EXTRA Vol. 151, No. 1

Canada Gazette

Part Ⅱ

OTTAWA, THURSDAY, SEPTEMBER 7, 2017

Registration

SOR/2017-172 September 1, 2017

EXPORT AND IMPORT PERMITS ACT

Order Amending the Export Control List

P.C. 2017-1121 August 31, 2017

Whereas the Governor in Council deems it necessary to implement an intergovernmental arrangement or commitment and to ensure the orderly export marketing of any goods that are subject to a limitation imposed by any country or customs territory on the quantity of the goods that, on importation into that country or customs territory in any given period, is eligible for the benefit provided for goods imported within that limitation;

And whereas the Governor in Council is satisfied that it is advisable to collect information with respect to the exportation of any goods in respect of which a specified quantity is eligible each year for the rate of duty provided for in the schedules in Annex 2-A of CETA, in accordance with Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to paragraphs 3(1)(d) and (f) (see footnote a), subsection 5.2(1) (see footnote b) and section 6 (see footnote c) of the Export and Import Permits Act (see footnote d), makes the annexed Order Amending the Export Control List.

Order Amending the Export Control List

Amendment

1 Group 5 of the schedule to the Export Control List (see footnote 1) is amended by adding the following after item 5204:

High-Sugar-containing Products

5205 High-sugar-containing products classified under subheadings ex 1302.20, ex 1806.10, ex 1806.20, ex 2101.12, ex 2101.20 and ex 2106.90 of Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA (Annex 5-A), containing 65 percent or more by net weight of added cane or beet sugar classified under subheadings 1701.91 to 1701.99 of Annex 5-A, for export to an EU country or other CETA beneficiary that

  • (a) originate in Canada and comply with the product description and sufficient production criteria referred to in Table A.1 of Annex 5-A;
  • (b) contain cane or beet sugar that has been refined exclusively in Canada;
  • (c) are not included in another item in this List; and
  • (d) are eligible for tariff elimination in accordance with the schedules in Annex 2-A of CETA.
Sugar Confectionery and Chocolate Preparations

5206 Sugar confectionery and chocolate preparations classified under headings and subheadings 17.04, 1806.31, 1806.32 and 1806.90 of Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA (Annex 5-A) for export to an EU country or other CETA beneficiary that

  • (a) originate in Canada and comply with the product description and sufficient production criteria referred to in Table A.2 of Annex 5-A;
  • (b) are not included in another item in this List; and
  • (c) are eligible for tariff elimination in accordance with the schedules in Annex 2-A of CETA.
Processed Foods

5207 Processed foods classified under headings and subheadings 19.01, ex 1902.11, ex 1902.19, ex 1902.20, ex 1902.30, 1904.10, 1904.20, 1904.90, 19.05, 2009.81, ex 2009.89, 2103.90, ex 2106.10 and ex 2106.90 of Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA (Annex 5-A) for export to an EU country or other CETA beneficiary that

  • (a) originate in Canada and comply with the product description and sufficient production criteria referred to in Table A.3 of Annex 5-A;
  • (b) are not included in another item in this List; and
  • (c) are eligible for tariff elimination in accordance with the schedules in Annex 2-A of CETA.
Dog and Cat Food

5208 Dog and cat food classified under subheadings 2309.10 and ex 2309.90 of Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA (Annex 5-A) for export to an EU country or other CETA beneficiary that

  • (a) originates in Canada and complies with the product description and sufficient production criteria referred to in Table A.4 of Annex 5-A;
  • (b) is not included in another item in this List; and
  • (c) is eligible for tariff elimination in accordance with the schedules in Annex 2-A of CETA.

Apparel Goods

5209 Apparel goods classified under headings and subheadings 6102.30, 61.04, 6108.92, 61.14, 62.01 and 62.05 of Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA (Annex 5-A) for export to an EU country or other CETA beneficiary that

  • (a) originate in Canada and comply with the product description and sufficient production criteria referred to in Table C.2 of Annex 5-A;
  • (b) are not included in another item in this List; and
  • (c) are eligible for tariff elimination in accordance with the schedules in Annex 2-A of CETA.

Vehicles

5210 Vehicles classified under subheadings 8703.21, 8703.22, 8703.23, 8703.24, 8703.31, 8703.32, 8703.33, 8703.80 and 8703.90 of the Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, made by the European Union, for export to an EU country or other CETA beneficiary that

  • (a) originate in Canada and comply with the product description and sufficient production criteria referred to in Table D.1 of Annex 5-A to Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA;
  • (b) are not included in another item in this List; and
  • (c) are eligible for tariff elimination in accordance with the schedules in Annex 2-A of CETA.

