ARCHIVED — Vol. 146, No. 21 — October 10, 2012

Registration

SOR/2012-179 September 20, 2012

CUSTOMS TARIFF

CJFTA Rules of Origin Regulations

P.C. 2012-1080 September 20, 2012

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 16(2) (see footnote a) of the Customs Tariff (see footnote b), hereby makes the annexed CJFTA Rules of Origin Regulations.

CJFTA RULES OF ORIGIN REGULATIONS

RULES OF ORIGIN

1. The following provisions of the Free Trade Agreement between Canada and the Hashemite Kingdom of Jordan, signed on June 28, 2009, have the force of law in Canada:

  • (a) Articles 4-1 and 4-2;

  • (b) Article 4-3, paragraph 1;

  • (c) Articles 4-4 to 4-13;

  • (d) Article 4-15; and

  • (e) Annex 4-1.

COMING INTO FORCE

2. These Regulations come into force on the day on which section 32 of the Canada–Jordan Economic Growth and Prosperity Act, chapter 18 of the Statutes of Canada, 2012, comes into force.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Executive summary

Issue: The Canada-Jordan Free Trade Agreement (CJFTA) was signed on June 28, 2009, and the Canada–Jordan Economic Growth and Prosperity Act (the Act) received Royal Assent on June 29, 2012. Regulations are also necessary to fully implement the CJFTA in Canada.

Description: These regulations are required in order to fully implement Canada’s obligations under the CJFTA. They link the preferential tariff treatment provided for under the CJFTA, and implemented in the Customs Tariff by the Act, with the rules of origin necessary to determine whether goods qualify for that preferential tariff treatment.

Cost-benefit statement: Based on current trading patterns, it is estimated that, under the CJFTA, the annual duties foregone by the Government of Canada when the CJFTA is fully implemented will be approximately $2.6 million. These duties foregone represent a benefit, in the form of lower customs duties paid by Canadian importers of Jordan-originating products. The CJFTA will provide Canadian exporters with increased access to the Jordanian market.

Business and consumer impacts: The CJFTA is expected to result in increased trade flows between Canada and Jordan. Removal of tariffs in Canada will lower costs to Canadian importers.

Domestic and international coordination and cooperation: These regulations implement the CJFTA in Canada signed on June 28, 2009, and coming into force on October 1, 2012.

Issue

The Canada-Jordan Free Trade Agreement (CJFTA) was signed on June 28, 2009, and the Canada–Jordan Economic Growth and Prosperity Act (the Act) received Royal Assent on June 29, 2012. Regulations are also necessary to fully implement the CJFTA in Canada. The Agreement will come into force on October 1, 2012.

Objectives

When implementing free trade agreements in Canada, an Act and associated regulations are necessary to implement commitments into the Canadian legal framework. Therefore, these regulations are required to fully implement Canada’s obligations under the CJFTA.

Description

The CJFTA Rules of Origin Regulations implement, in Canada, the rules of origin negotiated by Canada and Jordan, which will be used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment under the CJFTA. Preferential tariff treatment under the CJFTA, which reflects the actual reduction in specific rates of duty, has been implemented in the Customs Tariff through the Act.

The CJFTA Rules of Origin for Casual Goods Regulations establish the conditions under which goods acquired in Jordan by travellers are considered originating and therefore entitled to preferential tariff treatment. Where travellers acquire goods in Jordan and goods are either marked “made in Jordan” or not marked to the contrary, the traveller can claim the Jordan tariff preference on importation of the goods into Canada.

The CJFTA Tariff Preference Regulations allow eligible goods that are not shipped directly between Jordan and Canada to retain their eligibility for preferential tariff rates provided goods remain under customs control in third countries.

Regulatory and non-regulatory options considered

These regulations, pursuant to subsection 16(2) of the Customs Tariff, are necessary to fulfill Canada’s obligations under the CJFTA. There are no other practical alternatives.

Benefits and costs

These regulations are necessary to fully implement Canada’s commitments under the CJFTA. Canada and Jordan already enjoy good economic and trade relations. Canada’s two-way merchandise trade with Jordan totalled $89.0 million in 2011. The value of Canadian exports to Jordan was $70.1 million for 2011, up from $31 million in 2003. Imports totalled $18.7 million in 2011. Major Canadian exports to Jordan include pulse crops (mainly lentils and chickpeas), forest products, vehicles, machinery and plastics. Major imports from Jordan consist of knit and woven apparel, inorganic chemicals and vegetables.

Based on current trading patterns, it is estimated that, under the CJFTA, the annual duties foregone by the Government of Canada when the CJFTA is fully implemented will be approximately $2.6 million. These duties foregone represent a benefit in the form of lower customs duties paid by Canadian importers of Jordan-originating products. With the removal of tariffs in Canada, increased imports from Jordan could be expected, thus potentially leading to enhanced customs duty savings by Canadian importers. Moreover, the removal of tariffs in the Jordanian market should help Canadian exporters further penetrate those markets, potentially leading to increased exports. The reduction of Jordanian tariffs on Canadian goods would help make Canadian exporters more competitive in a range of sectors, including industrial and electrical machinery, auto parts, construction equipment and forestry products, such as wood building materials and paper. As well, this reduction of Jordanian tariffs on Canadian goods would help make Canadian exporters more competitive in agriculture and agri-food products, such as pulse crops.

Rationale

These regulations are necessary to fully implement Canada’s commitments under the CJFTA. The CJFTA was signed on June 28, 2009, and the Act implementing the CJFTA in Canada received Royal Assent on June 29, 2012. More specifically, the regulations link the preferential tariff treatment provided for under the CJFTA, and implemented in the Customs Tariff by the Act, with the rules of origin necessary to determine whether goods qualify for that preferential tariff treatment.

Canada has already implemented similar regulations for purposes of its other bilateral and regional free trade agreements (FTAs), including the North American Free Trade Agreement, the Canada-Chile FTA, the Canada-Israel FTA, the Canada-Costa Rica FTA, the Canada-European Free Trade Association FTA, the Canada-Peru FTA and the Canada-Colombia FTA.

Consultation

On February 20, 2008, the Government of Canada announced the launch of free trade negotiations with Jordan, following extensive consultations to gauge Canadians’ interests and sensitivities. Canadian manufacturers, importers and exporters were consulted extensively and kept informed of developments throughout the negotiations, including on issues concerning rules of origin. The CJFTA was signed on June 28, 2009, and is supported by a broad cross-section of Canadian stakeholders.

Implementation, enforcement and service standards

The Canada Border Services Agency (CBSA) will monitor compliance with the terms and conditions of these regulations in the normal course of its administration of customs and tariff-related legislation and regulations. As in the case of previous free trade agreements, the CBSA will update its systems to account for the implementation in Canada of the CJFTA and will inform importers of all relevant CJFTA-related issues pertaining to these regulations.

Contact

Colleen Brock
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Telephone: 613-996-5470

Footnote a
S.C. 2001, c. 28, s. 34(1)

Footnote b
S.C. 1997, c. 36