Canada Customs Focus To Improve Tariff Rate Quota Enforcement
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Canada Customs Focus To Improve Tariff Rate Quota Enforcement

The Office of the Auditor General of Canada (OAG) reported on the mismanagement of tariff rate quotas. Both Canada Border Services Agency (CBSA) and Global Affairs Canada were provided feedback to improve. This was included in the Spring Report to Parliament - Report 2 - Customs Duties, in May of 2017.

Limits On Tariff Rate Quota Exceeded

The OAG reported "the Canada Border Services Agency and Global Affairs Canada did not work together to adequately manage the limits on quota-controlled goods coming into Canada." The OAG estimated in 2015 the government should have assessed approximately $168 million in customs duties on imports of quota-controlled goods. Simply, the quota limits were exceeded. The goods included in this loss of revenue were dairy, chicken, turkey, beef and eggs.

Tariff Rate Quotas Protect Canadian Industry

This is important since quotas and Customs duties protect Canadian markets. By limiting the import of certain products, the Canadian government can assist Canadian businesses which compete with products that face fierce competition from export markets.

Certain goods imported into Canada are quota-controlled. Canada applies tariff rate quotas on these goods, which is a two-tier level of Customs duty rates. This is done to control the volume of goods coming into Canada. Examples of quota-controlled goods are dairy products, chicken, turkey, beef and egg products. A tariff rate quota sets a volume of a good which can be imported into Canada at a lower rate of duty and once the quota has been reached duties on subsequent imports are applied a higher rate of duty.

How To Import Dairy Into Canada

What Goods Are Subject To Tariff Rate Quotas?

Goods subject to tariff quotas are listed in the Import Control List of the Export and Import Permits Act. Importers must obtain a permit from Global Affairs Canada either directly or through a Customs broker to bring these goods into Canada. If the importer does not have a permit to import a quota-controlled good at the time of the import, the CBSA allows the importer five days to get a permit from Global Affairs Canada.

Failure To Enforce Tariff Rate Quotas

The OAG report found that CBSA was negligent by failing to enforce the permit for quota-controlled goods in 2015. CBSA recorded the permit information in one system and the duties and taxes paid and owed in another. This meant the permitted amount and the actual amount imported on quota-controlled goods were rarely compared.

Global Affairs Canada were responsible for issuing the authorizations, certificates and permits for items on the Import Control List. However, the volumes imported did not match the volumes authorized at a lower rate of duty. The OAG found importers likely imported a significant volume of controlled goods into Canada without a permit and without paying the appropriate amount of duty.

Focus To Improve Tariff Rate Quota Enforcement

Both Global Affairs Canada and CBSA agreed they need to work more closely together to better enforce tariff rate quotas. Both parties agreed tighter enforcement would commence by September 2017.

It is important to note that regardless of whether a permit, a certificate or other authorization is issued or granted under the Export and Import Permits Act (EIPA) by Global Affairs Canada, it is the Importers and Exporters responsibility to ensure ALL requirements are met with respect to their importation of tariff rate quota goods. Ensure all of your imports have been properly declared and duty paid before an audit determines otherwise.

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About the Author
Jan Brock

Jan Brock joined PCB Customs Brokers in 2015 as a Senior Trade Advisor. She retired from Canada Border Services Agency (CBSA) in 2015 after serving more than 37 years. Jan started her career with CBSA as a summer student in 1976 and worked part-time until she graduated from U.B.C. with a Bachelor of Education Degree in 1980 . Shortly after graduating from U.B.C. Jan worked full time as an inspector with CBSA and within three years was promoted to Superintendent. She served some time in the Regional Operations office as an Operations Review Officer before she was promoted to Chief of Operations first at the Customs Mail Centre, then in the Metro District as the Commercial Chief and ending her career as a Chief at Pacific Highway Commercial Operations where she served as Chief from 1992 to 2015. During her career she was a member of the Customs Drug Team and a trainer in the National Enforcement Program. Jan also served as the Regional Coordinator Officer Powers and Use of Force for the Pacific Region. Jan served on many Commercial Program Reviews and committees both national and regional during her career and possesses an expansive knowledge of importing and exporting into and from Canada.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.