Order Amending the Ukraine Goods Remission Order: SOR/2023-121

Canada Gazette, Part II, Volume 157, Number 13

Registration
SOR/2023-121 June 8, 2023

CUSTOMS TARIFF

P.C. 2023-566 June 8, 2023

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Order Amending the Ukraine Goods Remission Order under section 115footnote a of the Customs Tariff footnote b.

Order Amending the Ukraine Goods Remission Order

Amendments

1 Paragraph 3(a) of the Ukraine Goods Remission Order footnote 1 is replaced by the following:

2 Section 4 of the Order is replaced by the following:

Repeal

4 This Order is repealed on June 9, 2026.

3 The Order is amended by adding, after section 5, the schedule set out in the schedule to this Order.

Coming into Force

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

SCHEDULE

(Section 3)

SCHEDULE

(Paragraphs 3(a) and (a.1))

Tariff Item Numbers

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

The Russian Federation, with support from Belarus, continues to violate the sovereignty and territorial integrity of Ukraine. In addition to the devastating impacts on Ukraine’s population and infrastructure, Russia’s unprovoked and unjustifiable invasion has significantly harmed Ukraine’s economy.

Since June 9, 2022, the Government of Canada has provided comprehensive duty relief for one year to Ukrainian goods imported into Canada in support of Ukraine’s manufacturing and trade activities. The relief is set to expire on June 9, 2023. In close coordination with its Allies, Canada will continue supporting Ukraine’s economy by increasing its export opportunities through an extension of the relief measure set to expire on June 9, 2023.

While the import volumes have been small since the remission Order came into effect, supply-managed sectors have voiced concerns that, over time, extending remission to products subject to Canada’s supply management system (i.e. dairy, poultry and eggs) could undermine production planning, should import volumes reach significant levels in the future. To ensure predictable levels of imports for over-access supply-managed goods and support production planning by domestic producers, the relief measure will be modified to exclude over-access products subject to the supply management system.

Background

On February 24, 2022, Russian military forces invaded the sovereign country of Ukraine, including through the territory of Belarus with the permission of that country’s government.

From the beginning of the war in Ukraine, the Government of Canada has responded against Russia and Belarus, a broad range of measures and sanctions to the violation of sovereignty and of international law, in close coordination with our Allies and partners. This response included trade-restrictive measures under the Customs Tariff. Furthermore, the Government of Canada has supported Ukraine, including with development, humanitarian, military and economic assistance.

The Canada-Ukraine Free Trade Agreement (CUFTA), which entered into force on August 1, 2017, represents an important milestone in the Canada-Ukraine relationship that bring economic benefits to both countries. In April 2023, Canada and Ukraine announced the conclusion of CUFTA modernization negotiations and are working toward timely implementation.

To provide further economic support to Ukraine, since June 9, 2022, the Ukraine Goods Remission Order (the Order) has provided additional temporary and comprehensive duty relief for one year to Ukrainian goods imported into Canada. Under this measure, temporary relief from customs, anti-dumping and countervailing duties was provided for all Ukrainian goods, along with more flexible requirements than those for imports under the CUFTA, which currently provides duty-free treatment for all Ukrainian goods except certain refined sugars and over-quota supply-managed goods (i.e. dairy, poultry and eggs). From June 2022 through May 2023, imports under the Order have resulted in approximately $7.5 million in customs duties remitted, including for certain household appliances, wood floorings, vegetable oils, and frozen chicken products. Despite concerns raised by the supply-managed sectors, total imports under the Order have been minimal and have had no impact on domestic industries and their operations.

Given the enduring nature of the conflict that continues to significantly disrupt and harm Ukraine’s economy, Canada is extending temporary tariff relief to June 9, 2024. This action is aligned with those of Canada’s allies and partners, including the European Union (EU) and the United Kingdom that extended by another year their suspensions of tariffs and import quotas for all Ukrainian goods, in force since late spring 2022. The EU also extended suspended anti-dumping duties and steel global safeguard measures against Ukraine. The United States did not provide comprehensive tariff or trade remedies relief but did implement a one-year suspension of the section 232 tariffs on Ukrainian steel on June 1, 2022.

