Vol. 145, No. 14 — July 6, 2011
Registration
SOR/2011-131 June 23, 2011
CUSTOMS TARIFF
ARCHIVED — CCOFTA Rules of Origin Regulations
P.C. 2011-733 June 23, 2011
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 16(2) (see footnote a) of the Customs Tariff (see footnote b), hereby makes the annexed CCOFTA Rules of Origin Regulations.
CCOFTA RULES OF ORIGIN REGULATIONS
RULES OF ORIGIN
1. The following provisions of the Free Trade Agreement between Canada and the Republic of Colombia, signed on November 21, 2008, have the force of law in Canada:
- (a) Articles 301 to 305;
- (b) Paragraphs 1 and 2 of article 306;
- (c) Articles 307 to 315;
- (d) Article 318; and
- (e) Annex 301.
COMING INTO FORCE
2. These Regulations come into force on the day on which section 30 of the Canada–Colombia Free Trade Agreement Implementation Act, chapter 4 of the Statutes of Canada, 2010, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the regulations.)
Executive summary
Issue: The Canada-Colombia Free Trade Agreement (CCOFTA) was signed on November 21, 2008, and the Canada-Colombia Free Trade Agreement Implementation Act (the Act) received Royal Assent on June 29, 2010. Regulations are also necessary to fully implement the CCOFTA in Canada.
Description: These regulations are required to fully implement Canada’s obligations under the CCOFTA. They link the preferential tariff treatment provided for under the CCOFTA, and implemented in the Customs Tariff by the Act, with the rules of origin necessary to determine whether goods qualify for that preferential tariff treatment.
Cost-benefit statement: Based on current trading patterns, it is estimated that, under the CCOFTA, the annual duties foregone by the Government of Canada when the CCOFTA is fully implemented will be approximately $9.1 million. These duties foregone represent a benefit, in the form of lower customs duties paid by Canadian importers of Colombia-originating products. The CCOFTA will provide Canadian exporters with increased access to the Colombian market.
Business and consumer impacts: The CCOFTA is expected to result in increased trade flows between Canada and Colombia. Removal of tariffs in Canada will lower costs to Canadian importers.
Domestic and international coordination and cooperation: These regulations contribute to the implementation of the CCOFTA in Canada.
Issue
The Canada-Colombia Free Trade Agreement (CCOFTA) was signed on November 21, 2008, and the Canada-Colombia Free Trade Agreement Implementation Act (the Act) received Royal Assent on June 29, 2010. Regulations are also necessary to fully implement the CCOFTA in Canada.
Objectives
When implementing free trade agreements in Canada, an Act and associated regulations implement commitments into the Canadian legal framework. Accordingly, these regulations are required to fully implement Canada’s obligations under the CCOFTA.
Description
The CCOFTA Rules of Origin Regulations implement, in Canada, the rules of origin negotiated by Canada and Colombia, which will be used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment under the CCOFTA. Preferential tariff treatment under the CCOFTA, which reflects the actual reduction in specific rates of duty, has been implemented in the Customs Tariff through the Act.
The CCOFTA Rules of Origin for Casual Goods Regulations establish the conditions under which goods acquired in Colombia by travellers are considered originating and therefore entitled to preferential tariff treatment. When travellers acquire goods in Colombia and goods are either marked made in Colombia, or not marked to the contrary, the traveller can claim the Colombia tariff preference on importation of the goods into Canada.
The CCOFTA Tariff Preference Regulations allow eligible goods that are not shipped directly between Colombia and Canada to retain their eligibility for preferential tariff rates, provided goods remain under customs control in third countries.
Regulatory and non-regulatory options considered
These regulations, pursuant to subsection 16(2) of the Customs Tariff, are necessary to fulfill Canada’s obligations under CCOFTA. There are no other practical alternatives.
Benefits and costs
Colombia is a dynamic emerging market with 44 million people and an economy with high growth potential. Canada’s merchandise trade with Colombia has expanded significantly in the past several years, with two-way trade amounting to $1.4 billion in 2010. The value of Canadian exports to Colombia was $643.8 million for 2010, while imports totalled $717.4 million in 2010. Major Canadian exports to Colombia include wheat, leguminous vegetables (e.g. lentils, peas), newsprint, off-road dump trucks, gas turbines, barley, copper wire and potassium chloride. Major imports from Colombia consist of coal, coffee, oil, bananas, flowers and sugar.
Based on current trading patterns, it is estimated that, under the CCOFTA, the annual duties foregone by the Government of Canada when the CCOFTA is fully implemented will be approximately $9.1 million. These duties foregone represent a benefit in the form of lower customs duties paid by Canadian importers of Colombia-originating products. With the removal of tariffs in Canada, increased imports from Colombia could be expected, thus leading to enhanced customs duty savings for Canadian importers. Moreover, the removal of tariffs in the Colombian market should help Canadian exporters further penetrate those markets, leading to increased exports. The reduction of Colombian tariffs on Canadian goods would help make Canadian exporters more competitive in a range of sectors, such as mining and hydroelectric transmission equipment, machinery and equipment, agriculture and agri-food products.
Rationale
These regulations are necessary to fully implement Canada’s commitments under the CCOFTA. More specifically, the regulations link the preferential tariff treatment provided for under the CCOFTA, and implemented in the Customs Tariff by the Act, with the rules of origin necessary to determine whether goods qualify for that preferential tariff treatment.
Canada has already implemented similar regulations for purposes of its other bilateral and regional free trade agreements (FTAs), including the North American Free Trade Agreement, the Canada-Chile FTA, the Canada-Israel FTA, the Canada-Costa Rica FTA, the Canada-European Free Trade Association FTA and the Canada-Peru FTA.
Consultation
In August 2002, the Government of Canada announced exploratory discussions with the Andean countries and, on June 7, 2007, announced the launch of free trade negotiations with Colombia. Canadian manufacturers, importers and exporters were consulted extensively and kept informed of developments throughout the negotiations, including on issues concerning rules of origin. The CCOFTA was signed on November 21, 2008, and is supported by a broad cross-section of Canadian stakeholders.
Implementation, enforcement and service standards
The Canada Border Services Agency (CBSA) will monitor compliance with the terms and conditions of these regulations in the normal course of its administration of customs and tariff-related legislation and regulations. As in the case of previous free trade agreements, the CBSA will update its systems to account for the implementation in Canada of the CCOFTA and will inform importers of all relevant CCOFTA-related issues pertaining to these regulations.
Contact
Colleen Brock
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Telephone: 613-996-5470
Footnote a
S.C. 2001, c. 28, s. 34(1)
Footnote b
S.C. 1997, c. 36