Notice to Importers

Products of Natural Milk Constituents (Item 125 on the Import Control List)

Serial No. 861
Date: December 1, 2014

This Notice replaces Notice to Importers No. 843 dated October 30, 2013 and will remain in effect until further notice.

This Notice is provided pursuant to the authority of the Export and Import Permits Act (EIPA) and its corresponding regulations.

In Brief

Imports of products of natural milk constituents into Canada are subject to import controls under Canada’s Export and Import Permits Act (EIPA).  Accordingly, an import permit is required for shipments of products of natural milk constituents to enter Canada.  Import permits for shipments of products of natural milk constituents destined to the Canadian market are issued to allocation holders under Canada’s tariff rate quota (TRQ) for products of natural milk constituents, which is administered by Foreign Affairs, Trade and Development Canada (DFATD). 

The access quantity for the products of natural milk constituents TRQ is 4,345,000 kilograms. The allocation period for the products of natural milk constituents TRQ extends from January 1 to December 31, inclusive. 

This Notice to Importers sets out the policies and practices pertaining to the administration of the TRQ, including the allocation policy, underutilization policy, return policy, and reallocation policy.  This Notice also explains how to apply for import permits.

Table of Contents


1.0 Purpose

1.1. The purpose of this Notice is:

  • a. to set out the policies and practices pertaining to the administration of Canada’s TRQ for products of natural milk constituents;
  • b. to invite applications for allocations under the TRQ for the next quota year; and
  • c. to explain how to apply for import permits for imports of products of natural milk constituents.

2. General Information

2.1. Background

2.1.1. In accordance with its commitments under the World Trade Organization (WTO), Canada has in place a TRQ for imports of products of natural milk constituents.

2.1.2. 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.

2.1.3. The within and over access rates of duty that apply to imports of products of natural milk constituents can be found in Canada’s Customs Tariff.

2.1.4. 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, when issuing import permits to allocation holders 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.

2.1.5.  Failure by an applicant to provide any information requested by DFATD, 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 a share of the products of natural milk constituents TRQ, the reduction or cancellation of an authorization issued pursuant to the EIPA, or the cancellation of associated permits.

2.2. Access Quantity

2.2.1. The access level for the products of natural milk constituents TRQ negotiated under the WTO is 4,345,000 kilograms.

2.3. Allocation Period

2.3.1.  The TRQ allocation year for the products of natural milk constituents TRQ extends from January 1 to December 31, inclusive.

3. Products Covered

3.1. This Notice pertains to item 125 of the Import Control List (ICL), namely products of natural milk constituents falling under heading Nos. 0404.90.10 or 0404.90.20 in the list of tariff provisions set out in the Schedule to the Customs Tariff.

3.2. Importers who require a determination as to whether the product they intend to import is eligible under the products of natural milk constituents TRQ are encouraged to obtain an advanced tariff classification ruling from the appropriate regional client service office of the Canada Border Services Agency (CBSA).

4. Allocation Policy

4.1. The TRQ for products of natural milk constituents is allocated to two groups:

  • a) eligible applicants who use milk protein concentrate in their manufacturing operations and product formulations; and  
  • b) eligible applicants who use other products of natural milk constituents (e.g., blends of products of natural milk constituents) in their manufacturing operations and product formulations.

4.2. The allocation to users of milk protein concentrate is calculated first. The quantity allocated to each eligible applicant who uses milk protein concentrate is the quantity requested, adjusted as necessary (e.g., for under-utilization) and subject to section 4.4.

4.3. The balance of the TRQ, if any, is allocated to users of other products of natural milk constituents. The quantity allocated to each eligible applicant who uses other products of natural milk constituents is the quantity requested, adjusted as necessary (e.g., for under-utilization) and subject to section 4.4.

4.4. If the cumulative requests made by eligible applicants exceed the quantity available, the quantity allocated to each eligible applicant will be the lower of the quantity requested or an equal share.

4.5. To be eligible, applicants must be processors or further processors that can demonstrate a requirement for milk protein concentrate or other products of natural milk constituents in their manufacturing operations and product formulations. They must also provide the ratio (percentage) of protein contained in the product they intend to import.

4.6. For the purpose of this Notice, where two or more applicants are related persons, they shall be eligible for only one allocation. Applicants for an allocation are required to provide a list of related persons. Applicants should consult Appendix 2 for the definition of related persons as it applies for the purpose of this Notice.

4.7. 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 considered. If the parent company does not make such a nomination in writing, it shall be determined by DFATD.

4.8. All import allocations expire at the end of each quota year and all firms interested in receiving an import allocation must reapply each year.

5. How to Apply for an Allocation

5.1. Applicants who wish to apply for an allocation under the products of natural milk constituents TRQ are invited to submit their application form (see Appendix 1) no later than the 7th of December immediately preceding the opening of the TRQ year.

