Canada-UK Trade Continuity Agreement (Canada-UK TCA) - Summary
In the Canada-United Kingdom (U.K.) Trade Continuity Agreement (Canada-UK TCA), Canada and the U.K. have substantively replicated CETA, modifying that agreement only as necessary for it to suit a bilateral context. The CETA is incorporated by reference in a Short Form Treaty and necessary modifications to the CETA are detailed in a Short Form Treaty annex.
Short Form Treaty
The Short Form Treaty incorporates the CETA by reference as the starting point for the TCA. A Canada-U.K. Joint Committee, modelled on CETA, is established. A Retained Law provision notes that references to EU law in the TCA are to be understood as references to EU law as incorporated into U.K. domestic law at the end of the Brexit transition period and provides recourse to urgent consultations if the U.K. decreases the conformity of a measure with the TCA. A Subsequent Negotiations provision commits the Parties to enter into negotiations on a new FTA within one year of the TCA’s entry into force, which the Parties seek to conclude within three years of the TCA’s entry into force.
Chapter 1 – General Definitions and Initial Provisions
The TCA includes several chapters which set out institutional and administrative provisions that apply to the entire Agreement. These provisions establish the framework by which the Agreement will be interpreted, managed and implemented.
Chapter 2 – National Treatment and Market Access for Goods
Comprehensive market access for goods is at the cornerstone of any free trade agreement. This access is achieved by a commitment of the signatory Parties to lower or eliminate tariffs, to not apply restrictions or prohibitions on the import or export of goods, and to treat imported products no less favorably than similar goods produced domestically. Such commitments are contained in the National Treatment and Market Access for Goods (NTMA) chapter. There are no substantive changes to the CETA NTMA chapter text in the TCA, and 100% of the CETA tariff elimination commitments are carried forward. The TCA fully protects Canada’s dairy, poultry and egg sectors, and provides no new incremental market access for cheese or any other supply-managed products. A handful of goods (certain agricultural and fish and seafood goods) subject to tariff rate quotas under CETA were also carried over with new volumes that are the result of a negotiated outcome. Under CETA, beef, pork and wheat TRQs are administered under a licencing system that the U.K. was unable to replicate in the TCA. Instead, beef, pork and wheat TRQs will be administered on a first-come, first-served basis under the TCA. This outcome provides streamlined access to the U.K. market that reduces red-tape and paperwork. The TCA allows for an optional return to a licensing system if both parties agree.
Chapter 3 – Trade Remedies
The Trade Remedies chapter’s provisions accomplish three main objectives: ensuring that trade remedies are applied transparently, ensuring due consideration of public interest in imposing anti-dumping or countervailing duties, and ensuring that safeguards are applied in the least trade distorting manner possible.
Chapter 4 – Technical Barriers to Trade
Under the World Trade Organization (WTO) Agreement on Technical Barriers to Trade (TBT Agreement), the Parties have already made a number of commitments with respect to the preparation, adoption and application of technical regulations, standards, and conformity assessment procedures, to avoid implementing measures that act as unnecessary obstacles to international trade. The TBT chapter incorporates and builds on the key provisions of the WTO TBT Agreement and sets out provisions that help prevent and address disruptions created by regulations and associated testing or certification requirements.
Chapter 5 – Sanitary and Phytosanitary Measures (SPS)
The Chapter on Sanitary and Phytosanitary Measures (SPS) affirms and builds upon the World Trade Organization (WTO) Agreement on the Application of Sanitary and Phytosanitary Measures. The Chapter maintains each Party’s right to take the SPS measures necessary to protect against risks to food safety, animal or plant life or health, while requiring that such measures be science-based, transparent, and applied only to the extent necessary to protect human, animal or plant life, so as not to create unnecessary and unjustifiable SPS-related trade restrictions. Canada and the U.K. also committed, through parallel exchanges of letters, to work together on issues of relevance to trade in the meat sector and for biotechnology products with a view to facilitate trade.
Chapter 6 – Customs and Trade Facilitation
The Customs and Trade Facilitation Chapter seeks to ensure that effective and efficient border measures expedite the movement of goods, while measures to ensure national safety and security are also maintained. The chapter complements similar commitments the Parties have undertaken under the auspices of the WTO and the World Customs Organization (WCO).
Chapter 7 – Subsidies
Comprehensive commitments between the Parties and other trading partners are set out in the WTO Agreement on Subsidies and Countervailing Measures, and the WTO Agreement on Agriculture. Because subsidies have a potential impact on all trading partners, Canada believes that the WTO is the venue best suited to strengthen disciplines on their appropriate use. All subsidies provided within Canada, with the exception of those relating to cultural industries, are subject to the subsidies chapter of this agreement. Provisions covering exchange of information and notifications between the Parties will encourage enhanced transparency.
