Tax Alert - CPTPP Offers Canadian Companies Opportunity to Lower Duty Costs and Expand Globally

November 08, 2018


The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a new free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, will be one of the largest of its kind in the world. The CPTPP will provide enhanced access to key Asian markets.

At the end of October 2018, Canada and Australia became the fifth and sixth countries, respectively, to ratify the CPTPP, joining Japan, Mexico, New Zealand and Singapore, who ratified the agreement earlier this year. Canada is now the only G7 country to have a free trade agreement with all of its G7 partners. For Canadian companies who import goods from these countries or want to export and expand on the global market, this is exciting news.

Now that the six partner countries meet the predetermined threshold, the CPTPP will provisionally go into effect on December 30, 2018 for these countries. It is expected that five remaining countries — Brunei, Chile, Malaysia, Peru, and Vietnam will ratify the agreement in their individual countries in 2019. Note: A country will be able to participate fully in CPTPP, 60 days after ratification by the country.

You can find more information on the CPTPP and the full text of the agreement here.

Canadian importers and exporters looking to take advantage of this new agreement need to be aware that changes in material sourcing may affect the ability to qualify their goods under other Free Trade Agreements such as the North American Free Trade Agreement (NAFTA) or the newly negotiated United States-Mexico-Canada Agreement (USMCA).

This news should be a call to action for all Canadian importers and exporters to:

  1. Review current and future supply chains for duty cost reduction opportunities
  2. Review current and future sales opportunities in CPTPP party countries
  3. Understand how free trade agreements could potentially impact a change in sourcing

Undoubtedly, the Canadian customs and trade landscape continues to change at a record pace. BDO Customs & International Trade can provide concise answers to questions your company may have about the CPTPP and other Free Trade Agreements.

Please contact a member of our Customs and International Trade practice for assistance.

Brian Morcombe
Partner, Indirect Tax
Charmaine Goddeeris
Senior Manager, Customs & International Trade

Watch this webinar on demand to explore how you can manage the impact of Canadian tariffs on products you bring into Canada.

The information in this publication is current as of November 7, 2018.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.