Vol. 147, No. 26 — December 18, 2013

Registration

SOR/2013-213 November 29, 2013

CUSTOMS ACT

Regulations Amending Certain Regulations Made Under the Customs Act (CEFTA, CPFTA and CCOFTA)

P.C. 2013-1289 November 28, 2013

Whereas, pursuant to paragraph 167.1(b) (see footnote a) of the Customs Act (see footnote b), the annexed Regulations give effect, in part, to public announcements made on June 29, 2009, July 30, 2009, and August 10, 2011, known as Customs Notice 09-14, Customs Notice 09-018 and Customs Notice 11-013, respectively;

And whereas Customs Notices 09-014, 09-018 and 11-013 provide that the regulatory amendments giving effect to their announcements are to come into force on July 1, 2009, August 1, 2009 and August 15, 2011 respectively;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to subsection 43.1(2) (see footnote c), section 164 (see footnote d) and paragraph 167.1(b) (see footnote e) of the Customs Act (see footnote f), makes the annexed Regulations Amending Certain Regulations Made Under the Customs Act (CEFTA, CPFTA and CCOFTA).

REGULATIONS AMENDING CERTAIN REGULATIONS MADE UNDER THE CUSTOMS ACT (CEFTA, CPFTA AND CCOFTA)

PART 1

AMENDMENTS RETROACTIVE TO JULY 1, 2009

EXPORTERS’ AND PRODUCERS’ RECORDS REGULATIONS

1. The definition “advance ruling” in section 1 of the Exporters’ and Producers’ Records Regulations (see footnote 1) is replaced by the following:

“advance ruling” means an advance ruling referred to in Article 509 of NAFTA, Article 5.8 of CIFTA, Article E-09 of CCFTA, Article V.9 of CCRFTA or Article 28 of Annex C to CEFTA. (décision anticipée)

FREE TRADE AGREEMENT ADVANCE RULINGS REGULATIONS

2. (1) The portion of paragraph 14(b) of the Free Trade Agreement Advance Rulings Regulations (see footnote 2) before subparagraph (i) is replaced by the following:

(2) Paragraph 14(b) of the Regulations is amended by striking out “or” at the end of subparagraph (ii), by adding “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(3) Paragraph 14(d) of the Regulations is replaced by the following:

(4) Paragraph 14(h) of the Regulations is amended by adding the following after subparagraph (iv):

CERTIFICATION OF ORIGIN OF GOODS EXPORTED TO A FREE TRADE PARTNER REGULATIONS

3. Paragraph 3(a) of the Certification of Origin of Goods Exported to a Free Trade Partner Regulations (see footnote 3) is replaced by the following:

DETERMINATION, RE-DETERMINATION AND FURTHER REDETERMINATION OF ORIGIN, TARIFF CLASSIFICATION AND VALUE FOR DUTY REGULATIONS

4. The Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations (see footnote 4) are amended by replacing “Deputy Minister” with “President” in the following provisions:

TARIFF ITEM NOS. 9971.00.00 AND 9992.00.00 ACCOUNTING REGULATIONS

5. The heading before section 2 of the French version of the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations (see footnote 5) is replaced by the following:

DÉCLARATION EN DÉTAIL

6. (1) The portion of section 2 of the French version of the Regulations before paragraph (a) is replaced by the following:

2. L’importateur ou le propriétaire des marchandises, ou la personne autorisée en application de l’alinéa 32(6)a) ou du paragraphe 32(7) de la Loi sur les douanes à faire la déclaration en détail des marchandises, doit, au moment de faire la déclaration aux termes de l’article 32 de cette loi, y joindre les documents suivants :

(2) Paragraph 2(b) of the Regulations is replaced by the following:

REFUND OF DUTIES REGULATIONS

7. The heading of Part 5.1 of the Refund of Duties Regulations (see footnote 6) is replaced by the following:

GOODS IMPORTED FROM COSTA RICA OR AN EFTA STATE

8. Section 23.1 of the Regulations is replaced by the following:

23.1 This Part applies to the granting of a refund under paragraph 74(1)(c.11) of the Act of duties paid on goods that were imported from Costa Rica on or after November 1, 2002 or an EFTA state on or after July 1, 2009, but only if no claim for preferential tariff treatment under CCRFTA or under CEFTA, as the case may be, was made in respect of those goods at the time they were accounted for under subsection 32(1), (3) or (5) of the Act.

