Vol. 151, No. 28 — July 15, 2017

Export Permits Regulations (Non-strategic Products)

Statutory authority

Export and Import Permits Act

Sponsoring department

Department of Foreign Affairs, Trade and Development

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The proposed new Export Permits Regulations (Non-strategic Products) would be created under the authority of paragraphs 12(a) and (b) of the Export and Import Permits Act (EIPA) and would define the information to be provided to the Minister of Foreign Affairs in a permit application for CETA Origin Quotas set out in Annex 5-A (Origin Quotas and Alternatives to the Product-Specific Rules of Origin in Annex 5) of Annex 5 (Product Specific Rules of Origin) of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU). These new proposed Export Permits Regulations (Non-strategic Products) would also enable the Minister to issue export permits under the CETA Origin Quotas for other non-strategic goods on the Export Control List (ECL). An export permit would confer on the goods the ability to receive the CETA preferential tariff upon arrival in the EU.

These new proposed Export Permits Regulations (Non-strategic Products) are a key component of a wider regulatory framework that would comprise the following: proposed amendments to the Export Control List (ECL); new proposed Export Allocations Regulations; and proposed amendments to the existing Export Permits Regulations. This regulatory framework would provide for the administration of CETA export Origin Quotas covering agricultural goods, textiles and apparel products, and vehicles.

The Export Control List (ECL) would be amended to add the relevant tariff codes listed in Tables A.1 (Annual Quota Allocation for High-Sugar-containing Products Exported from Canada to the European Union), A.2 (Annual Quota Allocation for Sugar Confectionary and Chocolate Preparations Exported from Canada to the European Union), A.3 (Annual Quota Allocation for Processed Foods Exported from Canada to the European Union), A.4 (Annual Quota Allocation for Dog and Cat Food Exported from Canada to the European Union), D.1 (Annual Quota Allocation for Vehicles Exported from Canada to the European Union) and six tariff lines from Table C.2 (Annual Quota Allocation for Apparel Exported from Canada to the European Union) of Annex 5-A of CETA. These goods would be added to the ECL pursuant to paragraphs 3(1)(d) and (f) of the EIPA. New proposed CETA Export Allocations Regulations would be established in order to define the information requirements for an export allocation application. Finally, a simultaneous amendment would be made to the existing Export Permits Regulations (EPR) to exclude from its scope the tariff codes that would be added to the ECL for CETA Origin Quotas and other non-strategic goods. This approach is similar to a recent amendment to the EPR that was made so as to exclude softwood lumber goods from the EPR and add these non-strategic goods to the Export Permit Regulations (Softwood Lumber Products 2015).

These proposed Regulations are needed by CETA’s provisional application to ensure that eligible goods exported from Canada receive the preferential tariff treatment on importation into the EU. As per paragraph 6 of Annex 5-A to Annex 5 of CETA, following Canada’s notification of goods requiring export permits, the EU will only apply the preferential tariffs to those goods accompanied by Canadian government-issued documentation.

Background

The benefits of CETA will be broad, including tariff reduction and elimination commitments, and comprehensive provisions with respect to investment and cross-border trade in services, government procurement, and financial services.

A key objective of CETA is to eliminate trade barriers between Canada and the EU on most goods, from maple syrup to salmon (from Canada). Upon CETA’s provisional application, Canadian producers, manufacturers, exporters, importers, and consumers will benefit from the phased reduction or immediate elimination of tariffs on “originating” goods as per the tariff elimination schedule found in Annex 2-A (Tariff Elimination) of CETA. Additional quantities of goods will qualify for preferential tariff treatment through the “Origin Quotas” established in Annex 5-A (Origin Quotas and Alternatives to the Product-Specific Rules of Origin in Annex 5) of Annex 5 (Product Specific Rules of Origin) to the Protocol on Rules of Origin and Origin Procedures in CETA.

CETA’s “rules of origin” establish the minimum amounts of Canadian and EU content that products must contain to qualify for the CETA preferential tariff indicated in Annex 2-A (Tariff Elimination) upon import into the applicable Party, e.g. 55% Canada-EU content for vehicles from Canada into the EU. “Originating” goods are those goods that meet the applicable rules of origin found in Annex 5 (Product Specific Rules of Origin) of the Protocol on Rules of Origin and Origin Procedures of CETA. There are no quantitative limits on the trade of these goods.

Goods that do not meet the rules of origin found in Annex 5 may still be eligible to enter the EU market at preferential tariff rates if they qualify under the more flexible “alternative” rules of origin contained in Annex 5-A of Annex 5 to the Protocol on Rules of Origin and Origin Procedures of CETA (e.g. 30% Canada-EU content for vehicles from Canada to the EU). Prescribed annual quantities of goods, called “Origin Quotas,” which meet the alternative rules of origin, may be imported into the EU at the same preferential tariff rate available for the equivalent “originating” goods (e.g. 100 000 vehicles from Canada to the EU per year). Tables A.1, A.2, A.3, A.4, B.1, C.1, C.2, and D.1 of Annex 5-A specify goods that are eligible to be exported to the EU market at preferential tariff rates through Origin Quotas, the annual quantities, the units of measurement, and the alternative rules of origin the goods must meet to qualify for preferential tariff treatment.

