On September 14, 2017, the Canada Border Services Agency ("CBSA") issued Customs Notice 17-30 "Implementation of the Canada-European Union Comprehensive Economic and Trade Agreement", which sets out some of the final administrative details needed before duty-free imports are processed starting on September 21, 2017. These final details supplement the Canada-EU CETA text, the Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act and various regulations (see Canada Has Published Order-In-Council And Regulations For Canada-EU CETA Implementation).
Customs Notice 17-30 provides the tariff rate code for imports of good originating in a European Union country or included territory. The tariff rate code is put in Box 28 of the B3 Canada Customs Coding Form. Can you use the CEUT tariff rate code?
First, you will have to know the 10-digit H.S. tariff classification number for the good that you wish to import. Please refer to " What is an H.S. Tariff Classification Number?" for guidance.
Whether a good originating in the European Union or an included territory is duty free will depend on whether the good is listed in Canada's Schedule of Commitments in Annex 2-1 of Chapter 2 of the Canada-EU CETA. We have prepared a helpful guide on tariff reductions based on Customs Tariff Chapter. You will use the H.S. tariff classification number to review the Schedule of Commitments.
If the good you wish to import is in the list of Canada's Schedule of Commitments and the duty rate will by 0% after September 21, 2017, you must be entitled to the preferential tariff treatment in order to claim the preferential treatment. Entitlement to the preferential CEUT tariff rate will depend on whether the imported goods are originating under the CETA Protocol on rules of origin and origin procedures. You will have to look up the rule or origin and determine, with the help of the exporter, whether the good satisfies the Canada-EU CETA rule or origin.
You then must follow the steps set out by the CBSA in Customs Notice 17-30. Customs Notice 17-30 requires that you have proof of originating status at the time of importation. The customs procedures are different than NAFTA and other free trade agreements. Under the Canada-EU CETA, the required proof of origin is an Origin Declaration. The Origin Declaration and the various languages in which it may be completed are contained in Annex 2 of the Protocol on Rules of Origin and Origin Procedures. This Origin Declaration may be provided on an invoice or any other commercial document that describes the originating product in sufficient detail to enable its identification. In order to claim the preferential tariff treatment accorded under the CETA, importers must have in their possession the Origin Declaration completed by the exporter in the EU country or other CETA beneficiary of export.
As a general rule, the Origin Declaration should be on each and every invoice you receive from the exporter and cover only the originating goods on the invoice. We are finding that some exporters are not able to apply a digital signature on invoices or are running into difficulties inserting the required statement on invoices. There are other alternatives that should be acceptable to the CBSA.
As a general rule, the goods must be shipped directly from the EU or included territory to Canada. An exception to the general rule is contained in Article 14 of the Protocol on rules of origin and origin procedures, which permits certain transshipment. Article 14 provides that:
- A product that has undergone production that satisfies the requirements of Article 2 shall be considered originating only if, subsequent to that production, the product;
(a) does not undergo further production or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the product to the territory of a Party; and
(b) remains under customs control while outside the territories of the Parties.
- The storage of products and shipments or the splitting of shipments may take place where carried out under the responsibility of the exporter or of a subsequent holder of the products and the products remain under customs control in the country or countries of transit.
What this means is that if EU-origin goods are maintained by a U.S. distributor in a bonded warehouse, they may be able to enter Canada duty-free under the Canada-EU CETA. Please refer to Can Canadian Importers Claim CETA Preferential Tariff Treatment If Goods Are Transshipped?
Before importing the goods using the CEUT preferential tariff treatment, you must determine if the goods are subject to quotas. Cheeses, textiles and apparel goods are subject to quotas. If you do not have an import permit for your shipment of quota goods, you will not be able to claim CEUT tariff treatment even if the goods are listed in Canada's Schedule of Commitments and meet the rule of origin.
With respect to cheese quota, Global Affairs Canada has received applications for import quota allocations and will issue quota on October 2, 2017 for 2017. With respect to textile and apparel goods, the import must request an import permit from Global Affairs Canada. For 2017, import permits will be issued on a first come, first served basis until the 2017 quota is used. The rules are set out in Notice to Imports No. 899 "Textiles and Apparel for Import to Canada from the European Union and its Member States (Items 86.98 and 86.99 on Canada's Import Control List)" issued on September 1, 2017.
If your goods are originating in the EU and the duty is reduced to 0% in the Canada-EU CETA Schedule of Commitments and you have your Origin Declaration and any import permits required and the goods are shipped directly to Canada from the EU (that is, there is no transshipment or the goods may be proved to have been in a customs bonded warehouse if transshipped), you should be entitled to receive the benefits of the Canada-EU CETA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
