Serial No. 166
Date: August 20 , 2009
1.1 The purposes of this Notice are:
a) to inform exporters of the Minister’s policies and practices respecting the exportation of certain sugar-containing products;
b) to inform exporters of sugar-containing products to the United States of the procedures governing the allocation of the 59,250,000 kilograms of Canadian export quota and the requirements for accessing the 5,459,000 kilograms of global export quota;
c) to inform exporters of the procedures governing the issuance of export permits for the exportation of sugar-containing products to the United States.
2.1 This Notice replaces Notice to Exporters No.159 dated May 30, 2008. It refers to Item 5203 of the Export Control List (ECL): "sugar-containing products (United States)".
2.2 Sugar-containing products are defined as "articles containing over 10 percent by dry weight of sugar" as described in additional U.S. Note 3 to Chapter 17 of the Harmonized Tariff Schedule of the United States (HTSUS). The aggregate quantity of "articles containing over 10 percent by dry weight of sugar" is reflected in Note 8 of Chapter 17 of the Harmonized Tariff Schedule of the United States (HTSUS)". The list of tariff item numbers which fall under the U.S. sugar-containing products Tariff Rate Quota (TRQ) is attached to this Notice as Appendix1.
2.3 The definition in paragraph 2.2 refers to articles containing over 10 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients. This definition does not include:
2.4 Unless otherwise specified,
a) the term "percent by dry weight" means the "sugar content as a percentage of the total solids in the product";
b) the term "capable of being further processed or mixed with similar or other ingredients" means that the exported product is in such condition or container as to be subject to any additional preparation, treatment or manufacture or to be blended or combined with any additional ingredient, including water or any other liquid, other than processing or mixing with other ingredients performed by the ultimate consumer prior to consumption of the product;
c) the term "prepared for marketing to the ultimate consumer in the identical form and package in which exported" means that the product is exported in packaging of such sizes and labelling as to be readily identifiable as being intended for retail sale to the ultimate consumer without any alteration in the form of the product or its packaging; and,
d) the term "ultimate consumer" does not include institutions such as hospitals, prisons and military establishments or food service establishments such as restaurants, hotels, bars or bakeries.
2.5 Exporters who require a determination as to whether the product they intend to export is within the U.S. sugar-containing products TRQ mentioned above are encouraged to obtain a binding ruling from the National Commodity Specialist Division, U.S. Customs Border Protection (CBP), Department of Homeland Security
3.1 This Notice will remain in effect until further notice.
4.1 Each of the products covered by this Notice was added to the Export Control List pursuant to section 3.1 of the Export and Import Permits Act (EIPA), in order to ensure the orderly export marketing of sugar-containing products that are subject to a limitation imposed by the United States in 1995. Under the authority of section 6 of the EIPA, the Governor in Council has the power to revoke, amend, vary or re-establish the ECL.
4.2 Exports of sugar-containing products into the United States that are accompanied by a Canadian export permit are subject to low rates of duty up to a predetermined limit, while exports over this limit are subject to significantly higher rates of duty. Having established an export quota, the Minister shall issue export permits for goods on the ECL under authority of subsection 7.(1) of the EIPA.
5.1 In 1995, as part of its WTO commitments, the U.S. established a global tariff rate quota (TRQ) for sugar-containing products of 64,709 tonnes.
5.2 On September 4, 1997 Canada and the United States signed an understanding under which Canada obtained a country-specific reserve of 59,250,000 kilograms within the U.S. sugar-containing products tariff rate quota. The understanding also provides that only goods that are "product of Canada" may be included in Canada’s country-specific reserve. Canadian firms may also access the 5,459,000 kilogram global quota which is open to any country to supply.
5.3 Effective February 4, 2000, the United States agreed to require an export permit issued by the Government of Canada as a condition of entry in the United Sates for sugar-containing products imported under Canada’s country-specific reserve. To claim the "in-quota" rate of duty the eight digit export permit number issued by DFAIT must be indicated on the U.S. Entry Summary Form.
6.1 The quota year for sugar-containing products extends from October 1 to September 30, inclusive.
6.2 The sugar-containing products export quota is allocated to traditional exporters (i.e., firms exporting specified sugar-containing products prior to 1995 when the U.S. imposed a TRQ). Traditional exporters (hereinafter referred to as quota holders) may apply to receive their initial allocation as adjusted, where necessary, for under-utilization, as well as any additional allocation obtained through the 2008-2009 quota reallocation process.
6.3 On October 1, 2012, any quota holder that has been unable by September 30, 2012 to demonstrate its ability fully to utilize the additional allocation obtained through the 2008-2009 reallocation process will have its additional allocation adjusted to reflect actual utilization. The unutilized amount will be permanently reallocated on a combined equal share/pro rata share basis to other quota holders that have fully utilized their entire quota allocation in 2011-2012.