Objectives

Following broad-based public engagement on the administration of the Origin Quotas, the Minister has decided to administer certain CETA Origin Quotas using permits so as to enable the orderly export marketing of the eligible goods that are subject to the quantitative limitation and which, on importation, will be eligible for the preferential tariff treatment provided for by CETA. In order to administer the CETA Origin Quotas through the issuance of export permits, the goods would be added to the ECL. New proposed Export Permit Regulations (Non-strategic Products) are needed for the purpose of issuing permits for certain CETA Origin Quota goods that would be added to the ECL. In the absence of new permit regulations, Canada will only be able to administer the CETA Origin Quotas and monitor their utilization levels by using the existing EPR whose original aim was to control trade for security-related purposes. In recognition of the difficulties in using permits issued under this regulation for commercial trade reasons, an amendment was made to exclude softwood lumber products from its scope and new regulations were drafted specifically for this type of trade. The proposed Export Permits Regulations (Non-strategic Products) would enable the Minister to request similar types of information as authorized under the Export Permits Regulations but with the aim of administering nonstrategic goods, including the CETA Origin Quotas.

These Regulations are needed by the date of CETA’s provisional application to enable the Minister to issue permits to export Origin Quotas. This regulatory framework was requested by the affected stakeholders during consultations.

Description

The proposed Regulations would require information from applicants for export permits for non-strategic goods, including CETA Origin Quota goods, similar to the Export Permit Regulations and the Import Permit Regulations, but with small differences to account for the nature of non-strategic goods (i.e. high-sugar-containing products and vehicles).

An applicant would be required to provide the name, address, telephone number and email address of the exporter and, as applicable, an agent or mandatary applying on behalf of an exporter; the official language selected for communications; an indication of whether the exporter, and, if applicable, the agent or mandatary, are residents of Canada; a detailed description of the product for which the applicant is applying for an export permit; the exporter’s identifier number assigned by the Minister; a tariff classification of the product set out in the EU’s tariff schedule; the quantity of the product, its unit of measurement, and the value in Canadian dollars of the product; the date of shipment of the product; the port of entry into the EU country or other CETA beneficiary; the date of entry into the EU country of other CETA beneficiary; the name and address of the importer or consignee; and, the country of origin of the product.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no significant change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no significant costs for small business.

Consultation

During negotiations, officials undertook consultations with producers, industry associations, the provinces, and other interested parties. Canadian industry associations and companies supported and helped develop Canada’s position prior to undertaking commitments on CETA Origin Quotas, recognizing that CETA will provide Canadian companies with important market access at a preferential tariff rate. During consultations on the administration of the Origin Quotas, stakeholders indicated that the issuance of permits for certain goods would provide certainty that their exports would receive Origin Quota preferential tariff treatment upon arrival in the EU. Stakeholders also indicated a desire for Canadian export data on the utilization of certain Origin Quotas to inform the application of Growth Provisions as well as to inform possible future quota allocation decisions for certain goods.

The proposed Regulations are being published for a 15-day comment period.

Rationale

The new proposed Export Permits Regulations (Nonstrategic Products) would be created to define the types of information that shall be provided to the Minister in a permit application. Paragraphs 12(a) and (b) of the EIPA allow the Governor in Council to make regulations that prescribe the information that shall be required when applying for export permits.

Implementation, enforcement and service standards

As with Canada’s existing practice in quota administration, information will be made publicly available to exporters immediately following the Treasury Board Committee’s approval of the Regulations and prior to CETA’s provisional application. A Notice to Exporters providing the administrative processes for the Origin Quotas will be posted on the Global Affairs Canada Export and Import Controls website. This information will also be included in a Canada Border Services Agency (CBSA) D-memorandum which will be made available on the CBSA website and linked to the Global Affairs Canada website. The issuance of export permits will be subject to Global Affairs Canada’s service standards for the delivery of permits. Global Affairs Canada’s current service standards require that

Contact

Reuben East
Deputy Director
Trade Controls Policy Division (TIC)
Global Affairs Canada
111 Sussex Drive
Ottawa, Ontario
Telephone: 343-203-4365
Email: reuben.east@international.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to section 12 (see footnote a) of the Export and Import Permits Act (see footnote b), proposes to make the annexed Export Permits Regulations (Non-strategic Products).

Interested persons may make representations concerning the proposed Regulations within 15 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Reuben East, Deputy Director, Trade Controls, Global Affairs Canada, 111 Sussex Drive, Ottawa, Ontario K1N 1J1 (tel.: 343-203-4365; fax: 613-996-0612; email: Reuben.East@international.gc.ca).

Ottawa, July 13, 2017

Jurica Čapkun
Assistant Clerk of the Privy Council

Export Permits Regulations (Non-strategic Products)

Interpretation

Definition of product

1 In these Regulations, product means any product referred to in items 5201 to 5210 of Group 5 of the schedule to the Export Control List.

Permit

Application

2 An application under subsection 7(1) of the Export and Import Permits Act or a request under section 8.31 of that Act for a permit to export a product shall include, in the form provided by the Minister,

Amendments

3 (1) An export permit holder may, in writing, before the expiry date of the permit, make a request to the Minister to amend the permit. The request must state the terms and conditions of the permit in respect of which the amendment is being requested and the reasons for the amendment.

Approval

(2) If the request is approved, the letter of the Minister amending the permit, together with the original permit, becomes a valid permit.

Coming into Force

4 These Regulations come into force on the day on which section 15 of the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, chapter 6 of the Statutes of Canada, 2017, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

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