Registration

SOR/2008-282 September 5, 2008

EXPORT AND IMPORT PERMITS ACT

Order Amending the Import Control List

P.C. 2008-1680 September 5, 2008

Whereas the Government of Canada and the European Communities have committed, on June 12, 2008, to modify, in Canada’s schedule of concessions pursuant to the Agreement Establishing the World Trade Organization, Canada’s concession on tariff item No. 3504.00.00 in the List of Tariff Provisions set out in the schedule to the Customs Tariff (see footnote a) with regard to certain milk protein substances;

Whereas the Government of Canada and the Government of Switzerland have committed, on the same date, to make the same modification;

And whereas the Governor in Council deems it necessary to control the import of certain milk protein substances for the purpose of implementing those commitments;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to paragraph 5(1)(e) and section 6 (see footnote b) of the Export and Import Permits Act (see footnote c), hereby makes the annexed Order Amending the Import Control List.

ORDER AMENDING THE IMPORT CONTROL LIST

AMENDMENT

1. The Import Control List (see footnote 1) is amended by adding the following after item 125.1:

125.2 Milk protein substances with a milk protein content of 85% or more by weight, calculated on a dry matter basis, that do not originate in a NAFTA country, Chile, Costa Rica or Israel and that are the subject of two commitments signed by the Government of Canada on June 12, 2008, one with the European Communities and the other with the Government of Switzerland, relating to the modification, in Canada’s schedule of concessions pursuant to the Agreement Establishing the World Trade Organization, to Canada’s concession on tariff item No. 3504.00.00 in the List of Tariff Provisions set out in the schedule to the Customs Tariff with regard to those substances.

COMING INTO FORCE

2. This Order comes into force on September 8, 2008, but if it is registered after that day, it comes into force on the day on which it is registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issue and objectives

Canada has concluded a re-negotiation of certain of our World Trade Organization (WTO) tariff concessions, initiated under GATT Article XXVIII, with the European Communities (EC) and Switzerland. The tariff concession in question concerns milk protein substances with a milk protein content of 85% or more by weight, calculated on a dry matter basis. In accordance with Section 5 of the Export and Import Permits Act, in order to implement the agreement with the EC and Switzerland, the Import Control List (ICL) must be amended to include Item 125.2, which pertains to milk protein substances with a milk protein content of 85% or more by weight, calculated on a dry matter basis, that are classified under tariff item No. 3504.00.11 or 3504.00.12. Effective September 8, 2008, the Schedule to the Customs Tariff will be amended by the Department of Finance to reflect the conclusion of the negotiations. To ensure effective implementation of the agreement with the EC and Switzerland, the effective date of the ICL amendment must coincide with the effective date of the amendments made to the Schedule to the Customs Tariff, namely September 8, 2008.

Objectives of government intervention by this Order in Council are the following:

1. to implement a change in Canada’s WTO obligations subsequent to a re-negotiation of a tariff concession, as outlined in an intergovernmental arrangement, concluded with the EC and Switzerland; and

2. to establish the import controls that will be necessary to administer the proposed amendments to the Schedule to the Customs Tariff.

Description and rationale

In January 2006, in the case of Les Produits Laitiers Advidia Inc. and the Canada Customs and Revenue Agency (now Canada Border Services Agency), the Federal Court of Appeal upheld a Canadian International Trade Tribunal (CITT) decision concerning the tariff classification of certain milk protein concentrates. The CITT ruling effectively lowered the rate of duty applicable to certain milk protein concentrates (MPCs) to 6.5% from the 270% over-quota tariff formerly applicable.

The Minister of Agriculture and Agri-Food, in April 2006, invited leaders from the Dairy Farmers of Canada (DFC) and the Dairy Processors Association of Canada (DPAC) to form a Dairy Industry Working Group (DIWG) with a view to developing common positions to address this issue, among others, to ensure continued growth and profitability of the dairy industry. The DIWG was not able to reach a consensus. As a result, the DFC requested that the Government initiate Article XXVIII negotiations under the WTO.

In February 2007, the Ministers of Agriculture and Agri-Food Canada and of International Trade Canada announced the Government’s intention to undertake GATT Article XXVIII negotiations to modify Canada’s WTO commitments regarding the tariff treatment of certain imported MPCs. Following this announcement, the Article XXVIII process was launched.

An agreement was reached on the GATT Article XXVIII negotiations and the Schedule to the Customs Tariff will be amended by the Department of Finance to reflect the conclusion of the GATT Article XXVIII process concerning milk protein substances with a milk protein content of 85% or more by weight, calculated on a dry matter basis.

These amendments to the Import Control List are needed in order to implement the results of the Article XXVIII negotiations with the EC and Switzerland. Specifically, the ICL must be amended to include Item 125.2, which pertains to milk protein substances with a milk protein content of 85% or more by weight, calculated on a dry matter basis, that are classified under tariff item No. 3504.00.11 or 3504.00.12. Effective September 8, 2008, the Schedule to the Customs Tariff is deemed to be amended to reflect the conclusion of the negotiations. The effective date of the ICL amendment, therefore, should coincide with the effective date of the amendments made to the Schedule to the Customs Tariff, namely September 8, 2008.

This ICL amendment will have minimal impact on the present costs or savings to the government, industry, consumers or others. Implementation and administration costs to the government are expected to be approximately $12,000.00. The prevalent administrative costs of the tariff rate quota will be import permit issuance fees. These permit issuance costs are not included in the $12,000.00 as this activity is operated on a cost recovery basis. Costs to industry for permit issuance are expected to be approximately $21,000.00 in total based on average permit issuance costs for similar products.

The proposed ICL amendment is needed to implement an intergovernmental arrangement concluded with the EC and Switzerland, resulting from Canada’s GATT Article XXVIII negotiations initiated on April 11, 2007. There are no alternatives available to effectively administer the intergovernmental arrangements in question.

Consultation

The proposed measure is consistent with existing import control policies and is expected to have minimal financial implications for Government, industry, consumers and others and is consistent with Canada’s rights and obligations under the WTO. Any potential controversy arising from this action would be related to the administration of the new quota, which will be addressed through a separate consultation process in the Tariff Rate Quota Advisory Committee (TQAC) for dairy. The TQAC’s mandate is to provide advice regarding the administration of the tariff rate quota (TRQ) allocation system to the Minister of International Trade through his officials, and comprises representatives of all sectors with a direct interest in the TRQ administration, i.e. retailers, importers, wholesalers, processors, further processors, producers and consumers. Therefore, no consultations were held on the measure at issue.

Implementation, enforcement and service standards

A Notice to Importers will be issued by the Department of Foreign Affairs and International Trade to inform industry stakeholders of the addition of Item 125.2 to the Import Control List pertaining to milk protein substances with a milk protein content of 85% or more by weight, calculated on the dry matter, that are classified under tariff item No. 3504.00.11 or 3504.00.12.

Contact

Hugues Leroux
International Trade Officer
Agriculture Section (TICA)
Trade Controls Policy Division
Export and Import Controls Bureau
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-996-2594

Footnote a
S.C. 1997, c. 36

Footnote b
S.C. 1991, c. 28, s. 3

Footnote c
R.S., c. E-19

Footnote 1
C.R.C., c. 604; SOR/89-251

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