Canada Bolsters Support of Israel with Expanded Free Trade Agreement

July 24, 2015

2 min read

Canadian Prime Minister Stephen Harper announced this week new updates to a free trade agreement with Israel, called the Canada Israel Free trade Agreement (CIFTA).

In an announcement from the Prime Minister’s Office, Harper said: “The modernized CIFTA will notably provide expanded market access opportunities for agricultural, fish and seafood products through the reduction or elimination of Israeli tariffs on a large number of products, and duty-free access under tariff rate quotas for certain products.”

The new agreement modernizes four major trade areas including market access for goods, rules of origin, institutional provisions and dispute settlement. The updated agreement also adds seven new trade provisions that didn’t exist in the original CIFTA. These chapters cover the areas of trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, intellectual property, electronic commerce, labor and environment.

Israel and Canada originally formed a free trade agreement in 1996 and enacted on January 1, 1997. The goals of the original CIFTA agreement sought to eliminate trade barriers and tariffs, promote fair competition and increase investments between the two nations.

While Israel was not one of Canada’s major trading partners at the time, the Canadian government, under then Prime Minister Jean Chretien of the Liberal Party, sought to allow Canadian businesses to benefit from the growing Israeli economy. This effort was purported to help Canadian businesses keep up with their US counterparts who were enjoying trade with Israel under the US-Israel Free Trade Agreement that had been enacted over a decade earlier under US President Ronald Reagan.

Between the signing of the CIFTA agreement and 2014, bilateral trade between Israel and Canada increased to over $1.5 billion Canadian dollars.

Other bilateral agreements between the two countries include: Air Transportation Agreement (2015), a renewed and funded Science & Technology Agreement, the Double Taxation Agreement (1977), and the Canadian Space Agency – Israeli Space Agency MOU for Space Cooperation (March 2005).

According to the Government of Canada’s website: “Canada’s top merchandise exports to Israel in 2014 (valued at $449 million) were aircraft, electrical machinery, paper/paperboard, precious stones and metals, cereals and vegetable products. Canada’s main merchandise imports (valued at $1.1 billion) were pharmaceutical products, electrical machinery and equipment, precious stones and metals, machinery, plastics, chemicals, and scientific and precision instruments.”

The expanded version of CIFTA will reduce tariffs, enhance cooperation and increase regulatory transparency. It will reduce transaction cost for businesses and create new opportunities for investment. The Canadian government hopes that the expanded deal will also increase support for businesses and investors on both sides, deepen trade and investment linkages, and further strengthen the bilateral relationship between the two countries.

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