9. Paragraph 23.3(b) of the Regulations is replaced by the following:

PART 2

AMENDMENTS RETROACTIVE TO AUGUST 1, 2009

EXPORTERS’ AND PRODUCERS’ RECORDS REGULATIONS

10. The definition “advance ruling” in section 1 of the Exporters’ and Producers’ Records Regulations (see footnote 7) is replaced by the following:

“advance ruling” means an advance ruling referred to in Article 509 of NAFTA, Article 5.8 of CIFTA, Article E-09 of CCFTA, Article V.9 of CCRFTA, Article 28 of Annex C to CEFTA or Article 419 of CPFTA. (décision anticipée)

FREE TRADE AGREEMENT ADVANCE RULINGS REGULATIONS

11. Paragraph 2(d) of the Free Trade Agreement Advance Rulings Regulations (see footnote 8) is replaced by the following:

12. (1) Subparagraph 14(a)(vi) of the Regulations is replaced by the following:

(2) The portion of paragraph 14(b) of the Regulations before subparagraph (i) is replaced by the following:

(3) Paragraph 14(b) of the Regulations is amended by striking out “or” at the end of subparagraph (iii), by adding “or” at the end of subparagraph (iv) and by adding the following after subparagraph (iv):

(4) Paragraph 14(h) of the Regulations is amended by striking out “or” at the end of subparagraph (iv) and by adding the following after subparagraph (v):

CERTIFICATION OF ORIGIN OF GOODS EXPORTED TO A FREE TRADE PARTNER REGULATIONS

13. Paragraph 2(c) of the Certification of Origin of Goods Exported to a Free Trade Partner Regulations (see footnote 9) is replaced by the following:

14. Paragraph 3(b) of the Regulations is replaced by the following:

TARIFF ITEM NOS. 9971.00.00 AND 9992.00.00 ACCOUNTING REGULATIONS

15. Paragraph 2(b) of the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations (see footnote 10) is replaced by the following:

REFUND OF DUTIES REGULATIONS

16. The heading of Part 5.1 of the Refund of Duties Regulations (see footnote 11) is replaced by the following:

GOODS IMPORTED FROM COSTA RICA, AN EFTA STATE OR PERU

17. Section 23.1 of the Regulations is replaced by the following:

23.1 This Part applies to the granting of a refund under paragraph 74(1)(c.11) of the Act of duties paid on goods in respect of which no claim for preferential tariff treatment under CCRFTA, CEFTA or CPFTA was made at the time the goods were accounted for under subsection 32(1), (3) or (5) of the Act and that were imported

18. Paragraph 23.3(b) of the Regulations is replaced by the following:

PART 3

AMENDMENTS RETROACTIVE TO AUGUST 15, 2011

EXPORTERS’ AND PRODUCERS’ RECORDS REGULATIONS

19. The definition “advance ruling” in section 1 of the Exporters’ and Producers’ Records Regulations (see footnote 12) is replaced by the following:

“advance ruling” means an advance ruling referred to in Article 509 of NAFTA, Article 5.8 of CIFTA, Article E-09 of CCFTA, Article V.9 of CCRFTA, Article 28 of Annex C of CEFTA, Article 419 of CPFTA or Article 419 of CCOFTA. (décision anticipée)

FREE TRADE AGREEMENT ADVANCE RULING REGULATIONS

20. Paragraph 2(d) of the Free Trade Agreement Advance Rulings Regulations (see footnote 13) is replaced by the following:

21. (1) Subparagraph 14(a)(vi) of the Regulations is replaced by the following:

