Regulations Amending Certain Regulations Made Under the Customs Act (Low Value Shipment Threshold): SOR/2024-199

Canada Gazette, Part II, Volume 158, Number 22

Registration
SOR/2024-199 October 7, 2024

CUSTOMS ACT

P.C. 2024-1071 October 4, 2024

Whereas the annexed Regulations give effect, in part, to a public announcement made on April 4, 2020, known as Customs Notice 20-15;

And whereas that Notice provides that the regulatory amendments giving effect to that announcement come into force on July 1, 2020;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, makes the annexed Regulations Amending Certain Regulations Made Under the Customs Act (Low Value Shipment Threshold) under paragraphs 32(6)(b)footnote a, 35.1(4)(c)footnote b, 147.1(14)(d)footnote c and (e)footnote c, 164(1)(i)footnote d and 167.1(b)footnote e of the Customs Act footnote f.

Regulations Amending Certain Regulations Made Under the Customs Act (Low Value Shipment Threshold)

Accounting for Imported Goods and Payment of Duties Regulations

1 The Accounting for Imported Goods and Payment of Duties Regulations footnote 1 are amended by replacing “$2,500” with “$3,300” in the following provisions:

Fees in Respect of Mail Regulations

2 Paragraph 4(c) of the Fees in Respect of Mail Regulations footnote 2 is replaced by the following:

Proof of Origin of Imported Goods Regulations

3 Subsection 6(4) of the Proof of Origin of Imported Goods Regulations footnote 3 is replaced by the following:

(4) If the benefit of preferential tariff treatment under NAFTA, CCFTA, CCRFTA, CPFTA, CCOFTA, CPAFTA or CHFTA is claimed for commercial goods whose estimated value for duty does not exceed $3,300, the importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Act if the commercial goods do not form part of a series of importations that is undertaken or arranged for the purpose of avoiding the requirements of that subsection.

4 Subsection 9.1(4) of the Regulations is replaced by the following:

(4) If the benefit of preferential tariff treatment under CJFTA is claimed for commercial goods whose estimated value for duty does not exceed $3,300, the importer and the owner of the goods are exempt from the requirements of subsection 35.1(1) of the Act if the goods do not form part of a series of importations that is undertaken or arranged for the purpose of avoiding the requirements of that subsection.

5 Subsection 10(4) of the Regulations is replaced by the following:

(4) If the benefit of preferential tariff treatment under CIFTA is claimed for commercial goods whose estimated value for duty does not exceed $3,300, the importer and owner of the commercial goods are exempt from the requirements of subsection 35.1(1) of the Act if the commercial goods do not form part of a series of importations that is undertaken or arranged for the purpose of avoiding the requirements of that subsection.

6 Subsection 12.1(4) of the Regulations is replaced by the following:

(4) If the benefit of preferential tariff treatment under CEFTA is claimed for commercial goods whose estimated value for duty does not exceed $3,300, the importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Act if the goods do not form a part of a series of importations that is undertaken or arranged for the purpose of avoiding the requirements of that subsection.

Coming into Force

7 These Regulations are deemed to have come into force on July 1, 2020.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In April 2020, Canada Border Services Agency (CBSA) published Customs Notice (CN) 20-15, which announced an increase to the low-value shipment threshold and simplified proof of origin requirements.

The CBSA has been administering these changes on a provisional basis since the coming into force of the Canada-United States-Mexico Agreement (CUSMA) on July 1, 2020. However, amendments to Canada’s existing regulatory framework are required to codify these changes into law.

Background

The rise of e-commerce in recent years has led to increasing volumes of low-value shipments imported into Canada. This rapidly expanding volume of low-value imports has resulted in customs clearance delays, a strain on CBSA systems, and placed an administrative burden on the trade community, including customs brokers, carriers, importers and freight forwarders. To address these challenges, and further facilitate trade with international partners, the Government of Canada increased the low-value shipment threshold for express shipments from Can$2,500 to Can$3,300 through the CUSMA (Article 7.8: Express Shipments).

Although the CUSMA changes apply only to express shipments, the CBSA has long administered a harmonized low-value shipment threshold across the Commercial Program. Therefore, the Minister of Public Safety approved the decision to increase the low-value shipment threshold across all streams of importation. These changes took effect on July 1, 2020, and were publicly announced on April 4, 2020, via CN 20-15.

CN 20-15 also announced that effective July 1, 2020, importers and owners of low-value commercial goods are no longer required to provide a written statement certifying the origin of the goods in order to be exempt from the requirements to provide proof of origin when claiming preferential treatment under Canada’s free trade agreements.

