BC Businesses can Benefit from the CPTPP
Have you ever considered the benefits of expanding your business and reaching customers within international markets? Did you know that the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could help your B.C. business access international markets with over 460 million potential purchasing customers? These are questions worth asking, and we are here to help your business take full advantage of Canada’s trade agreements and export opportunities.
British Columbia’s Pacific Coast location presents easy global access and opportunities to connect your business to the Asia-Pacific markets. British Columbia is among the world’s most open and stable trading economies, and the CPTPP is a tool that allows B.C. businesses to gain an edge over international competition. To understand how this agreement can benefit your business, let’s do a quick overview of the CPTPP and its functions:
What is the CPTPP? Better yet, what are free trade agreements?
The CPTPP is a free trade agreement (FTA) between Canada and ten other countries in the Asia-Pacific region. As an overview, FTAs are agreements made between two or more countries whose purpose is to facilitate trade and eliminate trade barriers between them. In doing this, FTAs make it cheaper for businesses to export and import goods internationally. FTAs create many economic benefits – but most of all, they help your business expand on an international scale.
The CPTPP entered into force in late 2018 for Canada, Australia, Japan, Mexico, New Zealand, and Singapore, and for Vietnam in early 2019. It will enter into force for the remaining parties, Brunei, Chile, Malaysia, and Peru once they ratify the Agreement.
The CPTPP is a progressive agreement in a sense that it goes beyond tariff and barriers elimination and embraces labour rights, the environment, and cooperation amongst small and medium-sized enterprises (SMEs). The CPTPP also promotes diversity and inclusion; it advances the participation of under-represented groups in free trade, such as SMEs, women, and Indigenous-owned businesses. The CPTPP provides opportunities for all B.C. organizations – but what truly are its benefits?
Benefits of the CPTPP to Canadian businesses
The CPTPP makes it less expensive to export to the Asia-Pacific market with current preferential access to six countries outside of Canada. The Agreement provides your business with the opportunity to increase market share and gain an edge over international competition in those markets. In 2019, the CPTPP’s eleven partner countries accounted for a population of 500 million – this equated to a trading bloc of $13.5 trillion in Gross Domestic Product (GDP). The CPTPP expands Canada’s economy as a whole and contributes to growth in Canada’s GDP. Here is an overview of some of the key benefits the CPTPP provides:
Competitively price your goods: Once fully implemented 99% of Canadian exports to CPTPP partner countries will be duty-free, reducing the cost of products in the Asia-Pacific region. Lower import costs encourage CPTPP countries to import your goods – this allows your products to be more competitively priced in the international market.
Reduce international investment risk: The CPTPP includes a framework that reduces investment risk, protects Canadian investments abroad, and increases the level of protection for your B.C. business when engaging in international trade with CPTPP partner countries.
Heightened market presence: By reducing trade barriers, the CPTPP makes it easier and cost-effective for B.C. companies to do business in the Asia-Pacific markets. The CPTPP also provides B.C. companies with a more stable, transparent, and predictable environment to operate and do business. This leads to an increased awareness surrounding your business altogether.
Expand your business: The CPTPP gives your B.C. business market access preferences to 13.5% of the entire globe’s GDP. This presents an amazing opportunity to expand your business to the Asia-Pacific markets and reach customers on a global scale.
Each country within the CPTPP offers different export benefits depending on your business’ product, shipment size, purchaser, and so on. For example, Vietnam has eliminated tariffs of eight percent on apples from Canada, giving B.C. businesses a competitive edge when exporting apples to Vietnam. If you want to learn more about how the CPTPP can benefit your business, as well as sector-specific opportunities in Vietnam, check out this recorded webinar on the CPTPP and Vietnam.
How can the CPTPP benefit my sector?
Now you may be wondering – this all sounds great, but how can the CPTPP benefit my business specifically?
The CPTPP benefits all B.C. business sectors in varying ways. For example, the CPTPP grants B.C. companies in the agrifood industry the ability to gain preferential access to Japan, the second largest importer of B.C. meat products. The agreement also allows B.C. agrifood companies to reap the benefits of duty-free exports on almost all B.C. agricultural exports to New Zealand and Australia.
The CPTPP also provides immense opportunities for other industries, such as the life sciences sector. The CPTPP allows B.C. life sciences companies to have preferential access to its second largest market for ultraviolet (UV) equipment and eliminates almost all tariffs on life science products exported to the Asia-Pacific market.
These overviews provide examples of how the CPTPP can benefit different types of B.C. businesses – but don’t worry, the scope goes much further than the sectors listed above! The CPTPP also provides advantages to many other B.C. sectors, including forestry, seafood, energy, mining, and many more. To learn about how the CPTPP can benefit your business sector, check out this Government of Canada resource that dives deeper into all the industries that can benefit from the CPTPP.
Preferential treatment under the CPTPP
The benefits associated with the CPTPP, such as tariff reductions and duty-free exports, are not automatic – you must claim them. This process is commonly known as claiming preferential tariff treatment. So, what is preferential tariff treatment, and how do you claim it?
As an overview, the first step in claiming preferential tariff treatment under the CPTPP is to classify your products. Products are classified using Harmonized System (HS) codes. The first six digits of HS codes are standardized across the globe – however, depending on your product and country of shipment, you may need to add extra digits to this code. To determine your products’ official HS codes, reach out to your customs broker or seek legal advice. To learn more, the Canadian Tariff Finder serves as a helpful starting point in understanding which tariffs are applied to your products.
Once you have determined the relevant HS code, it is important to confirm that your product meets the CPTPP’s Rules of Origin. Rules of Origin are rules that assure that products are sourced, originate or were processed in countries that are a part of the CPTPP, rather than products simply passing through CPTPP partner countries. Since it is rare for a product to be sourced entirely from one country, Rules of Origin define how much non-originating material a product can possess to qualify for CPTPP benefits. To find out if your product meets the Rules of Origin, reach out to your customs broker, or request an Advance Ruling from the country you plan to export to.
It is also important to confirm your product meets the Rules of Origin by including a Certificate of Origin. There is no set format for this under the CPTPP, however, specific information is required. Confirming preferential tariff treatment and whether your product satisfies the rules of origin with the customs authorities of the importing CPTPP country in advance allows you to verify that your product will benefit from reduced or eliminated tariffs.
For more information on FTAs, the CPTPP, international trade and the specifics of your business’ situation, contact our Trade Policy and Negotiations team here.
The CPTPP’s duty-free imports and reductions to trade barriers allow your business to gain an edge over international competition, presenting B.C. businesses with an abundance of opportunity. To learn more about how the CPTPP can benefit your business, check out this recorded webinar. To explore the range of FTAs available to B.C. businesses, visit our Trade Agreements website and see how FTAs could benefit your business today.
To stay up to date with the latest news on FTAs and international trade, follow Trade and Invest BC on Twitter and LinkedIn.
