Regulations Amending Certain Regulations Made Under the Customs Act (CHFTA): SOR/2023-152

Canada Gazette, Part II, Volume 157, Number 14

Registration
SOR/2023-152 June 23, 2023

CUSTOMS ACT

P.C. 2023-0656 June 23, 2023

Whereas the annexed Regulations give effect, in part, to a public announcement made on September 24, 2014, known as Customs Notice 14-023;

And whereas that Notice provides that the regulatory amendments giving effect to that announcement are to come into force on October 1, 2014;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to subsections 35.1(4)footnote a, 43.1(2)footnote b, and 164(1)footnote c and (1.1)footnote d and paragraph 167.1(b)footnote e of the Customs Act footnote f, makes the annexed Regulations Amending Certain Regulations Made Under the Customs Act (CHFTA).

Regulations Amending Certain Regulations Made Under the Customs Act (CHFTA)

Exporters’ and Producers’ Records Regulations

1 The definition advance ruling in section 1 of the Exporters’ and Producers’ Records Regulations footnote 1 is replaced by the following:

advance ruling
means an advance ruling referred to in Article 509 of NAFTA, Article 5.8 of CIFTA, Article E-09 of CCFTA, Article V.9 of CCRFTA, Article 28 of Annex C of CEFTA, Article 419 of CPFTA, Article 419 of CCOFTA, Article 5-9 of CJFTA, Article 4.10 of CPAFTA or Article 5.10 of CHFTA. (décision anticipée)

Free Trade Agreement Advance Ruling Regulations

2 Paragraph 2(d) of the Free Trade Agreement Advance Rulings Regulations footnote 2 is replaced by the following:

3 (1) Subparagraph 14(a)(iii) of the Regulations is replaced by the following:

(2) Subparagraph 14(a)(vi) of the Regulations is replaced by the following:

(3) The portion of paragraph 14(b) of the Regulations before subparagraph (i) is replaced by the following:

(4) Paragraph 14(b) of the Regulations is amended by striking out “or” at the end of subparagraph (vii), by adding “or” at the end of subparagraph (viii) and by adding the following after subparagraph (viii):

(5) Paragraphs 14(e) to (g) of the Regulations are replaced by the following:

(6) Paragraph 14(h) of the Regulations is amended by striking out “or” at the end of subparagraph (viii) and by adding the following after subparagraph (ix):

Certification of Origin of Goods Exported to a Free Trade Partner Regulations

4 Paragraph 2(c) of the Certification of Origin of Goods Exported to a Free Trade Partner Regulations footnote 3 is replaced by the following:

5 Paragraph 3(b) of the Regulations is replaced by the following:

Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations

6 Paragraph 2(b) of the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations footnote 4 is replaced by the following:

Refund of Duties Regulations

7 The heading of Part 5.1 of the Refund of Duties Regulations footnote 5 is replaced by the following:

Goods Imported from Costa Rica, an EFTA State, Peru, Colombia, Jordan, Panama or Honduras

8 (1) The portion of section 23.1 of the Regulations before paragraph (a) is replaced by the following:

23.1 This Part applies to the granting of a refund under paragraph 74(1)(c.11) of the Act of duties paid on imported goods in respect of which no claim for preferential tariff treatment under CCRFTA, CEFTA, CPFTA, CCOFTA, CJFTA, CPAFTA or CHFTA was made at the time the goods were accounted for under subsection 32(1), (3) or (5) of the Act, and that were imported from, as the case may be,

(2) Section 23.1 of the Regulations is amended by striking out “or” at the end of paragraph (e), by adding “or” at the end of paragraph (f) and by adding the following after paragraph (f):

9 Paragraph 23.3(b) of the Regulations is replaced by the following:

Proof of Origin of Imported Goods Regulations

10 The heading before section 6 of the Proof of Origin of Imported Goods Regulations footnote 6 is replaced by the following:

Proof of Origin of Goods That Are Entitled to the Benefit of Preferential Tariff Treatment Under NAFTA, CCFTA, CCRFTA, CPFTA, CCOFTA, CPAFTA or CHFTA

11 (1) Subsections 6(1) and (2) of the Regulations are replaced by the following:

6 (1) Subject to subsections (2) to (5), if the benefit of preferential tariff treatment under NAFTA, CCFTA, CCRFTA, CPFTA, CCOFTA, CPAFTA or CHFTA is claimed for goods, the importer or owner of the goods shall, at the times set out in section 13, furnish to an officer, as proof of origin for the purposes of section 35.1 of the Act, a Certificate of Origin for the goods that is completed in English, French or Spanish.