Objective

The objective of the Regulations Amending Certain Regulations Made Under the Customs Act (Low Value Shipment Threshold) [the amendments] is to formalize the operational changes that have been administered by the CBSA via CN 20-15 to harmonize the low-value shipment threshold in the commercial import stream, and to provide streamlined procedures that facilitate the processing of all low-value shipments.

Description

The following amendments formalize the operational changes outlined in CN 20-15.

References to low-value shipment thresholds in the Accounting for Imported Goods and Payment of Duties Regulations, the Fees in Respect of Mail Regulations, and the Proof of Origin of Imported Goods Regulations are amended to reflect the new amount of Can$3,300.

Certain sections of the Proof of Origin of Imported Goods Regulations are also amended to remove the requirement to provide a written statement certifying the origin of commercial goods with a value for duty not exceeding Can$3,300 when claiming a preferential tariff treatment, which affords duty-free status under any of Canada’s free trade agreements currently in force. Instead, a commercial invoice that indicates the origin of the goods will suffice.

Regulatory development

Consultation

Stakeholders impacted by these amendments include Canadian businesses, consumers, importers, customs brokers, carriers and other parties involved in the customs clearance process.

The CBSA sought input from diverse stakeholders during the development of these amendments through a multiphase engagement process. Consultations relating to Article 7.8: Express Shipments were held with the following associations during the CUSMA negotiations:

These associations represent a wide range of industry participants, including customs brokers (300); carriers (35 000); couriers (13); freight forwarders (81); and importers (230 000).

Other government agencies, including Global Affairs Canada, the Department of Finance Canada, the Treasury Board of Canada Secretariat and the Privy Council Office, were also included in the CUSMA implementation consultations. All agencies were supportive of the CBSA’s proposal to streamline the customs clearance process for low-value shipments.

Additionally, in November 2019, the BCCC undertook consultations with representatives from key associations representing small, medium and large businesses regarding changes to the proof of origin requirements and a harmonized low-value shipment threshold across all CBSA programs. There was consensus among all stakeholders that the proposed regulatory changes would benefit the industry, the economy and consumers, as well as simplify the importation process for low-value shipments in all streams.

Given that these regulatory amendments formalize operational processes that have been in effect since July 1, 2020, as outlined in the CN, and for which prior broad consultations took place, a public comment period through the Canada Gazette, Part I was not undertaken.

Modern treaty obligations and Indigenous engagement and consultation

As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted. The assessment examined the geographical scope and subject matter of the amendments in relation to modern treaties in effect and did not identify any potential modern treaty impacts or obligations.

Instrument choice

As the requirements are established in regulations and amendments are needed to codify the Customs Notice, no other instrument choice was considered.

Regulatory analysis

Benefits and costs

The amendments are a matter of routine administrative and financial procedure; there are no perceived negative impacts to the social and economic well-being of Canadians and Indigenous groups.

The CBSA would incur minor costs related to communication and outreach activities needed as a result of these regulatory amendments. Some of these activities related to the implementation have been ongoing since the issuance of CN 20-15 and will continue onwards following the coming into force of these regulatory amendments. Specifically, CBSA program areas have undertaken steps to amend references to the low-value shipment threshold in departmental memoranda and standard operating procedures to reflect the new value.

Small business lens

Analysis under the small business lens concluded that the amendments will not impact Canadian small businesses. The administrative procedures remain unchanged as a result of these regulatory amendments.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on businesses and no regulatory titles are repealed or introduced.

Regulatory cooperation and alignment

The regulatory changes to the Accounting for Imported Goods and Payment of Duties Regulations and the Fees in Respect of Mail Regulations emerged from the decision to raise the low-value shipment threshold for express shipments, pursuant to Article 7.8 of the CUSMA. These regulatory amendments align Canada’s low-value shipment threshold with those of the United States and Mexico.

Effects on the environment

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, as the regulatory amendments have no impact on the environment.

Gender-based analysis plus

A preliminary gender-based analysis plus (GBA+) was completed, and it was determined that these amendments are not expected to have any gender-specific impacts.

Implementation, compliance and enforcement, and service standards

Implementation

Once made, paragraph 167.1(b) of the Customs Act allows regulatory changes that have previously been the subject of a public announcement to have a retroactive effect. As these changes were announced in a Customs Notice, the amendments are deemed to have come into force on July 1, 2020.

Relevant CBSA policy manuals and web content have been updated to reflect the regulatory amendments. These activities will be absorbed within existing operating budgets and additional staff will not be required. These amendments are technical in nature and have no impact on the continuing administration of these Regulations.

Contact

Natacha Noiseux
Acting Manager Postal and Courier Programs Unit
Program and Policy Management Division
Commercial Program Directorate
Commercial and Trade Branch
Canada Border Services Agency
Email: LVS-EFV@cbsa-asfc.gc.ca