(2) The portion of paragraph 14(b) of the Regulations before subparagraph (i) is replaced by the following:

(3) Paragraph 14(b) of the Regulations is amended by striking out “or” at the end of subparagraph (iv), by adding “or” at the end of subparagraph (v) and by adding the following after subparagraph (v):

(4) Paragraph 14(h) of the Regulations is amended by striking out “or” at the end of subparagraph (v) and by adding the following after subparagraph (vi):

CERTIFICATION OF ORIGIN OF GOODS EXPORTED TO A FREE TRADE PARTNER REGULATIONS

22. Paragraph 2(c) of the Certification of Origin of Goods Exported to a Free Trade Partner Regulations (see footnote 14) is replaced by the following:

23. Paragraph 3(b) of the Regulations is replaced by the following:

TARIFF ITEM NOS. 9971.00.00 AND 9992.00.00 ACCOUNTING REGULATIONS

24. Paragraph 2(b) of the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations (see footnote 15) is replaced by the following:

REFUND OF DUTIES REGULATIONS

25. The heading of Part 5.1 of the Refund of Duties Regulations (see footnote 16) is replaced by the following:

GOODS IMPORTED FROM COSTA RICA, AN EFTA STATE, PERU OR COLOMBIA

26. Section 23.1 of the Regulations is replaced by the following:

23.1. This Part applies to the granting of a refund under paragraph 74(1)(c.11) of the Act of duties paid on imported goods in respect of which no claim for preferential tariff treatment under CCRFTA, CEFTA, CPFTA or CCOFTA was made at the time the goods were accounted for under subsection 32(1), (3) or (5) of the Act, and that were imported from, as the case may be,

27. Paragraph 23.3(b) of the Regulations is replaced by the following:

PART 4

AMENDMENTS COMING INTO FORCE ON REGISTRATION

DETERMINATION, RE-DETERMINATION AND FURTHER RE-DETERMINATION OF ORIGIN, TARIFF CLASSIFICATION AND VALUE FOR DUTY REGULATIONS

28. The Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations (see footnote 17) is amended by adding the following after section 3:

3.1 Despite subsection 3(1), in the case of a determination that is treated under subsection 97.201(5) of the Act as if it were a re-determination under paragraph 59(1)(a) of the Act, the officer shall give notice of re-determination, referred to in subsection 59(2) of the Act, to the exporter or producer of the goods subject to the determination.

TARIFF ITEM NOS. 9971.00.00 AND 9992.00.00 ACCOUNTING REGULATIONS

29. The title of the French version of the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations (see footnote 18) is replaced by the following:

RÈGLEMENT SUR LA DÉCLARATION EN DÉTAIL DE MARCHANDISES DES NOS TARIFAIRES 9971.00.00 ET 9992.00.00

30. The portion of section 2 of the French version of the Regulations before paragraph (a) is replaced by the following:

2. L’importateur ou le propriétaire des marchandises, ou la personne autorisée en application de l’alinéa 32(6)a) ou du paragraphe 32(7) de la Loi sur les douanes à faire la déclaration en détail des marchandises, doit, au moment de faire la déclaration en détail aux termes de l’article 32 de cette loi, y joindre les documents suivants :

PART 5

COMING INTO FORCE

31. (1) Part 1 is deemed to have come into force on July 1, 2009.

(2) Part 2 is deemed to have come into force on August 1, 2009.

(3) Part 3 is deemed to have come into force on August 15, 2011.

(4) Part 4 comes into force on the day on which these Regulations are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issue

In order for the Canada Border Services Agency (CBSA) to administer the customs procedures included in the CanadaEuropean Free Trade Association Free Trade Agreement (CEFTA), the Canada-Peru Free Trade Agreement (CPFTA), and the Canada-Colombia Free Trade Agreement (CCOFTA), minor technical amendments must be made to the Exporters’ and Producers’ Records Regulations, the Free Trade Agreement Advance Rulings Regulations, the Certification of Origin of Goods Exported to a Free Trade Partner Regulations, the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations, the Refund of Duties Regulations, and the Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations.

