Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Australia, Japan, Mexico, New Zealand, Singapore and Vietnam): SOR/2018-287
Canada Gazette, Part II, Volume 152, Number 26
SOR/2018-287 December 17, 2018
P.C. 2018-1609 December 14, 2018
Whereas, under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, goods that originate in a CPTPP country are entitled to a CPTPP tariff;
Therefore, to extend the entitlement to the Comprehensive and Progressive Trans-Pacific Partnership Tariff to all eligible goods that originate in Australia, Japan, Mexico, New Zealand, Singapore and Vietnam, Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 52.61(1) footnote a of the Customs Tariff footnote b, makes the annexed Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Australia, Japan, Mexico, New Zealand, Singapore and Vietnam).
Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Australia, Japan, Mexico, New Zealand, Singapore and Vietnam)
1 The List of Countries and Applicable Tariff Treatments set out in the schedule to the Customs Tariff footnote 1 is amended by adding, in the column “Tariff Treatment / Other”, a reference to “CPTPT” opposite the references in the column “Country Name” to “Australia”, “Japan”, “Mexico”, “New Zealand” and “Singapore”.
2 The List of Countries and Applicable Tariff Treatments set out in the schedule to the Act is amended by adding, in the column “Tariff Treatment / Other”, a reference to “CPTPT” opposite the reference in the column “Country Name” to “Vietnam”.
Coming into Force
3 (1) Subject to subsection (2), this Order comes into force, or is deemed to have come into force, on the day on which section 43 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation Act, chapter 23 of the Statutes of Canada, 2018, comes into force.
(2) Section 2 comes into force on the later of the day referred to in subsection (1) and the day on which the Comprehensive and Progressive Agreement for Trans-Pacific Partnership comes into effect between Canada and Vietnam.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Canada and 10 other Asia-Pacific countries (Australia, Brunei Darussalam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or the Agreement) on March 8, 2018. The CPTPP will establish a trading bloc that represents 495 million people and 13.5% of global GDP, and help facilitate long-term growth for the Canadian economy. Exports to these countries are significant for the Canadian economy, totalling $32 billion in 2016. Key Canadian goods exported to CPTPP signatories include oil seeds, machinery and equipment, wheat, pork and coal. Canada’s merchandise imports from CPTPP signatories totalled more than $68 billion in 2017. Major imports included vehicles and their parts, machinery and equipment, and electronics and electrical goods.
In order to implement the CPTPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation Act (the Act) was introduced in the House of Commons on June 14, 2018, and received royal assent on October 25, 2018. The Government of Canada notified the depositary for the CPTPP (New Zealand) of its ratification on October 26, 2018, the fifth country to do so (following Japan, Mexico, New Zealand and Singapore). On October 31, 2018, Australia notified the depositary of its ratification of the Agreement. Pursuant to the Agreement, which establishes that it enters into force 60 days after the first six CPTPP signatories have ratified it, the CPTPP will enter into force for, and among, these first six parties on December 30, 2018. On November 15, 2018, Vietnam notified the depositary of its ratification of the CPTPP, becoming the seventh country to do so. The Agreement will enter into force between the first six parties and Vietnam on January 14, 2019.
With confirmation of the coming-into-force date of the CPTPP and the first six countries to have ratified the Agreement, Canada is now able to extend preferential tariffs to the countries that notified the depositary of their ratification.
The objective of this Order is to finalize the implementation of Canada’s tariff commitments under the CPTPP.
The Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Australia, Japan, Mexico, New Zealand, Singapore and Vietnam) [the Order] amends the Customs Tariff to extend entitlement to CPTPP preferential tariff treatment to the six other countries which have ratified the CPTPP (i.e. Australia, Japan, Mexico, New Zealand Singapore and Vietnam).