(2) The importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Act if the importer or owner furnishes to an officer, at the time set out in paragraph 13(a), a written and signed declaration, in English or French, certifying that the goods originate in a NAFTA country, Chile, Costa Rica, Peru, Colombia, Panama or Honduras, as the case may be, and that a completed Certificate of Origin is in the importer’s possession.

(2) The portion of subsection 6(3) of the Regulations before paragraph (a) is replaced by the following:

(3) If the benefit of preferential tariff treatment under NAFTA, CCFTA, CCRFTA, CPFTA, CCOFTA, CPAFTA or CHFTA is claimed for casual goods, the importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Act if the goods are entitled to preferential tariff treatment under, as the case may be,

(3) Subsection 6(3) of the Regulations is amended by striking out “or” at the end of paragraph (e), by adding “or” at the end of paragraph (f) and by adding the following after paragraph (f):

(4) The portion of subsection 6(4) of the Regulations before paragraph (a) is replaced by the following:

(4) If the benefit of preferential tariff treatment under NAFTA is claimed for commercial goods whose estimated value for duty is less than $2,500 or if the benefit of preferential tariff treatment under CCFTA, CCRFTA, CPFTA, CCOFTA, CPAFTA or CHFTA is claimed for commercial goods whose estimated value for duty is less than $1,600, the importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Act if

(5) Subparagraphs 6(4)(b)(i) and (ii) of the Regulations are replaced by the following:

Coming into Force

12 These Regulations are deemed to have come into force on October 1, 2014.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issues

The Canada-Honduras Free Trade Agreement (CHFTA) was signed on November 5, 2013, and came into force on October 1, 2014. Although the Canada Border Services Agency (CBSA) has been administering the CHFTA since its implementation, amendments to Canada’s existing regulatory framework are required to establish in domestic law the customs procedures agreed to in the CHFTA.

As part of the negotiations for this Free Trade Agreement (FTA), Canada and Honduras agreed to procedures governing the verification of origin of goods claiming preferential treatment under the CHFTA. New regulations are necessary in order to establish the verification of origin procedures agreed to by Canada and Honduras in Canadian law.

Background

Under an FTA, a range of Canadian goods and services benefit from the reduction or elimination of tariff and non-tariff barriers to trade. With the exception of a few agricultural goods, the CHFTA essentially eliminated the customs duties on all imports from Honduras, either upon implementation of the agreement, or through a tariff phase out.

Pursuant to the Customs Tariff, goods imported into Canada from the majority of Canada’s trading partners are entitled to the Most-Favoured-Nation Tariff. Notable exclusions are North Korea, the Russian Federation and Belarus. The Customs Tariff also establishes a series of preferential tariff treatments, whose rates of duty are lower than the Most-Favoured-Nation Tariff rate. Preferential tariff treatments include the General Preferential Tariff, Least-Developed Country Tariff, Commonwealth Caribbean Countries Tariff, Australia Tariff, New Zealand Tariff and the various preferential tariffs that have been negotiated between Canada and its free trade partners.

Canada has numerous FTAs currently in force. The customs procedures contained in the CHFTA are similar to those of the Canada-Peru Free Trade Agreement and the Canada-Colombia Free Trade Agreement. The amendments to these regulations and the new regulations described below (the regulatory changes) were publicly announced by the CBSA in a Customs Notice (CN 14-023) published on September 24, 2014.

Paragraph 167.1(b) of the Customs Act (Act) allows regulatory changes that have previously been the subject of a public announcement to have a retroactive effect to the day of the announcement. The regulations will be deemed to have come into force on October 1, 2014. Since that date, the CBSA has been administering the amendments announced in Customs Notice CN14-023.

Objective

The objective of this regulatory initiative is to establish in Canadian law the commitments related to customs procedures negotiated in CHFTA.

