ARCHIVED – Dairy – CPTPP Cream Tariff Rate Quota (TRQ) (Item 117.1 on the Import Control List)
Serial No. 939
Date: May 1, 2019
This Notice to Importers is provided pursuant to Section 6.2 of the Export and Import Permits Act (EIPA) and will remain in effect until further notice.
In brief
Imports of cream into Canada are subject to import controls under Canada’s EIPA. Accordingly, an import permit is required for shipments of cream to enter Canada.
Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, Canada agreed to establish a tariff rate quota (TRQ) of 734,000 kilograms for cream.
The allocation period for this TRQ extends from August 1, 2019 to July 31, 2020, inclusive. Import permits for shipments of cream destined to the Canadian market are issued to allocation holders under Canada’s tariff rate quota for cream, which is administered by Ƶ.
This Notice to Importers sets out the policies and practices pertaining to the administration of this TRQ, including the allocation, underutilization, return and transfer policies. This Notice also explains how to apply for import permits.
Summary of key dates and access quantity for the 2019-2020 allocation year
- TRQ year: August 1, 2019 to July 31, 2020
- Access quantity: 515,000 kilograms
- Start of application period: May 1, 2019
- Application deadline: June 15, 2019
- Reference period for assessing applicant’s eligibility for an allocation: May 1, 2018 to April 30, 2019
- Opening of the TRQ for imports: August 1, 2019
- Date for returning unutilized quota: April 1, 2020 (no later than 12:00h, Eastern Time)
Table of Contents
1. Purpose
1.1 The purpose of this Notice is to:
- set out the policies and practices pertaining to the administration of the CPTPP cream TRQ;
- invite applications for allocation under the TRQ for the next allocation year; and
- explain how to apply for permits for imports of cream.
2. Definitions
“Cream” means a product that is included in Items 117.1 of the Import Control List.
“Processor” means an establishment that carries on the manufacture of cream in its own provincially-licensed or federally-registered facility throughout the entire reference period.
“Further Processor” means an establishment that uses cream in its manufacturing operations and product formulations.
“Distributor” means an establishment that buys cream and re-sells it to other businesses.
- For clarity, commission brokers do not meet the distributor definition and are not eligible for an allocation under the TRQ. For purposes of this Notice, commission brokers procure or sell on behalf of others without taking ownership of or financial responsibility for the cream.
- Additionally, retailers do not meet the distributor definition and are not eligible for an allocation under the TRQ. For purposes of this Notice, retailer is an establishment that is primarily engaged in retailing food, and which buys cream and sells it directly to final consumers.
“Market share” means an applicant’s level of activity in the cream sector in relation to the total activities of the other eligible applicants within the group of the TRQ.
“Equal share” means each applicant receives the same allocation level based on the quantity of TRQ available divided by the number of eligible applicants within the group of the TRQ.
“Reference period” means the period of time used to measure an applicant’s activity in the processing or distribution of cream in the Canadian dairy sector. For the purpose of this Notice, the reference period is from May 1 to April 30 immediately preceding the applicable allocation year.
“Accountant” means a member in good standing of one of the professional accounting bodies in Canada, who is registered with his/her provincial professional organization to provide accounting services and is independent from the applicant (i.e., is not an owner, a partner, a director, or an employee of the company applying for an import allocation).
3. General information
3.1.1. In accordance with its commitments under the CPTPP, Canada has established a TRQ for imports of cream.
3.1.2. Under Canadian TRQs, in any given year, a predetermined quantity of imports of a good controlled under the EIPA can enter Canada at a lower rate of duty, while imports over this quantity are subject to higher rates of duty. The TRQs therefore have three components: an import access quantity negotiated with Canada’s international trade partners; a within access commitment rate of duty that applies to imports up to the access level; and a higher, over access commitment rate of duty for imports over the access level.
