EU-Canada agreement explained
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The EU-Canada agreement explained

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Creating new opportunities for your business

The Comprehensive Economic and Trade Agreement, or CETA, is a trade agreement between the EU and Canada.

By boosting trade between us, CETA will create jobs and growth – and new opportunities for your business. Canada is a large market for Europe's exports and a country rich in natural resources that Europe needs.

CETA is a progressive trade agreement. It has some of the strongest commitments ever included in a trade deal to promote labour rights, environmental protection and sustainable development. CETA integrates the EU's and Canada's commitments to apply international rules on workers' rights, environmental protection and climate action. And these obligations are binding.

What does CETA do?

The agreement:

  • removes customs duties
  • helps make European firms more competitive in Canada
  • makes it easier for EU firms to bid for Canadian public contracts
  • opens up the Canadian services market to EU companies
  • opens up markets for European food and drink exports
  • protects traditional European food and drink products (known as Geographical Indications) from being copied
  • cuts EU exporters' costs while upholding standards
  • benefits small and medium-sized EU firms
  • benefits EU consumers
  • makes it easier for European professionals to work in Canada
  • allows for the mutual recognition of some qualifications
  • creates predictable conditions for both EU and Canadian investors
  • makes it easier for European firms to invest in Canada
  • helps Europe's creative industries, innovators and artists
  • supports people's rights at work and the environment.

With CETA, the EU and Canada pledge to ensure that economic growth, social issues and environmental protection go hand-in-hand.

What benefits come from removing customs duties?

CETA benefits European companies by getting rid of 99% of the duties (taxes) they have to pay at Canadian customs. The same will apply to Canadian businesses exporting to the EU.

Most customs duties ended as soon as CETA came into effect. All customs duties on industrial products had disappeared by Septemper 2024, after seven years.

From day one in September 2017, Canada removed customs duties on EU exports worth €400m every year, rising to an estimated €590m a year at the end of phase-in periods. This makes Europe's exports more competitive on the Canadian market.

European firms also benefit from cheaper parts, components, and other inputs from Canada which they use to make their products.

How does CETA make European firms more competitive in Canada?

CETA helps European firms compete in Canada by:

  • removing customs duties, which will lower the price Canadians have to pay for European goods
  • ending the need for expensive double testing is some areas
  • making it easier for them to send maintenance engineers and other specialists to provide:
    • after-sales and related services
    • support for equipment, machinery and software they sell there.
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Are EU firms able to bid for public contracts in Canada?

Yes. This is one of the big gains for EU businesses from CETA. In fact, Canada has opened up its government tenders to EU companies more than with any of its other trading partners.

EU firms are able to bid to provide goods and services at federal, provincial and municipal level – the first non-Canadian firms to be able to do so. This is important because Canada's provincial public contracts market is worth twice as much as the federal one. In total, Canada's public authorities buy goods and services worth billions every year.

Canada has also agreed to make the tendering process more transparent by publishing all its public tenders on a single procurement website. The Access2Markets portal shows you whether you are eligible to procure. Access to information is one of the biggest obstacles for smaller companies in accessing overseas markets, so these two websites helps smaller businesses in Europe.

How does CETA open up the Canadian services market?

In services and investment CETA is a far-reaching agreement.

Half of the EU's economic growth from CETA comes from more trade in services. Trade in services between the EU and Canada increased by 73% between 2016 and 2023. 

European firms have more opportunities to provide services, such as specialised maritime services like dredging, moving empty containers, or shipping certain cargo within Canada.

In sectors such as environmental services, telecoms and finance, European firms are able to access Canada's market at both federal and – for the first time – provincial levels. The different possibilities are explained in the services tool in Access2Markets.

CETA doesn't cover public services, so:

  • EU Member States are able to keep public monopolies.
  • CETA doesn't force governments to privatise or deregulate public services like the water supply, health or education.
  • EU Member States continue to be able to:
    • decide which services they want to keep universal and public and
    • subsidise them.
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What opportunities does CETA offer to farmers, food producers and makers of Europe's traditional food and drink products?

