Canada-Israel Free Trade Agreement
What is the CIFTA?
In 2014, Canada and Israel agreed to modernize the Canada-Israel Free Trade Agreement (CIFTA), a goods-only agreement in force since January 1, 1997. Through two phases of negotiations in 2014-2015 and 2017-2018, Canada and Israel updated four chapters and added nine new chapters to CIFTA.
The modernized CIFTA improves access to the Israeli market for Canadian companies through further elimination and reduction of tariffs on agricultural, agri-food and fisheries products. With the addition of new chapters on Trade and Gender and Small and Medium-sized Enterprises, as well as new provisions on responsible business conduct and new labour and environmental protections, the modernized CIFTA signals the importance of inclusive trade and ensuring that the benefits and opportunities that flow from trade and investment are more widely shared.
Since CIFTA first came into effect over two decades ago, Canada’s two-way merchandise trade with Israel has more than tripled and was valued at nearly $1.8 billion in 2021. Two-way services trade was valued at $412 million in 2020.
Related links
- Country profile: Israel
- Final environmental assessment
- CIFTA and small and medium-sized enterprises
- Canada-Israel Free Trade Amending Protocol 2018
- Text of the original 1997 Canada-Israel Free Trade Agreement
Key facts
- The original Canada-Israel Free Trade Agreement came into effect over 25 years ago, on January 1, 1997.
- Two-way merchandise trade between Canada and Israel was valued at nearly $1.8 billion in 2021. Two-way services trade was valued at $412 million in 2020.
- In 2021, Canadian agricultural and agrifood exports were valued at $193 million, over triple the amount in 2019.
- Science and technology are significant drivers of the Israeli economy.
News
Modernized CIFTA: Benefits for Canada
Advantages of the modernized Canada-Israel Free Trade Agreement for Canada.
Canada-Israel Free Trade Agreement: Frequently asked questions
Why is the Canada-Israel Free Trade Agreement (CIFTA) important to Canada?
- Canada is a trading nation. Canadians’ standard of living depends on robust international trade as a key driver of economic growth for a prosperous middle class.
- Israel, with a GDP of $539 billion, is an important economic player in the Middle East and offers a range of opportunities for Canadians and Canadian businesses, including in trade, investment, science, technology and innovation.
- Since CIFTA came into force in 1997, Canada-Israel merchandise trade has more than tripled, reaching a value of nearly $1.8 billion in 2021. Two-way services trade was valued at $412 million in 2020.
Why modernize CIFTA?
- The original CIFTA was a goods-only agreement that eliminated tariffs on all industrial products and some agricultural, fish and seafood products.
- Canada and Israel agreed to modernize CIFTA by updating existing chapters and adding new elements. This makes CIFTA a 21st-century agreement by reducing technical barriers to trade, enhancing cooperation, increasing transparency in regulatory matters, reducing red tape for business and adding inclusive trade elements that seek to ensure the benefit and opportunities that flow from trade are more widely shared.
- Through the modernized CIFTA, Canada and Israel are creating the right conditions for trade in their modern and knowledge-based economies.
- Since CIFTA came into force over two decades ago, two-way merchandise trade between Canada and Israel has more than tripled, reaching a value of nearly $1.8 billion in 2021. Two-way services trade was valued at $412 million in 2020. There is room to grow and deepen the commercial relationship.
- A modernized Canada-Israel FTA enables our companies to take greater advantage of expanded market access; creates more favourable conditions for exporters through important non-tariff commitments; and establishes mechanisms under which Canada and Israel can cooperate to address and seek to resolve unjustified non-tariff barriers that may arise.
- Finally, the modernized Agreement helps to further strengthen Canada’s support for Israel, as it works toward securing its future as a stable, democratic and prosperous country.
What are the benefits of the modernized CIFTA?
- The modernized CIFTA includes additional chapters and provisions to help Canadian businesses succeed in the Israeli market. The benefits of the modernized CIFTA include:
- provisions that address non-tariff barriers and establish mechanisms to allow Canada and Israel to discuss, prevent and resolve unjustified non-tariff barriers that may arise;
- enhanced border efficiencies, increased regulatory transparency and reduced red tape;
- new and improved market access for virtually 100% (up from 90%) of Canadian exports of agricultural, agri-food, fish and seafood products to Israel;
- a more level playing field for Canadian exporters competing with those from other countries, such as the United States and the European Union, and;
- support for Canada’s inclusive trade approach in areas such as trade and gender , small and medium-sized enterprises (SMEs) and responsible business conduct.
What is the relationship between the existing CIFTA (1997) and the modernized Agreement?