Coming into Force

2 This Order comes into force on the day on which section 18 of the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, chapter 6 of the Statutes of Canada, 2017, comes into force, but if it is registered after that day, it comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

In accordance with paragraphs 3(1)(d) and (f) of the Export and Import Permits Act (EIPA), the Governor in Council may include any article on the Export Control List (ECL) which it deems necessary to control for the purposes of implementing an intergovernmental arrangement or commitment; or ensuring the orderly export marketing of goods that are subject to a limitation imposed by any country or customs territory on the quantity of the goods that, on importation into that country or customs territory in any given period, are eligible for the benefit provided for goods imported within that limitation. Section 6 of the EIPA provides the Governor in Council with the authority to amend the ECL and subsection 7(1) and section 8.31 of the EIPA provide the Minister of Foreign Affairs with the ability to issue export permits for goods that have been added to the ECL pursuant to paragraphs 3(1)(d) and (f).

In order for Canada to implement and administer its international commitments under the Comprehensive Economic and Trade Agreement (CETA) with the European Union (EU), the ECL will need to be amended to include certain export Origin Quota goods found in Annex 5-A (Origin Quotas and Alternatives to the Product-Specific Rules of Origin) of Annex 5 (Product Specific Rules of Origin) to the Protocol on Rules of Origin and Origin Procedures of the CETA.

The following goods will be added to the ECL effective upon CETA’s provisional application so as to ensure Canada’s compliance with its commitments under the agreement: (1) High-Sugar-containing Products; (2) Sugar Confectionary and Chocolate Preparations; (3) Processed Foods; (4) Dog and Cat Food; (5) Apparel Goods; and (6) Vehicles.

The specific goods to be added to the ECL are listed in Tables A.1 (Annual Quota Allocation for High-Sugar-containing Products Exported from Canada to the European Union), A.2 (Annual Quota Allocation for Sugar Confectionary and Chocolate Preparations Exported from Canada to the European Union), A.3 (Annual Quota Allocation for Processed Foods Exported from Canada to the European Union), A.4 (Annual Quota Allocation for Dog and Cat Food Exported from Canada to the European Union), D.1 (Annual Quota Allocation for Vehicles Exported from Canada to the European Union) and six tariff lines in Table C.2 (Annual Quota Allocation for Apparel Exported from Canada to the European Union) of Annex 5-A of CETA.

Background

The benefits of CETA will be broad, including tariff reduction and elimination commitments, and comprehensive provisions with respect to investment and cross-border trade in services, government procurement, and financial services.

A key objective of CETA is to eliminate trade barriers between Canada and the EU on most goods, from maple syrup to salmon (from Canada). Upon CETA’s provisional application, Canadian producers, manufacturers, exporters, importers, and consumers will benefit from the phased reduction or immediate elimination of tariffs on “originating” goods as per the tariff elimination schedule found in Annex 2-A (Tariff Elimination) of CETA. Additional quantities of goods will qualify for preferential tariff treatment through the Origin Quotas established in Annex 5-A (Origin Quotas and Alternatives to the Product-Specific Rules of Origin) of Annex 5 (Product Specific Rules of Origin) to the Protocol on Rules of Origin and Origin Procedures of CETA.

CETA’s “rules of origin” establish the minimum amounts of Canadian and EU content that products must contain to qualify for the CETA preferential tariff indicated in Annex 2-A (Tariff Elimination) upon import into the applicable Party, e.g. 55% Canada-EU content for vehicles from Canada into the EU. “Originating” goods are those goods that meet the applicable rules of origin found in Annex 5 of the Protocol on Rules of Origin and Origin Procedures of CETA. There are no quantitative limits on the trade of these goods.

Goods that do not meet the rules of origin found in Annex 5 may still be eligible to enter the EU market at preferential tariff rates if they qualify under the more flexible “alternative” rules of origin contained in Annex 5-A of Annex 5 to the Protocol on rules of origin and origin procedures of CETA (e.g. 30% Canada-EU content for vehicles from Canada to the EU). Prescribed annual quantities of goods, called “Origin Quotas,” which meet the alternative rules of origin, may be imported into the EU at the same preferential tariff rate available for the equivalent “originating” goods (e.g. 100 000 vehicles from Canada to the EU per year). Tables A.1, A.2, A.3, A.4, B.1, C.1, C.2, and D.1 (described above) of Annex 5-A (Origin Quotas and Alternatives to the Product-Specific Rules of Origin in Annex 5) specify goods that are eligible to be exported to the EU market at preferential tariff rates through Origin Quotas, the annual quantities, the units of measurement, and the alternative rules of origin the goods must meet to qualify for preferential tariff treatment.

