SOR/2016-145: Regulations Amending Certain Regulations Made Under the Customs Act (CPAFTA)
REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE
June 14, 2016
REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the regulations.) Issues The Canada-Panama Free Trade Agreement (CPAFTA) was signed on May 14, 2010, and came into force on April 1, 2013. Although the Canada Border Services Agency (CBSA) has been administering the CPAFTA since it came into force, amendments to Canada’s existing regulatory framework are required to fully codify ... (Click for more)
Published on June 14, 2016
SOR/2016-145: Regulations Amending Certain Regulations Made Under the Customs Act (CPAFTA)
REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the regulations.) Issues The Canada-Panama Free Trade Agreement (CPAFTA) was signed on May 14, 2010, and came into force on April 1, 2013. Although the Canada Border Services Agency (CBSA) has been administering the CPAFTA since it came into force, amendments to Canada’s existing regulatory framework are required to fully codify into law the customs procedures related to the CPAFTA. As part of the negotiations for this Free Trade Agreement (FTA), Canada and Panama agreed to procedures governing the verification of origin of goods claiming preferential treatment under the CPAFTA. New regulations are necessary in order to codify into Canadian law the verification of origin procedures agreed to by Canada and Panama. Background Under a Free Trade Agreement, 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 CPAFTA essentially eliminates the customs duties on all imports from Panama, either immediately upon implementation of the agreement, or through a tariff phase-out. The CPAFTA also eliminates tariffs on more than 90% of goods exported from Canada to Panama. Pursuant to the Customs Tariff, goods imported into Canada from all countries, other than North Korea, are entitled to the Most-Favoured-Nation Tariff. 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 11 Free Trade Agreements currently in force, namely the North American Free Trade Agreement, the Canada-Chile Free Trade Agreement, the Canada-Costa Rica Free Trade Agreement, the Canada-Israel Free Trade Agreement, the Canada-European Free Trade Association Free Trade Agreement, the Canada-Peru Free Trade Agreement, the Canada-Colombia Free Trade Agreement, the Canada-Jordan Free Trade Agreement, the Canada-Honduras Free Trade Agreement, the Canada-Korea Free Trade Agreement and the Canada-Panama Free Trade Agreement. The customs procedures contained in the Canada-Panama Free Trade Agreement are similar to those of the North American Free Trade Agreement, the Canada-Peru Free Trade Agreement and the Canada-Colombia Free Trade Agreement. The amendments to these regulations and the new regulations described below were publicly announced by the CBSA in a Customs Notice posted on March 22, 2013 (CN13-006). The Customs Notice can be viewed at the following Web address: CN13-006: http://www.cbsa-asfc.gc.ca/publications/cn-ad/cn13-006-eng.html Objectives This regulatory proposal is intended to incorporate the CPAFTA into Canada’s existing regulatory framework by allowing customs procedures related to rules of origin to be administered in accordance with the terms of the CPAFTA. Description In order to implement the CPAFTA, minor amendments to five existing regulations made under the Customs Act (the Act) are necessary, as well as the creation of a new regulation. 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 consist of determinations related to a variety of issues, including such things as the tariff classification of the goods, the applicable rate of customs duty and the originating status of a good under a free trade agreement. 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 is amended to incorporate the CPAFTA requirements regarding advance rulings (Article 4.10 of the CPAFTA), into the definition of “advance ruling” applicable in the Exporters’ and Producers’ Records Regulations. 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 Panama of materials used in the production of goods produced in Panama. Section 14 of the Free Trade Agreement Advance Rulings Regulations enumerates the grounds upon which an advance ruling may be modified or revoked. One such ground permits officers to modify or revoke advance rulings in circumstances where errors have been made in the application of the North American Free Trade Agreement, the Canada-Chile Free Trade Agreement, the Canada-Costa Rica Free Trade Agreement, the Canada-Peru Free Trade Agreement, and the Canada-Colombia Free Trade Agreement and the Canada-Jordan 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 CPAFTA to this list. Section 14 also 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 Panama, and to reference interpretations agreed to by Canada and Panama with respect to the relevant provisions of the CPAFTA. Section 14 is also amended to address instances where an advance ruling can be modified or revoked in order to conform with a modification made to certain chapters of the CPAFTA. 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 Panama 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. These Regulations are also amended to allow, in the case of goods exported to Panama, 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 Canada-Israel Free Trade Agreement (CIFTA) beneficiary, Peru, or Colombia) for repair or alteration. These Regulations provide that proof of this exportation must be submitted when such goods are accounted for under section 32 of the Act. This amendment adds Panama 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 allows duties on eligible goods imported from Panama, to be refunded in cases where a claim for preferential tariff treatment under the CPAFTA was not made at the time the goods were initially accounted for under section 32 of the Act. New regulations CPAFTA Verification of Origin Regulations The new CPAFTA Verification of Origin Regulations implement the customs procedures associated with verifying the origin of goods for which preferential tariff treatment under the CPAFTA has been claimed. These procedures can include, for example, the manner of conducting a verification of origin, the conditions surrounding a verification visit, and the verification requirements that the exporter and the producer must meet. “One-for-One” Rule The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business. Since the implementation of the CPAFTA on April 1, 2013, the administrative procedures remain unchanged as a result of these regulatory amendments. Small business lens The small business lens does not apply to this proposal, as there are no costs to small business. Since the implementation of the CPAFTA on April 1, 2013, the administrative procedures remain unchanged as a result of these regulatory amendments. Consultation Prior to launching the FTA 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. The regulatory amendments contained herein were announced by the CBSA in Customs Notice CN13-006. The Customs Notice provided opportunities for the public to review the proposed regulatory changes and provide comments to the CBSA. No comments were received. Rationale Canada’s Free Trade Agreements are governed by a network of regulations (e.g. the Exporters’ and Producers’ Records Regulations and the other regulations listed above) that, taken together, implement into Canadian law the customs procedures negotiated as part of each FTA. Consequently, with each new FTA implementation bill passed by the Canadian Parliament, a series of minor, technical amendments are needed in order to incorporate the new FTA into Canada’s existing regulatory framework. Given that since the implementation of the CPAFTA, the CBSA has been administering these regulations as though the amendments announced in Customs Notice CN13-006 were already in force, the amendments have no business or consumer impacts, nor do they impose additional costs to the CBSA or to stakeholders. Implementation, enforcement and service standards Paragraph 167.1(b) of the 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 proposed regulations would be deemed to have come into force on April 1, 2013. Since that date, the CBSA has been administering these regulations as though the amendments announced in Customs Notice CN13-006 were already in force. These amendments are therefore technical and housekeeping in nature and will have no impact on the continuing administration of these regulations. Subsection 35.1(5) of the Act provides for the denial or withdrawal of preferential tariff treatment in the event that the requirements set out in the regulations are not met. The CBSA will continue to monitor compliance with these regulations in the course of its regular administration of customs and tariff related legislation and regulations. Contact Caley Sayers Trade and Anti-dumping Programs Directorate Canada Border Services Agency 222 Queen St. 4th Floor Ottawa, Ontario K1A 0L8 Footnote a S.C. 1997, c. 14, s. 39 Footnote b S.C. 2012, c. 18, s. 30 Footnote c S. C. 1992, c. 28, s. 31(1) Footnote d R.S., c. 1 (2nd Supp.) Footnote 1 SOR/97-71 Footnote 2 SOR/97-72; SOR/97-331, s. 1 Footnote 3 SOR/97-332 Footnote 4 SOR/98-47; SOR/2013-213, s.29 Footnote 5 SOR/98-48
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