- The modernization and expansion of CIFTA was done through an Amending Agreement, which replaces the entire 1997 CIFTA text with the expanded and modernized CIFTA text.
What are the market access outcomes in the modernized CIFTA?
- Canada negotiated the reduction or elimination of a number of Israeli tariffs on agricultural, fish and seafood products that are of export interest to Canadian stakeholders.
Agriculture – a key export interest for Canada. Since entry into force, 92% of Canadian exports enter Israel duty free in unlimited quantities, up from 83%. In 2021, Canadian agricultural and agrifood exports were valued at $193 million, over triple the amount in 2019.
- Immediate duty-free treatment for:
- Dog and cat food (previous tariff of 4%);
- Soy beverages (previous tariff of 6%);
- Baked goods including bread, pastries and biscuits (previous tariff of up to 8%); and
- Sweetened and dried cranberries (previous tariff of 12%).
- Volume-limited duty-free access under new or expanded Tariff Rate Quotas (TRQs):
- Apples – new TRQ of 900 metric tonnes (MT) (over-quota tariff of $0.63/kg);
- Chickpeas – expansion of TRQ from 100MT to 400MT (over-quota tariff of $0.36/kg);
- Wines, including ice wines – new TRQ of 60,000 litres (over-quota tariff of 12% plus $0.46/litre); and
- Frozen processed potatoes, including frozen French fries – expansion of TRQ from 50MT to 100MT (over-quota tariff of 50%).
- Israel also provides preferential tariff rates for other goods, such as:
- Canola oil (reduction of 40% from previous 8% tariff);
- Shelled beans (reduction of 50% from previous 12% tariff); and
- Turkey hatching eggs (reduction of 50% from previous $1.14/unit tariff).
Fish and Seafood – Under the modernized CIFTA, 98% of exports enter Israel duty free in unlimited quantities, up from 90%.
- Shrimp (previous MFN tariff of 26% tariff; duty-free TRQ of 150MT and an over-quota rate reduction of 25%).
How does the modernized CIFTA align with Canada’s inclusive trade agenda?
- The modernized CIFTA is more than just an ambitious free-trade agreement: it is the product of bilateral cooperation that prioritizes inclusive trade.
- An inclusive approach to trade is integral to Canada’s trade policy and is being advanced in all of Canada’s new free trade agreements. Everyone benefits when more Canadians are able to participate in the global economy.
- CIFTA’s modernization provided an opportunity for Canada to add inclusive trade provisions, such as:
- trade and the environment, to ensure that both countries pursue high levels of environmental protection while realizing the benefits of liberalized trade
- trade and labour, to commit the two parties to effectively enforcing their labour laws, which must, in turn, embody and provide protection for internationally recognized labour rights and principles, with recourse to an enforceable binding dispute-settlement mechanism
- trade and gender, to acknowledge the importance of incorporating a gender perspective into economic and trade issues and to ensure that economic growth benefits everyone. The trade and gender chapter establishes a dedicated committee to facilitate activities to help women more fully benefit from the opportunities created by the Agreement
- small and medium-sized enterprises (SMEs), to include general provisions on the importance of SMEs to Canada’s and Israel’s economies, to facilitate cooperation activities and information-sharing, and to establish an SME committee to perform accountability, transparency, and advisory functions
- new responsible business conduct provisions, including a commitment to encourage the use of voluntary responsible business conduct standards with specific reference to the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises
Modernized Canada-Israel Free Trade Agreement: Benefits for Canada
As one of Canada’s long-standing trading partners, Israel represents an important market for Canadian goods and services. Through the modernized Canada-Israel Free Trade Agreement (CIFTA), Canada and Israel are creating the right conditions for increased trade and new opportunities to further expand the Canada-Israel economic partnership.
Summary
- The modernized CIFTA includes new, inclusive trade elements that are highlighted in four updated chapters and nine new chapters.
- The modernized CIFTA increases market access by further reducing tariffs on Canadian exports to the Israeli market, providing new and improved market access for virtually 100% of Canadian exports of agricultural, agri-food and fish and seafood products.
- It also improves the ways in which Canadians do business in Israel by enhancing border efficiencies, increasing regulatory transparency and reducing red tape.
- The modernized CIFTA and also includes updates to the dispute settlement mechanism, goods market access, rules of origin, institutional provisions to enhance transparency and rules of origin chapters.