3.1.3. The within and over access rates of duty that apply to imports of cream can be found in Canada’s .
3.1.4. Pursuant to the EIPA and its corresponding regulations, when deciding whether to issue an import allocation or whether to consent to a transfer, the Minister shall take into account whether the import allocation holder has furnished false or misleading information in connection with any reports required by the Act or the regulations made under the Act or by any condition of an import allocation or import permit during the 12-month period preceding the period in respect of which the import allocation or transfer is to apply. Furthermore, the Minister may attach conditions to import allocations and/or to import permits, and may amend, suspend, cancel or re-instate import permits and allocations.
3.1.5. Failure by an applicant to provide any information requested by Ƶ under the EIPA or failure to comply with any condition of an authorization or permit issued pursuant to the EIPA may result in the rejection of the application for an allocation under the cream TRQ, the reduction or cancellation of an authorization issued pursuant to the EIPA, or the cancellation of associated permits.
3.2 Access quantity
3.2.1. The access quantity for the CPTPP cream TRQ will be phased in over fourteen years. The phase-in table can found in the text of the under 2-D, entitled .
3.2.2. The 2019-2020 access level for the CPTPP cream TRQ is 515,000 kilograms.
3.3 Allocation period
3.3.1. The allocation year for the CPTPP cream TRQ extends from August 1, 2019 to July 31, 2020, inclusive.
3.3.2. Eligibility for an allocation will be assessed on the basis of each applicant’s activities in the cream industry during the reference period of May 1 to April 30 immediately preceding the new quota year. An applicant must be a resident of Canada and active regularly in the Canadian cream sector during the reference period and the allocation year.
3.3.3. Being active regularly during the reference period and the allocation year is normally understood to mean monthly activity.
4. Products covered
4.1. This Notice pertains to Items 117.1 of the Import Control List (ICL), namely cream falling under heading Nos. 0401.40.10 and 0401.50.10 in the list of tariff provisions set out in the Schedule to the .
4.2. Importers who require a determination as to whether the product they intend to import is eligible under the CPTPP cream TRQ are encouraged to obtain an advance tariff classification ruling from the appropriate regional client service office of the Canada Border Services Agency (CBSA).
5. Allocation policy
5.1. The TRQ that is available for a given year is allocated in the following way:
- 80 percent of the TRQ is allocated to the processor group on a market share basis;
- 10 percent of the TRQ is allocated to the further processor group on a market share basis; and
- 10 percent of the TRQ is allocated to the distributor group on an equal share basis.
5.2. An eligible processor market share is calculated on the basis of the kilograms of cream produced during the reference period by the applicant in relation to the total market calculated within the group of eligible applicants.
5.3. Eligible further processor market share is calculated on the basis of the kilograms of cream used in the manufacture of food products during the reference period by the applicant in relation to the total market calculated within the group of eligible applicants.
5.4. Eligible applicants are eligible to apply under only one group during any given allocation year under the CPTPP cream TRQ.
5.5. For the purpose of this Notice, where two or more applicants are related persons, they shall be eligible for only one allocation. To determine which persons are related, applicants are required to provide a list of “related persons”. A definition of related persons may be found in Appendix 4.
5.6. In the case of separate applications from related applicants involving a parent company and one or more subsidiaries, only the application nominated by the parent company will be eligible. If the parent company does not make such a nomination in writing, it shall be made by Ƶ.
5.7. In order to ensure that allocations are issued in economically viable quantities, applicants whose market share calculation does not result in a minimum 20,000 kg allocation will normally not be issued an allocation. Applicants are to identify the minimum volume they are willing to accept. Should an applicant’s market share calculation result in a volume lower than the identified volume, no allocation will be issued.
5.8. All import allocations expire at the end of each allocation year and all applicants interested in receiving an import allocation must reapply each year.
6. How to apply for an allocation
6.1. Applicants who wish to apply for an allocation under this TRQ are invited to submit their completed application form and any other relevant documents beginning May 1 and no later than June 15 immediately preceding the opening of the allocation year.
