Clearit.ca's Blog on Customs Brokerage and News Updates
As part of its action plan to support the Canadian agri-food manufacturing industry, the new Trudeau Government’s first budget included clear intentions to eliminate duties on imports of certain food manufacturing ingredients, excluding supply managed products. Budget 2016 aims to make agri-food manufacturers more competitive on both the international market and domestically. For importers of food manufacturing ingredients, this represents an important opportunity as the possibility of benefiting from tariff elimination becomes a reality for them.
Agriculture and Agri-Food Canada published in 2015 an astonishing report that clearly noted the sheer importance of Canada’s food and beverage processing industry. Accounting for the largest share, 16 percent, of the total sector’s GDP in 2-13 and having the largest share of jobs, 16.7 percent, Canada’s food and beverage processing industries stand tall as key players in the economy.
The government’s plan would eliminate tariffs by modifying MFN rates currently in place on certain items to rates of “Free”, with no obligatory requirement that these particular items meet free trade rules of origin. There are multiple categories that would subsequently fall under the proposal, so if you’re a manufacturer whose goods purchased is found in the following categories, count yourself lucky: certain vegetable inputs; certain animal or vegetable fats and oils and prepared edible fats; certain prepared foodstuffs (limited to those used in manufacturing food products or beverages); beverages, spirits and vinegar and finally, certain products of the allied or chemical industries. The MFN rates of duty that currently apply to the above categories range from 2 to 17 percent – that should give you an idea of the possible savings ahead and the Department of Finance has kept the door open to listen to the industry on its views regarding various tariff items that might not be covered by the proposal.
Your Feedback Counts
To get a better idea of whether or not a specific ingredient falls under the proposed tariff elimination, the Department if Finance has published a list of all the items identified. The list will allow manufacturers to better estimate the reduction of production costs but at the same time, it will encourage players in the industry to offer precious feedback to the government.
As the elimination of customs duty is linked to tariff classification, the consultation process offers the unique opportunity to allow agri-food manufacturers to ensure that the imported ingredients they buy are accurately tariff classified.
How to Have Your Voice Heard
Comments on the government’s proposed tariff elimination need to be submitted by June 21, 2016, to the International Trade Policy Division (Agri-Food Inputs) at the Department of Finance. As a guide, comments should include at a minimum:
- Contact information of a Canadian company or industry association with one contact person identified;
- the eight-digit tariff item(s) and description of the goods;
- the reason behind the concern in relation to the proposed tariff elimination and a proposition on ways to alleviate the concerns;
Of course, any commercially sensitive information should be clearly identified as such when submitting comments and concerns.
The government’s proposal is a unique opportunity for agri-food manufacturers to have their voice heard in regards to permanent cost reductions. Stakeholders may want to support the proposal as it stands to express comments in favor of a more extended list of agri-food ingredients. For a helping hand in ensuring a meaningful impact, manufacturers should consider consulting with experienced customs brokers and legal counsel.