Modernization overview and chapters
Through two phases of negotiations between 2014 and 2018, Canada and Israel updated four existing chapters in the Agreement and added nine new chapters. The modernized CIFTA also adds a provision on corporate social responsibility. The modernized CIFTA is more than just an ambitious trade agreement; it is the product of bilateral cooperation to expand the Agreement to include an inclusive approach to trade, which seeks to ensure that Canadians more broadly share the benefits and opportunities that flow from trade and investment.
Updated chapters:
- Goods market access: Provides new and improved commercially meaningful market access through the reduction or elimination of additional Israeli tariffs on agriculture, fish and seafood products that are of export interest to Canadian stakeholders.
- Rules of origin: Recognizes the presence of global value chains and the integrated nature of North American production and streamlines the provisions for obtaining preferential tariff treatment.
- Dispute settlement: Improves the efficiency, effectiveness and transparency of the dispute settlement mechanism allowing Canada and Israel to cooperate in addressing and seeking to resolve unjustified non-tariff barriers.
- Institutional provisions: Provides a more detailed and robust institutional structure for administration of the Agreement and to enhance transparency.
New chapters:
- Electronic commerce: Commits Canada and Israel to refrain from introducing tariff and other barriers to electronic commerce.
- Intellectual property (IP): Affirms the commitments of Canada and Israel under the World Trade Organization to ensure protection for IP rights, including commitments to facilitate cooperation between Canada and Israel to combat IP rights infringement and explores ways to expedite the examination of patent applications. The IP chapter includes provisions on cooperation on IP rights enforcement between both Canada and Israel, as well as a consultation mechanism to aid in bilateral IP-related matters.
- Sanitary and phytosanitary measures (SPS): Includes provisions to promote bilateral cooperation and transparency on SPS-related issues. Ensuring early and effective cooperation on issues related to food safety, animal, and plant health will help strengthen the protection of Canada’s environment and food supply, while avoiding unjustified barriers to trade.
- Technical barriers to trade: Ensures that technical regulation, conformity assessment procedures, and other standards-related measures cannot be used as unjustified barriers to trade. The chapter will help Canadian exporters by creating a mechanism to minimize, and seek to resolve, the negative impacts of discriminatory or overly burdensome regulatory requirements.
- Trade and environment: Ensures that both Canada and Israel pursue high levels of environmental protection while realizing the benefit of liberalized trade, with recourse to dispute settlement mechanisms.
- Trade and labour: Ensures effective enforcement of labour law that should in turn embody and provide protection for international labour standards, with recourse to an enforceable binding dispute settlement mechanism.
- Trade facilitation: Enhances border efficiencies, increases regulatory transparency, and reduces red tape for Canadian businesses.
- Trade and gender: This chapter acknowledges the importance of incorporating a gender perspective into economic and trade issues to ensure that economic growth benefits everyone. The chapter provides a framework for Canada and Israel to cooperate on issues related to trade and gender. It establishes a bilateral committee to perform accountability, transparency, and advisory functions, and coordinate and facilitate cooperation activities.
- Trade and small and medium enterprises (SMEs): This chapter includes general provisions that recognize the importance of SMEs to the economies of Canada and Israel, which facilitates cooperation activities and information sharing including a dedicated SME website. It also establishes an SME committee to perform accountability, transparency, and advisory functions, and coordinate and facilitate cooperation activities.
- Responsible Business Conduct: These provisions, found in the Other Provisions chapter, include a commitment to encourage the use of voluntary responsible business conduct standards with specific reference to the Organisation for Economic Co-operation and Development Guidelines for Multi-National Enterprises.
Canada-Israel Free Trade Agreement: Backgrounder
What is the Canada-Israel Free Trade Agreement?
The Canada-Israel Free Trade Agreement (CIFTA) entered into force on January 1, 1997, eliminating tariffs on all industrial products manufactured in Canada and Israel, as well as on a limited number of agricultural and fisheries products.
Between 1999 and 2003, additional agricultural and agri-food tariff reductions on goods previously excluded from the Agreement were negotiated. The additions included better market access for a number of Canada's top agricultural and agri-food exports to Israel.
On October 10, 2010, Canada and Israel announced they would begin discussions to revise the existing CIFTA. Officials started exploratory talks to move beyond the original, first-generation trade Agreement by expanding its scope and liberalize tariffs on a number of additional agriculture and fish and seafood products.
On January 21, 2014, the Canadian and Israeli prime ministers announced the launch of negotiations to expand and modernize CIFTA. Canadian industry and other stakeholders were consulted before and during the modernization negotiations.
In 2017, Canada and Israel agreed to a further expansion of CIFTA to include new chapters on Trade and Gender and Small and Medium-sized Enterprises (SMEs), as well as new inclusive trade provisions on responsible business conduct.
