Canadian Regulation of Imports and Exports

Chapter 6


General Protectionist Measures
• Absolute prohibition on the import of a certain good • Embargo – prohibition against the import of goods originating in a certain country • Restrictive licensing for certain imports • Quotas or quantitative limits on certain goods • Customs tariffs applicable to various goods

Export and Import Permits Act
1/ Import Control List: - agricultural products - textiles and apparel - armaments - steel products - wild fauna and flora - any good requested by an exporting country i.e. short supply or protected - retaliation against foreign trade measure - for information gathering

Export and Import Permits Act
2/ Administration: - once goods on list, permit needed from International Trade Canada (ITC) (EICB) - only Canadian residents eligible - if goods in short supply from other country, export permit required first - note: issuance of permits not subject to judicial review 3/ Other Import Restrictions: i) Food and drugs - Food and Drug Act ii) wheat and grains - permit from Canadian Wheat Board iii) oil and gas - National Energy Board iv) cultural property - Cultural Property Import and Export Act


Canadian International Trade Tribunal (CITT)
• Principal decision making body with respect legislation affecting imports and exports • Quasi-judicial • Three main areas
– Taxpayer appeals from customs decisions of Revenue Canada – Inquiries into producers complaints of injury from imports – Policy issues on trade and tariffs for government

Import Quotas
• Milk, Poultry and Egg Marketing Boards developed quotas to protect producers • WTO rules say that such quotas must be “tariffied”, i.e. replaced by an equivalent tariff • Other multi-lateral agreements have quota provisions, e.g. wheat, coffee, beef, tin


Other Import Requirements
1/ Product Standards: - national products standards apply to imports e.g. CSA, UL - Standards Council of Canada - coordinates national, provincial standards organizations - accredits US testing or certifications organizations under NAFTA - all food and drug products must comply with Food and Drug Act - all hazardous and environmentally harmful products must comply with laws 2/ Packaging and Labelling: Customs Tariff - Country of Origin – English or French Consumer Products: Consumer Packaging and Labelling Act: i) name of product ii) quantity in metric (volume, weight, number) iii) producer or importer’s name and address iv) English and French Textile Labelling: i) manufacturer’s name and address ii) generic name of textiles used iii) country of origin 7

Procedure and Documentation for Imports
All carriers must report the arrival of imported goods at the nearest border point, accompanied by an invoice describing the transaction and identifying both the vendor and the importing party. The following are determined: 3. Value for duty of the goods 4. Tariff classification of the goods 5. Origin of the goods 6. Applicable tariff rate Then, after applying the appropriate tariff rate to the dutiable value of the goods, customs adds any applicable sales taxes, antidumping duties or countervailing duties and collects cost of importing

Dutiable value of Goods
Six methods (hierarchical): 2. Transaction Value – actuals (75% of cases) 3. Transaction Value of Identical Goods 4. Transaction Value of Similar Goods 5. Deductive Value (reverse engineer from retail price) 6. Computed Value (cost plus) 7. Residual Value (when all else fails pick a method and use some judgment)

Tariff Classification
• Customs Co-operation Council (CCC) developed the “Harmonized Commodity Description and Coding System” • All tariff items are listed in the Customs Tariff and categorized as above. • There are more than a thousand headings and more than five thousand sub-headings • Complex and intimidating, especially since in any appeal the onus is on the importer to show that the customs officer erred

Rules of Origin
Once classified, the tariff rate is now a function of the country of origin of the goods. The importer must provide evidence of the country of origin upon entry of the goods into Canada. Deciders: Minimum percentage of cost of production “Substantial Transformation” “the country where the goods assumed their final form.

Canadian Tariff Schedules
1. Most Favoured Nation Tariff – applies to all signatories to GATT/WTO and anyone else we have extended that privilege. 2. British Preferential Tariff – applies to goods imported from various Commonwealth countries other than the U.K. Specific tariffs apply to New Zealand, Australia and Commonwealth Caribbean countries 3. United States-Mexico Tariff – NAFTA 4. General Preferential Tariff – assistance for developing countries. 5. General Tariff – where no treaty or agreement exists Surtaxes can also be applied in certain circumstances…

Canadian Trade Remedy Legislation
Two primary remedies 2. Anti-dumping Duties 3. Countervailing Duties


Dumping is selling a good in a foreign country at a price below that at which it is sold in the domestic market. (See Box 6.2, Page 174) Anti-dumping duties are applied when goods are being dumped and material injury has been caused to the affected Canadian industry. In general the amount of the duty should be that amount which restores equity, compensates for the injury

Material Injury
Material Injury means that some party has suffered meaningful and measurable hurt as a direct result of some other party’s actions Factors in determining material injury 3. Are goods being dumped “like goods” to those already produced in Canada? 4. Is there already production of “like goods”. 5. The complainant must represent all or a sufficient proportion of the affected Canadian industry. 6. Injury causation standard 7. Future material injury must be proven in order to effect ongoing anti-dumping duties.

Countervailing Duties
Countervailing duties are applied when the goods being imported have been subsidized by the country in which they were produced Both subsidy and material injury have to be demonstrated.


Any financial or commercial benefit given to a producer, manufacturer, grower, distributor, importer, or exporter by any government. But… Not so clear in practice what is or is not a subsidy and even then subsidies are not necessarily prohibited in certain circumstances e.g. for economic development

Temporary measures imposed where serious injury may result to domestic producers as a result of very large increases in the amount of goods being imported.


Canadian Regulation of Exports
Export Controls: Purpose: - to meet international commitments re trade in military, strategic goods, nuclear weapons - to prevent supply of military and strategic goods to countries that threaten Canada’s security - to encourage further processing of natural resources in Canada - to conserve strategic domestic supply


Export Controls
How System Works: - Export and Import Permits Act NOTE: - export permits are required if goods: 1/ on Export Control List 2/ destined for country on Area Control List 3/ of US origin 4/ cultural property

Export Control List
- anything on list requires export permit from ITC (EICB) Note: U.S. exempt except # 5. - 8 Groups: 1) Industrial Goods - dual purpose for civilian and military use (Wassenaar Arrangement - replaced COCOM) 2) Munitions - goods and technologies specifically designed or modified for military use (WA) 3) Atomic Energy - nuclear specific (NPT) 4) Nuclear Related/Dual-Use - goods that could be used for nuclear weapons (NPT) - permits for 3,4 - Atomic Energy Control Board 5) Miscellaneous Goods - forest products logs, softwood lumber, pulpwood), medical products, agricultural and food, US origin goods, automatic weapons 6) Missile Technology - goods related to systems capable of delivering chemical, biological or nuclear weapons ( Missile Technology Control Regime) 7) Chemical and Biological Agents - any agents or dual-use equipment that could be used for chemical or biological weapons (Australia Group, CWC) 8) Restricted Chemicals - any chemicals that could be used in production of illicit drugs ( Chemical Action Task Force, UN)


Area Control List
- any goods to ACL countries requires permit from DFAIT (EICB) - countries under conflict or UN embargo - Angola, Libya, Iraq, Myanmar


US Origin Goods
• - all strategic and non-strategic goods • ACL plus Iran, Cuba, North Korea


- apply (form EXR-1042) to ITC - documentation often required from government of importing country: i) International Import Certificate ii) End-use Certificates and/or Import Licence iii) Delivery Verification Certificates iv) End-use Statements - process time - 10 days to 6 weeks - General Export Permits - allows export of specified goods to eligible destinations without requiring export permit paperwork for each shipment (limited availability) - Individual Export Permit - allows specific shipment - permits valid for 1-2 years depending on group Note: non-binding advance rulings available

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