On January 1, 2025, Canada is set to make changes to its to unilateral tariff programs for imports under the Customs Tariff.  The changes include several beneficiary countries being graduated from the General Preferential Tariff (“GPT”) and Least Developed Country Tariff (“LDCT”) programs, and the introduction of a General Preferential Tariff Plus Program (“GPTP”) that will come into force at a later date.

Background

Canada’s customs system operates on the basis of preferential tariffs, in which countries are assigned a particular tariff treatment.  The tariff treatment assigned to a country is used (in conjunction with the HS Code) to determine the rate of duty imposed on a particular good imported into Canada from that country.

Tariff Treatments

The default tariff treatment is called the Most-Favoured-Nation (“MFN”) Tariff, and the MFN Tariff rates generally applies to all countries (except Russia and Belarus). 

By contrast the GPT program, open to developing countries, provides reduced tariffs or duty-free treatment to a significant number of goods for GPT Countries.  Similarly, the LDCT program, which is open to the world’s poorest countries, provides for duty-free treatment for all imports (except over-access, supply-managed dairy, poultry and egg products). 

The new GPTP program will provide tariff preferences beyond those of the GPT program to countries that make efforts to improve conditions relating to human rights, labour rights, and sustainable development.

Changes to the Customs Tariff List of Countries

Importers should be aware that several nations will graduate (be removed) from the GPT and the LDCT on January 1, 2025.

The following countries will graduate from the GPT on January 1, 2025: Belize, British Virgin Islands, Fiji, Georgia, Guatemala, Guyana, Iraq, Marshall Islands, Moldova, Nauru, Paraguay, Tonga, Turkmenistan, Tuvalu, and Vietnam. 

Two countries will also be reinstated to the GPT: Lebanon, and Tunisia.

The following countries will graduate from the LDCT on January 1, 2025: Cape Verde, Samoa, Vanuatu, and Tuvalu. 

Additional countries will also be removed from the LDCT over the next three years: Sao Tome and Principe in 2024, Bangladesh, Laos, and Nepal in 2026, and the Solomon Islands in 2027.

Other Preferential Tariff Updates for 2025

Rules of Origin – Canada will also be updating its rules of origin for apparel products to liberalize and harmonize them across all of Canada’s preferential tariff programs, and to generally allow for the cutting and sewing of fabrics in developing and least-developed countries to confer origin on the final apparel product, regardless of the origin of the yarn and fabric. 

Shipping Requirements – Canada will be moving the direct shipment and documentation requirements from the Customs Tariff to the Regulations.  In the process the Regulations are expected to allow for greater flexibility in terms of acceptable documentary requirements and also eliminate the six-month time limit on the storage of goods in intermediary countries.

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