Chapter 8 – Investment
Trade in investment is distinct from the trade in goods or in services, and operates under distinct rules. As in the CETA, the TCA incorporates a dedicated chapter to facilitate increased investment between the Parties. The Investment Chapter is designed to give investors greater certainty, stability, transparency, and protection for their investments, and to secure access for both Parties investors to each other’s respective markets. As the investment dispute resolution provisions are not part of CETA provisional application, Canada and the U.K. agreed to suspend these provisions pending a review by both Parties.
Chapter 9 – Cross-Border Trade in Services (CBTS)
As in the CETA, provisions of the CBTS Chapter form the foundation for the liberalization of the services market under the agreement. In addition to the application of national treatment and MFN obligations, the chapter establishes the scope for services market access under the agreement. Importantly, coverage is defined through a negative list approach. That is, all services are covered by the obligations of the agreement unless explicitly indicated otherwise. TCA maintains for Canadian service suppliers market access into the U.K. that is among the best it has ever granted to a trading partner. This means that Canadian suppliers in most service sectors remain on an equal footing with U.K. service providers, and receive better treatment than most of their non-U.K. competitors.
Chapter 10 – Temporary Entry and Stay of Natural Persons for Business Purposes
The Temporary Entry Chapter of CETA, which addresses administrative requirements such as economic needs tests that can impose time delays and administrative costs on prospective business entrants, has been replicated in the TCA. Provisions of the chapter are aimed at increasing transparency and predictability of these requirements. In the area of Contract Service Suppliers and Independent Professionals, commitments taken by the U.K. represent preferential access for Canada, meaning that Canadians benefit from better access into the U.K. than what is generally available to its other trading partners
Chapter 11 – Mutual Recognition of Professional Qualifications
The Mutual Recognition of Professional Qualifications (MRPQ) Chapter replicates a detailed framework that streamlines the process for the negotiation of mutual recognition agreements (MRAs) recognized between the Parties regulators and/or professional bodies.
Chapter 12 – Domestic Regulation
The objectives of the Domestic Regulation chapter are to ensure that licensing and qualification requirements and procedures are transparent, objective, fair, and timely. The replicated provisions apply to the framework for licensing - ensuring that requirements are clear, publically available, and based on objective criteria – and also to procedures, ensuring that the consideration of an application and the granting of a permission are timely and non-arbitrary.
Chapter 13 – Financial Services
The Financial Services chapter, as replicated from CETA, applies to measures adopted or maintained by the Parties relating to financial institutions, investors and their respective investments in financial institutions, and cross-border trade in financial services. The chapter tailors the general commitments in the agreement to the financial services sector. In addition to national treatment, most-favoured-nation treatment and market access obligations, the chapter includes specific commitments on regulatory transparency and the cross-border transfer and processing of information by financial institutions.
Chapter 14 International Maritime Transport Services
This article replicates CETA provisions that government measures affecting the IMTS sector are subject to the provisions of the agreement’s Investment and Cross-Border Trade in Services (CBTS) chapters, including obligations not to maintain discriminatory measures with respect to accessing and using ports, and the use of infrastructure and services of ports.
Chapter 15 – Telecommunications
The Telecommunications Chapter, replicated from CETA, is composed of provisions related to the use of public telecommunications networks, as well as to the physical and procedural aspects of network management. The Chapter also seeks to maintain enhanced regulatory certainty for telecommunications service suppliers by including disciplines to ensure that telecommunications regulators act impartially, objectively and in a transparent fashion. In this way, the Chapter supports Canadian telecommunications service suppliers and investors by making the regulatory environment for telecommunications services more predictable and competitive.
Chapter 16 – Electronic Commerce
The Electronic Commerce chapter, as replicated from CETA, includes measures to protect personal information and to facilitate cooperation on issues such as the treatment of spam and protection from fraudulent and deceptive commercial practices. The Chapter also includes a commitment to maintain the current framework of not applying customs duties on digital products transmitted electronically as a means to further enhance the transparent and predictable regulatory framework of electronic commerce.
Chapter 17 – Competition Policy
As in CETA, the purpose of the Competition Policy Chapter is to ensure that the benefits of trade liberalization under the agreement are not offset by anticompetitive business conduct. While the agreement’s approach recognizes the independence of each Party to enforce its domestic competition legislation in the ways it sees fit, the chapter provides a framework which ensures that each Party has in place a transparent, non-discriminatory and fair enforcement regime to counter specific types of anticompetitive practices.
