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Import Cheese, Yogurt, Poultry or Eggs? Apply for TRQs!

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As we have previously discussed, Canada has one of the most protectionist agricultural product sectors in the world, putting import restrictions and incredibly high tariffs on basic groceries like cheese, eggs and poultry  and leading to continuing disputes with countries like the US and New Zealand over this approach.

Even if Canada is forced to change under pressure from its trade partners, tariff rate quotas (“TRQs”) will still remain a fact of life for importers – so it is best to know when and how to apply, and what to expect!

What is a TRQ?

Among other things, importing supply-managed goods into Canada requires TRQ allocation from Global Affairs Canada (“GAC”).  That is required in order to avoid paying huge tariffs that would effectively make the imported good cost-prohibitive relative to Canadian produced alternatives, and commercially unprofitable. (For more information, see our prior blog here).

When Do I Need to Apply for TRQ?

There is no “one-size-fits-all” answer here, as different product categories have different application periods.  However, for many products the application period is either May 16 to June 15 (e.g., butter, cream, milk, various powdered products) or October 1 to November 15 (e.g., cheese, concentrated milk, ice cream, powdered buttermilk, yogurt, poultry and eggs).

With the application window for this second group of products coming up very soon, importers should start getting their ducks in a row now!

How Do I Apply?

The TRQ process can appear deceptively simple at first – namely, an application form needs to be submitted to the applicable government email address. However, there are plenty of potential pitfalls (particularly for newcomers), given that each type of product has its own requirements and limitations, and that applications for an allocation need to be made with reference to a particular trade regime involved (e.g, CPTPP, CETA, CUSMA or WTO rules, etc.)   For example, “Cheese of All Types” has applications available under all four of these trade regimes – with different allocation rules and policies for each (e.g., retailers are ineligible under CPTPP and CUSMA, but can apply for an allocation under CETA!).

Legal guidance here is always helpful, if not absolutely required!

What Can I Expect?

The TRQ system is (in our view) notoriously stacked against new market entrants and biased in favour of established Canadian players. This means that new entrants need to carefully consider their strategies and plans for achieving or securing allocation. With the right strategy, however, success can be achieved!

As a closing note, TRQ applicants also need to make sure that if they do receive allocation, they are actually in a position to use it – as “under-utilization penalties” can be applied for subsequent applications!

Whether you are interested in breaking into the Canadian TRQ system, or are an established player, expert advice can make the difference between (continued) success and a potentially critical oversight/error.

Do you require assistance in this area?  If so, please click here.

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