6.4 Sugar-containing products are exported in bulk and retail forms. Quota holders may have an export quota allocation for bulk quota, retail quota or both. "Bulk" means "capable of being further processed or mixed with similar or other ingredients" and "retail" means "prepared for marketing to the ultimate consumer in the identical form and package in which exported". See paragraphs 2.4(c) and (d) for complete descriptions.
6.5 Quota holders may obtain an export allocation, subject to demonstrating their active involvement (including continuing to contribute to employment and value-added activity) in the production of sugar-containing products for exportation to the United States that fall within the U.S. TRQ. Active involvement will normally be understood to mean the production of these sugar-containing products in the quota holder’s own facility. An activity test will be administered annually for quota holders.
6.6 All quota holders are required each year to complete and return the "Application Form for Sugar-containing Products Allocation Holders to Retain Their Share of the Sugar-containing Products TRQ", which will be forwarded under separate cover. Quota holders that have satisfied the terms and conditions of this Notice and the application form, including the annual activity test, may continue to receive an allocation (as adjusted, where necessary, for under-utilization).
7.1 The U.S. global sugar-containing product access level is 5,459,000 kilograms per sugar quota year (i.e., October 1 to September 30).
7.2 Exports of sugar-containing products under the U.S. global sugar-containing product quota require an export permit issued by DFAIT to leave Canada. Such permits are issued on a first-come first served basis to residents of Canada up to the global quota level of 5,459,000 kilograms.
7.3 The United States administers the global sugar-containing product quota on a first-come first-served basis. The issuance of a Canadian export permit does not guarantee exports access to this TRQ.
8.1 Individual export permits are required for each shipment of sugar-containing products to the United States entering under subheadings 1701.91.54, 1704.90.74, 1806.20.75, 1806.20.95, 1806.90.55, 1901.90.56, 2101.12.54, 2101.20.54, 2106.90.78, and 2106.90.95, as defined in paragraphs 2.2 to 2.4 of this Notice and described in additional Note 8 to Chapter 17 of the HTSUS.
8.2 Quota holders with a share of Canada’s country specific reserve level of 59,250 tonnes may apply for "specific export permits" issued by DFAIT. These permits normally allow Canadian quota holders to export their sugar-containing products to the United States at the low "in quota" rate of duty, which, subject to paragraphs 6.2 and 6.4, are normally issued on demand to quota holders up to the amount of their export allocation.
8.3 Quota holders that have a share of Canada’s country specific quota should ensure, in conjunction with their customs brokers, that the Canadian export permit number is indicated on the appropriate U.S. customs entry document for each shipment of sugar-containing product exported to the United States pursuant to their sugar-containing product quota allocation. Quota holders are also advised to provide their U.S. customs broker with a copy of the export permit prior to the time of export. Canadian exporters should retain the original export permit.
8.4 Quota holders that wish to export sugar-containing products under the U.S. global quota are also required to have individual export permit for each shipment entering the United States under the tariff subheading specified in paragraph 8.1. However, export permits issued for shipments under the U.S. global quota should not be presented with the entry documents to U.S. Customs.
8.5 DFAIT has in place the following procedures for receiving applications for export permits:
a) When requesting an export permit, applicants are to complete the Form EXT-1466, "Application for Permit" (a copy of which is attached as Appendix 3), and transmit it to DFAIT.
b) A description of the process of applying for a permit is attached as Appendix 2, including information about fees, the monthly billing system and information required from applicants. Export permits are issued either (i) through an on-line automated system in the offices of customs brokers in major centres across Canada, or (ii) in the offices of DFAIT.
9.1 Quota holders that cannot fully utilize their allocation are encouraged to return any portion of their quota that they believe will be unused. Quota holders are encouraged to return their unused quota, if any, as early as possible to be reallocated on an equal share basis to other quota holders that can demonstrate an ability to use the additional quota within their own facilities. The latest date to return unused quota is April 1st each year. Any amounts returned to DFAIT on or before this deadline will not be considered as unused allocations for the purposes of administering the adjustment for under-utilization as set out in section 10.0 of this Notice.
10.1 A quota holder that uses less than 90% of its allocation in any one year may received an allocation in the next year which reflects the actual level of use. Affected quota holders will be advised of the adjustments made to their allocation prior to the final allocation of the export quota.
11.1 Enquiries about export quota allocations may be addressed to:
Keltie Findlay Leclair
Trade Controls Policy Division (TICA)
Foreign Affairs and International Trade Canada
125 Sussex Drive
11.2 Enquiries about permit issuance and utilization of export quota allocations may be addressed to:
Trade Controls Policy Division (TICA)
Foreign Affairs and International Trade Canada
125 Sussex Drive
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