Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Peru): SOR/2021-270
Canada Gazette, Part II, Volume 156, Number 1
Registration
SOR/2021-270 December 21, 2021
CUSTOMS TARIFF
P.C. 2021-1028 December 17, 2021
Whereas, under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, goods that originate in a CPTPP country are entitled to a CPTPP tariff;
Therefore, to extend the entitlement to the Comprehensive and Progressive Trans-Pacific Partnership Tariff to all eligible goods that originate in Peru, Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 52.61(1) footnote a of the Customs Tariff footnote 1, makes the annexed Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Peru).
Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Peru)
Amendment
1 The List of Countries and Applicable Tariff Treatments set out in the schedule to the Customs Tariff footnote 1 is amended by adding, in the column “Tariff Treatment / Other”, a reference to “CPTPT” opposite the reference in the column “Country Name” to “Peru”.
Coming into Force
2 This Order comes into force, or is deemed to have come into force, on the day on which the Comprehensive and Progressive Agreement for Trans-Pacific Partnership comes into effect between Canada and Peru.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
On March 8, 2018, Canada and ten other Asia-Pacific countries (Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP” or “the Agreement”).
The Agreement entered into force on December 30, 2018, for Canada, Australia, Japan, Mexico, New Zealand, and Singapore, the first six countries to have ratified the CPTPP. On January 14, 2019, the Agreement entered into force for Vietnam, the seventh signatory to have ratified the CPTPP. Peru officially notified its ratification of the Agreement on July 21, 2021, becoming the eighth country to do so. Accordingly, the Agreement entered into force on September 19, 2021, for Peru. With confirmation of the ratification of the Agreement by Peru, Canada is now required to extend preferential tariffs to that country.
Objective
The objective of this Order is to fulfill the implementation of Canada’s tariff commitments to Peru under the CPTPP.
Description
The Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Peru) [the Order] amends the Customs Tariff to extend entitlement to CPTPP preferential tariff treatment to Peru.
Regulatory development
Consultation
The Order is technical and consequential as it implements negotiated outcomes of the CPTPP. Therefore, there have been no public consultations conducted specifically on the Order. However, the Government consulted extensively on the CPTPP (and its predecessor the Trans-Pacific Partnership, or TPP), which gave the opportunity to stakeholders to input into the negotiated outcome that is reflected in the Order. In September 2017, the Government launched public consultations on the possibility of implementing the then TPP with members other than the United States, which ultimately became the CPTPP. The Parliamentary process was an additional opportunity for stakeholders and the general public to be informed of, and comment on, the CPTPP. The CPTPP is supported by a broad cross-section of Canadian business stakeholders from all regions and from many sectors.
Given the Order is not controversial and broad consultations have already occurred, publication of the draft Order in the Canada Gazette, Part I, was not considered necessary.
Modern treaty obligations and Indigenous engagement and consultation
As a result of the Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Peru), benefits in the form of reduced duties will be accessible to anyone seeking to import goods from Peru if they meet the necessary requirements, including Indigenous peoples.
Instrument choice
The only viable mechanism to extend preferential tariffs is through an order made under the Customs Tariff. The fact that the CPTPP provides for staggered implementation commencing once the first six signatories have ratified the Agreement means that there was not certainty on which countries would be party to the Agreement, nor when. Accordingly, it was not possible to extend the tariff treatment in the implementing bill and an order to extend preferential tariffs is required.
Regulatory analysis
Benefits and costs
By extending entitlement to CPTPP preferential tariff treatment to Peru, the Order allows Canadian importers of goods originating from those countries to claim the preferential tariffs as established in the CPTPP.
While not a direct impact of the Order as Canada has already committed to implementing the Agreement, when Canada’s tariff commitments under the CPTPP are fully implemented, it is estimated that annual duties foregone by the Government would be approximately $652 million based on recent trade patterns with current CPTPP signatories. These duties represent a benefit, in the form of lower customs duties to be paid by Canadian importers of products originating from CPTPP members. The removal of CPTPP tariffs on Canadian exports will similarly make Canadian goods more competitive in CPTPP markets, potentially leading to increased exports across a range of sectors.
A study by Global Affairs Canada’s Office of the Chief Economist projects long-term economic gains for Canada totalling $4.2 billion by 2040 once the Agreement enters into force for all 11 signatories, driven by increases in exports and investment through preferential access. Upon full implementation by all 11 signatories, 99% of tariff lines of CPTPP Parties will be duty-free, covering 98.1% of Canada’s average annual exports to CPTPP markets ($32 billion). By removing trade barriers and providing transparent, predictable, rules-based market access, the CPTPP benefits a wide range of industries and sectors across Canada, including agriculture and agri-food, fish and seafood, forestry, services, and various industrial products.
Small business lens
The Order does not make changes to the importing and exporting of goods, including the required customs forms; rather, it extends Canada’s tariff commitments to Peru under the CPTPP. Accordingly, there is no incremental change to the level of administrative burden or compliance costs currently imposed on businesses, including small businesses, as a result of implementing this Order. The Order will decrease costs for all businesses, including small businesses, purchasing originating goods from Peru.
One-for-one rule
The Order does not make changes to the importing and exporting of goods, including the required customs forms. Therefore, no increase or decrease in the level of administrative burden imposed on businesses is anticipated. Accordingly, the one-for-one rule does not apply.
Regulatory cooperation and alignment
Given that this Order extends entitlement to CPTPP preferential tariff treatment to Peru as per Canada’s negotiated commitments in that Agreement, there is no regulatory cooperation component to this Order.
Strategic environmental assessment
Global Affairs Canada conducted an environmental assessment of the Agreement in accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals. The Initial Environmental Assessment encompassed both qualitative and quantitative analyses. The overall findings of the Initial Environmental Assessment were that Canadian environmental impacts as a result of the TPP Agreement (now CPTPP) would likely be minor in nature.
The Order is consequential to the implementation of the CPTPP. Therefore, a separate environmental assessment was not conducted on the Order.
Gender-based analysis plus
The Order is consequential to the implementation of the CPTPP and, in itself, has no gender-based analysis plus (GBA+) impacts. Global Affairs Canada has conducted a GBA+ analysis of the Agreement.
Rationale
The Order is necessary to fulfill Canada’s tariff commitments under the CPTPP. It is non-discretionary in nature as it reflects the negotiated outcome of the CPTPP (i.e. the tariff schedule is set out in the CPTPP).
The Order extends preferential tariffs necessary for Canadian importers of goods originating from countries specified in the Order to claim the CPTPP preferential tariff. Without the implementation of the Order, importers of originating goods of Peru would not be able to claim the CPTPP preferential tariff rates, and would have to use Most Favoured Nation tariff treatment footnote 2 or other tariff treatments from existing bilateral free trade agreements, even after the CPTPP has entered into force among the seven CPTPP countries and Peru. This would place Canada in violation of its commitments under the CPTPP.
Implementation, compliance and enforcement, and service standards
The Canada Border Services Agency (CBSA) will monitor compliance with the terms and conditions of the Order in the normal course of its administration of customs- and tariff-related legislation and regulations. As in the case of previous free trade agreements, the CBSA will update its systems to account for the implementation in Canada of the CPTPP and will inform importers of all relevant CPTPP-related issues pertaining to the Order.
Contact
Brad Norwood
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Email: tariff-tarif@fin.gc.ca