Permits will be used to monitor the utilization levels of the export Origin Quotas in order to ensure that all Origin Quota exports are accounted for against the annual negotiated quantity of goods eligible for preferential tariff access in the EU. The Minister of Foreign Affairs may issue export permits only for goods that have been added to the ECL. Export Origin Quota transactions will also be properly documented to address any discrepancies between Canada’s export Origin Quota utilization data and that of the EU. Such a discrepancy could give rise to a dispute regarding whether a Growth Provision contained in Annex 5-A has been met and whether a Party is therefore obligated to increase the annual level of a quota. Growth Provisions describe the conditions that would trigger an increase in quota volumes, e.g. if Canadian exports of High-Sugar-containing Products reach 60% or above of the annual quota during any one year in the first five years following provisional application then the quota amount will increase by 20% for the next five-year period.

Objectives

Governor in Council authority is required to add certain CETA export Origin Quota-eligible goods to the ECL to enable the Government of Canada to establish export permit requirements for these goods. An export permit requirement will enable the orderly export marketing of eligible goods subject to the quantitative limitation that, on importation, will be eligible for the benefit provided for by CETA. Canada cannot administer the export Origin Quotas using permits or monitor their utilization levels unless the ECL is amended to include these goods. The goods must be added to the ECL by the date of CETA’s provisional application.

Description

The Order will add certain CETA export Origin Quota-eligible goods to the ECL in order for the Minister to administer them through the issuance of export permits. The goods must be added to the ECL effective as of CETA’s provisional application. Canada cannot issue export permits for goods that are not on the ECL.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this Order, as there is no significant change in administrative costs to business.

Small business lens

The small business lens does not apply to this Order, as there are no significant costs to small business.

Consultation

During negotiations, officials undertook consultations with producers, industry associations, the provinces and territories, and other interested parties. Canadian industry associations and companies supported and helped develop Canada’s position prior to undertaking commitments on CETA export Origin Quotas, recognizing that CETA will provide Canadian companies with important market access at a preferential tariff rate.

During subsequent broad-based public engagement on the administration of the Origin Quotas, stakeholders indicated that the issuance of permits for certain goods would provide certainty that their exports would receive Origin Quota preferential tariff treatment upon arrival in the EU. Stakeholders also indicated a desire for Canadian export data on the utilization of certain Origin Quotas to inform the application of Growth Provisions as well as to inform possible future quota allocation decisions for certain goods. Based on this stakeholder input, the Department is seeking to add certain export Origin Quota goods to the ECL.

Canada Gazette prepublication

This Order was published in the Canada Gazette, Part I, on July 15, 2017, followed by a 15-day comment period. Global Affairs Canada received one comment on the regulations, which noted that, subject to the implementation of an appropriate mechanism to allocate and administer vehicle quotas, the respondent did not have concerns with the proposed regulations.

Rationale

In order to issue an export permit for certain CETA export Origin Quota-eligible goods, the goods covered by CETA export Origin Quota provisions must first be added to the ECL effective as of CETA’s provisional application. As per sections 7.1 and 8.31 of the EIPA, export permits may only be issued for goods included on the ECL. If these goods are not added to the ECL, Canada will be unable to administer these CETA provisions.

Implementation, enforcement and service standards

As with Canada’s existing practice in quota administration, information will be made publicly available to exporters immediately following the Treasury Board Committee’s approval of this Order and prior to entry into force. A Notice to Exporters providing the administrative processes for the Origin Quotas will be posted on the Global Affairs Canada Export and Import Controls website. This information will also be included in a Canada Border Services Agency (CBSA) D-memorandum which will be made available on the CBSA website with a link to the Global Affairs Canada website. The issuance of export permits will be subject to Global Affairs Canada’s service standards for the delivery of permits. Global Affairs Canada’s current service standards require that

  • all non-routed permits are delivered within 15 minutes of time of application if no problems are noted with the application;
  • permits that need to be rerouted (i.e. that require assistance in order to complete the application) or which have been flagged for review are processed within four hours;
  • routine permit applications submitted by fax, mail or courier are processed within two business days of receipt; and
  • routine import permit applications which cannot be completed electronically are attended to promptly and the applicant is advised of any necessary supporting documentation or information within four hours, with a view to resolving outstanding issues as expeditiously as possible.

Contact

Blair Hynes
Deputy Director
Trade Controls Policy Division (TIC)
Global Affairs Canada
111 Sussex Drive
Ottawa, Ontario
Telephone: 343-203-4353
Email: blair.hynes@international.gc.ca