Notice to Exporters – High-Sugar Containing Products for Export to the European Union and its Member States (Item 5205 on Canada’s Export Control List)

Serial No. 207
Date: September 1, 2017

This Notice is provided pursuant to the authority of the Export and Import Permits Act (EIPA) and its corresponding regulations. This Notice will remain in effect until further notice.

In Brief:

Under the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU) and its Member States, the EU agreed to establish a 30,000 metric tonne origin quota for imports of high-sugar containing products from Canada.

The origin quota year extends from January 1 to December 31, inclusive.

Exports from Canada of high-sugar containing products that are eligible under the CETA origin quota are subject to export controls under the EIPA. Accordingly, an export permit is required for shipments of these high-sugar containing products from Canada to the EU in order to obtain the preferential tariff rate under CETA.

This Notice to Exporters sets out the policies and practices pertaining to the administration of Canadian exports under the CETA origin quota for high-sugar containing products, including the allocation, return, re-allocation and under-utilization policies.  This Notice also explains how to apply for export permits.

Summary of Key Dates and Access Quantity for the 2017 Quota Year

2017 – Origin Quota Year: September 21 to December 31

  • Access Quantity: 8,384 metric tonnes (pro-rated for the period from September 21 to December 31, 2017)
  • Application Deadline: September 15, 2017
  • Date of Allocation Issuance and Opening of the Origin Quota for exports: September 21, 2017
  • Date for Returning Unutilized Quota: November 1, 2017

Table of Contents

1.0 Purpose

1.1 The purpose of this Notice is to:

  • Set out the Minister’s policies and practices pertaining to the administration of the CETA export origin quota for high-sugar containing products;
  • Invite applications for an allocation under the export origin quota for high-sugar containing products; and
  • Explain how to apply for export permits for shipments of high-sugar containing products destined for the EU under the CETA origin quota for high-sugar containing products.

2.0 Definitions

“Food Processor” means an establishment that manufactures the high-sugar containing products of the type eligible to benefit from the origin quota in its own facilities in Canada.

“Sugar Refiner” means an establishment that refines sugar in its own facilities in Canada, and that has been active in the Canadian sugar refining sector for at least five years.

3.0 General Information

3.1 Under CETA origin quotas, certain products that do not satisfy the product-specific rules of origin under Annex 5: Product-Specific Rules of Origin may qualify as originating under alternative product-specific rules of origin as specified in  Annex 5-A: Origin quotas and alternatives to the product-specific rules of origin in annex 5 (Annex 5-A).

3.2 The origin quotas specify the quantity of a product(s) that can qualify as originating and receive preferential CETA tariff treatment. In order to receive this treatment the product must meet the product description and undergo sufficient production to satisfy the applicable product-specific rule of origin associated with that origin quota.

3.3 Weekly utilization rates for exports that require export permits for origin quota-eligible shipments are available online. The EU also publishes quota utilization rates on its EUROPA website.

4.0 Products Covered

4.1 This Notice pertains to Table A.1 of Annex 5-A which sets out the provisions applicable to certain high-sugar containing products. As per CETA, products must contain 65 per cent or more by net weight of added cane or beet sugar of subheading 1701.91 through 1701.99. All the cane or beet sugar must have been refined in Canada.

4.2 A detailed list of the origin quota products that are subject to export controls under the EIPA may be found in the Handbook of Export and Import Commodity Codes.

5.0 Access Level

5.1 The annual origin quota for eligible high-sugar containing products is 30,000 metric tonnes, net weight.

5.2 Exceptionally, for 2017, the origin quota access level for the period of September 21 to December 31, 2017 is 8,384 metric tonnes.

5.3 CETA contains growth factors for the high-sugar containing products origin quota under which the volume of this origin quota will increase if certain conditions are met. The growth factors are outlined at the end of Table A.1 in Annex 5-A.

5.4 The Department will review the allocation policy in the fifth year following the entry into force of CETA if the growth factor has not been achieved during the first four years.

5.5 Exporters will be notified of any increase in the origin quota through further Notices to Exporters.

6.0 Allocation Policy

6.1 The high-sugar containing products export origin quota is divided into two pools:

  • Pool 1 - 90 percent of the origin quota quantity is allocated on an equal share basis to eligible Canadian sugar refiners; and
  • Pool 2 - 10 percent of the origin quota quantity is made available on a first-come, first-served basis to eligible Canadian Food Processors and Sugar Refiners. Sugar Refiners that have received an allocation in Pool 1 will not normally be issued an allocation under Pool 2 until they have utilized 80 percent of their initial allocation under Pool 1, and they are able to demonstrate a substantiated requirement for increased amounts (e.g., by way of purchase orders).

7.0 How to Apply for an Allocation

7.1 Given that the CETA high-sugar containing products origin quota will come into force on September 21, 2017, for the first allocation year, applicants who wish to apply for an allocation under Pool 1 of this origin quota are invited to submit their completed application form (see Appendix 1) no later than September 15, 2017. Allocations will be made available on September 21, 2017.