6.2. All applicants for an allocation are required to include as part of their application:
- a sworn affidavit;
- a letter from an independent qualified professional (normally and accountant) verifying the information included in the application; and
- information concerning related persons (if applicable).
6.3. All appendices to the application should be in the exact format of the models attached to this Notice. Any changes to the wording of the appendices will normally not be permitted. Any change to the appendices should be discussed and submitted in advance to be validated by Ƶ.
6.4. The information that the applicant provides will be considered when allocating the TRQ. Ƶ retains the right to request additional information. Applicants may be required to provide evidence of their activities. Accountants may be asked to explain the procedures used in greater detail and may be asked to provide Ƶ with copies of all working documents. Any costs associated with a request for additional information will be borne by the applicant. Failure to provide information requested may result in the application being deemed incomplete.
6.5. The declaration in the application form allows Ƶ and its representative access to any information pertaining to the applicant in relation to the application for an import allocation or to subsequent applications for, or concerning the use of, import permits that is in the files of Agriculture and Agri-Food Canada or the Canadian Food Inspection Agency. Normally, applicants are informed of any such requests for information.
6.6. Section 18 of the EIPA forbids any person to knowingly induce, aid or abet any other person to contravene any of the provisions of the EIPA. Such contraventions by an applicant or its accountant may lead to prosecution for offenses under the EIPA.
6.7. Applicants are invited to send their applications by E-MAIL to the CPTPP Dairy Mailbox. Applicants sending their application by e-mail should be prepared to present the original version of their application upon Ƶ’s request. Failure to do so may lead to the cancellation of any allocation issued pursuant to the application and/or the cancellation of associated permits.
6.8. Applications sent by MAIL or COURIER should be addressed to the quota manager of the CPTPP cream TRQ at Ƶ. The mailing address of the Trade Controls Policy Division can be obtained on the Ƶ website, under .
6.9. For legibility reasons, applications sent by facsimile will not be accepted.
6.10. Applications postmarked after the deadline immediately preceding the opening of the allocation year, or in a format other than that required, will normally not be considered. Lost applications will not normally be considered without acceptable proof that they were sent before the deadline (e.g., courier receipt).
7. Underutilization, returns and reallocation
7.1 Underutilization
7.1.1. Allocation holders with a utilization rate less than 95 percent in the previous allocation year may have their allocations adjusted downward by an under-utilization penalty for the new allocation year. Footnote 1
7.1.2. For allocation holders that under-utilized in the previous allocation year, allocations in the new allocation year will be reduced by the percentage of the allocation not utilized in the previous allocation year. Footnote 2
7.1.3. Allocation holders that under-utilized during the previous allocation year will be advised of the applicable under-utilization penalty before the allocations are finalized for the new allocation year.
7.2 Returns
7.2.1. Allocation holders may return any portion of the balance of their allocation by informing Ƶ in writing, no later than April 1 of the allocation year. Any portion of an allocation that is returned by this date will be considered as having been used for the purposes of administering the under-utilization policy.
7.3 Reallocation
7.3.1. Returned quantities will normally be made available seven days after the return deadline to eligible allocation holders who have not returned any unused quantity of their allocation. The reallocated quantity will be in proportion of the applicant’s allocation, or on demand if quantities still remain after the first offer.
8. Transfer policy
8.1. The Minister may allow the transfer of allocations between allocation holders. All requests for allocation transfer must be referred to Ƶ for consideration. Requests must be made by way of the .
8.2. Allocation holders who transfer any portion of their allocation will not normally be eligible to receive transfers from other allocation holders. Conversely, allocation holders who receive a transfer will normally not be eligible to transfer any portion of their allocation to another allocation holder.
9. Import permit
9.1 Types of permits
9.1.1. An import permit issued by Ƶ is required for every shipment of cream covered by this Notice to enter Canada. For a given shipment, importers may either present a shipment-specific import permit or invoke the appropriate General Import Permit (GIP).