- The chapters on trade and gender and on SMEs provide a framework for Canada and Israel to work together on ways to increase the participation of women and SMEs in trade and investment. Each chapter establishes a bilateral committee to oversee activities.
- The Responsible Business Conduct article affirms the two countries’ commitment to encourage the use of voluntary responsible business conduct standards by enterprises, with specific reference to the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises.
On May 28, 2018, Francois-Philippe Champagne, Canada’s Minister of International Trade, and Eli Cohen, Israel’s Minister of the Economy and Trade, met in Montréal, Quebec, to sign the Protocol Amending the Canada-Israel Free Trade Agreement, which includes the 2015 and 2018 chapters.
On September 1, 2019, the modernized CIFTA entered into force for Canada and Israel.
Since CIFTA first came into effect over two decades ago, Canada’s two-way merchandise with Israel has more than tripled and was valued at nearly $1.8 billion in 2021.
Canada’s achievements
As part of the modernized CIFTA, updates were made to four existing chapters:
- market access for goods
- rules of origin
- dispute settlement
- institutional provisions
Nine new chapters and a provision were added that deal with new and ongoing trade elements and issues:
- e-commerce
- intellectual property
- labour
- sanitary and phytosanitary measures
- technical barriers to trade
- the environment
- trade facilitation
- trade and gender
- small- and medium-sized enterprises
- article on responsible business conduct
The addition of inclusive trade elements signals a commitment from both Canada and Israel to create the right conditions for trade in their modern, knowledge-based economies. Some of the chapters, including those on gender, labour and environment, are firsts for Israel in a free trade agreement; they are in line with recent agreements signed by Canada.
The modernized CIFTA also benefits Canadian companies by:
- reducing or eliminating tariffs on agricultural, agri-food and fish and seafood products;
- helping to increase market access for businesses of all sizes;
- reducing technical barriers to trade;
- enhancing cooperation;
- increasing transparency in regulatory matters;
- reducing transaction costs; and
- further enhancing Canada’s visibility in the Israeli market.
Canada-Israel Free Trade Agreement: Timeline
September 2019
The modernized Canada-Israel Free Trade Agreement enters into force on September 1, 2019.
May 2019
On May 27, 2019, Canada’s implementing legislation for the modernized CIFTA (Bill C-85) receives royal assent.
October 2018
The Minister of International Trade Diversification, Jim Carr, introduces Bill C 85, An Act to amend the Canada-Israel Free Trade Agreement Implementation Act and to make related amendments to other Acts, in the House of Commons on October 23, 2018, after having completed its 21-sitting-day period.
June 2018
Under the Policy on Tabling of Treaties in Parliament, on June 20, 2018, the Parliamentary Secretary of International Trade tables the modernized Canada-Israel Free Trade Agreement (CIFTA) treaty, with all binding side instruments, in the House of Commons for 21 consecutive sitting days.
May 2018
François-Philippe Champagne, Canada’s Minister of International Trade, and Eli Cohen, Israel’s Minister of the Economy and Industry, meet in Montréal, Quebec, to sign the Protocol Amending the Canada-Israel Free Trade Agreement (CIFTA).
June 2017
Cabinet authorizes the signature, implementation and ratification of the 2015 and 2017 amendments.
2017
Canada and Israel agree to a further expansion of CIFTA to include new chapters on Trade and Gender and Small and Medium-sized Enterprises (SMEs), as well as new inclusive trade provisions on responsible business conduct and new labour and environmental protections.
July 2015
Canada and Israel announce the conclusion of the modernized CIFTA. Amendments to the 1997 Agreement include four updated chapters (Dispute Settlement, Goods Market Access, Governance, and Rules of Origin) and seven new ones (E-commerce, Environment, Intellectual Property, Labour, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, and Trade Facilitation).
January 2014
The prime ministers of Canada and Israel announce the launch of negotiations to modernized CIFTA.
October 2011
The Government of Canada begins consultations with Canadians on an expanded and modernized CIFTA.
1999 to 2003
Canada and Israel negotiate and implement reduction and elimination of tariffs on products previously excluded from CIFTA. This results in a reduction of tariffs on many of Canada's top agricultural and agri-food exports to Israel.
January 1997
The Canada-Israel Free Trade Agreement, a goods-only agreement, enters into force on January 1, 1997, eliminating tariffs on all industrial products manufactured in Canada and Israel.
Contact Point
Canada’s Free Trade Agreement Secretariat
Global Affairs Canada
John G. Diefenbaker Building
111 Sussex Drive, Ottawa, ON K1N 5A1
Email: consultations@international.gc.ca
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