Many customs duties on farm produce, processed foods and drinks have disappeared. Europe can export nearly 92% of its agricultural and food products to Canada duty-free. European exports to Canada's market of high-income consumers will become cheaper.

This creates new export opportunities for EU farmers and producers of:

  • wines and spirits
  • fruit and vegetables
  • processed products
  • cheese
  • Europe's traditional specialities (known as 'geographical indications').

In areas such as wines and spirits, CETA also removes other barriers to trade. This makes it easier for EU exporters to access the Canadian market.

Removing customs duties will give the EU food processing industry better access to Canadian fish. In parallel to lifting customs duties, the EU and Canada will develop sustainable fisheries in parallel by:

  • monitoring;
  • establishing control and surveillance measures, and;
  • fighting illegal, unreported and unregulated fishing.

CETA helps both sides export agricultural products.

Under CETA, Canada has agreed to protect 143 Geographical Indications (GIs) – distinctive food and drink products from specific towns or regions in the EU. They include things like Roquefort cheese, balsamic vinegar from Modena and Dutch Gouda cheese.

Many of these products are among the EU's top EU food and drink exports. Producers are often small or medium-sized businesses in rural communities.

Canada will protect these traditional European products from imitations in much the same way as the EU does. So, for example, cheese sold in Canada as Gouda will have to come from Gouda.

There are limited quotas for a few sensitive products such as beef, pork and sweetcorn for the EU and dairy products for Canada. CETA doesn't open up the market for poultry or eggs in the EU or Canada, and it respects the EU's entry-price system.

All imports from Canada have to meet EU rules and regulations on technical standards, consumer safety, environmental protection, animal or plant health and food safety (including rules on GMO's).

How does CETA cut companies' costs without cutting corners on standards?

CETA helps cut costs for EU firms that export to Canada, especially smaller ones.

It involves so-called conformity assessment certificates. These prove that a product has been tested and meets:

  • the relevant technical rules and regulations and
  • any health, safety, consumer protection or environmental standards that also apply.

The EU and Canada have agreed to accept each other's conformity assessment certificates in areas such as:

  • electrical goods
  • electronic and radio equipment
  • toys
  • machinery
  • measuring equipment.

This means that, under certain circumstances, a conformity assessment body in the EU can test EU products for export to Canada according to Canadian rules and vice-versa.

For example, an EU firm that wants to sell a toy in Canada will only need to get its product tested once, in Europe, where it can already obtain a certificate valid for Canada.

This avoids both sides doing the same test and greatly cuts costs for both companies and consumers.

It particularly helps smaller companies, for whom paying twice for the same test can put them off exporting altogether.

Under CETA, the EU and Canada also set up a voluntary Regulatory Cooperation Forum. The Forum:

  • enables regulators to exchange experiences and information
  • helps identify areas where regulators could work together
  • provides help and makes suggestions to regulators and legislators.

The Regulatory Cooperation Forum won't:

  • change existing regulations
  • develop new legislation
  • have any decision-making powers
  • restrict the decision-making power of regulators in the EU's Member States or at EU level.
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How do small and medium-sized firms (SMEs) benefit?

CETA benefits small and medium-sized firms by:

  • removing customs duties
  • making it easier for them to bid for contracts in Canada's government
  • eliminating expensive double testing is some areas
  • strengthening copyright protection
  • ensuring copies of traditional European food and drink products aren't sold as the genuine article.
  • providing centralised information via Access2Markets.  
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How do consumers benefit?

Opening markets has the potential to keep prices down and give consumers more choice.

But free trade doesn't mean lowering or changing EU standards that protect people's health and safety, social rights, their rights as consumers or the environment.

We're not going to change these standards. Imports from Canada still have to satisfy all EU product rules and regulations – without exception.