Chapter 18 – State Enterprises, Monopolies and Enterprises Granted Special Rights or Privileges
As in CETA, the agreement acknowledges the right of governments to establish monopolies or state enterprises to further specific public policy objectives, but also seeks to ensure that they do not unduly hamper the free flow of trade. Accordingly, the Monopolies and State Enterprises Chapter maintains rules and disciplines for state enterprises to protect the market from any trade distortions that might arise from their interaction with private enterprises.
Chapter 19 – Government Procurement
As Parties to the World Trade Organization Agreement on Government Procurement (GPA), Canada and the U.K. have already committed to treat goods, services and suppliers of the other Party in a fair, transparent and non-discriminatory manner. The TCA replicates the procedural rules and market access commitments that Canada and the U.K. have agreed to in the CETA GP Chapter. As was the case in CETA, Canada and the U.K. have also agreed to establish by September 21, 2022 individual electronic single point of access (SPA) for procurement notices covered under the TCA, including at the sub-central level. The SPAs will provide Canadian and U.K. businesses with one-stop-shop to quickly retrieve information about all bid opportunities that are covered under the TCA.
Chapter 20 – Intellectual Property
The Intellectual Property Rights (IPR) Chapter, as replicated from CETA, promotes effective protection for the Parties IPR holders, through specific commitments for copyright and related rights, trademarks, designs, patents, geographical indications, plant varieties, as well as IPR enforcement measures and cooperation between the Parties.
Chapter 21 – Regulatory Cooperation
The Regulatory Cooperation Chapter, as replicated from CETA, maintains strengthened cooperation in regulatory matters to promote forward-looking, early engagement between the Parties as new measures are being developed. By facilitating earlier access to regulatory development processes under the TCA, it is expected that the differences in regulatory approaches between the Parties will be reduced over time, resulting in fewer barriers to trade when regulations are implemented.
Chapter 22 – Trade and Sustainable Development
The Trade and Sustainable Development chapter – as replicated from CETA -, in concert with the Trade and Labour and Trade and Environment chapters of that agreement, reflects the Parties’ shared values in recognizing that economic, social, and environmental objectives are mutually supportive and reinforcing. By maintaining shared commitments, this Chapter helps to ensure economic growth under the agreement does not occur at the expense of other important social and environmental objectives.
Chapter 23 – Trade and Labour
Canada views the pursuit of liberalized trade and the promotion and protection of labour rights as mutually reinforcing and equally important. In that sense, replication of CETA commitments in the TCA with respect to labour provides assurances that high standards of labour protection will be maintained as bilateral trade increases with the U.K. TCA’s labour chapter contains comprehensive labour rights obligations and confirms the importance of effectively enforcing domestic labour legislation. Canada and the U.K. have also committed to uphold health and safety at work, acceptable minimum employment standards, and non-discrimination in respect of working conditions, particularly for migrant workers.
Chapter 24 – Trade and Environment
Canada is firmly committed to the principle that trade and environmental protection should be mutually supportive. For this reason, replication of CETA commitments in the TCA with respect to environment provides assurances that trade and environmental protection are mutually reinforcing and equally important, and that the increased prosperity resulting from liberalized trade does not occur at the expense of environmental protection. The objectives of the Trade and Environment Chapter, as replicated from CETA, ensure that both Canada and the UK pursue high levels of environmental protection while realizing the benefit of liberalized trade. As in CETA, the Chapter contains commitments for Parties to effectively enforce domestic environmental laws, and cooperate to address global environmental issues such as climate change, multilateral environmental agreements, and sustainable fisheries and sustainable forestry.
Chapter 25 – Bilateral Cooperation and Dialogues
The Dialogues and Bilateral Cooperation chapter is replicated from CETA and draws on established partnerships and common interests between Canada and the U.K. in a number of areas. The chapter sets out provisions through which Canada and the U.K. commit to engagement in the areas of biotechnology, forestry, raw materials, and science and technology.
Chapter 26 – Administrative and Institutional Provisions
The Administrative and Institutional Provisions chapter of the TCA defines how the agreement will be jointly managed and implemented by the Parties. The chapter establishes the structure and processes of the various committees, each of which play an important role in administering the agreement. This area is important in providing the administrative and institutional context that allows the agreement to be interpreted and applied in a consistent manner.
