Vol. 133, No. 17 — August 18, 1999

Registration
SOR/99-317 28 July, 1999

CUSTOMS TARIFF

European Union Surtax Order

P.C. 1999-1323 28 July, 1999

His Excellency the Governor General in Council, pursuant to subsection 53(2) and section 79 of the Customs Tariff (see footnote a), on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, for the purposes of responding to the failure of the governments of the countries of the European Union to comply with a World Trade Organization decision requiring the member states of the European Union to bring certain measures imposed by the European Commission that restrict access for Canadian-produced beef into conformity with their obligations which failure adversely affects trade in goods of Canada, hereby makes the annexed European Union Surtax Order.

EUROPEAN UNION SURTAX ORDER

INTERPRETATION

1. In this Order, "EU goods" means the goods that are described in column 2 of Schedule 1 or Schedule 2 and classified under the tariff item set out opposite that description, and that originate in Austria, Belgium, Denmark, Finland, France, Federal Republic of Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden or the United Kingdom of Great Britain and Northern Ireland.

APPLICATION

2. This Order does not apply to EU goods that are in transit to Canada on the day on which this Order comes into force.

SURTAX

3. The EU goods that are described in Schedule 1 are hereby made subject to a surtax in an amount equal to the value for duty determined in accordance with sections 45 to 55 of the Customs Act less the customs duty calculated in accordance with the Customs Tariff in respect of those goods.

4. The EU goods that are described in Schedule 2 and imported into Canada in a quantity in excess of 2,970 metric tonnes in the twelve-month period beginning on the day on which this Order comes into force are hereby made subject to a surtax in an amount equal to the value for duty determined in accordance with sections 45 to 55 of the Customs Act less the customs duty calculated in accordance with Customs Tariff in respect of those goods.

AMENDMENTS TO THE IMPORT CONTROL LIST

5. The Import Control List (see footnote 1) is amended by adding the following after item 193:

194. Other cuts of swine, frozen, that originate in Austria, Belgium, Denmark, Finland, France, Federal Republic of Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden or the United Kingdom of Great Britain and Northern Ireland and that are classified under tariff item No. 0203.29.00 in the List of Tariff Provisions set out in the schedule to the Customs Tariff.

COMING INTO FORCE

6. This Order comes into force on August 1, 1999.

SCHEDULE 1
(Sections 1 and 3)

Column 1 Tariff Item No.	Column 2 Description of Goods
0201.10.10	Carcasses and half-carcasses of bovine animals, fresh or chilled, within access commitment
0201.10.20	Carcasses and half-carcasses of bovine animals, fresh or chilled, over access commitment
0201.20.10	Other cuts of bovine animals, with bone in, fresh or chilled, within access commitment
0201.20.20	Other cuts of bovine animals, with bone in, fresh or chilled, over access commitment
0201.30.10	Meat of bovine animals, boneless, fresh or chilled, within access commitment
0201.30.20	Meat of bovine animals, boneless, fresh or chilled, over access commitment
0202.10.10	Carcasses and half-carcasses of bovine animals, frozen, within access commitment
0202.10.20	Carcasses and half-carcasses of bovine animals, frozen, over access commitment
0202.20.10	Other cuts of bovine animals, with bone in, frozen, within access commitment
0202.20.20	Other cuts of bovine animals, with bone in, frozen, over access commitment
0202.30.10	Meat of bovine animals, boneless, frozen, within access commitment
0202.30.20	Meat of bovine animals, boneless, frozen, over access commitment
0203.11.00	Carcasses and half-carcasses of swine, fresh or chilled
0203.12.00	Hams, shoulders and cuts thereof, of swine, with bone in, fresh or chilled
0203.19.00	Other cuts of swine, fresh or chilled
0203.21.00	Carcasses and half-carcasses of swine, frozen
0203.22.00	Hams, shoulders and cuts thereof, of swine, with bone in, frozen
0206.29.00	Edible offal of bovine animals, frozen, excluding tongues and livers
0707.00.99	Cucumbers and gherkins, fresh or chilled, other than for processing
1602.20.90	Prepared or preserved meat of liver of any animal, excluding the following: - sausage and similar products of meat, meat offal or blood, - food preparations based on meat, meat offal or blood, - paste of fowls of the species Gallus domesticus or of turkeys, not in cans or glass jars
1602.42.10 and 1602.42.90	Prepared or preserved meat of swine, being shoulders and cuts thereof
1602.49.10 and 1602.49.90	Other prepared or preserved meat, meat offal or blood of swine, including mixtures
1602.50.10, 1602.50.91 and 1602.50.99	Prepared or preserved meat, meat offal or blood of bovine animals, excluding sausages and similar products

SCHEDULE 2
(Sections 1 and 4)

Column 1 Tariff Item No.	Column 2 Description of Goods
0203.29.00	Other cuts of swine, frozen

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Order.)

