OTTAWA, THURSDAY, SEPTEMBER 7, 2017
SOR/2017-180 September 1, 2017
Regulations Amending the Vessel Duties Reduction or Removal Regulations
P.C. 2017-1129 August 31, 2017
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to paragraph 132(1)(k) of the Customs Tariff (see footnote a), makes the annexed Regulations Amending the Vessel Duties Reduction or Removal Regulations.
Regulations Amending the Vessel Duties Reduction or Removal Regulations
1 The definitions Minister and vessel in section 2 of the Vessel Duties Reduction or Removal Regulations (see footnote 1) are replaced by the following:
Minister means the Minister of Public Safety and Emergency Preparedness; (ministre)
vessel means a good of heading 89.01, of subheading 8902.00, of tariff item No. 8903.91.00, 8903.92.00, 8903.99.90 or 8904.00.00, of heading 89.05, of heading 89.06 or of tariff item No. 8907.90.90. (navire)
2 Section 8 of the Regulations is amended by adding “and” at the end of paragraph (b) and by adding the following after that paragraph:
- (c) in the case of a vessel that is not a duty-paid vessel and that engages in any activity referred to in subsections 3(2.1) to (2.4) of the Coasting Trade Act, that activity is specified in the application referred to in paragraph 10(a).
Coming into Force
3 These Regulations come into force on the day on which subsection 92(2) 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 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.)
Consequential amendments to the Vessel Duties Reduction or Removal Regulations (the Regulations) are required to reflect changes made to the Coasting Trade Act, through the Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act (Bill C-31), which implement Canada’s maritime commitments under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). On July 8, 2017, the Prime Minister and the President of the European Commission announced that the provisional application of CETA will come into effect on September 21, 2017.
When a vessel is imported into Canada, the importer is liable for the payment of all applicable duties and taxes upon importation. For certain vessels imported on a temporary basis, the Regulations provide for the payment of applicable duties and taxes at a reduced rate. Provided there is no suitable Canadian-registered vessel available, the duty is payable at a rate of 1/120th of the value of the vessel, for each month it remains in Canadian waters.
The Coasting Trade Act reserves the marine transportation of goods and passengers in Canada and the conduct of other marine activities of a commercial nature in Canadian waters to Canadian registered duty-paid vessels.
It requires that foreign registered and/or non-duty paid vessels working in Canadian waters have a coasting trade licence, which grants them the right to engage in Canada’s domestic coasting trade. If the Canadian Transport Agency (CTA), under the authority granted by the Coasting Trade Act, determines that no suitable Canadian-registered vessel is available (the “determination”), the Canada Border Services Agency (CBSA) grants a coasting trade licence and permits application of the 1/120th duty rate for that vessel.
Amendments to the Coasting Trade Act allow European Union (EU) and Canadian entities, including third country entities under Canadian or EU control, to perform certain coasting trade activities without requiring a coasting trade licence. These coasting trade activities include the following:
- the repositioning of empty containers (on a non-revenue basis);
- feeder services between the ports of Halifax and Montréal; and
- private dredging services.
In all such cases, a determination by the CTA will no longer be made.
As a result, since not all temporarily imported vessels would need to undergo a determination, certain temporarily imported vessels would no longer be eligible for the reduced duty option under the Regulations. In order to ensure that the opportunity to pay duty on a reduced basis remains available for temporarily imported vessels impacted by these changes, the existing requirement within the Regulations that there be no suitable available Canadian-registered or Canadian-registered non-duty-paid vessel will be waived for these vessels, consistent with, and consequential to, the changes being made to the Coasting Trade Act.
The objective of these amendments is to ensure that the Regulations reflect the changes being made to the Coasting Trade Act that implement the marine sector commitments of Canada under CETA. This will ensure the continued opportunity to pay duty on a reduced basis for temporarily imported vessels impacted by these changes to the Coasting Trade Act.
The Regulations are being amended to remove the requirement that there be no suitable Canadian-registered or Canadian-registered non-duty-paid vessel available when a vessel engaged in the repositioning of empty containers, private dredging activities, and feeder services between the ports of Montréal and Halifax. Vessels temporarily imported for these activities will continue to have the opportunity of paying duty at a reduced rate of 1/120th of the value of the vessel for each month they remain in Canadian waters.
The “One-for-One” Rule does not apply to the Regulations, as there will be no change in administrative costs to business.
Small business lens
The small business lens does not apply to the Regulations, as there are no costs imposed on small business.
In December 2008, the Government of Canada launched public consultations with provinces and territories, businesses, industry associations and the general public to gauge Canadians’ interests and sensitivities in launching free trade negotiations with the EU. Stakeholders were regularly consulted throughout the negotiations, including on marine transport issues. A free trade agreement with the EU is supported by a broad cross-section of Canadian business stakeholders.
The amended Regulations were published in the Canada Gazette, Part I, on July 15, 2017, followed by a 15-day comment period. One submission was received from a domestic shipping company that raised concerns related to the impact of the changes to the Coasting Trade Act on the competitiveness of Canadian-flagged ship operators, but was not directly related to the content of these Regulations themselves. It also requested that the application of the “One-for-One” Rule and the small business lens be reconsidered. Since the Regulations solely introduce consequential amendments to ensure the continued opportunity to pay duty on a reduced basis for temporarily imported vessels impacted by changes made to the Coasting Trade Act, and there are no expected changes in administrative burden or compliance costs, no modifications to the proposed Regulations have been made.
These regulatory amendments implement consequential changes required to align the Regulations with the marine commitments of Canada under CETA. This will ensure the continued opportunity to pay duty on a reduced basis for temporarily imported vessels impacted by the changes to the Coasting Trade Act.
Implementation, enforcement and service standards
The 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 CETA and will inform importers of all relevant CETA-related issues pertaining to these Regulations.
International Trade Policy Division
Department of Finance