CPTPP 

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to save Canadian exporters millions of dollars in tariffs, open markets around the world, and make Canada more competitive in the marketplace.

The CPTPP consists of 11 countries (Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) with a combined GDP of $13.5 trillion (or 13.5% of the global GDP with almost half a billion consumers). Canadian imports from and exports to the 10 other CPTPP countries accounted, respectively, for $72.5 billion and $31.5 billion in 2016.

Other countries looking to join the CPTPP are Colombia, Korea, and Thailand, which are expected to become partners in 2019. This inclusion will raise the CPTPP’s global GDP to 18%.

The industries benefiting most from this agreement is the commodity industry (e.g. agricultural products and natural resources) and more so the service industry (e.g. tourism, computer technology, accounting).  

Under the CPTPP, the product can be made of goods originating from any of the CPTPP countries. This makes producing the good more cost effective and exporting/importing easier with little to no tariffs.

Some of the benefits of the CPTPP agreement include opening markets to Canadian businesses and products, a reduction in price for consumer goods, and no tariffs or a reduction in tariffs on certain goods.

The CPTPP will not only make e-commerce and expedited shipping and customs clearance simpler, it will also have investor protections in place to make doing business in the region more accessible and less risky for businesses.  

CWF estimates there are $1.2 billion in products that consumers in CPTPP markets are already buying. Those markets are prime for Canadian businesses because their traditional American competitors are not in those markets or have limited bilateral agreements with those countries.

Other benefits associated with being a CPTPP member include: filing the same paperwork for all 10 countries, once a product clears one country is it cleared for all, and receiving advance customs rulings. When the CPTPP is implemented, it’s estimated that annual duties foregone by the Canadian government will be about $652 million.

Some of the disadvantages to the agreement include other countries having market access in Canada thus an increase in competition at home.

CBSA has confirmed that there is no requirement to provide proof of CPTPP origin for commercial goods with an estimated value of less than CDN $1,600.

Rules of origin for casual goods

According to the CBSA, casual goods that are acquired in a CPTPP country are considered to originate in that country and are entitled to the benefit of the CPTPP tariff applicable to that country if:

1) the marking of goods is in accordance with the marking laws of that country and the goods are either the product of that country or the product of Canada; or

2) the goods do not bear a mark and nothing indicates that goods are neither the product of the CPTPP country nor the product of Canada.

Rules of origin regulations

Rules of origin regulations are used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment.

Rules of origin custom tariff regulations state a good with a heading of 87.03 qualifies as originating if a change to a good of subheading 87.03 from any other heading; or no change in tariff classification required for a good of heading 87.03, provided there is a regional value content of not less than 40% under the net cost method or 50% under the build-down method.  

Single Window Initiative

Canadian Border Services Agency is implementing a single window initiative beginning in the New Year for goods that fall under nine federal departments. “SWI is mainly an initiative that enhances the ability of customs brokers to streamline their processes, which will expedite the processing and efficiency of executing customs clearance on behalf of importers.  It may also lead to a reduction of fees to importers in certain situations,” said John Quirke, vice-president of trade consulting for Frontier Supply Chain Solutions. The changes will take place on Jan.1, 2019. The SWI has two service options: An Integrated Import Declaration (IID – SO911) and a License, Permit, Certificate and Other Documentation (LPCO Image – SO 927). The benefits of the program are a simplified import process, a reduction in paper, and a decrease in costs, according to the CBSA. The deadline to complete all testing and certification is Jan. 1, 2019. The deadline to close all other service options for the transition is April 1, 2019. All importers are required to contact the person knowledgeable of the shipment for information. SWI for Transport Canada SWI for the Canadian Nuclear Safety Commission SWI for Health Canada  SWI for Clothing, Steel and Agricultural Products SWI for Vehicles and Engines  

Steel and Aluminum Surtaxes

While the new United States-Mexico-Canada Agreement has been finalized and is awaiting final passage through the countries’ legislatures, the issue of Canadian steel and aluminum export tariffs into the U.S. has yet to be resolved.

In light of this, the Canadian government has decided to provide surtax relief on steel imports for Canadian companies.

On Oct. 16, 2018, Finance Minister Bill Morneau appeared before the House of Commons Standing Committee on International Trade where he noted 135 companies have already submitted remission requests.

Morneau provided an update on another category of support which involved loans from the Business Development Bank of Canada and Export Development Canada. He said BDC has authorized loans totalling $131 million for 189 businesses, while EDC has authorized $44 million worth of loans for 24 clients.

To further protect the steel and aluminum industry, the government has announced counter-measures against foreign steel products by charging a surtax of 25% on seven steel products: heavy plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod.

The safeguards took effect on Oct. 25, 2018.

In February 2019, the Canadian government made two amendments to the provisional surtaxes on imported steel goods.

The first was an increase in the volume of energy tubular products and wire rod from Mexico that are free from provisional surtaxes; the second was a surtax exemption of Canadian origin steel re-imported into Canada.

The amendments went into effect on Feb. 2.

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