Originally published in Blakes Bulletin on
International Trade, August 2008
On July 19, 2008, the Canadian government announced that it
would be accepting public feedback regarding proposed price and
volume triggers to the application of above-quota duties under
the special agricultural safeguard applicable to supply-managed
products. To have their comments considered, interested parties
must provide those comments before September 1, 2008.
Canada has tariff-rate quotas for all supply-managed
products, as well as several additional products. This was done
pursuant to the World Trade Organization (WTO) Agreement on
Agriculture (the Agreement), which requires the conversion
of all non-tariff border measures into tariff-rate quotas.
Imports that fall within a specified quota volume are subjected
to a lower tariff rate, whereas those that exceed the specified
volume are subjected to a higher rate, known as an
"over-quota tariff". Should a WTO member country wish
to impose duty in addition to the over-quota tariff, they may
use the special agricultural safeguard, provided they meet the
requirements for its use, set out in the Agreement.
WTO Special Agricultural Safeguard
Canada is imposing the special agricultural safeguard under
Article 5 of the Agreement. This permits a WTO member country
to assess temporary additional duty on over-quota imports if
those imports exceed specified trigger volumes or fall below
specified trigger prices.
In Canada, this aspect of the Agreement is implemented by s.
68 of the Customs Tariff and the Safeguard Surtax
Regulations 1995-1, 1995-2, and 1995-3. According to s.
68, the Minister of Finance may order the imposition of a
surtax based on the findings and recommendations of the
Minister of Agriculture and Agri-Food.
The safeguard measure can be applied where the volume of
imports of the specific good exceeds 125% of the average
imports of the most recent three years for which data is
available. If this threshold is surpassed, then a surtax of up
to one-third of the applied over-quota tariff can be
The additional duty can be applied to imports where the
price of a particular shipment falls below 90% of the 1986-1988
average. (However, the government has indicated that any
recommendations to the Minister of Finance for a surtax will
show that the goods are being imported at least 10% below their
trigger price.) There is no set amount for this surtax;
instead, it will vary with the amount by which the shipment is
below the average in question.
Whether the shipment trips the volume or price trigger, the
surtax can be applied only to those imports that exceed the
quota, not those that fall within. However, the additional duty
assessed to a particular shipment can be imposed only with
respect to one of the two types of triggers.
The government announced on February 7, 2008 their intention
to "operationalize" the special agricultural
safeguard regarding supply-managed products. The government had
reserved its right to impose additional duties as permitted in
the Agreement and now intends to exercise that right and impose
the duties. The July 19 notice, which invites feedback,
includes the levels of the price and volume triggers as
calculated by Agriculture and Agri-Food Canada. This list is
lengthy, and can be found at: http://www.agr.gc.ca/itpd-dpci/technical/ssg_e.htm,
The full list of values will form the basis of the report
provided by the Minister of Agriculture and Agri-Food to the
Minister of Finance, subject to any changes made following the
consultation period as a result of feedback received. It is
these trigger values that the government has invited comments
on before September 1, 2008. After this, the government will
determine the final trigger values and will begin to monitor
imports of the prescribed goods and assess the surtax on the
above tariff shipments.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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