Order Repealing the Certain Goods Remission Order (COVID-19): SOR/2022-78
Canada Gazette, Part II, Volume 156, Number 9
Registration
SOR/2022-78 April 7, 2022
CUSTOMS TARIFF
P.C. 2022-342 April 6, 2022
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 115footnote a of the Customs Tariff footnote b, makes the annexed Order Repealing the Certain Goods Remission Order (COVID-19).
Order Repealing the Certain Goods Remission Order (COVID-19)
Repeal
1 The Certain Goods Remission Order (COVID-19) footnote 1 is repealed.
Coming into Force
2 This Order comes into force on the 30th day after the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
The Certain Goods Remission Order (COVID-19) [the temporary Remission Order], which has temporarily waived customs duties on medical goods, including personal protective equipment (PPE), has fulfilled its objectives of helping address supply shortages of medical supplies in Canada, including PPE. As the measure is no longer warranted, it is being repealed.
Background
The outbreak of COVID-19 led to a sharp increase in domestic demand for medical supplies, including PPE. As part of the Government’s broader response to mitigate the economic impacts of COVID-19 and support sourcing options at a lower cost for critical goods needed to combat the pandemic, the Government implemented the temporary Remission Order. Effective May 4, 2020, this Order temporarily waived otherwise applicable customs duties on imports of specified medical supplies, including PPE. Tariff relief for specified goods was made available to all importers, including businesses, distributors, and individual Canadians. Key categories of products covered by the temporary Remission Order included diagnostic test kits, face and eye protection, gloves, protective garments, disinfectants/sterilization products, medical devices, thermometers, wipes and medical consumables, and other goods (e.g. soap). The temporary Remission Order reduced the cost of importing these goods, with the primary goal of better equipping Canadian businesses, essential service providers, and Canadians with necessary medical supplies, including PPE.
Since its implementation, the Government has continued to monitor the usage of the temporary Remission Order, as well as domestic supply and demand of medical goods in Canada, and has concluded that domestic shortages of medical goods, including PPE, have been resolved and Canada is no longer in an emergency scenario that warrants this temporary tariff relief.
The temporary Remission Order was adopted following another COVID-19 measure announced on March 16, 2020, which temporarily broadened the entities eligible for relief from customs duties and the Goods and Services Tax and the Harmonized Sales Tax (GST/HST) under the Goods for Emergency Use Remission Order, to include certain health-care entities and first responders. Since no claims for customs duties relief were claimed under this measure, it will end on the date on which the repeal of the temporary Remission Order becomes effective.
Objective
The objective of the Order Repealing the Certain Goods Remission Order (COVID-19) [the Order] is to repeal the temporary Remission Order implemented at the outset of the COVID-19 pandemic to temporarily waive customs duties applicable to the importation of medical supplies, including PPE.
Description
The Order Repealing the Certain Goods Remission Order (COVID-19) reinstates applicable customs duties on imports of specified medical supplies, including PPE, that were waived on a temporary and emergency basis in response to the COVID-19 pandemic. Repealing the temporary Remission Order reinstates most-favoured nation (MFN) tariffs on specified goods, including PPE, to the rates in effect immediately before the temporary Remission Order took effect. These MFN rates range from 6% to 18%.
The Order will take effect 30 days from the date on which it is registered in order to provide advanced notice to the importing community. Goods already in transit to Canada prior to the date of effect of the repeal may continue to benefit from relief under the temporary Remission Order, subject to the conditions specified therein.
Canadians will continue to benefit from other relief implemented by the Government to make PPE more affordable for Canadians, including the removal of the GST/HST from the purchases of face masks and face shields announced in December 2020, which remains in place until face coverings are no longer broadly recommended by public health guidelines.
Importers may also be eligible to claim other targeted tariff relief for goods that were previously covered by the scope of the temporary Remission Order, such as by claiming preferential tariff treatment for imports from Canada’s free trade agreement partners, or conditional tariff relief for goods to be used in a medical environment as described in the Canada Border Services Agency (CBSA) Memorandum D10-15-26.