Description

In order to establish the commitments and customs procedures into Canadian domestic law that were negotiated in the CHFTA, minor amendments to six existing regulations and the introduction of a new regulation made under the Act are necessary.

Amendments to Regulations:

Exporters’ and Producers’ Records Regulations

An advance ruling is a written ruling issued by a CBSA officer before goods are imported. Advance rulings can provide guidance as to things such as the tariff classification of goods and the originating status of a good under an FTA. The definition of “advance ruling” found at section 1 of the Exporters’ and Producers’ Records Regulations incorporates by reference specific Articles from the FTAs to which Canada is a signatory. These Articles describe the subject matter upon which applications for advance rulings under each of these FTAs can be based, for example, whether or not a good qualifies as an originating good under the FTA. Section 1 of the Exporters’ and Producers’ Records Regulations is amended to incorporate the CHFTA requirements regarding advance rulings (i.e. Article 5.10 of the CHFTA), into the definition of “advance ruling.”

Free Trade Agreement Advance Rulings Regulations

Section 2 of the Free Trade Agreement Advance Rulings Regulations describes the classes of persons (e.g. importers and persons authorized to account for goods under paragraph 32(6)(a) or subsection 32(7) of the Act) eligible to apply for an advance ruling with respect to goods proposed to be imported from one of Canada’s free trade partners. The classes of persons eligible to apply for an advance ruling is expanded to include producers in Honduras of materials used in the production of goods in Honduras.

Section 14 of the Free Trade Agreement Advance Rulings Regulations enumerates the grounds upon which an advance ruling may be modified or revoked.

For example, section 14 permits officers to modify or revoke advance rulings in circumstances where errors have been made in the application of a regional value content requirement outlined in Chapter D of the Canada-Chile Free Trade Agreement, or Chapter IV of the Canada-Costa Rica Free Trade Agreement. This amendment would add Chapter Five of the CHFTA.

Moreover, section 14 permits officers to modify or revoke advance rulings in circumstances where errors have been made in the application of the Canada-Chile Free Trade Agreement, the Canada-Costa Rica Free Trade Agreement, the Canada-Peru Free Trade Agreement, the Canada-Colombia Free Trade Agreement, the Canada-Jordan Free Trade Agreement and the Canada-Panama Free Trade Agreement with respect to goods that re-enter Canada after being exported for alteration or repair. This section is amended to add the CHFTA to this list.

In addition, section 14 allows for an advance ruling to be modified or revoked where the ruling is not in accordance with an interpretation agreed to by Canada and its relevant free trade partner. This section is amended to include reference to goods exported from Honduras, and to reference interpretations agreed to by Canada and Honduras with respect to the relevant provisions of the CHFTA.

Section 14 is amended to allow for an advance ruling to be modified or revoked in order to conform with a modification made to certain chapters of the CHFTA.

Certification of Origin of Goods Exported to a Free Trade Partner Regulations

Section 97.1 of the Act addresses the Certificate of Origin that must be provided by exporters of goods to free trade partners who claim preferential tariff treatment under an FTA. The Certificate of Origin requirements that must be met in order to satisfy section 97.1 are described in the Certification of Origin of Goods Exported to a Free Trade Partner Regulations.

The Certification of Origin of Goods Exported to a Free Trade Partner Regulations are amended to add Honduras to the list of free trade partners for which an exporter, who is not the producer of the good, may complete a Certificate of Origin based on a certificate completed and signed by the producer and provided voluntarily to the exporter, stating that the goods meet the applicable rules of origin.

Additionally, these regulations are amended to allow, in the case of goods exported to Honduras, certificates of origin to be completed in English, French, or Spanish.

Tariff Items Nos. 9971.00.00 and 9992.00.00 Accounting Regulations

Tariff item Nos. 9971.00.00 and 9992.00.00 deal with goods that, regardless of their country of origin, have been returned to Canada after having been exported to one of Canada’s free trade partners (i.e. the United States, Mexico, Chile, Costa Rica, Israel or other CIFTAfootnote 7 beneficiary, an EFTAfootnote 8 state, Peru, Colombia, Jordan or Panama) for repair or alteration.

