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Getting ready to cross the line

Aktualisiert: 13. Dez 2018

The benefits and the limits of free trade - EU and CETA in theory and practice

Hiking the mountains in the Alps we expect to find pure air, freedom and positive energy. We can let our mind wander until we come to the next natural obstacle (a gully, a stream, a cow, a steep path, etc.) that triggers our senses. Well, this reminds me of a sign that was standing seemingly at a strategic point in the middle of the hill and saying: "Grenzübertritt nur mit gültigem Ausweis. Nur Mitnahme zollfreier Waren", i.e. Crossing borders only with a valid identification card and with duty-free products.  This could stump us for a moment!  

The lessons I have learned are not written but arise when it actually happens.

What we call countries, regions, and states seems to be nowadays less defined than it used to be. This is the impression we have when we cross borders within the European Union. We can come and go without waiting at the customs and being questioned about what we intend to do or what we are bringing in our luggage. For Canadians this perception is even reinforced by the fact that all european countries are relatively close to each other and form an interesting collage of cultural diversity. It is fascinating and even surreal that one could change the language, the culture and the worldview within less than 100 km distance.

Being able to enter this market without having any barriers seems to be a wonderful gift for Canadian and European companies. The Comprehensive Economic and Trade Agreement (CETA), which entered into force on 21 September 2017, is the free-trade agreement between Canada and the European Union. It seeks to eliminate 99% of the customs duties between Canada and the EU, promote environmental protection and sustainable development, create jobs, apply international rules on workers’ rights and enable the mutual recognition of diplomas.  

Hence not only businesses can benefit from the agreement, but also individuals who want to discover new avenues and "sell" their knowledge abroad. It is worth it to give it a try. Nevertheless I would recommend to be careful when it’s time to put your plans into practice.

What I've learned from my experience

When I founded my business in 2006 selling Canadian specialities in Germany, I spent a lot of time and energy understanding the regulations and the taxes attributed to all products that I was importing. The first lesson I have learned is that the importation of goods could be quite tricky depending on the product class you are referring to. Moreover each country has its own regulation even if it is part of the European Union. Who knows for example what a "Grad Plato" is? Well, this information is mostly relevant when you intend to import beer to Germany. 

And what about taxes? You won't be surprised to know that there are many forms of taxes. In Germany for example there are Drittlandszollsatz, Einfuhrumsatzsteuer, Verbrauchersteuer  and Präferenzzollsatz. The latter is based on the agreement made between the countries and replaces the Drittlandszollsatz only when the conditions are filled.  Therefore I would recommend you to be cautious when it comes to import goods. You will save time and money by getting well informed about the differences between all categories. Believe me, sweet jam can cause you more headache than a bottle of wine!

In summary from a business and personal point of view this treaty is very promising and it is worth it to give it a try. If you follow the path, your journey will be enjoyable and free from any obstacles. I wish you all the best in your new adventure!

If this blog was informative, please write to me your feedback or share it with your friends. Thank you!  

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