As part of the negotiations for each for each free trade agreement (FTA), Canada and the EFTA member states, Canada and Peru, and Canada and Colombia, agreed to procedures governing the verification of origin of goods claiming preferential treatment under the CEFTA, the CPFTA, and the CCOFTA, respectively. New regulations are therefore necessary in order to codify into Canadian law the verification of origin procedures agreed to by Canada in each of these FTAs.

Background

The Canada-European Free Trade Association Free Trade Agreement (CEFTA) was signed on January 26, 2008. The European Free Trade Association (EFTA) member states include Iceland, Norway, Switzerland and Liechtenstein. The CEFTA came into force on July 1, 2009.

The Canada-Peru Free Trade Agreement (CPFTA) was signed on May 29, 2008. The CPFTA came into force on August 1, 2009.

The Canada-Colombia Free Trade Agreement (CCOFTA) was signed on November 21, 2008. The CCOFTA came into force on August 15, 2011.

The amendments to these regulations and the new regulations described below were publicly announced by the CBSA in Customs Notices posted on June 29, 2009 (CN09-014 describing the CEFTA), July 30, 2009 (CN09-018 describing the CPFTA), and August 10, 2011 (CN11-013 describing the CCOFTA).

Paragraph 167.1(b) of the Customs Act allows regulatory changes that have previously been the subject of a public announcement to have a retroactive effect; since the implementation dates of the CEFTA, the CPFTA, and the CCOFTA, respectively, the CBSA has therefore been administering these regulations as though the amendments announced in these Customs Notices were already enacted.

The amendments described below simply finalize the process begun with the public announcements contained in the Customs Notices, formalizing processes that are already being administered. The amendments and new regulations described above will officially incorporate these FTAs into Canada’s existing regulatory regime.

Objectives

These regulatory amendments incorporate the CEFTA, the CPFTA, and the CCOFTA into Canada’s existing regulatory framework by allowing customs procedures related to rules of origin to be administered in accordance with the terms of each of these FTAs.

Description

In order to implement the CEFTA, the CPFTA, and the CCOFTA, minor amendments to a number of existing regulations made under the Customs Act are necessary.

The particulars of each of these amendments are discussed below.

Exporters’ and Producers’ Records Regulations

An advance ruling is a written ruling, issued before goods are imported. Advance rulings can consist of determinations related to a variety of issues, including such things as the tariff classification of the goods and the applicable rate of customs duty. The definition of “advance ruling” found at section 1 of the Exporters’ and Producers’ Records Regulations incorporates by reference specific Articles from the FTAs to which Canada is a signatory. These Articles describe the subject matter upon which applications for advance rulings under each of these FTAs can be based. Section 1 is being amended to incorporate Article 28 of Annex C to the CEFTA, Article 419 of the CPFTA, and Article 419 of the CCOFTA into the definition of “advance ruling” applicable in the Exporters’ and Producers’ Records Regulations.

Free Trade Agreement Advance Rulings Regulations

Section 2 of the Free Trade Agreement Advance Rulings Regulations describes the classes of persons [e.g. importers and persons authorized to account for goods under paragraph 32(6)(a) or subsection 32(7) of the Customs Act] eligible to apply for an advance ruling with respect to goods proposed to be imported from one of Canada’s free trade partners. The classes of persons eligible to apply for an advance ruling is being expanded to include producers in Peru of materials used in the production of goods produced in Peru, and producers in Colombia of materials used in the production of goods produced in Colombia.

Section 14 of the Free Trade Agreement Advance Rulings Regulations enumerates the grounds upon which an advance ruling may be modified or revoked.

One such ground permits officers to modify or revoke advance rulings in circumstances where errors have been made in the application of the North American Free Trade Agreement (NAFTA), the Canada-Chile Free Trade Agreement (CCFTA), and the Canada-Costa Rica Free Trade Agreement (CCRFTA) with respect to goods that re-enter Canada after being exported for alteration or repair. This section is being amended to add the CPFTA and the CCOFTA to this list.