So CETA doesn't change how the EU regulates food safety, including on GMO products or the ban on hormone-treated beef.

Is it easier for EU citizens to work in Canada?

Yes, in some cases.

CETA makes it easier for company staff and other professionals to work on the other side of the Atlantic, and for firms to move staff temporarily between the EU and Canada.

This helps European companies run their operations in Canada.

It is also easier for other EU professionals to temporarily supply legal, accounting, architectural or similar services.

How does mutual recognition of qualifications work?

CETA provides a framework for the EU and Canada to recognise each other's qualifications in regulated professions such as architects, accountants and engineers.

Professional organisations in the EU and Canada can jointly work out the details for recognising each other's qualifications.

The authorities in the EU and Canada then approve their work and make it law.

How does CETA make it easier for European firms to invest in Canada?

CETA is the first EU trade agreement that offers benefits to EU companies investing outside the EU. It makes it easier for European firms to invest in Canada.

CETA:

  • removes barriers for EU firms wanting to invest in Canada.
  • ensures all European investors in Canada are treated equally and fairly
  • improves the investment climate and offer more certainty to investors by:
    • not discriminating between domestic and foreign investors
    • not imposing new restrictions on foreign shareholdings.
  • The investment protection chapters of the agreement will only enter into force once CETA is fully ratified. The parts which are not yet in force can be found here.
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How does CETA protect investments?

Once CETA is fully in force it will include a dispute resolution for investment which addresses the shortcomings of previous Investor-State Dispute Settlement and ad hoc arbitral tribunals. It creates the highest standards of legitimacy, neutrality and transparency. To achieve these goals, the agreement includes a court with a first-tier tribunal and an appellate tribunal, both composed of independent, highly qualified judges submitted to strict ethical rules. It includes safeguards against any abuse of process, ensures consistency of the decisions rendered by the Tribunal, and gives powers to the EU and Canada to guide the Tribunal on how to interpret the provisions of CETA. Additionally, the EU and Canada committed to strong transparency rules making relevant documents publicly available and opening hearings to the public. The Investment Court System is the first step toward the establishment of a Multilateral Investment Court (MIC) and will be replaced by the MIC when it enters into force.

The EU and Canada have addressed the potential difficulties faced by small economic operators in accessing investment dispute resolution and have concluded negotiations on new rules to streamline and simplify dispute resolution procedures, making it easier for SMEs to access the investment court system (ICS) foreseen by CETA, and saving them time and money. These rules, once formally adopted, will enter into force at the same time as Chapter 8 on investment once ratification is completed.

More information on the investment provisions in CETA can be found here.

The Investment Court System

CETA's provisions on investment protection and investment dispute settlement will replace the eight existing bilateral investment agreements between EU Member States and Canada. A single set of rules will be clearer for both investors and states.

It'll also be possible to introduce further measures to prevent people abusing the system and challenging legitimate legislation which governments have passed in the public interest.

Firms won't be able to sue governments just because profits might be affected. They'll only be allowed to bring a claim in a limited number of well-defined cases that breach CETA and discriminate against the investor because of their nationality.

A firm will have to demonstrate that a public authority has breached CETA's provisions in a specific way. There'll be no room for tribunal members to interpret the agreement freely.

CETA's new investment protection system:

Sets up a permanent dispute settlement tribunal:

  • to hear claims of breaches of CETA's investment protection standards, and;
  • where three judges selected randomly from a pre-appointed pool will hear cases - one from the EU, one from Canada, and a presiding member from a third country.

Establishes an appeals system like those in national legal systems

When CETA comes into force the EU and Canada will set up an appeals tribunal. This will hear and review decisions of the tribunal. It'll check decisions for legal correctness and reverse them if there's been a mistake.

Has rules on tribunal members

  • A binding code of conduct will ensure tribunal members are fully independent and impartial.
  • A tribunal member won't be able to work in parallel as both legal counsel and as expert in other investment disputes while they are a tribunal member.
  • A tribunal member who breaches of the Code of Conduct will be sacked.

Ensures proceedings are transparent

  • All documents – including submissions by the parties to a dispute, and the tribunal's decisions – will be available on a public website.
  • All hearings will be open to the public.
  • Interested parties – such as non-governmental organisations or trade unions – will be able to make submissions.

Bans frivolous claims

  • The tribunal will dismiss so-called frivolous claims – cases which clearly have no justification – and force the investor to pay the legal costs, including those of the state they have challenged.
  • Under CETA, the Court will be able to issue fast-track rulings.
  • It will also be able to dismiss claims where it's obvious the claimant has no solid grounds to bring a case because:
    • either the claimant isn't an eligible investor under CETA
    • or the action that they're complaining about isn't covered by CETA.
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How does CETA help Europe's creative industries, innovators and artists?

CETA helps level the playing field between Canada and the EU in the area of Intellectual Property Rights (IPR). European musicians, artists, and others working in Europe's creative industries will be properly rewarded for their work.

CETA:

  • strengthens copyright protection by bringing Canada's rules in line with EU laws for protecting new technologies and managing digital rights
  • improves the way Canada's IPR system protects patents for EU pharmaceutical products
  • strengthens enforcement
  • strengthens Canada's border measures against:
    • counterfeit trademark goods;
    • pirated copyright goods, and;
    • counterfeit geographical indication goods.
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How does CETA affect people's rights at work and the environment?

In CETA the EU and Canada reaffirm their commitment to sustainable development.

Both agree that more trade and investment should strengthen, not weaken, environmental protection and labour rights.

The EU and Canada want CETA to help ensure that economic growth, social development, and environmental protection reinforce each other. So CETA includes the EU's and Canada's obligations under international agreements on workers' rights and environmental and climate protection.

When it comes to implementing the EU's and Canada's commitments in these areas, CETA gives a strong oversight role to EU and Canadian civil society – business associations, trade unions, consumer bodies, environmental groups and other non-governmental organisations (NGOs).

CETA also sets up a process for settling disputes, including government consultations and a panel of experts.

What's the Joint Interpretative Instrument?

When they signed CETA, the EU and Canada also signed a  a Joint Interpretative Instrument. It further clarifies what the EU and Canada have agreed in CETA. The document has legal force.

It covers areas such as:

  • the new Investment Court System;
  • governments' right to regulate in the public interest;
  • public services, and;
  • labour rights and environmental protection.
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What kind of agreement is CETA – EU-only or mixed?

In certain international agreements, the EU has so-called 'exclusive competence'. EU governments task the European Commission, the EU's executive arm, with negotiating and concluding such agreements. Such agreements are therefore 'EU-only.'

In other agreements the EU has so-called 'shared competence'. Both the EU institutions and EU Member States conclude the agreement. So it is a 'mixed' agreement to which EU Member States must give their consent.

What happens next?

CETA entered into force provisionally on 21 September 2017. The Commission now coordinates its implementation. Before it takes full effect, it needs to be ratified by all national and some regional parliaments in all 27 EU Member States.

What is provisional application?

An EU-only agreement enters into force straight after the European Parliament gives its approval.

But mixed agreements enter into force only once each individual EU country has approved it. Each country's approval procedures may take several years, so in the meantime EU governments can decide in the EU Council to provisionally apply the agreement ('provisional application').

Provisional application ends after all EU Members notify the Council that they have completed their internal ratification procedures. Only then can CETA fully enter into force.

Which parts of CETA does the EU provisionally apply?

CETA has now entered into force provisionally, meaning that most of the agreement already applies - as explained in this legal document and in this factsheet. Areas that are not yet in force are:

  • investment protection;
  • investment market access for portfolio investment (but market access for foreign direct investment is an exclusive EU competence), and;
  • the Investment Court System.
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