9.1.2. Goods imported directly into a bonded warehouse do not require either a specific import permit or a GIP. However, an import permit is required to move goods out of a bonded warehouse for consumption in Canada.
9.2 Shipment-specific import permits
9.2.1. Shipment-specific import permits are normally issued on demand to allocation holders up to the amount of their allocation under the CPTPP cream TRQ. Shipments entering Canada under a shipment-specific import permit can normally do so at the within access rate of duty as long as there is sufficient quota remaining.
9.2.2. To claim the within access rate of duty for a shipment, the importer must present the shipment-specific import permit to the CBSA at the time of final accounting.
9.2.3. Shipment-specific import permits will not normally be issued retroactively for shipments that have already been imported into Canada, including under the authority of a GIP, regardless of the importer’s allocation.
9.2.4. For a shipment-specific import permit to be considered valid, the name on the permit must match exactly the name of the importer on the CBSA’s B3-3 Canada Customs Coding Form and related documents at time of final accounting. Furthermore, the quantity on the permit must be the same as the net quantity on the Customs invoice. It is incumbent on the recipient of the permit to ensure that a permit application is made in the name of the importer of record and includes the correct quantity. Questions about the proper procedures to fill out customs entry documents should be addressed to local CBSA officials.
9.3 General Import Permit
9.3.1. The GIP that applies for cream is . There is no limit to the quantities of cream that may enter Canada under the GIP; however, such imports will be subject to the higher over access rate of duty.
9.4 How to apply for a permit
9.4.1. Information about the permit application process, including information about fees, the monthly billing system, information required from applicants and the permit application form, is available on the Ƶ website: .
10. Contact us
10.1. Contact details for the Supply-Managed Trade Controls Policy Division and the Help Desk are available on the Ƶ website:
10.2. For directory assistance, you may call 343-203-6820.
Appendices
Appendix 1 – Affidavit for [indicate activity field]
[To be printed on company letterhead]
I [NAME OF PERSON], A RESIDENT OF THE COUNTY OR MUNICIPALITY OF [_________________], IN THE PROVINCE OF [______________] MAKE OATH AND SAY AS FOLLOWS:
- I am employed by [Applicant name] as [job title].
- [Applicant name] does and will continue to do business in [year] as a (indicate your field of activity):
- ☐ Processor, or
- ☐ Further-Processor, or
- ☐ Distributor.
- During the reference period of May 1 to April 30 immediately preceding the new quota year (Select your field of activity),
- ☐ as a processor, the company produced XXXX kg of cream in its own provincially-licensed or federally-registered facility, or
- ☐ as a further-processor, the company used XXXX kg of cream in its own provincially-licensed or federally-registered facility for the production of other products, or
- ☐as a distributor, the company sold XXXX kg of cream to other businesses, excluding sales to other distributors, sales to related persons and sales directly to final consumers.
- No statistical sampling techniques were used to estimate the quantity of cream in kilograms declared under Paragraph 3 of this affidavit.
- All other information provided by [Applicant name] on the “DAIRY – CREAM – Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPRPP) Tariff Rate Quota (TRQ) Allocation Application for [Allocation year] is accurate and complete.
- I understand that the information provided by [Applicant name] in this affidavit will be used to assess [Applicant name] application for a share of the [Allocation year] CPTPP cream TRQ. I am aware that Section 17 of the Export and Import Permits Act (EIPA) forbids anyone to furnish false or misleading information or knowingly to make any misrepresentation in any application in order to procure an import permit. I am aware that Section 18 of the EIPA forbids any person to knowingly induce, aid or abet any other person to contravene any of the provisions of the EIPA.