Note:  For the 2015 quota year only, the deadline for submitting a complete application form is December 22, 2014.

5.2. Applicants are required to provide the following information on their application form:

  • Company profile, including any relevant relationships (see Appendix 2 for the definition of related persons as it applies for the purpose of this Notice);
  • Ratio (percentage) of protein contained in the product to be imported;
  • Description of products of natural milk constituents for which an allocation is being requested;
  • Quantity requested; and
  • Description of product(s) being manufactured and ratio of the product(s) to be imported used in their production (i.e., product formulation).

5.3. Applications sent by MAIL or COURIER should be addressed to the products of natural milk constituents quota manager at DFATD. The name and mailing address of the TRQ manager can be obtained on the DFATD website, under Contact Us.

5.4. Applications sent by EMAIL should be sent to Dairy-Laitier@international.gc.ca. Applicants sending their application by email should be prepared to present the original version of their application at DFATD’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.

5.5. For legibility reasons, applications sent by facsimile will not be accepted.

5.6. Applications postmarked after the deadline, or in a format other than that required, will not be considered. Claims of lost applications will not normally be considered without acceptable proof that they were sent before the deadline (e.g., courier receipt).

6. Under-Utilization, Return and Reallocation Policies

6.1. Under-Utilization Policy

6.1.1. An allocation holder with a utilization rate less than 95% in the previous quota year may have its allocation adjusted downward by an under-utilization penalty for the new quota year. Footnote 1

6.1.2. For allocation holders that under-utilized in the previous quota year, allocations in the new quota year will be reduced by the percentage of the allocation not utilized during the previous quota year. Footnote 2

6.1.3. Allocation holders that under-utilized during the previous quota year will be advised of the applicable under-utilization penalty before the allocations are finalized for the new quota year.

6.2. Return and Reallocation Policy

6.2.1. Allocation holders may return any portion of the balance of their allocation no later than September 1 of the quota year.  Any portion of an allocation that is returned by this date will be considered as having been used for purposes of administering the under-utilization policy in 6.1.

6.2.2 Returned quota available for redistribution will be allocated, for use within the quota year, to applicants who can demonstrate before the return deadline of September 1 that they meet the eligibility criteria set out is section 4. The quantity reallocated to each eligible applicant will be the lower of the quantity requested or an equal share.

7. Supplemental Import

7.1. The Minister may, at his discretion, authorize imports of products of natural milk constituents apart from the import access quantity. The Notice to Importers Dairy Products - Supplementary Imports explains the administration of supplemental imports, including products of natural milk constituents.  The Notice is available on the DFATD website at Dairy Products.

8. Import Permits

8.1. Types of Permits

8.1.1 An import permit issued by DFATD is required for every shipment of products of natural milk constituents 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).

8.2. Shipment-Specific Import Permits

8.2.1. Shipment-specific import permits are normally issued on demand to allocation holders up to the amount of their allocation under Canada’s products of natural milk constituents TRQ. Shipments entering Canada under a shipment-specific import permit can normally do so at the within access rate of duty.

8.2.2. To claim the within access rate of duty for a shipment, the importer must present the shipment-specific import permit to CBSA at the time of final accounting.

8.2.3. 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.

8.2.4. For a shipment-specific import permit to be considered valid, the name on the permit must match exactly the name of the importer on CBSA’s B3 Customs entry 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 party granted 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.

8.3. General Import Permits

8.3.1. The GIP that applies for products of natural milk constituents is General Import Permit No. 100 – Eligible Agricultural Goods. There is no limit to the quantities of products of natural milk constituents that may enter Canada under the GIP; however, such imports will be subject to the higher over access rate of duty.

8.4. How to Apply for a Permit

8.4.1. 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 DFATD website: Applying for an Import Permit.

9. Contact Us

9.1. Names and direct phone numbers for TRQ manager(s), permit officer(s), and the Help Desk are available on the DFATD website: Contact Us.

9.2. For directory assistance, you may call 343-203-4372.

Footnotes

Footnote 1

The utilization rate (%) will be calculated for every allocation holder as follows:

Utilization Rate (%) = (Actual Level of Use (kg) / Total Allocation Granted (kg)) X 100%

Where:
Actual Level of Use (kg) = Permits Used (kg) + Returns (kg)

And:
Total Allocation Granted (kg) = Initial Allocation (kg) + Reallocation of returns (kg)

Return to footnote 1 referrer

Footnote 2

The under-utilization penalty will be calculated as follows:

Underutilization Penalty (kg) = Pre-penalty Allocation (kg) X Underutilization Rate (%)

Where:
“Pre-penalty Allocation (kg)” is the allocation that the allocation holder would have been eligible for in the new quota year, if the allocation holder had not under-utilized in the previous quota year.

And:
Underutilization Rate (%) = 100% - Utilization Rate (%)

Return to first footnote 2 referrer