Vol. 147, No. 8 — April 10, 2013
Registration
SOR/2013-50 March 21, 2013
CUSTOMS TARIFF
CPAFTA Rules of Origin Regulations
P.C. 2013-309 March 21, 2013
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 16(2) (see footnote a) of theCustoms Tariff (see footnote b), makes the annexedCPAFTA Rules of Origin Regulations.
CPAFTA RULES OF ORIGIN REGULATIONS
RULES OF ORIGIN
1.The following provisions of the Free Trade Agreement between Canada and the Republic of Panama, signed on May 14, 2010, have the force of law in Canada:
- (a) Articles 3.01 to 3.04;
- (b) Article 3.05, paragraph 1;
- (c) Articles 3.06 to 3.15; and
- (d) Annex 3.02.
COMING INTO FORCE
2.These Regulations come into force on the day on which section 38 of theCanada–Panama Economic Growth and Prosperity Act, chapter 26 of the Statutes of Canada, 2012, 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.)
Issue
The Canada-Panama Free Trade Agreement (CPAFTA) was signed on May 14, 2010. When implementing free trade agreements in Canada, an act and associated regulations are necessary to implement commitments into the Canadian legal framework.
The Canada-Panama Economic Growth and Prosperity Act (the Act) received Royal Assent on December 14, 2012. The Agreement will come into force on April 1, 2013. Associated regulations are required to fully implement the commitments of the CPAFTA into the Canadian legal framework.
Objectives
Full implementation of the CPAFTA.
Description
The CPAFTA Rules of Origin Regulations implement, in Canada, the rules of origin negotiated by Canada and Panama, which will be used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment under the CPAFTA. Preferential tariff treatment under the CPAFTA, which reflects the actual reduction in the rates of duty, has been implemented in the Customs Tariff through the Act.
The CPAFTA Rules of Origin for Casual Goods Regulations establish conditions under which goods acquired in Panama by travellers are considered originating and therefore entitled to preferential tariff treatment. Where travellers acquire goods in Panama and goods are either marked “made in Panama,” or not marked to the contrary, the traveller can claim the Panama tariff preference on importation of the goods into Canada.
The CPAFTA Tariff Preference Regulations allow eligible goods that are not shipped directly between Panama and Canada to retain their eligibility for preferential tariff rates provided goods remain under customs control in third countries.
“One-for-One” Rule
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 small business.
Consultation
On May 31, 2008, the Government of Canada launched public consultations on potential trade negotiations with Panama with Canadian provinces and territories, along with businesses, industry associations and the general public. Free trade negotiations with Panama were launched in October 2008. Canadian manufacturers, importers and exporters were consulted extensively and kept informed of developments throughout the negotiations, including on issues concerning rules of origin. The CPAFTA was signed on May 14, 2010, and is supported by a broad range of Canadian business stakeholders.
Rationale
These regulations, made pursuant to subsection 16(2) of the Customs Tariff, link the preferential tariff treatment provided for under the CPAFTA, and implemented in the Customs Tariff by the Act, with the rules of origin necessary to determine whether goods qualify for that preferential tariff treatment.
Panama is an established market for Canada and the bilateral trade and investment relationship has potential for long-term growth. In 2011, bilateral merchandise trade between Canada and Panama totalled $235.3 million, with Canadian exports accounting for $111.2 million and imports totalling $124.1 million. In 2011, major Canadian exports to Panama consisted of machinery and electrical and electronic equipment and precious stones and metals. Major imports from Panama included precious stones and metals (including gold), edible fruits and nuts (mainly bananas and plantains), and fish and seafood products.
Based on recent trading patterns, it is estimated that annual duties foregone by the Government of Canada when the CPAFTA is fully implemented will be less than $100,000. These duties foregone represent a benefit, in the form of lower customs duties payable, to Canadian importers of Panama-originating products. With the removal of tariffs in Canada, increased imports from Panama could be expected, thus potentially leading to enhanced customs duty savings by Canadian importers. Moreover, the removal of tariffs in the Panamanian market should help Canadian exporters further penetrate those markets, potentially leading to increased exports. Reduction of Panamanian tariffs on Canadian exports could help make Canadian goods more competitive in a range of sectors, including fish and seafood products, construction materials and equipment, frozen potato products, pulses (beans, lentils), beef and beef products, most pork products, malt and forest products.
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 and the Canada-Jordan 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 in the case of previous free trade agreements, the CBSA will update its systems to account for the implementation in Canada of the CPAFTA and will inform importers of all relevant CPAFTA-related issues pertaining to these regulations.
Contact
Diane Kelloway
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Telephone: 613-996-6470
- Footnote a
S.C. 2001, c. 28, s. 34(1) - Footnote b
S.C. 1997, c. 36