Objective

The objective of this Order is to amend the Ukraine Goods Remission Order to extend relief of customs duties, anti-dumping duties, and countervailing duties that are applicable or may be applicable on Ukrainian goods to encourage increased exports from Ukraine to Canada until June 9, 2024, while ensuring predictable levels of imports for over-access supply-managed goods in support of production planning by domestic sectors.

Description

The Order remits customs duties paid or payable under the Customs Tariff, as well as anti-dumping and countervailing duties paid or payable under the Special Import Measures Act, for all goods originating in Ukraine and imported into Canada, with the exception of over-access supply-managed products (i.e. dairy, poultry and eggs) after June 9, 2023, unless these goods were already in transit to Canada on or before that date.

Remission of duties under the Order is temporary, applying from June 9, 2023, to June 9, 2024.

Regulatory development

Consultation

Since June 9, 2022, the Government has tracked importations closely and has maintained an ongoing dialogue on the effects of the original Order with domestic industry stakeholders, including with the supply-managed producers and processors of dairy, poultry and eggs, who requested that duty remission not be renewed for over-access supply-managed products given their concerns that this could undermine production planning over time, should import volumes reach significant levels.

The extension of the remission Order addresses this request and the Government will continue to monitor imports and also maintain this ongoing dialogue with stakeholders. Given the exceptional and urgent nature of this measure, and the modification that reflects stakeholder views already expressed over the past year, dedicated formal public consultations were not conducted. As such, this Order was granted an exemption from the requirement to prepublish in the Canada Gazette, Part I.

Modern treaty obligations and Indigenous engagement and consultation

The proposal is not expected to impact potential or established Aboriginal or treaty rights, which are recognized and affirmed in section 35 of the Constitution Act, 1982.

Instrument choice

Making an order in council under section 115 of the Customs Tariff is the most appropriate mechanism to temporarily extend relief from customs duties, anti-dumping duties, and countervailing duties to support exports from Ukraine to Canada.

Regulatory analysis

Benefits and costs

Providing remission of customs duties, anti-dumping duties, and countervailing duties will continue to encourage economic activity where possible in Ukraine. Extension to June 9, 2024, is necessary given the enduring nature of the conflict and its repercussions for Ukrainian production and trade.

The Order will complement the tariff preferences provided by Canada under the CUFTA for Ukrainian goods, including through the exclusion of over-access dairy, poultry and eggs to ensure predictable levels of imports of these goods, while continuing to temporarily grant enhanced market access (i.e. for certain refined sugars not tariff-free under CUFTA), along with more flexibility in meeting import requirements to benefit from tariff-free treatment compared to the CUFTA (e.g. rules of origin and shipment documentation requirements).

Based on this, about $3.2 million in duties are expected to be remitted from June 9, 2023, to June 9, 2024, which represents a transfer payment from general revenues to Canadian importers. The Government of Canada will continue to monitor imports from Ukraine under the extended Order.

Small business lens

For some small businesses that may import Ukrainian goods, the Order would provide relief from duties as well as cost savings resulting from a reduced burden of proof to access duty relief, namely an exemption from having to provide certificates of origin demonstrating that their goods were produced in Ukraine.

One-for-one rule

The one-for-one rule applies since there is an incremental decrease in administrative burden on business, and the proposal is considered burden out under the rule. No regulatory titles are repealed or introduced.

The regulations will temporarily lift requirements to provide documentation in support of preferential tariff treatment, such as proof of origin. It is anticipated that this will save approximately 1 minute of time for each importation made by an estimated 179 importers who in total process 7 676 transactions per year. Assuming this task is performed at the average Canadian salary, this amounts to estimated annualized savings of $387, as measured using the required method under the Red Tape Reduction Regulations (measured at 2012 price levels and discounted to 2012).

Regulatory cooperation and alignment

There is no regulatory cooperation component to this Order.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

This Order would come into force upon registration to extend duty relief from June 9, 2023, to June 9, 2024. The Government will continue to monitor imports and engage with stakeholders that may be affected by the remission Order. The Canada Border Services Agency (CBSA) will monitor compliance with the terms and conditions of the Order in the normal course of its administration of customs and tariff-related legislation and regulations. The CBSA has informed importers through the publication of a Customs Notice that provides information on making claims of remission (i.e. refunds of relevant duties paid or waiver of duties payable).

Contact

Yannick Mondy
Director
Trade and Tariff Policy
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Email: tariff-tarif@fin.gc.ca