7.2 For the 2018 origin quota year and beyond, applicants who wish to apply for an allocation under Pool 1 of this origin quota are invited to submit their completed application form no later than October 1 immediately preceding the opening of the origin quota year.

7.3 Applicants under Pool 2 may apply at any time during a quota year (see Appendix 1).

7.4 Applicants for an allocation are invited to send their applications by E-MAIL to: Origin.Quotas@international.gc.ca. Applicants should be prepared to present the original version of their application upon Global Affairs Canada’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.

7.5 Applications sent by MAIL or COURIER should be addressed to the high-sugar containing products origin quota manager at Global Affairs Canada. The contact information of the quota manager can be obtained on the Global Affairs Canada website under Contact Us.

7.6 Applications sent by facsimile will not be accepted.

7.7 All information provided by an applicant is subject to verification by officials of Global Affairs Canada.  If the applicant fails to provide any information requested by Global Affairs Canada, the application may be considered incomplete and the applicant’s request for an allocation may be denied.

7.8 The Export Allocation Regulations under the EIPA may be found online. These regulations outline the requirements for an allocation application and the considerations that the Minister will take into account when deciding whether to issue an export allocation.

8.0 Return, Re-Allocation and Under-Utilization Policies

8.1 Return Policy

8.1.1 Allocation holders may return any portion of the balance of their allocation no later than July 1 of the origin quota year.

8.1.2 Until July 1, returned quota will be made available on a first-come, first-served basis only to allocation holders.

8.1.3 After July 1, any remaining quota in both pools will be made available on a first-come, first-served basis to allocation holders and eligible Food Processors for the remainder of the origin quota year.

8.1.4 Allocation holders may make a request for a share of returned quota only after they have utilized 80 percent of their initial allocation in Pool 1 unless they are able to demonstrate a substantiated requirement for increased amounts (e.g., by way of purchase orders).

8.1.5 Exceptionally, for 2017, the return date for allocation holders to return any portion of the balance of their allocation is November 1, 2017. After November 1, any remaining quota in both pools will be made available on a first-come, first-served basis to allocation holders and eligible Food Processors for the remainder of the origin quota year.

8.2 Under-utilization Policy

8.2.1 If 60% of the origin quota has not been utilized in one of the first three origin quota years, commencing with the year of CETA’s provisional application, an under-utilization policy will be applied to allocations in the fourth origin quota year.

8.2.2 To avoid an adjustment of their allocation in the fourth origin quota year, allocation holders must normally utilize at least 70 percent of their initial allocations under Pool 1 in either the second or third origin quota years.

8.2.3 For the purpose of the under-utilization policy, returned quota will be considered under-utilized.

8.2.4 Quota retained by Global Affairs Canada pursuant to the under-utilization policy will be added to Pool 2, where it will be available to allocation holders and Food Processors on a first-come, first-served basis.

8.2.5 Allocation holders may regain quota from Pool 2 based on their actual utilization level in Pool 1.

9.0 Export Permits

9.1 Types of Permits

9.1.1 A shipment-specific export permit is required for every shipment of high-sugar containing products covered by this Notice in order to receive preferential tariff treatment available through the origin quota.

9.1.2 Once the origin quota has been fully utilized, export permits will not be issued.

9.1.3 The Export Permit Regulations (Non-strategic Products) may be found online.

9.2 Accessing the CETA Origin Quota for High-Sugar Containing Products

9.2.1 As outlined in paragraph 3 of Annex 5-A, the EU administers access to origin quotas on a first-come, first-served basis.

9.2.2 Pursuant to paragraph 5 of Annex 5-A, Canada has notified the EU of Global Affairs Canada-issued export permit requirements for products exported under the applicable origin quota. Accordingly, under Paragraph 6 of Annex 5-A, the EU shall only provide preferential tariff treatment based on the alternative rule of origin for the origin quotas to products accompanied by an export permit.

9.2.3 In accordance with the CETA Protocol on rules of origin and origin procedures, the exporter of the product is required to provide an origin declaration to the importer.

9.2.4 In order for the exporter to identify origin quota exports to the EU and to inform the importer of the application of Annex 5-A, the exporter is to include a reference to Annex 5-A on the commercial invoice or other commercial document, and provide the importer with a copy of the export permit. In accordance with paragraph 4 of Annex 5-A, the Parties shall not count any products against the annual origin quota without such reference.

9.3 How to Apply for a Permit

9.3.1 Information about the permit application process, including information about fees, the monthly billing system, and information required from applicants, is available on the Global Affairs Canada website: Applying for an Export Permit (Non-strategic Products).

10.0 Contact us

10.1 Contact information is available on the Global Affairs Canada website: Contact Us.

10.2 For directory assistance, you may call 343-203-6820, or email: tic@international.gc.ca.