Order Amending the Order Amending the Export Control List: SOR/2020-148

Canada Gazette, Part II, Volume 154, Number 14

Registration

SOR/2020-148 June 26, 2020

EXPORT AND IMPORT PERMITS ACT

P.C. 2020-493 June 25, 2020

Whereas the Governor in Council deems it necessary to control the export or transfer of goods for the purposes of implementing an intergovernmental arrangement or commitment and ensuring the orderly export marketing of goods that are subject to a limitation imposed by a country on the quantity of the goods that, on importation into that country in any given period, is eligible for the benefit provided for goods imported within that limitation;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to paragraphs 3(1)(d) and (f) footnote a and section 6 footnote b of the Export and Import Permits Act footnote c, makes the annexed Order Amending the Order Amending the Export Control List.

Order Amending the Order Amending the Export Control List

Amendments

1 Section 3 of the Order Amending the Export Control List footnote 1 is amended by replacing the Item 5203 that it enacts with the following:

5203 Sugar-containing products as follows:

2 Section 4 of the Order is amended by replacing the Item 5204 that it enacts with the following:

5204 Sugars, syrups and molasses as follows:

Coming into Force

3 This Order comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

The Canada-United States-Mexico Agreement (CUSMA), which replaces the North American Free Trade Agreement (NAFTA) and entered into force on July 1, 2020, provides important outcomes in key areas, including market access, rules of origin for automotive manufacturing, agriculture, labour, environment, intellectual property rights, culture, and dispute settlement. CUSMA is expected to strengthen the trilateral commercial relationship and provide much-needed stability and predictability for Canadian businesses and workers.

A tariff rate quota (TRQ) is a mechanism whereby a set annual amount of a specific product may be imported at a reduced or zero rate of duty. This is commonly referred to as the “within access commitment”. An important feature of a TRQ is that it does not function as an absolute quantitative limit on the amount of product that may be imported. The “within access commitment” is, therefore, complemented by an “over access commitment”. The latter does not set any limits on the amount of product that may be imported, but applies a different, generally higher, rate of duty. Imports face this higher rate of duty once the “within access commitment” amount has been reached or when certain requirements associated with the “within access commitment” are not satisfied (e.g. the product does not meet the origin requirements and cannot qualify for within access preferential treatment). A country may designate certain tariff codes specific to the within access goods, and other tariff codes for goods entering at the over access tariff rate. In some cases, the codes are not specific to the type of access commitment. Permits may be implemented for goods under a certain TRQ for the purposes of implementing an intergovernmental arrangement or commitment and ensuring orderly export marketing of the goods to allow companies to export predictably at the within access or over access rate of duty.

In order to implement export controls for two new United States’ TRQs for sugar-containing products and refined sugar under CUSMA, and the requirement for export permits as requested by stakeholders, new tariff codes were added to the Export Control List (ECL) under item numbers 5203 and 5204, effective July 1, 2020. These amendments were approved by the Governor in Council on April 3, 2020, and published in the Canada Gazette, Part II, on April 29, 2020. However, including over access tariff codes in the amendments would have resulted in an unintended increase in the administrative burden for exporters if no amendments had been made prior to July 1, 2020, such that all exports, both within access and over access goods into these TRQs to the United States, would have required export permits.

Objective

The amendments ensure that only CUSMA TRQ within access goods are controlled for the purposes of implementing an intergovernmental arrangement or commitment and ensure orderly export marketing of these goods.

Description and rationale

The Export Control List is amended such that only within access goods under items 5203 and 5204 are included for the purposes of implementing an intergovernmental arrangement or commitment and ensuring orderly export marketing of these goods.

Consultation

The Government of Canada consulted regularly through the CUSMA negotiations with provincial and territorial governments and stakeholder groups. As the above-mentioned regulatory amendments are consequential to CUSMA, further consultation and pre-publication were not necessary. These amendments are intended to limit the administrative burden for exporters of sugar-containing products and refined sugar.

Benefits and costs

The amendments will ensure that only CUSMA TRQ within access sugar-containing products and refined sugar goods are controlled for exports. The amendments reduce the unintended administrative burden that would have resulted from the April 2020 amendments to the Export Control List. There are no associated costs with these amendments.

Small business lens

Analysis under the small business lens determined that the amendments will not impact small businesses in Canada.

One-for-one rule

The one-for-one rule does apply as there is a decrease in administrative burden on businesses compared to the original intent of the amendments to the Export Control List requiring export permits for all sugar-containing products and refined sugar exports under CUSMA. However, the original administrative burden was exempted from the one-for-one rule. Accordingly, this reduction in administrative burden cannot be counted as an “out” under the one-for-one rule.

Regulatory cooperation and alignment

While these amendments implement a non-discretionary obligation that Canada agreed to within the context of a binding international agreement, these are not related to a work plan or commitment under a formal regulatory cooperation forum.

Implementation

Global Affairs Canada’s Trade and Export Controls Bureau is responsible for issuing permits and will lead on the implementation of these amendments. Information concerning any changes arising from these amendments will be made publicly available to exporters via publication on the Global Affairs Canada website prior to CUSMA’s entry into force.

Contact

Elizabeth Clarke
Deputy Director
Non-Supply Managed Trade Controls Division
Global Affairs Canada
111 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343‑203‑4366
Fax: 343‑996‑0612
Email: Elizabeth.Clarke@international.gc.ca