CCFTA Rules of Origin Regulations: SOR/2021-144

Canada Gazette, Part II, Volume 155, Number 14

Registration
SOR/2021-144 June 17, 2021

CUSTOMS ACT
CUSTOMS TARIFF

P.C. 2021-586 June 17, 2021

His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Finance and the Minister of Public Safety and Emergency Preparedness with respect to the provisions of the annexed Regulations other than section 1, and on the recommendation of the Minister of Finance with respect to that section 1, makes the annexed CCFTA Rules of Origin Regulations pursuant to

(a) subsection 164(1.1) footnote a of the Customs Act footnote b; and

(b) subsections 16(2) footnote c and 16(4) footnote d of the Customs Tariff footnote e.

CCFTA Rules of Origin Regulations

Rules of origin

1 The following provisions of the Canada-Chile Free Trade Agreement have the force of law in Canada:

2 The CCFTA Rules of Origin Regulations footnote 1 are repealed.

Coming into force

3 These Regulations come into force on the 120th day after the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issues

In a free trade agreement, the rules of origin provisions are used to determine whether a good has undergone enough production in the free trade area in order to be eligible for preferential tariff treatment. Canada implements its rules of origin commitments through regulations.

Canada and Chile have agreed to amend provisions related to the rules of origin set out in Canada-Chile Free Trade Agreement (CCFTA). Regulations are needed to domestically implement the changes agreed by Chile and Canada.

The Canada-United States-Mexico Agreement (CUSMA) came into force on July 1, 2020, and superseded the North American Free Trade Agreement (NAFTA). The NAFTA Rules of Origin Regulations were not repealed when the CUSMA came into force due to timing constraints. However, they are obsolete and must be repealed.

Objective

Description

The CCFTA Rules of Origin Regulations repeal the current CCFTA Rules of Origin Regulations and replace them with regulations that implement the modernized rules of origin provisions agreed to by Canada and Chile. These modernized rules of origin reflect Canada and Chile's more recent free trade agreements, align the rules of origin with more recent nomenclature of the Harmonized Commodity Description and Coding System and provide producers of certain goods more flexibility to source inputs while still qualifying for preferential tariff treatment under the CCFTA.

The Regulations Repealing the NAFTA Rules of Origin Regulations repeal the obsolete NAFTA Rules of Origin Regulations.

Regulatory development

Consultation

Consistent with other trade agreement negotiations, the Government maintained an open dialogue with the public and private sector stakeholders throughout the negotiation of the rules of origin amendments, including the publication of a notice of intent in the Canada Gazette, Part I, on March 16, 2013, that launched public consultations on the amendments. No comments were received as a result of the Canada Gazette process.

Given the administrative and consequential nature of the CCFTA Rules of Origin Regulations and the Regulations Repealing the NAFTA Rules of Origin Regulations, publication in the Canada Gazette, Part I, was not considered necessary.

Modern treaty obligations and Indigenous engagement and consultation

An assessment of the CCFTA Rules of Origin Regulations and the Regulations Repealing the NAFTA Rules of Origin Regulations did not identify any potential modern treaty implications.

Instrument choice

The CCFTA Rules of Origin Regulations fully implement Canada's negotiated rules of origin commitments under the CCFTA and are necessary for importers to be able to continue to claim preferential tariff treatment under the CCFTA. The Regulations Repealing the NAFTA Rules of Origin Regulations are necessary to repeal the obsolete NAFTA Rules of Origin Regulations. Regulations are the only instruments for achieving Canada's international commitments in respect of these matters.

Regulatory analysis

Benefits and costs

The CCFTA Rules of Origin Regulations do not change procedures for the importing and exporting of goods. Rather, they update the criteria for determining whether a good is considered originating and therefore eligible for preferential tariff treatment provided for under the CCFTA. There is no incremental change to the level of administrative burden currently imposed on businesses and no cost impacts.

Without the implementation of the CCFTA Rules of Origin Regulations, importers of originating goods from Chile would not be able to apply the updated rules of origin agreed between Canada and Chile. This could result in fewer goods claiming tariff preference when imported into Canada and would undermine the agreement set out in the Exchange of Letters between the Government of Canada and the Government of the Republic of Chile constituting an 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, signed by Canada on August 26, 2019, and by Chile on May 8, 2020.

The Regulations Repealing the NAFTA Rules of Origin Regulations are necessary to repeal the NAFTA Regulations that have become obsolete with the implementation of the CUSMA.

Small business lens

The CCFTA Rules of Origin Regulations do not change procedures for the importing and exporting of goods. Rather, they update the criteria for determining whether a good is considered originating and therefore eligible for preferential tariff treatment provided for under the CCFTA. Therefore, all businesses, including small businesses, will be able to claim the preferential tariff treatment on goods originating in Chile and will continue to see benefits in the form of lower duties paid on their imports.

One-for-one rule

The one-for-one rule does not apply to the CCFTA Rules of Origin Regulations as there is no incremental change in administrative burden on businesses. An existing regulation is repealed and replaced with a new regulatory title, which results in no net increase or decrease in regulatory titles.

The one-for-one rule applies to the Regulations Repealing the NAFTA Rules of Origin Regulations, since a regulatory title is removed, and the repeal is considered a title out.

Regulatory cooperation and alignment

These regulations are not related to a work plan or commitment under a regulatory cooperation forum. They are necessary for Canada to fulfill its commitments under the CCFTA and the CUSMA, which are international agreements.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified.

Implementation, compliance and enforcement, and service standards

The Canada Border Services Agency (CBSA) will monitor compliance with the terms of CCFTA Rules of Origin Regulations in the normal course of its administration of customs- and tariff-related legislation and regulations. As was the case for previous free trade agreement modernizations, the CBSA will inform importers of all relevant issues pertaining to the CCFTA Rules of Origin Regulations.

Contact

Karen LaHay
International Trade Policy Division
Department of Finance Canada
Ottawa, Ontario
K1A 0G5
Telephone: 613‑369‑4043