Sworn before me at the City of ________________________________________in the province
of______________________, on this ____________ day of ________[Month]of ______ [Year]
Notary Public, Justice of the Peace or Commissioner of Oaths
______________________________________
Signature and printed or typed name of swearer
Appendix 2 – Independent verification of an application for an allocation as a (indicate field of activity) of the CPTPP Cream Tariff Rate Quota (TRQ) in [allocation year]
Independent verifier's letterhead
To: Ƶ
Re: [Applicant name]
[Applicant EIPA File Number]
At the request of [Applicant name] and as required by Notice to Importers No. _______ dated _______________________, I performed the following procedures in connection with [Applicant name]’s application as (indicate applicant’s field of activity) for an allocation of the CPTPP cream TRQ for the [allocation year] (“the application”).
I enquired of [Applicant name] and confirmed that the company will continue to do business in [year] as defined in Notice to Importers dated ____________ as (select applicant’s field of activity):
- ☐ Processor, or
- ☐ Further Processor, or
- ☐ Distributor.
Procedures performed and findings
1. I read Notice to Importers and understand its contents. In particular, I am aware that Items 117.1 of the Import Control List (ICL) includes only cream classified under tariff heading 0401.40.10 and 0401.50.10.
2. I inspected the following documents in support to the application of (Applicant name) as a (indicate the applicable field of activity) and more specifically:
- ☐&Բ;Processor’s application:
- I have inspected:
- the applicant’s production records indicating:
- the dates of production;
- the total quantity of XXXX kilograms of cream produced during the reference period of May 1 to April 30 immediately preceding the new allocation year.
- ☐&Բ;Further Processor’s application:
- I have inspected:
- recipes of further processed food products containing cream.
- production reports of further processed food products indicating:
- the date of production;
- the type of further processed products;
- the quantity of further processed products manufactured.
- The total quantity of XXXX kilograms of cream used in the manufacture of further processed food products during the reference period of May 1 to April 30 immediately preceding the new allocation year.
- ☐&Բ;Distributor’s application:
- I have inspected:
- sales reports and sale invoices indicating:
- the name of the businesses that bought cream from the applicant;
- the date of sales;
- the total quantity of XXXX kilograms of cream sold to other businesses during the reference period of May 1 to April 30 immediately preceding the new allocation year.
The following exceptions were found:
_________________________________________________________________
3. I enquired of the [name and title of individual responsible for the application] as to whether (select the field of activity of the applicant):
- ☐&Բ;Processor’s application: I inquired of [name and title of individual responsible for the application] as to whether the cream produced during the reference period was co-processed and co-packed by another firm.
- ☐&Բ;Further Processor’s application: I inquired of [name and title of individual responsible for the application] as to whether only cream used as an ingredient in the production of further processed food products was included in the calculation.
- ☐&Բ;Distributor’s application: I inquired of [name and title of individual responsible for the application] as to whether sales to other distributors, sales to related persons or sales of cream directly to final consumers were included in the calculation.
The following exceptions were found:
_________________________________________________________________
4. I compared the type of cream described in [documents supporting the application] to the types of cream listed in Items 117.1 of the ICL and found that the type of cream was of a type listed in Items 117.1 of the ICL.
The following exceptions were found:
_________________________________________________________________
These procedures do not constitute an audit of the application and therefore I express no opinion on the application.
This letter is for use solely in connection with [Applicant name]’s application for an allocation under the CPTPP cream TRQ.
I am a professional member in good standing of an institute, society or association of accountants incorporated by or under an Act of the Legislature of this province, whose normal professional activities include the performance of independent audits of financial statements, and am qualified to express an opinion on financial statements for third party use.