The Order is technical and consequential as it implements negotiated outcomes of the CPTPP. Therefore, there have been no public consultations conducted specifically on this Order. However, the Government has extensively consulted on the Trans-Pacific Partnership (TPP) and the CPTPP, which gave the opportunity to stakeholders to input into the negotiated outcome that is reflected in this Order. In December 2011, the Government of Canada launched public consultations with provinces and territories, businesses, industry associations and the general public to determine whether Canadians would be supportive of launching free trade negotiations with the TPP countries. Stakeholders were regularly consulted throughout the negotiations of the TPP. In September 2017, the Government subsequently launched public consultations on the possibility of implementing the TPP with members other than the United States, which ultimately became the CPTPP. The Parliamentary process was an additional opportunity for stakeholders and the general public to be informed of, and comment on, the CPTPP. The CPTPP is supported by a broad cross-section of Canadian business stakeholders from all regions and from many sectors.
Given that the Order is not controversial and broad consultations have occurred, publication of the draft Order in the Canada Gazette, Part I, was not considered necessary.
Modern treaty obligations and Indigenous engagement and consultation
There is no modern treaty obligation associated with the Order. Given the technical and consequential nature of the Order, no consultations with Indigenous peoples were conducted specifically on the Order. Indigenous peoples participated in the above-mentioned consultation processes.
The only viable mechanism to extend preferential tariffs is through an order made under the Customs Tariff. The fact that the CPTPP provides for staggered implementation commencing once the first six signatories have ratified the Agreement means that there was not certainty on which countries would be party to the Agreement, nor when. Accordingly, it was not possible to extend the tariff treatment in the Act and an order to extend preferential tariffs is required.
Benefits and costs
By extending entitlement to CPTPP preferential tariff treatment to the six other countries which have ratified the CPTPP, the Order allows Canadian importers of goods originating from those countries to claim the preferential tariffs as established in the CPTPP.
While not a direct impact of the Order, when Canada’s tariff commitments under the CPTPP are fully implemented, it is estimated that annual duties foregone by the Government would be approximately $652 million based on recent trade patterns with current CPTPP signatories. These duties represent a benefit, in the form of lower customs duties to be paid by Canadian importers of products originating from CPTPP members. The removal of CPTPP tariffs on Canadian exports will similarly make Canadian goods more competitive in CPTPP markets, potentially leading to increased exports across a range of sectors.
Small business lens
The small business lens does not apply to the Order, as there are no costs imposed on business.
The “One-for-One” Rule does not apply to the Order, as there is no change in administrative costs to business.
Regulatory cooperation and alignment
The Order is not related to a work plan or commitment under a regulatory cooperation forum.
Strategic environmental assessment
Global Affairs Canada conducted an environmental assessment of the Agreement in accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals. The Initial Environmental Assessment encompassed both qualitative and quantitative analyses. The overall findings of the Initial environmental assessment were that Canadian environmental impacts as a result of the TPP Agreement (now CPTPP) would likely be minor in nature.
The Order is consequential to the implementation of the CPTPP. Therefore, a separate environmental assessment was not conducted on the Order.
Gender-based analysis plus (GBA+)
The Order is consequential to the implementation of the CPTPP and, in itself, has no GBA+ impacts. Global Affairs Canada has conducted a GBA+ analysis of the Agreement.
The Order is necessary to fulfill Canada’s tariff commitments under the CPTPP. It is non-discretionary in nature as it reflects the negotiated outcome of the CPTPP (i.e. the tariff schedule is set out in the CPTPP).
The Order extends preferential tariffs necessary for Canadian importers of goods originating from countries specified in the Order to claim the CPTPP preferential tariff. Without the implementation of the Order, importers of originating goods of CPTPP member countries would not be able to claim the CPTPP preferential tariff rates, and would have to use Most Favoured Nation footnote 2 tariff treatment or other tariff treatments from existing free trade agreements with some CPTPP members, even after the CPTPP has entered into force. This would place Canada in violation of its commitments under the CPTPP.
Further, similar, orders will be needed to extend the appropriate CPTPP tariff treatment as other signatories ratify the Agreement.
Implementation, compliance and enforcement, and service standards
The Canada Border Services Agency (CBSA) will monitor compliance with the terms and conditions of the Order 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 CPTPP and will inform importers of all relevant CPTPP-related issues pertaining to the Order.
International Trade Policy Division
Department of Finance