Hot Topics in International Trade Law 


Spring 2009 - (International Trade Brief Spring 2009 )

International Trade Brief Spring 2009

Proposed Canadian Legislation Update

The following bills, with implications for international trade, have been tabled recently before the Canadian Parliament:

  • Bill C-2: An Act to Implement the Free Trade Agreement between Canada and the States of the European Free Trade Association ( Iceland , Liechtenstein , Norway , Switzerland ), known as the Canada EFTA Free Trade Agreement Implementation Act .
  • Bill C-6: An Act respecting the safety of consumer products ( Canada Consumer Product Safety Act) . The amendments include new prohibitions, such as the importation of consumer products posing a danger to human health or safety, measures facilitating the identification of such products, as well as new enforcement mechanisms.
  • Bills C-306 and C-312: An Act respecting the use of government contracts to promote economic development ( Canadian Products Promotion Act ) and an Act respecting the use of government procurements and transfers to promote economic development ( Made in Canada Act ).

New Trade Agreements to Watch For

Canada's Minister of International Trade surprised attendees at a Toronto Board of Trade meeting, stating that Canadian officials had recently been to South Korea to further free trade agreement discussions. He did mention that there were a few "issues", but it appears the agreement will not be on hold despite the problems being experienced by the North American auto industry. At that same meeting, he also hinted that the final details of the Canada-Panama free trade agreement were being worked out and negotiations should soon conclude. Additionally, Canada announced on March 5, 2009 that it will move forward in its discussions with the European Union for an economic partnership agreement.

Tariff Rates Reduced to Zero

Effective January 28, 2009, the tariff classifications for a number of items have changed, many being eliminated entirely. The affected products are classified under Section XVI of Canadian Customs Tariff relating to Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles .

The range of products that fall within Section XVI is very broad. Some examples include: machinery for heating, sterilizing, cooling, drying, cooking; dishwashing machines; weighing machinery; fork-lift trucks; printing machinery; moulding machinery for disc brake pads; and machinery for filling, closing, sealing or labeling bottles, cans, boxes, bags or other containers.

Importers of products classified within Section XVI of the Customs Tariff should review the full list of changes and contact legal counsel to ensure they are up-to-date.

"Export Controls" are Canada 's New Watch Words

A recent internal evaluation report of the Canada Border Services Agency (the "CBSA") identified limitations in Canada's export reporting and highlighted concerns with export controls compliance . The report suggested that the CBSA had been deficient in ensuring compliance with export control requirements and had allowed strategic nuclear and military equipment to leave Canada without verifying the identities of the buyers. Major issues emphasized in the report stem from the report's finding that exporters of controlled goods often file the mandatory export documentation with the CBSA in paper form, as opposed to electronically. ("Controlled Goods" refer to goods listed on Canada's export control list which require permits for items having potential military and strategic uses).

While most exporters in Canada file their declarations electronically ahead of shipping, allowing the CBSA to better manage inspections and to red-flag suspicious cargo, approximately 15% of all exports from Canada are reported in paper form. Additionally, many exporters are filing the paper documentation after-hours which, according to the report, means that inspections do not occur. Even when documents were deposited during operational hours, the report found that some border officers face significant time limitations, which obstruct their ability to adequately conduct inspections.

The report recommends that the CBSA develop a plan for implementing mandatory pre-departure electronic reporting of exports and calls for an end to antiquated paper forms. Paper forms have been eliminated for import declarations in Canada since 2004.These recommendations, if followed, would bring Canada in line with the policies of the United States and the European Union, where electronic filing in advance of shipping is mandatory. The report calls for the new CBSA processes to be developed by October 2009.

Canadian exporters should conduct internal audits to ensure they are following the proper policies and procedures to identify and communicate exports of both standard and controlled goods. If internal policies and procedures are not in place, they should be developed as soon as possible with the assistance of persons knowledgeable in the area of Canada's export and customs laws.

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This article appeared in the Lang Michener LLP International Trade Brief Spring 2009 .