Tax & Trade Blog

An oft-forgotten point in Trade and Customs disputes is the lack of legal weight courts will give to CBSA Administrative Policies (i.e., D-Memos) which set out CBSA’s interpretation of customs laws and procedures.

The recent case in Entreprise Robert Thibert Inc., 2021 CanLII 122329 (CA CITT) (“Entreprise”) serves as a useful reminder for importers that there is real risk in relying on these policies, especially in the tariff classification context, even when the CBSA’s published administrative position appears to be clear and unambiguous.

In our prior blog on World Customs Organization (“WCO”)’s five yearly revisions to the Nomenclature of Harmonized System or HS Codes, we discussed the possible amendments to the Canadian Customs Tariff. 

Effective January 1, the Canadian HS Code of tariff classification is being amended!  The Canadian Border Service Agency (“CBSA”) has recently published the proposed changes in the 2022 Customs Tariff.  These changes prompt importers/customs brokers to re-evaluate their tariff classifications and HS Coding systems to avoid any penalties associated with incorrect reporting and plan in advance by requesting validation of any existing CBSA Ruling!

In 2018, eleven counties including Canada and Mexico entered into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) for free trade between the signatory states. Formerly known as “Trans-Pacific Partnership”, CPTPP was initiated by the US to impede China’s non-market trade strategies and influence in the Indo-Pacific.

In 2021, the irony is that the US exited CPTPP in 2017 and China is now requesting to join.

The request does not seem to have been greeting with open arms, as CPTPP members undoubtedly worry about the impact of accepting China on other global trade agreements like the Canada-US-Mexico Trade Agreement (“CUSMA”) and others.

In what may well be one of the last decisions Canadian Courts make with respect to Chapter 11 of the North American Free Trade Agreement (“NAFTA”), the Ontario Court of Appeal (“OCA”) in United Mexican States v. Burr dismissed Mexico’s appeal from an Ontario Superior Court decision. The Superior Court had upheld the decision of an arbitral tribunal established under Chapter 11 of NAFTA in response to complaints by individual investors against Mexico.

While presenting an interesting issue, the implementation of the Canada – United States – Mexico Agreement (“CUSMA”) has effectively put an end to these investor-state dispute provisions as far as Canada is concerned, although a limited investor-state dispute mechanism remains in effect between Mexico and the United States.

The World Customs Organization (“WCO”) revises its Nomenclature of Harmonized Commodity Description and Coding System used for the uniform classification of goods traded internationally (“Harmonized System” or “HS Codes”), every five years. This is done to adapt to technological advancements and emerging global changes. As this nomenclature forms the basis for the Tariff Schedules of around 211 WCO member countries worldwide (including US and Canada), these changes are important!

Canada is expected to implement these changes in 2022, and importers will need to re-evaluate their tariff classification, declaration, and HS Coding systems to ensure conformity with the new Customs Tariff.