Description

This Order imposes a one hundred per cent (100%) duty on certain items originating from the European Union (EU) beginning on August 1st, 1999.

On January 1, 1989, the EU imposed a ban on imports of meat derived from cattle treated with growth-promoting hormones. Canada's exports of beef and beef products declined from 4,000 tonnes to less than 500 tonnes in the years following the ban. Canada consistently opposed the import ban on the grounds that it was not based on scientific evidence and therefore created an unjustified barrier to trade. The safety of the growth-promoting hormones at issue was endorsed in June 1995 by the Codex Alimentarius, which is the internationally accepted food safety standard setting body, on the basis that these hormones, when used according to accepted animal husbandry practices, do not pose a risk to human health. Canada challenged the EU measure in the WTO. Both a WTO Panel and the WTO Appellate Body found the EU in violation of certain of its obligations under the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) of the WTO. The Dispute Settlement Body of the WTO adopted these rulings on February 13, 1998. A subsequent arbitration concerning the implementation period directed the EU to bring its measures into compliance with the WTO ruling by May 13, 1999. The EU has failed to do so.

Canada's objective remains access to the EU market for Canadian beef. Under WTO rules, Canada is entitled to compensation or, failing agreement on compensation, to retaliate should the EU fail to comply with the WTO ruling. Since Canada and the EU did not agree to a mutually acceptable compensation package prior to June 2, on June 3 Canada requested an authorization to withdraw concessions to the EU at the WTO Dispute Settlement Body (DSB). The EU subsequently requested arbitration on the amount of retaliation Canada is seeking. The arbitrators issued their decision on July 12 and Canada obtained the authorization to retaliate on July 26. The measures provided for in this Order would impose a one hundred percent (100%) tariff on products selected from a list of items, originating from the EU, and published in the Canada Gazette Part I on April 17, 1999.

Should the EU implement the rulings on beef hormones or provide appropriate compensation, this Order would be terminated.

Alternatives

An Order in Council pursuant to the authority in the Customs Tariff, which allows Canada to enforce its rights under a trade agreement in response to policies of another country that adversely affects trade in goods of Canada, is the appropriate method for taking this action.

Benefits and Costs

The WTO provides that, in the event a Member fails to implement a ruling and there is no agreement on appropriate compensation, the complaining party may request authorization from the Dispute Settlement Body to retaliate. By retaliating, Canada is exercising its WTO rights to retrieve tariff concessions on imports of certain agri-food items originating from the EU. A one hundred percent (100%) tariff will be imposed on products valued at $11.3 million and originating from Member States of the EU. While the withdrawal of tariff concessions to the EU will likely prohibit $11.3 million in trade, a failure to take such action would leave open doors for countries to take trade restriction actions against Canada without fear of recourse.

Consultation

Consultations were carried out through publication of a notice in the Canada Gazette Part I on April 17, 1999, where interested parties were invited to submit comments. More than 100 submissions were received by the Department of Finance and the Department of Foreign Affairs and International Trade, in addition to the numerous phone calls. In addition, meetings with different industry representatives were held either with one or more of the three Departments involved in this issue. All comments have been taken into consideration in determining the appropriate action to be taken. The Department of Foreign Affairs and International Trade and Agriculture and Agri-Food Canada have kept informed the public on the progress of the issue through press releases issued regularly.

Compliance and Enforcement

Revenue Canada, which is the Department responsible for the administration of the Customs Tariff, will ensure that the Order will be enforced. The Department of Foreign Affairs and International Trade, which is responsible for the administration of the Export and Import Permits Act, will monitor the quantity of items of schedule 2 shipped and informed Revenue Canada when the surtax is to be applied.

Contact

Marie-France Huot
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Tel.: (613) 996-0628

Footnote a

S.C. 1997, c. 36

Footnote 1

C.R.C., c. 604

NOTICE:
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