Order Amending the United States Surtax Order (Other Goods): SOR/2019-111
Canada Gazette, Part II, Volume 153, Number 10
SOR/2019-111 April 30, 2019
P.C. 2019-391 April 29, 2019
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, pursuant to subsection 53(2) of the Customs Tariff footnote a, makes the annexed Order Amending the United States Surtax Order (Other Goods).
Order Amending the United States Surtax Order (Other Goods)
1 The schedule to the United States Surtax Order (Other Goods) footnote 1 is amended by deleting tariff item Nos. 8903.10.00, 8903.91.00, 8903.92.00 and 8903.99.90.
Coming into Force
2 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
This Order amends the United States Surtax Order (Other Goods) to remove boats imported from the United States (U.S.) from the list of goods subject to Canada’s countermeasures against U.S. steel and aluminum tariffs, in order to mitigate negative financial impacts on Canadian businesses.
On July 1, 2018, the United States Surtax Order (Other Goods) came into force to apply surtaxes of 10% on various goods from the U.S., including boats. It was implemented as part of Canada’s countermeasures (surtaxes) against $16.6 billion in imports of steel, aluminum, and other goods from the U.S., representing the value of 2017 Canadian exports affected by U.S. steel and aluminum tariffs under section 232 of the Trade Expansion Act of 1962.
The objective of these countermeasures is to encourage a prompt end to U.S. tariffs on Canadian steel and aluminum exports to the U.S., which significantly impact Canada’s steel and aluminum industries and threaten to undermine the integrity of the global trading system.
The products covered by Canada’s countermeasures were selected to support political advocacy in the U.S., while also mitigating the potential negative impacts on the Canadian economy (e.g. by ensuring that alternative domestic or non-U.S. supply sources are available).
Removing boats from the list of goods subject to surtaxes eliminates a financial burden on Canadian companies and individuals importing these goods from the U.S., mitigating the negative domestic impact of surtaxes on the Canadian marine industry, boat dealers, and individual importers.
The Order removes boats from the list of goods subject to surtaxes of 10% under the United States Surtax Order (Other Goods).
On May 31, 2018, the Government of Canada published a notice of intent to apply surtaxes or similar trade-restrictive countermeasures on a list of steel, aluminum, and other products. The notice of intent formally launched a 15-day comment period for Canadians to submit their views on the proposed countermeasures.
During the comment period, a total of 1 108 formal submissions were received, namely from industry associations, large corporations, and small and medium-sized enterprises.
Steel and aluminum producers expressed support for retaliation, as did the majority of submissions from individual Canadians. Downstream manufacturers of steel and aluminum-containing products generally expressed concerns with the potential negative impact of including certain products they import on the competitiveness of their Canadian operations. Importers of other products also raised concerns about the potential negative impact of surtaxes. For example, boat dealers raised concerns regarding negative price and competitiveness impacts (e.g. loss of sales due to increased prices) from the inclusion of U.S. boats they import and sell in Canada.
During public consultations on the scope of Canada’s countermeasures, and since their application on July 1, 2018, significant concern has been expressed by Canadian marinas and boat dealers to government officials and in the media with respect to the negative financial impacts of the surtaxes on their operations.
Modern treaty obligations and Indigenous engagement and consultation
As a result of this Order, benefits in the form of removed surtaxes will be accessible to anyone seeking to import boats from the U.S. into Canada, including Indigenous peoples.
The only viable mechanism to amend the United States Surtax Order (Other Goods) is through an order made under the Customs Tariff.
Costs and benefits
Imports of boats from the U.S. represented $663 million in imports to Canada in 2017, resulting in approximately $66 million of annual surtax revenues. Given that this Order provides for the removal of surtaxes on boats, the surtaxes will no longer apply on a prospective basis. This will result in foregone government revenues, but also equivalent cost savings for importers of these goods.
Small business lens
The Order does not make changes to the importing and exporting of goods, including the required customs forms; rather, it removes boats from the list of goods subject to surtaxes. Accordingly, there is no incremental change to the level of administrative burden or compliance costs currently imposed on businesses, including small businesses, as a result of implementing this Order. Therefore, the small business lens does not apply.
The Order amends the scope of applicable products listed in the United States Surtax Order (Other Goods); it does not impose new regulatory requirements, nor does it remove existing regulatory requirements. Consequently, no increase or decrease in the level of administrative burden imposed on businesses is anticipated and, therefore, the “One-for-One” Rule does not apply.
Regulatory cooperation and alignment
The Order is not related to a work plan or commitment under a regulatory cooperation forum.
Strategic environmental assessment
In accordance with The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that this Order would not result in positive or negative environmental effects; therefore, a strategic environmental assessment is not required.
Gender-based analysis plus
No gender-based analysis plus (GBA+) impacts have been identified for this Order.
Implementation, compliance and enforcement, and service standards
The Canada Border Services Agency is responsible for administering Customs Tariff legislation and regulations, and will ensure that the surtax on boats established in the United States Surtax Order (Other Goods) is no longer applied.
Trade and Tariff Policy
International Trade Policy Division
Department of Finance Canada