21 Aug 2019

Modernized Canada-Israel Free Trade Agreement (CIFTA) implemented and ready to enter into force on September 1st

On 21 August 2019, the regulations implementing the modernized CIFTA were published in the Canada Gazette, Part II. The Regulations are the final step in Canada’s implementation of the modernized agreement.

The CIFTA Rules of Origin Regulations repeal and replace the previous regulations and implement the modernized rules of origin that will now be used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment. The rules of origin are simplified, liberalized, and brought up to date with Canada’s approach in more recent free trade agreements.

The Regulations Amending the CIFTA Rules of Origin for Casual Goods Regulations amend the previous regulations and replace the conditions under which goods acquired in Israel by travellers are considered originating goods and therefore entitled to preferential tariff treatment. Where travellers acquire goods in Israel that are either marked “made in Israel,” or not marked to the contrary, the traveller can claim the CIFTA tariff preference on importation of the goods into Canada.

The CIFTA Tariff Preference Regulations repeal and replace the previous regulations to allow eligible goods that are not shipped directly between Israel and Canada to retain the eligibility for preferential tariff rates provided the goods remain under customs control in third countries.

The Regulations Amending the Regulations Defining Certain Expressions for the Purposes of the Customs Tariff amend the previous regulations to replace the definition of “imported from Israel or another CIFTA beneficiary” for the purposes of the Customs Tariff. The current definition allows certain originating goods that have undergone some processing in the United States to be considered imported from Israel or another CIFTA beneficiary and therefore eligible for preferential treatment. Updating the definition is necessary, as the modernized CIFTA allows for processing to occur in an expanded list of non-parties (i.e. the European Union, the Member States of the European Free Trade Association, Jordan, Mexico as well as the United States). Therefore, even if the last step of production occurs in a country other than Canada or Israel, the good may still be considered originating under the modernized CIFTA.

The new modernized agreement will enter into force in Canada on September 1st.

Tereposky & DeRose regularly provides advice on regional trade agreements. Should you have any questions regarding this matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com