THE CANADA-EUROPEAN UNION COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA): PRACTICAL CONSIDERATIONS FOR THE TEMPORARY FOREIGN WORKER’S JOURNEY TO PERMANENT RESIDENCY IN CANADA

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) has been provisionally applied since September 21, 2017. The purpose of CETA is to create jobs and strengthen Canada’s economic relations with the European Union (EU) member states, which encompasses 28 countries constituting the world’s second largest market.[1]

CETA offers employers the opportunity to hire foreign nationals from the 28 member states pursuant to two different categories of Labour Market Impact Assessment (LMIA)-exempt employer-specific work permits:

1. Key personnel, this category consists of two sub-categories:
   1. Intra-corporate transferees
   2. Investors
2. Contractual service suppliers and independent professionals

In my experience, contractual service suppliers and independent professionals are the most utilized. This category allows Canadian companies to contract directly with professional individuals who are citizens of EU member nations or with the individual’s EU employer, where the following requirements are met:

• Candidate holds a University degree or a qualification demonstrating knowledge of an equivalent level.
• Candidate has a minimum number of years of professional experience in the sector of activity which is the subject of the contract. For independent professionals, the requirement is six years. For contractual service suppliers, the requirement is three years.
• The terms of the assignment fall under a sector listed in Annex 10-E of CETA, and the profession fits into an accompanying National Occupational Classification (NOC) Code listed on IRCC’s website.

The maximum duration of an initial work permit issued pursuant to this category of CETA is twelve months, with the possibility to extend the permit for an additional twelve months at the discretion of Immigration, Refugees and Citizenship Canada (IRCC). This limitation on duration, along with the purposeful definitions of independent professionals and contractual service suppliers, speaks to the intention of the agreement to facilitate a very temporary supply of services. Paraphrased, CETA’s definitions are as follows:

• contractual services suppliers are defined as persons who are employed by an enterprise of an EU member nation, which has no established entity in Canada, and the EU-based enterprise has entered into a contract for that person to provide a consumer in Canada with a service on a temporary basis
• independent professionals are defined as persons who are established as self-employed in an EU member nation, with no establishment in Canada, and have entered into a contract to provide a consumer in Canada with a service on a temporary basis

CETA is different from other Free Trade Agreements (FTAs) with respect to how the relationship between the worker and the company in Canada is structured. Whereas other FTAs recognize an employee/employer relationship being established between the worker and the company, CETA treats all workers as contractors, or self-employed persons.

This difference can have significant practical consequences for workers who wish to remain in Canada on a permanent basis. For example, if a foreign worker seeks to pursue an application for permanent residency under Canada’s Express Entry System,  first they must confirm their eligibility under one of the following programs:

1. Canadian Experience Class (CEC) – based on at least one year of high skill full-time recognized work experience in Canada in the last three years and a high score on an approved English or French language test.
2. Federal Skilled Worker (FSW) – a variety of factors including: age, work experience, education, language scores, and adaptability are considered and points are given. The candidate must have at least 67 points and at least one year of high skill full-time work experience in the last ten years in Canada or outside Canada and a high score on an approved English or French language test.

Once the candidate has verified that they meet the requirements of one of these programs, they can create a candidate profile online under the Express Entry system. Based on the information in the profile, candidates are ranked against other candidates on the basis of points which are assigned pursuant to a Comprehensive Ranking System (CRS). Immigration, Refugees, and Citizenship Canada (IRCC) intermittently issues invitations to top ranking candidates to apply for permanent residence.

A professional who works in Canada pursuant to an LMIA-exempt work permit issued under the Canada-United States Mexico Agreement (CUSMA) free trade agreement for example, or pursuant to an LMIA-based work permit, may use that work experience to qualify for CEC and to claim CRS points under the Express Entry system. By comparison, a professional who has only worked in Canada pusuant to a CETA-based work permit will not qualify under the CEC program, and may only pursue permanent residencey under FSW. This is because a CETA-based worker’s Canadian work experience, which is considered self-employment, is not recognized as qualifying work experience under CEC and is recognized on a limited basis by the Express Entry CRS points ranking system. It can be very difficult to qualify as Express Entry selects top ranking candidates based on CRS points, putting candidates with qualifying Canadian work experience and the corresponding extra points at an advantage. It should also be noted that IRCC has not issued any invitations to apply for permanent residency under FSW since December 2020.

Some Canadian companies may have the intention of filling a position with a foreign national for longer than the 24-month duration that CETA allows, but in the short term, may choose to obtain a CETA-based work permit if that is the only LMIA-exempt option available. Not only can a CETA-based work permit be obtained more expeditiously than obtaining an LMIA and subsequent work permit, but it also costs the company less in government processing fees (a fee of CAD $230 is needed compared the CAD $1000 fee for an LMIA).

The bottom line, workers who hold CETA-based work permits would be wise to start exploring the possibility of an LMIA with the Canadian company as soon as possible if they wish to extend their time in Canada, and especially if they wish to seek permanent residency in Canada.

For more information on the the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) please contact  alexandrac@gands.com

[1] “Canada-European Union Comprehensive Economic and Trade Agreement” (16 September 2017), online: Government of Canada http://gazette.gc.ca/rp-pr-p1/2017/2017-09-16/html/sup1-eng.html.