Tax & Trade Blog

On February 2, 2023, the Canadian International Trade Tribunal (“CITT”) released an Order continuing the CITT’s original 2017 finding that the dumping of steel concrete reinforcing bar (“rebar”) originating in or exported from Belarus, Taiwan, Hong Kong, Japan, Portugal, and Spain (the “Listed Countries”) has caused injury to Canadian domestic injury.

The Order effectively means that the current anti-dumping duties (“ADDs”) of up to 108.5% will remain in place for Subject Goods originating in or exported from the Listed Countries.

Canada has bilateral free trade agreements with a number of other nations (e.g., between the US and Mexico under the USMCA, between Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam under the CPTPP, and with most of the European Union under the CETA).

Canada’s next target for free trade appears to be India, and Global Affairs indicates that negotiations toward an Early Progress Trade Agreement have been progressing rapidly!

Imported goods are identified using Canada’s tariff classification system. Tariff classification is important for two reasons: (1) the duty rate depends on the tariff classification; and (2) tariff classification determines eligibility for preferential duty rates under Canada’s various preferential trade agreements (generally speaking, “Free Trade Agreements” or “FTAs” for short).

Importers can sometimes find themselves in the unfortunate position of facing an enormous increase in duties, or disqualification from preferential FTAs, due to a tariff classification dispute with the Canada Border Services Agency (“CBSA”). As seen in the decision in Canada v. Best Buy Canada Ltd., 2021 FCA 161, classification is not always obvious!

Canada Border Services Agency (“CBSA”) resets its “audit priority areas” twice per year. Essentially, CBSA designates certain tariff classification codes as CBSA’s priority areas for customs verifications (i.e., “audits”), which is based on the program areas which CBSA believes pose significant risk for import non-compliance in tariff classification, valuation, and origin of goods.

CBSA has now released its January 2023 Trade Compliance Verification priorities, setting the stage for the next six (6) months. As is often the case, most of the focus is on tariff classification!

Are you a U.S. based business distributing goods in Canada?

If you have over $20 M in assets or $40 M in revenues, you are likely caught by Canada’s new “child and forced labour” rules and need to deal with this or risk $250,000 in fines!

If that is concerning, keep reading!