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"Modernized" Canada-Israel Free Trade

Agreement expands tariff reductions

and transshipment opportunites

Written By: Cyndee Todgham Cherniak

Date: November 5, 2019

On September 1, 2019, a "modenized" Canada-Israel Free Trade Agreement entered into effect.  The original Canada-Israel Free Trade Agreement (known as the “CIFTA”) entered into effect on January 1, 1997.  It was a limited free trade agreement. The CIFTA was previously amended on July 5, 2002 and November 1, 2003.  On May 28, 2018, Canada and Israel again amended the CIFTA by signing the Canada-Israel Free Trade Amending Protocol 2018. On May 27, 2019, Bill C-85: An Act to amend the Canada-Israel Free Trade Agreement Implementation Act and to make related amendments to other Acts received royal assent.  Bill C-85 (and the changes to the CIFTA) entered into effect on September 1, 2019.

The September 1, 2019 "modernized" CIFTA reduces tariffs to 0% or 4% on a number of goods in Chapter 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 20, 21, 22, and 23, (and a few items in Chapters 24, 28, 3, 35, 69 and 71) of the Customs Tariff Schedule.

More significantly the transshipment rule in the "modernized" CIFTA has been expanded beyond the United States.  Now, goods that are transshipped through Jordan, Iceland, Liechtenstein, Norway, and Switzerland, the European Union and Mexico may be entitled to the preferential CIFTA tariff rates when imported into Canada so long as only minor processing occurs in the intermediate country.  Canada has updated the Proof of Origin of Imported Goods Regulations, Free Trade Agreement Advance Rulings Regulations, Part 5 of the Refund of Duties Regulations and the Declaration of Minor Processing (Form E669) to reflect this expanded list of countries.  To benefit from the preferential tariff treatment, effective September 1, 2019, the amended Declaration of Minor Processing (Form E669) must be completed for CIFTA-eligible goods that have undergone minor processing in the territory of a non-Party prior to entering Canada.  This form must be completed if qualifying goods entered the commerce of the territory of a non-Party (e.g., the United States) or are otherwise not subject to a through bill of lading from Israel to Canada or from Canada to Israel. If the goods are passing through the territory of a non-Party (e.g., the United States) to Canada/Israel on a through bill of lading, the form does not have to be completed.  If goods are shipped to Canada directly from Israel, the Free Trade Agreement – Certificate of Origin (Form B239) must be completed.

If is also important to note that new chapters were added to CIFTA, including:

• Electronic commerce;
• Intellectual property;
• Sanitary and phytosanitary measures;
• Technical barriers to trade;
• Trade and environment;
• Trade and labour;
• Trade facilitation;
• Trade and gender;
• Trade and small and medium enterprises (SMEs); and
• Corporate social responsibility.

These chapters will be discussed in other blog articles.

For more information, please contact Cyndee Todgham Cherniak at 410-307-4168 or at Cyndee@LexSage.com.  There is more information about Canada’s free trade agreements on the LexSage website.

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