Copyright 2011, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on International Trade & Investment, March 2011
On March 22, the federal government released its Budget for 2011 (Budget 2011). There are several international trade-related items among the new measures announced in Budget 2011 (to view these measures, click here). While it appears that the government may fall on a non-confidence motion associated with Budget 2011, which would prevent the passage into law any of the measures it has proposed, Budget 2011 offers insight into the plans and priorities of the current government. As well, if this budget remains unimplemented, future governments may well choose to continue the plans outlined in the budget and adopt the planned measures.
Tariff Simplification
The government announced it will seek to "modernize" the Customs Tariff. Little detail has been provided on the precise nature of the changes contemplated, however, one measure expected to be included in this 'modernization' is the revocation of provisions which have become obsolete. As an example, Budget 2011 suggests that certain provisions listed in the "Special Measures", "Emergency Measures" and "Safeguards" section of the Customs Tariff may no longer be used because of commitments Canada has made in international agreements. These, among others, will be removed to make the Customs Tariff simpler to use.
The government has also said that it will make some structural changes to the Customs Tariff in order to make it more user-friendly. Budget 2011 indicates that one such modification will allow importers to more easily identify the tariff classification of their goods by reducing the number of tariff items and eliminating "end-use" provisions. According to Budget 2011, such measures should reduce administrative burdens placed on importers. It is also expected that the changes to the Customs Tariff will aim to make tariff treatment of imports from each country more transparent.
Budget 2011 also includes an announcement that the government will pursue measures to facilitate certain low-value importations. In particular, through the addition of new Tariff Items, non-commercial postal and courier imports valued at less than C$500 will be subject to tariff rates of 0%, 8%, or 20%, depending on the nature of the goods being imported.
Foreign Trade Zone Policies
Canada maintains "foreign trade zone" programs that generally provide favourable duty and tax treatment for goods imported into Canada for subsequent value-added manufacturing and export. In the light of their potential impact on Canadian importers and manufacturers, Budget 2011 announced the government's intention to review its foreign trade zone policies. The focus will be the efficiency of the administration of the Canadian programs, and the competitiveness of these programs compared to foreign trade zones in other countries.
Export Development Canada
In 2009, Export Development Canada (the EDC) was provided certain additional mandates to provide financing to Canadian exporters. Included amongst these powers was the ability to provide financing in the Canadian domestic market. In Budget 2011, the government announced that it would extend these powers until March 2012, and will also review the regulatory framework of the EDC as it relates to domestic financing.
Trade Remedies
Budget 2011 announces that new measures related to Canada's trade remedy system are being considered. The trade remedy system provides a mechanism by which Canadian producers can challenge unfair trade practices in relation to imported goods. Under this system, the government, after conducting highly technical investigations and hearings, may impose import duties on goods found to be "dumped" into Canada or improperly subsidized by a foreign government. The government provided little detail on the nature of such measures. However, it did indicate that the measures would be related to the efficiency of the system.
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