Regulatory development
Consultation
The Order terminates a temporary emergency measure implemented in response to the COVID-19 pandemic. Public consultations were not undertaken due to the need to respond expeditiously to the extraordinary public health situation. The Government indicated at the time of implementation that the measure would be temporary and remain in effect only as long as the COVID-19 situation warranted. As supply shortages of medical equipment, including PPE, have now been addressed, and other short-term measures to address supply shortages are being phased out, the measure is no longer required and will be terminated, consistent with the phase out of other broad-based emergency measures. The Order has been exempt from prepublication in the Canada Gazette, as this would impact the Government’s ability to promptly end the measure in line with similar actions being taken in the immediate term as part of the transition to more targeted support measures.
Modern treaty obligations and Indigenous engagement and consultation
This Order is not expected to impact Indigenous peoples. Any individual or business importing products into Canada may be subject to the re-imposed tariffs, to the extent they are importing a product previously covered by the scope of the temporary Remission Order and for which other forms of tariff relief are not available.
Instrument choice
The only viable mechanism to repeal the Certain Goods Remission Order (COVID-19) is by an Order on the recommendation of the Minister of Finance pursuant to section 115 of the Customs Tariff.
Regulatory analysis
Benefits and costs
Repealing the temporary Remission Order will reinstate MFN tariffs on specified goods, including PPE, to the rates in effect immediately before the temporary Remission Order took effect, representing a return to the status quo before the COVID-19 pandemic. For businesses that claimed the benefits of the temporary Remission Order for imports covered by the scope of the temporary Remission Order, the Order could increase costs for these businesses back to pre–COVID-19 levels, unless another form of tariff relief is available.
The Government communicated upon implementation that the Remission Order would be temporary and remain in effect as long as warranted by the COVID-19 situation.
From implementation in May 2020 through January 2022, the temporary Remission Order has resulted in approximately $653 million in savings for importers, which also represent foregone tariff revenues for the Government. Based on recent trade patterns, it is estimated that repealing the temporary Remission Order would have a positive impact on Government tariff revenues of approximately $324 million annually, which represents a corresponding cost to importers in the form of higher customs duties.
Small business lens
This Order could increase costs for some businesses that claimed the benefits of the temporary Remission Order for imports covered by the scope of the temporary Remission Order, including potentially small businesses, by reinstating specified tariffs to the MFN rates in effect immediately before the temporary Remission Order took effect. Since tariffs are measures of general application that cannot distinguish between the size of businesses, the Order will take effect 30 days from the date on which it is registered in order to provide advanced notice to the importing community.
One-for-one rule
The one-for-one rule applies, since the temporary Remission Order is being repealed, and considered a title out. There will be no change in the standard customs documentation required for imported goods as a result of the repeal of the Certain Goods Remission Order (COVID-19). As a result, this Order will not result in any new administrative costs or savings to business.
Regulatory cooperation and alignment
This Order does not represent the imposition of any new tariffs, but rather reinstates MFN tariffs on specified goods, including PPE, to the rates in effect immediately before the temporary Remission Order took effect. As a result, repealing the temporary Remission Order is consistent with Canada’s commitments under the World Trade Organization agreements and its free-trade agreements.
Strategic environmental assessment
The Department of Finance undertook a preliminary environmental scan and concluded that no significant environmental effects are expected, whether positive or negative.
Gender-based analysis plus (GBA+)
No groups are expected to be disproportionately affected by the Order. Any individual or business importing products into Canada may be subject to the re-imposed tariffs, to the extent they are importing a product previously covered by the scope of the temporary Remission Order and other forms of tariff relief are not available.
Implementation, compliance and enforcement, and service standards
The CBSA is responsible for administering the Customs Tariff and its regulations. The CBSA will inform importers of administrative issues related to this Order, as appropriate.
Contact
Yannick Mondy
International Trade Policy Division
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: fin.tariff-tarif.fin@canada.ca