Vol. 149, No. 6 — March 25, 2015
SOR/2015-66 March 13, 2015
Regulations Amending the Refund of Duties Regulations
P.C. 2015-312 March 12, 2015
Whereas the annexed Regulations give effect to a public announcement made on February 26, 2014 known as Customs Notice 14-003;
Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to paragraph 74(3)(b) (see footnote a), section 164(1) (see footnote b) and paragraph 167.1(b) (see footnote c) of the Customs Act (see footnote d), makes the annexed Regulations Amending the Refund of Duties Regulations.
REGULATIONS AMENDING THE REFUND OF DUTIES REGULATIONS
1. The Refund of Duties Regulations (see footnote 1) are amended by adding the following after section 18:
TIME LIMIT FOR APPLICATION — GOODS EXPORTED FROM CHILE
18.1 In the case of goods that were exported from Chile and imported into Canada on or after March 1, 2014, an application for a refund of duties must be made within four years after the goods were accounted for under subsection 32(1), (3) or (5) of the Act.
COMING INTO FORCE
2. These Regulations are deemed to have come into force on March 1, 2014.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
In order to meet Canada’s commitments under the amended Canada-Chile Free Trade Agreement (CCFTA), a regulatory amendment to the Refund of Duties Regulations was necessary to change the period of time for submitting a claim for a refund of duties paid on CCFTA-eligible goods from one to four years. Extending the refund period to four years aligns the refund period with those provided under all of Canada’s other free trade agreements (FTAs), excluding the North American Free Trade Agreement (NAFTA).
The CCFTA entered into force on July 5, 1997. It is a comprehensive agreement that covers trade in goods and services, as well as the bilateral investment relationship.
On September 30, 2013, the Agreement to Amend the Free Trade Agreement Between the Government of Canada and the Government of the Republic of Chile, Done at Santiago on 5 December 1996, as Amended, Between the Government of Canada and the Government of The Republic of Chile (hereinafter referred to as the Canada-Chile Amending FTA) came into force.
The amending agreement encompasses a number of areas not covered in the original agreement, including a financial services chapter and updates to the chapters on government procurement, dispute settlement and customs procedures.
Canada’s overall trade negotiations are led by the Department of Foreign Affairs, Trade and Development (DFATD) and are undertaken by several government departments and agencies. The Canada Border Services Agency (CBSA) is responsible to negotiate the customs procedures chapter and to implement in domestic law and policy the provisions relevant to the administration of this chapter.
When DFATD announced that Canada and Chile had agreed to reopen the CCFTA to amendment, the CBSA took that opportunity to extend the refund of duties period from one year to four years to match that of all of Canada’s other free trade agreements with the exception of the NAFTA. Specifically, Article VII, Amendments to Chapter E (Customs Procedures) replaces Article E-02(3) of the original CCFTA, and allows for a longer period within which the refund of duties can be prescribed.
When a good is imported, importers must choose a preferential tariff treatment. Under the Customs Tariff, the tariff treatment determines the amount of customs duty to be paid on a good. Most goods imported under an FTA are duty free. If importers do not claim the CCFTA tariff treatment at the time of import, they must pay the rate of customs duty associated with the tariff treatment that they claim. If, after the goods are accounted for and the customs duty is paid, importers become aware that the good was eligible for the CCFTA tariff treatment, they will have four years from the date they originally accounted for the good to claim a refund of the duties paid. Prior to the Canada-Chile Amending FTA, importers were only able to claim a refund of duties paid within one year from when they originally accounted for the good.
The Refund of Duties Regulations allow duties to be refunded in cases where a claim for preferential tariff treatment under an FTA was not made by the importer at the time goods were initially accounted for under section 32 of the Customs Act. These Regulations set out the manner in which retroactive claims for FTA preferential tariff treatment can be made.
Applying for a refund of duties provides importers with a benefit by allowing them to retroactively claim the benefit of a preferential tariff treatment. The application for preferential tariff treatment is directly related to the administration of the Customs Tariff.
In accordance with Article VII, Paragraph 1 of the Canada-Chile Amending FTA, the CBSA is obliged to provide a minimum of one year for importers to claim a refund of duties paid on CCFTAeligible goods. The extension to four years gives importers an additional three years to apply for a refund of duties paid on CCFTA-eligible goods. There are no implications for the CBSA, as a refund program already exists. For the importer, the refund claims process remains the same other than the extension of the timeframe within which to make a claim. The extension to four years now provides the same refund period to CCFTA-eligible goods as for all of Canada’s other FTAs (aside from NAFTA).
To increase the timeframe for submitting a claim for a refund of duties paid on CCFTA-eligible goods from one to four years.
Part 4 of the Refund of Duties Regulations is amended to provide that an application for a refund of duties paid on goods that were exported from Chile and imported into Canada on or after March 1, 2014, and in respect of which no claim for preferential tariff treatment under CCFTA was made at the time they were accounted for under subsection 32(1), (3) or (5) of the Customs Act must only be made within four years after the goods were accounted for under subsection 32(1), (3) or (5) of the Customs Act.
This amendment is intended to enable the CBSA to administer the customs procedures negotiated by the Canadian government as part of the amendment to the CCFTA. The proposed changes are technical in nature and will have no impact on the administration of customs procedures.
The “One-for-One” Rule does not apply to this amendment, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this amendment, as there are no costs (or insignificant costs) to small business.
The amendment was publicly announced by the CBSA in a customs notice posted on February 26, 2014 (CN14-003), pursuant to paragraph 167.1(b) of the Customs Act, which allows regulatory changes that have previously been the subject of a public announcement to have a retroactive effect. CN14-003 announces that the four-year refund period applies to CCFTA-eligible goods imported into Canada on or after March 1, 2014. No comments were received.
Canada’s FTAs are governed by a network of regulations, including the Refund of Duties Regulations, that implement into Canadian law the customs procedures negotiated as part of each FTA.
The regulatory amendment to Part 4 of the Refund of Duties Regulations is designed to allow the CBSA to meet its international obligations negotiated in the Canada-Chile Amending FTA. There are benefits to the trade community in that Canadian importers will now have four years to claim a refund of duties paid on CCFTA-eligible goods. This four-year refund period matches that of all of Canada’s other FTAs, excluding NAFTA.
Implementation, enforcement and service standards
The CBSA has informed importers of this regulatory amendment to implement the extended refund period by way of Customs Notice 14-003 (http://www.cbsa.gc.ca/publications/cn-ad/cn14-003-eng.html).
Since the implementation date of the amendment to the FTA described above, the CBSA has been administering these Regulations so as to grant importers four years to submit a claim for refund of duties paid on CCFTA-eligible goods.
Trade and Anti-Dumping Programs Directorate
Canada Border Services Agency
150 Isabella Street, 11th Floor