Tax & Trade Blog

In 2018, eleven counties including Canada and Mexico entered into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) for free trade between the signatory states. Formerly known as “Trans-Pacific Partnership”, CPTPP was initiated by the US to impede China’s non-market trade strategies and influence in the Indo-Pacific.

In 2021, the irony is that the US exited CPTPP in 2017 and China is now requesting to join.

The request does not seem to have been greeting with open arms, as CPTPP members undoubtedly worry about the impact of accepting China on other global trade agreements like the Canada-US-Mexico Trade Agreement (“CUSMA”) and others.

In what may well be one of the last decisions Canadian Courts make with respect to Chapter 11 of the North American Free Trade Agreement (“NAFTA”), the Ontario Court of Appeal (“OCA”) in United Mexican States v. Burr dismissed Mexico’s appeal from an Ontario Superior Court decision. The Superior Court had upheld the decision of an arbitral tribunal established under Chapter 11 of NAFTA in response to complaints by individual investors against Mexico.

While presenting an interesting issue, the implementation of the Canada – United States – Mexico Agreement (“CUSMA”) has effectively put an end to these investor-state dispute provisions as far as Canada is concerned, although a limited investor-state dispute mechanism remains in effect between Mexico and the United States.

The World Customs Organization (“WCO”) revises its Nomenclature of Harmonized Commodity Description and Coding System used for the uniform classification of goods traded internationally (“Harmonized System” or “HS Codes”), every five years. This is done to adapt to technological advancements and emerging global changes. As this nomenclature forms the basis for the Tariff Schedules of around 211 WCO member countries worldwide (including US and Canada), these changes are important!

Canada is expected to implement these changes in 2022, and importers will need to re-evaluate their tariff classification, declaration, and HS Coding systems to ensure conformity with the new Customs Tariff.

The Canadian dairy industry is one of the most protected industries in the world, which while good news for Canadian diary producers is decidedly bad news for Canadian importers looking to import and distribute specialty dairy products like fine or specialty cheeses. These importers will face requirements for both import licenses and quota allocation, with the latter usually difficult if not impossible to obtain for first time entrants!

Regulatory Background

As indicated, Canadian importers must have access to a Tariff Rate Quota (“TRQ”) in order to import supply-managed goods that fall within Canada’s Import Control List (“ICL”) at “preferential tariff” rates.

One of the least understood areas of CBSA administrative policy are the rules surrounding the operation and licensing of customs warehouses. These warehouses (of which there are several types) allow goods brought into Canada to be stored within the country while deferring the payment of applicable duties and taxes in respect of their import until they are ‘released’. The rules in this area are administratively complex, and expert legal advice should be considered for any business looking to use or operate a customs warehouse.