When you’re building your import-export business, it’s important to have the most efficient supply chain possible. That includes finding out which countries have free trade agreements with Canada so you can get the most bang for your buck (i.e. saving money on import taxes).
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The potential benefits of free trade agreements are numerous:
- Tariff reduction and/or elimination
- Removal of obstacles that hinder the international flow of goods
- Expanded investment opportunities
- Improvement of rules surrounding intellectual property, environmental protection, e-commerce, and government procurement
As you can see, it’s vital to be aware of which countries have a free trade agreement with Canada so you don’t miss out on any potential benefits. Initiating trade with one of these countries will save you from the headache of dealing with mounds of red tape and import taxes.
Currently, there are 14 Canadian free trade agreements in existence, covering 60% of the world’s Gross Domestic Product (GDP). Here’s a list of all of them–and the advantages you can gain from them as a Canadian small business owner.
1. Canadian-United States-Mexico Agreement (CUSMA)
The CUSMA is Canada’s free trade agreement with the United States and Mexico. This replaced NAFTA on July 1, 2020. It offers numerous benefits to Canadian small business owners, including duty-free treatment for almost all goods shipped between the three countries, simplified customs procedures, and lowered costs of international trade.
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2. Comprehensive Economic and Trade Agreement (CETA)
This is the free trade agreement between Canada and the European Union. It includes partnerships with Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
The CETA gives many advantages to Canadian small business owners, such as reduced or eliminated customs duties, the potential to obtain EU public contracts, increased accessibility to the European market, environmental protection, and streamlined customs processes.
3. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP is the free trade agreement Canada has with several Trans-Pacific countries. It is a partnership across four continents, connecting Canada with Australia, Japan, Mexico, New Zealand, Singapore, Brunei, Chile, Malaysia, Peru, and Vietnam.
This agreement is undoubtedly beneficial to Canadians, as it eliminates most taxes on both imports and exports, integrates Canadian goods into global value chains, improves customs efficiency, and makes room for Canadian small businesses in the Pacific region.
4. Canada-European Free Trade Association (EFTA) Agreement
This is the free trade agreement between Canada and the EFTA, whose members are Iceland, Liechtenstein, Norway, and Switzerland. It emphasizes tariff elimination for imports and exports between the five nations.
Even with tariff reduction or elimination, you’ll still likely need to pay GST on your imports, regardless of which free trade agreement applies.
5. Canada-Ukraine Free Trade Agreement (CUFTA)
The CUFTA is the free trade agreement between Canada and Ukraine. It greatly reduces duties on Canadian exports to Ukraine and virtually eliminates duties on imports from Ukraine to Canada. It also makes every effort to cut down on customs red tape.
6. Canada-Korea Free Trade Agreement (CKFTA)
This is Canada’s free trade agreement with South Korea. Its provisions for Canadian small businesses include eliminating tariffs, simplifying customs procedures, and ensuring non-discriminatory business treatment.
7. Canada-Israel Free Trade Agreement (CIFTA)
The CIFTA is the free trade agreement between Canada and Israel. It allows for reduced taxes on a variety of goods and improves Israeli market access for Canadian agricultural products as well as fish and seafood.
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8. Canada-Costa Rica Free Trade Agreement (CCRFTA)
This is the free trade agreement between Canada and Costa Rica. As of right now, it mainly focuses on trade in goods. At present, there are efforts underway to broaden this agreement.
The remaining free trade agreements give standard free trade privileges such as tariff reduction and improved customs efficiency between Canada and the following countries:
9. Canada-Jordan Free Trade Agreement (CJFTA)
10. Canada-Chile Free Trade Agreement (CCFTA)
11. Canada-Colombia Free Trade Agreement (CCOFTA)
12. Canada-Panama Free Trade Agreement (CPAFTA)
13. Canada-Honduras Free Trade Agreement (CHFTA)
14. Canada-Peru Free Trade Agreement (CPFTA)
Looking for expert advice on supply chain logistics, import tax, and shipping? BorderBuddy is here to help. We offer solutions for businesses of all sizes, so give us a call today.