Section 14 also addresses situations where an advance ruling is not in accordance with an interpretation agreed to by Canada and its relevant free trade partner. This section is being amended to include reference to goods exported from an EFTA state, from Peru, or from Colombia, and to reference interpretations agreed to by Canada and these trade partners with respect to the relevant provisions of the applicable FTA.

Section 14 also addresses instances where an advance ruling can be modified or revoked where a verification of origin of goods imported from an EFTA state has deemed those goods to be non-originating.

Furthermore, section 14 also addresses instances where an advance ruling can be modified or revoked in order to conform with a modification of the CEFTA, the CPFTA, or the CCOFTA.

Certification of Origin of Goods Exported to a Free Trade Partner Regulations

Section 97.1 of the Customs Act (Act) addresses the Certificate of Origin that must be provided by exporters of goods to free trade partners who claim preferential tariff treatment under an FTA. The Certificate of Origin requirements that must be met in order to satisfy section 97.1 are described in the Certification of Origin of Goods Exported to a Free Trade Partner Regulations.

The Certification of Origin of Goods Exported to a Free Trade Partner Regulations are being amended to add Peru and Colombia to the list of free trade partners for whom the basis of a nonproducing exporter’s certificate of origin, as required by paragraph 97.1(1) of the Act, can be a certificate, completed and signed by the producer and provided voluntarily to the exporter, stating that the goods meet the applicable rules of origin.

These Regulations are also being amended to add EFTA states to the list of free trade partner destinations where the certificate of origin may be completed in English or French, and to add Peru and Colombia to the list of free trade partner destinations where the certificate of origin can be completed in English, French, or Spanish.

Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations

Tariff item Nos. 9971.00.00 and 9992.00.00 deal with goods that, regardless of their country of origin, have been returned to Canada after having been exported to one of Canada’s free trade partners (i.e. the United States, Mexico, Chile, Costa Rica, Israel or other Canada-Israel Free Trade Agreement [CIFTA] beneficiary).

These Regulations provide that proof of this exportation must be submitted when such goods are accounted for under section 32 of the Act. This amendment adds the EFTA states, Peru, and Colombia to the list of Canada’s free trade partners to whom these Regulations apply.

Minor modifications have also been made to the French version of these Regulations so that they accord more readily with their English counterparts; the words “ou provisoire” have been deleted from the title of these Regulations and from instances where these words are used in section 2. Furthermore, the words “en détail” are being added after “déclaration” to the portion of this section before the final use of the term “déclaration.”

Refund of Duties Regulations

The amendments to the Refund of Duties Regulations allow duties to be refunded in cases where a claim for preferential tariff treatment under the CEFTA, the CPFTA, or the CCOFTA was not made at the time the goods were initially accounted for under section 32 of the Customs Act.

Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations

Section 58 of the Act provides that any duly designated officer may determine the origin, tariff classification, and value for duty of imported goods at, or before, the time they are accounted for pursuant to section 32 of the Act.

Section 59 for the Act provides that this initial determination may be subject to re-determination, or further re-determination, if the conditions set out in the Act are met.

According to section 97.201 of the Act, the customs administration of an EFTA state to which goods were exported may request that the CBSA conduct a verification.

Methods of verification are prescribed by the new CEFTA Verification of Origin of Exported Goods Regulations, which form a part of this regulatory package (discussed below).

As part of this verification process, the CBSA must make a determination as to whether the goods exported from Canada qualify as originating in a CEFTA signatory. Annex C of the CEFTA deals with rules of origin for goods claiming preferential tariff treatment under the CEFTA and describes the circumstances under which a product shall be deemed as originating under the CEFTA.

The Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations are being amended to add a new section that will treat determinations as to whether goods are originating according to the CEFTA as though they were re-determinations and therefore subject to section 59 of the Act. Thus, determinations made according to section 97.201 of the Act must occur within the timeframes prescribed by this section. The new section of these Regulations prescribes to whom notice must be given pursuant to subsection 59(2).

These Regulations are also being amended so as to replace all usages of “Deputy Minister” with “President” in order to accurately reflect the CBSA’s organizational hierarchy.

New regulations

CEFTA Verification of Origin of Exported Goods Regulations

Section 28 of the Canada-EFTA Free Trade Agreement Implementation Act added section 97.201 to the Customs Act. The new CEFTA Verification of Origin of Exported Goods Regulations give effect to section 97.201 of the Act.

Section 97.201 discusses verifications of origins conducted on behalf of an EFTA state; according to this section, the methods of performing a verification are subject to prescribed conditions, and can take place at any prescribed premises, in a prescribed manner. The CEFTA Verification of Origin of Exported Goods Regulations prescribe the conditions, premises, and manner associated with verifying the origin of exported goods pursuant to section 97.201 of the Act.

CEFTA Verification of Origin of Imported Goods Regulations

Subsection 42.1(1.1) of the Act permits an officer to conduct a verification of origin of goods for which the benefit of preferential tariff treatment under the CEFTA is claimed by requesting that the customs administration of an EFTA state conduct a verification and provide an opinion as to whether the goods in question are originating pursuant to the CEFTA.

The new CEFTA Verification of Origin of Imported Goods Regulations describe the procedures an officer should follow when making this request for a verification, as well as the procedures an officer should follow upon receiving the results of the verification.

CPFTA Verification of Origin Regulations and CCOFTA Verification of Origin Regulations

The new CPFTA Verification of Origin Regulations and CCOFTA Verification of Origin Regulations implement the customs procedures associated with verifying the origin of goods for which preferential tariff treatment under the CPFTA and the CCOFTA, respectively, have been claimed. These procedures can include, for example, the manner of conducting a verification of origin, the conditions surrounding a verification visit, and the circumstances in which preferential tariff treatment may be denied or withdrawn.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no costs on small business.

Consultation

Prior to launching the negotiations for the CEFTA, the CPFTA, and the CCOFTA, respectively, Canadian manufacturers, importers and exporters were consulted extensively; furthermore, these stakeholders were kept informed of developments throughout the negotiation process for each FTA, including developments with respect to rules of origin issues.

The regulatory proposals contained herein were announced by the CBSA in Customs Notices CN09-014, CN09-018, and CN11-013. These Customs Notices provided opportunities for the public to review the proposed regulatory changes and provide comments to the CBSA. No comments were received.

Rationale

Canada’s Free Trade Agreements are governed by a network of regulations (e.g. the Exporters’ and Producers’ Records Regulations and the other regulations listed above) that, taken together, implement into Canadian law the customs procedures negotiated as part of each FTA.

Consequently, with each new FTA implementation bill passed by the Canadian Parliament, a series of minor, technical amendments are needed in order to incorporate the new FTA into Canada’s existing regulatory framework.

Implementation, enforcement and service standards

The CBSA has updated its systems to account for the implementation in Canada of these FTAs, and has informed importers of these amendments by way of Customs Notices. Since the implementation date of each of the FTAs described above, the CBSA has been administering these regulations so as to grant importers the benefit of the appropriate preferential tariff treatment associated with the CEFTA, the CPFTA, and the CCOFTA, respectively. These amendments are therefore technical and housekeeping in nature and will have no impact on the continuing administration of these regulations.

Paragraph 35.1(5) of the Customs Act provides for the denial or withdrawal of preferential tariff treatment in the event that the requirements set out in the regulations are not met. The CBSA will continue to monitor compliance with these regulations in the course of its regular administration of customs- and tariff-related legislation and regulations.

Contact

Caley Sayers
Trade Programs Directorate
Canada Border Services Agency
150 Isabella Street, 11th Floor
Ottawa, Ontario
K1A 0G5