Accountant name (please print) ______________________________
Accountant signature: ______________________________________
Date ____________________________________________________
Name of firm: ____________________________________________
City ____________________________________________________
Province: ________________________________________________
Membership Number with National Professional Organization:
________________________________________________________
Membership Number with Provincial Professional Organization:
________________________________________________________
Appendix 3 – Information Concerning Related Persons
1. For the purposes of this Notice to Importers, persons are related to each other and are related persons if they are:
- relatives of one another;
- corporation and
- a person who controls the corporation,
- any person who is a member of a related group that controls the corporation,
- any person who is a relative of any person who controls the corporation, or
- any person who is a relative of any person who is a member of a related group that controls the corporation; or
- two corporations
- controlled by the same person, related group, or unrelated group,
- one of which is controlled by one person and that person is a relative of a person who controls the other corporation,
- one of which is controlled by one person and that person is a member of a related group that controls the other corporation,
- one of which is controlled by one person and that person is a relative of any member of a related group that controls the other corporation,
- one of which is controlled by one person and that person is a relative of each member of an unrelated group that controls the other corporation,
- one of which is controlled by a related group, a member of which is also a member of another related group that controls the other corporation,
- one of which is controlled by a related group, a member of which is a relative of any member of another related group that controls the other corporation, or
- one of which is controlled by a related group, each member of which is a relative of at least one member of another related group that controls the other corporation.
2. Notwithstanding section 1, for the purposes of this Notice to Importers, persons shall normally be deemed related to each other and to be related persons if they are not dealing with each other at arm's length in respect of the import, purchase and/or sale of the products covered by this Notice.
3. (1) For the purposes of this Notice to Importers:
- “arm’s length” means the relationship that exists between parties that are self-interested, who are seeking to maximize their respective positions, and who act severally and independently from each other - it is a question of fact whether persons not related to one another within the meaning of section 1 of this appendix were at a particular time dealing with each other at arm's length;
- “common connection” may be evidenced by, for example:
- a provision in a formal agreement,
- conduct, or
- a business or family relationship;
- “economically dependent” means a state when the ongoing operations of a corporation depends upon the majority of its business volume coming from one source;
- “person” means an individual or a corporation;
- “related group” means two or more persons that have a common connection;
- “relative(s)” are persons connected by blood, marriage, common-law partnership, adoption or affinity regardless of age or relationship;
- “unrelated group” means two or more persons that have no common connection.
3. (2) For the purposes of this Notice to Importers:
- “control” means ownership of such a number of shares as carries with it the right to a majority of the votes in the election of the board of directors.
- In addition to this definition, the following also applies
- (i) ownership of more than one-third of the shares and less than a majority of the shares of a corporation may be presumed to constitute control of that corporation unless it can be established that the corporation is not controlled in fact by the owner of those shares
- (ii) a person who has an option or a right under a contract, in equity or otherwise, in any capacity, to shares in a corporation, or to acquire shares in a corporation, or to control the voting rights of shares in a corporation may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the person who has this option or right;
- (iii) where any person, related group, or unrelated group owns a large debt of a corporation which may become payable on demand or a substantial investment in retractable preferred shares that person, related group, or unrelated group may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the owner(s) of that debt or retractable preferred shares
- (iv) where a corporation has commercial activities, contractual agreements, or arrangements with any person, related group, or unrelated group that could make this corporation economically dependent on this person, related group, or unrelated group, then that person, related group, or unrelated group may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the person, related group, or unrelated group that has commercial activities, contractual agreements or arrangements with that corporation
- (v) where any person, related group, or unrelated group possesses unique expertise or experience that is critical for the ongoing operations of a corporation that person, related group, or unrelated group may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the person, related group, or unrelated group that possesses the unique expertise or experience
- “control in fact” means an ability to change or determine the composition of the board of directors or an ability to direct the business and affairs of the corporation.
4. For the purposes of this Notice to Importers:
- (a) where two corporations are related to the same third corporation within the meaning of this Notice to Importers, they are related to each other;
- (b) a corporation can be controlled or controlled in fact by a person, related group, or unrelated group notwithstanding that the corporation is also controlled by another person, related group, or unrelated group;
- (c) a person can be considered to be related to himself, herself, or itself for the purpose of establishing that persons are related to each other and are “related persons”.
- Date modified: