The inception, in 1994, of the North American Free Trade Agreement (NAFTA) , the trilateral trade pact involving Canada, the United States, and Mexico, represents the largest free trade agreement in Canada’s history. Since then, smaller, bilateral agreements have been forged with numerous Central and South American countries, among others. However, Canada is now on the cusp of a new age of expanded free trade that will involve countries throughout Europe and the Asia-Pacific region.
First, the Comprehensive Economic and Trade Agreement (CETA), once ratified, will usher in a new era of free trade between Canada and the 28 EU countries. While Canadian importers did enjoy lower tariffs under the British Preferential Tariff (BPT), that benefit was eliminated in 1998. CETA represents the first time that Canadians will have access to tariff reduced, and ultimately, duty free goods from all EU nations. It is anticipated that CETA will be ratified sometime this calendar year, in time for initial tariff reductions to be implemented for 2017.
Second, The Trans-Pacific Partnership (TPP), aims to create a massive free trade zone between 35 countries in and around the Asia-Pacific region including, Australia, Japan, Malaysia, New Zealand, and Vietnam to name but a few. The TPP will also see updates to our existing trade agreements with the US, Mexico, Chile, and Peru.
While free trade will always have its detractors, the simple reality is that the global economy is more interconnected now than it ever has been. Open, unencumbered trade is vital for the success and growth of all economic participants, Canada included. These two trade agreements, once in effect, represent a new era in global trade, and will bring with them new opportunities for Canadian commerce and industry.
As Customs Brokers we are excited to see what the first round of tariff reduction and elimination will bring. Watch this space for further updates as more information becomes available.