These regulations provide that proof of this exportation must be submitted when such goods are accounted for under section 32 (i.e. accounting and payment of duties) of the Act. This amendment adds Honduras to the list of Canada’s free trade partners to whom these obligations apply.

Refund of Duties Regulations

The amendments to the Refund of Duties Regulations allow duties on eligible goods imported from Honduras to be refunded in cases where a claim for preferential tariff treatment under the CHFTA was not made at the time the goods were initially accounted for under section 32 of the Act.

The Proof of Origin of Imported Goods Regulations

The proof of origin requirements for claiming preferential tariff treatment under the CHFTA share many of the characteristics of the requirements for claiming other preferential tariff treatments, for example, ensuring a valid certificate of origin is in the importer’s possession at the time of import and it is made available to the CBSA upon request. The language requirement for completing the CHFTA certificate of origin aligns with the proof of origin requirements for other Spanish-speaking countries with which Canada has an FTA, thus allowing for the CHFTA certificate of origin to be completed in English, French or Spanish.

New Regulations:

CHFTA Verification of Origin Regulations

The new CHFTA Verification of Origin Regulations sets out the procedures for authorized officers to conduct a verification of origin of goods by establishing the method and manner of conducting a verification for which preferential tariff treatment under the CHFTA is claimed.

As with the aforementioned amendments, these regulations officially establish the customs procedures negotiated in the CHFTA into Canada’s existing regulatory regime and are deemed to have come into force on October 1, 2014, the date of implementation of the Canada-Honduras CHFTA.

Regulatory development

Consultation

In January 2001, 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 Central America, including Honduras. In 2010, it was decided that an FTA was only viable with Honduras. Prior to negotiations, Canadian manufacturers, importers and exporters were consulted extensively and kept informed of developments throughout all these negotiations, including with respect to rules of origin issues.

Given that the regulations formalize processes and obligations that were agreed to in the CHFTA, that they are needed to fulfil Canada’s obligations under CHFTA, and that stakeholders have had the opportunity to comment through the prior broad consultations held on the CHFTA, a public comment period through the Canada Gazette, Part I process was not undertaken.

Modern treaty obligations and Indigenous engagement and consultation

The regulatory proposal is not expected to have differential impacts on Indigenous peoples or negative implications for modern treaties, as per Government of Canada obligations in relation to rights protected by section 35 of the Constitution Act, 1982, modern treaties and international human rights obligations.

The proposal was assessed for modern treaty implications as per the Cabinet Directive on the Federal Approach to Modern Treaty Implementation. The assessment found no immediate impacts on modern treaty obligations.

Instrument choice

No other instrument choice was considered as FTAs require signatories to set the provisions of the agreements into their respective domestic law.

Regulatory analysis

Benefits and costs

The regulations establish in domestic law the procedures of the CHFTA, which have been applicable under the CHFTA since the date of its implementation and announced through the use of a Customs Notice. Accordingly, there are no incremental costs for Canadians, businesses, or the Government as a result of the regulatory changes. The regulatory changes provide legal certainty and support Canada in meeting its obligations under the CHFTA.

Small business lens

Small business lens summary

Analysis under the small business lens determined that the regulatory changes will not impact Canadian small businesses.

One-for-one rule

The one-for-one rule does not apply as there is no impact on business. There are administrative requirements related to customs procedures on rules of origin; however, these customs procedures have been in place since the 2014 Customs Notice announcing the regulations. Therefore, there is no incremental change in administrative burden on business.

Regulatory cooperation and alignment

The CHFTA is the result of international cooperation and negotiation between Canada and Honduras. The regulatory changes only set into law the provisions of the CHFTA, which are already being implemented through the use of a Customs Notice.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

Implementation

The regulations are deemed to have come into force on October 1, 2014. Since that date, the CBSA has been administering these regulations as though the amendments announced in above-noted Customs Notice were already in force. No further actions were required for their implementation.

Contact

Edith Laflamme
Director, Trade Policy
Trade Policy Division
Trade and Anti-dumping Programs Directorate
Commercial and Trade Branch
Canada Border Services Agency
Edith.Laflamme@cbsa-asfc.gc.ca