal, specialist Corporate lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Corporate matter please contact Clarkslegal's corporate team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Ashan Arif

Ashan Arif

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Corporate team
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