Canada’s Top 3 Trade Agreements: CUSMA, CETA, CPTPP

If you are a small business owner shipping goods between countries, you probably have heard of free trade agreements. Canada holds three major free trade agreements which help goods and products ship easily between countries that face a lot of shipping traffic. 

We have created this guide to outline Canada’s top three trade agreements:

What are free trade agreements?

Free trade agreements are contracts established between two countries or a group of countries to determine the regulations for goods and products imported and exported from these countries. These agreements make it easier for both countries to monitor and ship more quickly, with less red tape processes getting in the way. With these agreements, shipments are less likely to be held up as long in customs, and have lower duties and taxes. These agreements also make it easier to monitor the goods shipping in and out, and promote online customs tracking, and make the entire process smoother. 

What is CUSMA?

CUSMA stands for The Canada-United States-Mexico Agreement (CUSMA), which is the free trade agreement established between Canada, the US, and Mexico in 2020. This replaced the well-known North American Free Trade Agreement (NAFTA), with several changes to update the agreement for the modern age, including updating digitized customs processes. This agreement is important because the proximity of the three countries means easy trade between them is extremely valuable to many businesses.

Some of the other major changes from CUSMA to NAFTA include automotive laws, stating that now 75% of the automobile parts of the imported cars must be manufactured in Canada, US, or Mexico, and labour laws for cars, which encourage fair pay for workers. 

What is CETA?

CETA is the Canada-EU Comprehensive Economic and Trade Agreement. This agreement between Canada and Europe came into effect in 2017. It has been extremely beneficial in increasing European trade to Canada. 

CETA improves trade between Canada and Europe by reducing many red tape processes, benefitting Canadian businesses by improving access to European government contracts, and increasing direct investment between Canada and Europe. In addition, many tariffs and taxes between Canada and Europe are waived or reduced. This is great news for your small business if you are shipping between Canada and Europe. 

What is CPTPP?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between Canada and 9 other countries in the Asia-Pacific, including: Australia, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, with plans for Brunei and Chile in the process of joining. It was first enacted between Canada and some Asian countries in 2018, and has since seen several other countries join. 

CPTPP strengthens the relationships between these countries and provides Canada with the important resources from Asia which it cannot get elsewhere. It also encourages the use of online customs portals. 

Now you know the basics about each of Canada’s top three free trade agreements. 

If you are shipping between these countries and aren’t sure about what this means for you, don’t worry. Your Canada customs broker Welke is here to help. We’ll answer all your questions and make sure your goods get where they need to be as quickly as possible.

Ready to get started? Get a quote.