Vol. 148, No. 27 — December 31, 2014
SOR/2014-299 December 12, 2014
CKFTA Rules of Origin Regulations
P.C. 2014-1454 December 12, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 16(2) (see footnote a) of the Customs Tariff (see footnote b), makes the annexed CKFTA Rules of Origin Regulations.
CKFTA RULES OF ORIGIN REGULATIONS
RULES OF ORIGIN
1. The following provisions of the Canada-Korea Free Trade Agreement have the force of law in Canada:
- (a) Articles 3.1 to 3.6;
- (b) Paragraphs 1 and 2 of Article 3.7;
- (c) Articles 3.8 to 3.17;
- (d) Article 3.20; and
- (e) Annex 3-A.
COMING INTO FORCE
2. These Regulations come into force on the day on which section 47 of the Canada–Korea Economic Growth and Prosperity Act, chapter 28 of the Statutes of Canada, 2014, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the regulations.)
The Canada-Korea Free Trade Agreement (CKFTA) was signed on September 22, 2014. When implementing free trade agreements in Canada, legislation and associated regulations are necessary to implement commitments into the Canadian legal framework.
The Canada–Korea Economic Growth and Prosperity Act received Royal Assent on November 26, 2014. Associated regulations are required to fully implement the commitments of the CKFTA into the Canadian legal framework.
- To fully implement Canada’s obligations under the CKFTA.
The CKFTA Rules of Origin Regulations implement, in Canada, the rules of origin negotiated by Canada and Korea that will be used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment. Goods that meet the criteria set out in the CKFTA Chapter on Rules of Origin or its associated annex qualify as originating and therefore are eligible for preferential tariff treatment. Preferential tariff treatment under the CKFTA, which reflects the actual reduction in specific rates of duty, has been implemented in the Customs Tariff through the Canada–Korea Economic Growth and Prosperity Act.
The CKFTA Rules of Origin for Casual Goods Regulations establish the conditions under which goods acquired in Korea by travellers are considered originating and therefore entitled to preferential tariff treatment. Where travellers acquire goods in Korea that are either marked as made in Korea, or not marked to the contrary, the traveller can claim the Korea tariff preference on importation of the goods into Canada.
The CKFTA Tariff Preference Regulations allow eligible goods that are not shipped directly between Korea and Canada to retain their eligibility for preferential tariff rates provided the goods remain under customs control in third countries.
The “One-for-One” Rule does not apply to these regulations as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to these regulations as there are no costs imposed on business.
In January 2005, the Government of Canada launched public consultations with provinces and territories, businesses, industry associations and the general public to gauge Canadians’ interests and sensitivities in launching free trade negotiations with Korea. Stakeholders were consulted regularly throughout the negotiations, including on issues concerning rules of origin. A free trade agreement with Korea is supported by a broad cross-section of Canadian business stakeholders.
These regulations are necessary to fulfil Canada’s commitments under the CKFTA. The regulations link the preferential tariff treatment provided for under the CKFTA, and implemented in the Customs Tariff by the Canada–Korea Economic Growth and Prosperity Act, with the rules of origin necessary to determine whether the goods qualify for preferential tariff treatment.
In 2013, bilateral merchandise trade between Canada and Korea totalled $10.8 billion, with Canadian exports accounting for $3.5 billion and imports totalling $7.3 billion. When the free trade agreement is fully implemented, it is estimated that annual duties foregone by the Government would be approximately $175 million based on current trade patterns. These duties represent a benefit, in the form of lower customs duties to be paid by Canadian importers of Korea-originating products. The removal of Korean tariffs on Canadian exports will similarly make Canadian goods more competitive in the Korean market, potentially leading to increased exports across a range of sectors.
Canada has already implemented similar regulations for purposes of its other bilateral and regional free trade agreements (FTAs), including the North American Free Trade Agreement, the Canada–Israel FTA, the Canada–Chile FTA, the Canada — Costa Rica FTA, the Canada–European Free Trade Association FTA, the Canada–Peru FTA, the Canada–Colombia FTA, the Canada– Jordan FTA, the Canada–Panama FTA and the Canada–Honduras FTA.
Implementation, enforcement and service standards
The Canada Border Services Agency (CBSA) will monitor compliance with the terms and conditions of these regulations in the normal course of its administration of customs and tariff-related legislation and regulations. As is the case of previous free trade agreements, the CBSA will update its systems to account for the implementation in Canada of the CKFTA and will inform importers of all relevant CKFTA-related issues pertaining to these regulations.
International Trade Policy Division
Department of Finance