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Canada to Remove Tariff Preferences from 72 Countries

Thursday, October 31, 2013
Sandler, Travis & Rosenberg Trade Report

The government of Canada announced recently a number of significant changes concerning the tariff preferences the country extends to developing countries. These changes will take effect Jan. 1, 2015, and include the following.

Beneficiaries. Benefits under the General Preferential Tariff are being withdrawn with respect to all goods that originate in the following countries: Algeria, American Samoa, Antigua and Barbuda, Argentina, Azerbaijan, Bahamas, Bahrain, Barbados, Bermuda, Bosnia and Herzegovina, Botswana, Brazil, Brunei, Cayman Islands, Chile, China, Colombia, Costa Rica, Croatia, Cuba, Dominica, Dominican Republic, Ecuador, Equatorial Guinea, French Polynesia, Gabon, Gibraltar, Grenada, Guam, Hong Kong, India, Indonesia, Iran, Israel, Jamaica, Jordan, Kazakhstan, Kuwait, Lebanon, Macao, Macedonia, Malaysia, Maldives, Mariana Islands, Mauritius, Mexico, Namibia, Netherlands Antilles, New Caledonia and Dependencies, Oman, Palau, Panama, Peru, Qatar, Russia, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Seychelles, Singapore, South Africa, South Korea, Suriname, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, United Arab Emirates, Uruguay, Venezuela, and U.S. Virgin Islands. This change will not apply to goods that were in transit to Canada before Jan. 1, 2015.

GPT benefits will continue to be available to 103 countries. However, Canada intends to continue to review GPT eligibility biannually and to remove benefits for countries that (a) are classified for two consecutive years as high- or upper-middle income according to the last World Bank income classifications or (b) have a 1% or greater share of world exports for two consecutive years according to the latest World Trade Organization statistics.

Equatorial Guinea and the Maldives are also being removed from benefits under the Least-Developed Country Tariff because they are now classified as high- and upper-middle income countries, respectively.

Grandfathered Benefits for LDCs, Apparel. With respect to countries being removed from GPT eligibility (a) products imported from LDCs can continue to qualify for duty-free treatment under the LDCT even when using inputs from such countries and (a) apparel produced in these countries from Canadian textiles will remain eligible for reduced rates of duty under the outward processing program.

Technical Amendments. A number of revenue-neutral technical amendments have been made, including (a) removing rules of origin applicable to goods that are duty-free on an MFN basis, (b) updating the schedule to reflect revisions to the Customs Tariff, (c) adding the word “territory” to the definitions of “beneficiary country” and “least developed country,” and (d) clarifying that the rule of origin for apparel applies only to the fabric that makes up the major portion of the imported garment.

Sugar. To maintain tariff-free inputs for Canadian sugar refiners, most-favored-nation tariffs on imported raw cane sugar are being eliminated because the large majority of such imports currently enter Canada duty-free under the GPT from countries for which GPT eligibility is being withdrawn.

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