Chapter 27 – Transparency
The Transparency chapter constitutes part of the institutional framework for the TCA as a whole. The provisions of the chapter are designed to facilitate cooperation between the Parties in the area of information sharing, and to ensure administrative proceedings are fair and just. In addition, the chapter helps ensure that Canadian and U.K. stakeholders are either notified of, or have access to information regarding measures that may affect trade under the TCA.
Chapter 28 – Exceptions
The exceptions chapter sets out commitments made between Canada and the U.K. to exclude certain areas from the TCA, usually for reasons of national interest. For example, the Agreement does not prevent a Party from taking action to protect its national security interests. Some of the exceptions are applicable to the entire Agreement while others only apply to certain chapters. Generally, these exceptions are designed to ensure that Canada and the U.K. maintain the right to take action in the public interest. The Chapter also sets out where Canada or the U.K. may impose measures that would otherwise be inconsistent with the TCA obligations to pursue certain policy objectives.
Chapter 29 – Dispute Settlement
As in CETA, the TCA dispute settlement mechanism applies to any disagreement pertaining to the interpretation or application of the agreement, unless stated otherwise. The chapter emphasizes the importance of resolving disagreements through cooperative means, recognizing that formal dispute settlement processes can be time consuming and resource intensive. Accordingly, the chapter contains provisions regarding consultation and mediation, which improve flexibility in resolving trade disputes, and helps ensure that formal dispute settlement is used only as a last resort.
Chapter 30 – Final Provisions
The Final Provisions chapter provides the legal language needed to bring the TCA into force. It also includes provisions for amendments to the text and processes for termination, should Canada or the U.K. wish to withdraw from the agreement.
Protocol on Rules of Origin and Origin Procedures
Canadian exporters will have clear and favourable rules that take into consideration Canada’s supply chains to determine which goods are considered originating in Canada and therefore eligible for preferential tariff treatment. The TCA largely replicates the CETA rules of origin. The agreement allows for accumulation with the EU on a transitional basis for 3 years. This means that materials sourced from the EU that are used in the production of goods in Canada or the U.K. can continue to count toward the originating status of those goods for purposes of Canada-U.K. trade. TCA Origin Quotas reflect volumes negotiated on a bilateral basis, also subject to the 3-year transitional timeframe.
Similar to the CETA, TCA’s Origin Procedures establish common approaches for importers, exporters, and customs authorities with regard to areas such as certification of origin, record keeping, and origin verification. Accordingly, the chapter clarifies the processes necessary for importers and exporters to take full advantage of the Agreement, while at the same time providing customs authorities with an applicable methodology to ensure that only qualifying goods enjoy the benefits of TCA.
Protocol on Mutual Acceptance of the Results of Conformity Assessment
Not all jurisdictions are alike in terms of the manner in which they apply conformity assessment procedures. This can impose additional costs and delays for producers who wish to export. The TCA Protocol on Conformity Assessment replicates CETA provisions to address these issues by creating a framework for Canadian businesses to bring certain products to the U.K. market without needing to have their products tested twice. The Protocol achieves this by establishing a mechanism through which Canadian conformity assessment bodies in certain product categories can test products to certify their conformity with U.K. technical regulations, and have that certification recognized and accepted in the U.K.
Protocol on Mutual Recognition of the Compliance and Enforcement Programme regarding Good Manufacturing Practices for Pharmaceutical Products
As with CETA, the Protocol’s central objective is to reduce the number of duplicative visits and certification requirements faced by pharmaceutical manufacturers that sell their products in both Canada and the U.K. As a result of the mutual recognition achieved under the Protocol, regulators in the U.K. will be able to rely on the certifications granted by Canadian regulators for certain products, and vice versa.
Wine and Spirits Agreement
Under the TCA, Canada and the U.K. replicated a number of commitments that work to ensure both the continued strength of this important industry, and that it benefits from more liberalized trade. The TCA’s wines and spirits provisions, as in CETA, set out in an Annex to the Initial Provisions Chapter, incorporate and build upon both the 2003 Agreement between Canada and the European Community on Trade in Wines and Spirits Drinks and the 1989 Agreement between the European Economic Community and Canada concerning trade and commerce in alcoholic beverages.
The TCA reaffirms the national treatment and non-discrimination commitments of the 2003 Agreement, while also maintaining a number of exceptions that reflect the unique character of the sale of wines and spirits in Canada. Specifically, Canadian wineries and distilleries retain the authority to sell only their own products on-site; Ontario and British Columbia are allowed to continue operating stores that sell only their own products; and Quebec may also continue to require all wine sold in grocery and convenience stores to be bottled in-province. Liquor boards are also required to not use the monopoly position they hold in their home jurisdiction to engage in activities that have an anti-competitive effect in other markets.
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