Canada: Canada Launches Consultations On Import TRQs For Dairy, Poultry, Eggs

Last Updated: July 15 2019
Article by Cyndee Todgham Cherniak

The Government of Canada is consulting with stakeholders concerning the allocation and administration of import tariff rate quotas (TRQs) for dairy (e.g., cheese, milk, butter), eggs and poultry (e.g., chicken, turkey). A TRQ is an import mechanism that allows a certain amount of a specific product to be imported at a low or zero duty rate of customs duties, while anything above that is generally charged a much higher rate of customs duties.

Canada's dairy, poultry and egg TRQs are implemented and administered by Global Affairs Canada in accordance with the Export and Import Permits Act and its associated regulations, and ministerial policies set out in Notices to Importers.  In connection with the consultations, stakeholders have until 11:59 p.m. (Pacific Time) on August 31, 2019, to submit their responses, comments and suggestions.  After this time, you may not have another opportunity to change the way import TRQs are managed in Canada.

Canada's supply management regime covers dairy, eggs and poultry and Canada limits the volume of imports of these products by administering a TRQ system.  As a result of new import allocations in the Canada-European Union Comprehensive Economic and Trade Agreement (Canada-EU CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada-United States-Mexico Agreement ("CUSMA" or "USMCA" or "NAFTA 2.0"), Canada is seeking input on how the TRQs should be allocated and administered on a going forward basis. The number of TRQ commitments for supply managed commodities has increased from the 20 TRQs established under the World Trade Organization in 1995 to 42 TRQs under administration today (including the Canada-EU CETA TRQs (2 new TRQs for cheese) and the CPTPP TRQs (20 new TRQs for dairy, poultry and eggs)).  When CUSMA (16 new TRQs for dairy, poultry and eggs) is ratified, the number of TRQs for supply managed goods increases to 58 TRQs. It is time to reconsider whether there is a more inclusive way to allocate and administer Canada's supply management regime.

This consultation process is important as a new system for allocating and administering TRQs will be developed.  If you wish to benefit from the TRQs, this is the time to speak up.

Who should participate?

You should participate.  The Government of Canada would like to hear from all sectors of Canadian society and from international stakeholders, including:

  • the Canadian public;
  • producers, manufacturers, processors, further processors, distributors, retailers and importers;
  • relevant national, provincial and territorial industry associations;
  • small, medium and large enterprises;
  • provincial and territorial governments;
  • national, provincial, territorial and regional associations;
  • trading partners; and
  • any other interested stakeholders

The stakeholders will include importers, industry associations, large retailers, specialty retailers, restaurants, manufacturers of food products, governments, dairy producers, foreign governments, etc.

How should stakeholders participate?

Stakeholders may complete an online questionnaire and submit that questionnaire electronically. The survey allows stakeholders to choose from two dozen products to comment on, including chicken, eggs, cheese and butter. The questionnaire also asks questions about what the preferred method of allocation would be for TRQs, whether new entrants should face different eligibility criteria, and whether there should be a cap on how much of the quota one allocation holder can receive. Stakeholders are also asked whether a portion of the allocation should be reserved for specific demographics or other categories, like women-owned businesses; whether transfers should be allowed; and what, if any, restrictions should be considered for auctions.

Stakeholders may also prepare written submissions and send the submissions to TRQConsultation.ConsultationCT@international.gc.ca.

Current Supply Management Regime

Importers of supply managed goods must obtain import allocation in order to be permitted to import dairy, poultry and eggs at the "within access" tariff rate.  The "over access" tariff rates can exceed 300%. In addition, the importer must  obtain an import permit for each and every shipment of supply managed goods prior to the importation of the goods.  If the importer has an import permit for a shipment of "supply managed goods" issued by Global Affairs Canada, the "supply managed goods" may enter Canada under the "within access commitment" tariff code, which has a lower duty rate or is duty free. Only importers who have been allocated import quota or who have entered into an arrangement to use a quota holder's quota may import "supply managed goods" under an import permit (they are the only ones who will receive an import permit from Global Affairs Canada). Import permits are issued on a shipment-by-shipment basis for a specific product and a specific quantity of that product (e.g., 1000 kgs of chicken wings). If the importer does not have an import permit for "supply managed goods", the goods enter Canada under the "over access commitment" tariff code and are subject to significant duties (often over 300%).

For more information about TRQ allocation and administration, please refer to the Government of Canada questions and answers and the backgrounder for the consultations.

This regime is not inclusive, and it is time to make some positive changes.  What do you suggest those changes should be?

Importance of Consultations

It is important to participate in the consultation process.  If you do not participate, the Government of Canada will not have the input needed to amend TRQ regime in a way that will benefit your business.

One of the most important elements of the consultations is the allocation of TRQ.  Prior to the implementation of the Canada-EU CETA, import allocations were not regularly opened to new entrants.  The Canada-EU CETA required that new entrants be allocated a portion of the cheese TRQs over a period of years.  This was the first time that new entrants could receive an allocation and then be granted import permits.  Every year, Global Affairs Canada allocates EU cheese TRQ.

If Canadian companies wish to apply for and receive the new CPTPP TRQs and the new CUSMA TRQs, this is the time to outline a fair process for allocation and administration.
We would be pleased to discuss what should be contained in submissions.

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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