Archived Document
Report of the Minister of Foreign Affairs
Report of the Minister of Foreign Affairs
Respecting operations under the EXPORT AND IMPORT PERMITS ACT for the year 2007
Table of Content Links
This Report is submitted pursuant to section 27 of the Export and Import Permits Act (hereinafter referred to as the Act), Chapter E-19 of the 1985 Revised Statutes of Canada, as amended, which provides:
"As soon as practicable after the 31st day of December of each year the Minister shall prepare and lay before Parliament a report of the operations under this Act for that year."
INTRODUCTION
The authority to control the import and export of commodities and technologies is derived from the Act. The Act finds its origin in the War Measures Act and was passed as a Statutory Act of Parliament in 1947 and subsequently amended on a number of occasions.
The Act provides that the Governor in Council may establish lists known as the Import Control List (ICL), the Export Control List (ECL) and the Area Control List (ACL). For each one of these lists, the Act sets out criteria that govern the inclusion of goods or countries on the respective lists and provides that the Governor in Council may revoke, amend, vary or re-establish any of the lists. Control over the flow of goods contained on these lists or to specific destinations is effected through the issuance of import or export permits.
The Act delegates to the Minister of Foreign Affairs the authority to grant or deny applications for these permits and thus confers on him broad powers to control the flow of the goods contained in these lists. The operations carried out under the Act can be grouped under the following headings:
1. IMPORT CONTROLS:
a) Textiles and Clothing
b) Agricultural and Dairy Products
c) Steel Products
d) Weapons and Munitions
2. EXPORT CONTROLS:
(a) Strategic, military and atomic energy goods, materials and technology as well as items controlled for non-proliferation purposes.
(b) Miscellaneous goods including logs, softwood lumber, cedar bolts and blocks, roe herring, peanut butter, sugar, sugar-containing products and products of U.S. origin.
(c) Any goods to countries listed on the Area Control List (ACL), which includes Myanmar (Burma) and Belarus.
3. OFFENCES:
The Act contains provisions pertaining to offences and penalties therefore. Every person (including a corporation, any of its directors or officers) found contravening any provision of the Act is liable to be prosecuted. A prosecution may be instituted at any time within but not later than three years after the time when the subject matter of the complaint arose.
REPORT
1. IMPORT CONTROLS
Section 5 of the Act provides that the Governor in Council may establish a list of goods, called an Import Control List, whose importation the Governor in Council deems it necessary to control for any of the following purposes:
(a) to ensure, in accordance with the needs of Canada, the best possible supply and distribution of an article that is scarce in world markets or is subject to governmental controls in the countries of origin or to allocation by intergovernmental arrangement;
(b) to restrict, for the purpose of supporting any action taken under the Farm Products Marketing Agencies Act, the importation in any form of a like article to one produced or marketed in Canada the quantities of which are fixed or determined under that Act;
(c) to control the importation into Canada of arms, ammunition, implements or munitions of war, army, naval or air stores, or any articles deemed capable of being converted there into or made useful in the production thereof;
(d) to implement any action taken under the Farm Income Protection Act, the Fisheries Prices Support Act, the Agricultural Products Cooperative Marketing Act, the Agricultural Products Board Act or the Canadian Dairy Commission Act, with the object or effect of supporting the price of the article;
(e) to implement an inter-governmental arrangement or commitment;
(f) to limit, pursuant to an enquiry by the Canadian International Trade Tribunal, the importation of goods causing or threatening to cause serious injury to domestic producers;
(g) to place certain steel products on the Import Control List for the purpose of collecting information on imports of such products; and;
(h) to facilitate implementation of action taken under the Customs Tariff to enforce Canada's rights under a trade agreement or respond to acts of another country that would adversely affect trade in Canadian goods or services.
(a) Textiles and Clothing
(i) Trade with NAFTA countries:
Products must originate in North American Free Trade Agreement (NAFTA) countries in order to qualify for NAFTA rates of duties. This is determined through the use of NAFTA rules of origin for yarn, fabric and clothing. For apparel and textiles that do not meet these rules of origin, NAFTA provides preferential access to the Canadian, U.S. and Mexican markets through the use of Tariff Preference Levels (TPLs). The four broad categories of TPL and their corresponding volumes for access to the U.S. market, which have been fixed since 1999, are as follows:
- Wool Apparel - 5,325,413 square metre equivalents (SMEs)
- Cotton or Man-made Fibre Apparel - 88,326,463 SMEs
- Cotton or Man-made Fibre Fabrics and Made-up Goods - 71,765,252 SMEs
- Cotton or Man-made Fibre Spun Yarns - 11,813,664 kilograms.
(A) TPL allocation
Subject to the EIPA, the EIPA regulations and applicable policies, Canadian companies with apparel TPL allocations may export to customers in the North American free trade area products manufactured in Canada from fabrics and yarns imported from outside this area up to the limit of their allocations.
Because of the extensive use of TPLs for wool and non-wool apparel, an allocation policy based primarily on historical TPL usage by exporters was developed for these categories of products in 1998. In 2005, a similar allocation policy was implemented for woven fabrics.
The TPLs for knit and other fabrics are allocated on a historical-use basis to the extent of utilization by exporters, and on a first-come, first-served basis for those amounts not allocated directly to exporters. The TPL for yarn is allocated to exporters on a first-come, first-served basis.
(B) TPL utilization in 2007
The 2007 TPL utilization rates for the four categories of Canadian TPL exports were as follows:
- wool apparel and made-up goods - 80% for the United States and 0% for Mexico;
- cotton or man-made fibre apparel and made-up goods - 49% for the United States and 21% for Mexico;
- cotton or man-made fibre fabrics and made-up goods - 33% for the United States and 8% for Mexico;
- cotton or man-made fibre spun yarns - 52% for the United States and 2% for Mexico.
(Historical TPL utilization statistics are available at: http://www.international.gc.ca/controls-controles/textiles/index.aspx)
As provided for in the NAFTA, the annual growth rates for the TPL volumes for Canadian goods entering the United States were eliminated at the end of 1999. No growth rates were provided for trade with Mexico.
(C) TPL transfer mechanism
In 1998, a mechanism was established to allow companies to transfer a portion of their TPL allocations to other companies. The mechanism was implemented in two stages, with an implementation date of October 1, 1998 for wool apparel and January 1, 1999 for non-wool apparel. On December 21, 2005 a similar transfer mechanism was implemented for woven fabrics.
(D) TPL allocations for new entrants
The method of allocating TPL is based primarily on historic utilization. However, small TPL pools have been created for woven fabric, wool and non-wool apparel to accommodate new exporters (see http://www.international.gc.ca/controls-controles/textiles/notices_exp_avis/123.aspx for apparel and http://www.international.gc.ca/controls-controles/textiles/notices_exp_avis/142.aspx for fabrics).
(ii) Issuance of certificates and permits
For the purposes of administering NAFTA TPL provisions, DFAIT issues import and export certificates of eligibility pursuant to section 9.1 of the Act. The following summary outlines the number of applications for certificates of eligibility processed in 2007:
(a) Exports (certificates of eligibility)
certificates issued……………………. 37,357
certificates denied………………………... 921
certificates cancelled.........………. 1,099
(b) Imports (certificates of eligibility)
certificates issued……………………...7,918
certificates denied……………………….. 228
certificates cancelled…………………… 232
(b) Agricultural and Dairy Products
1. Agriculture Products
Canada is a signatory to the WTO Agreement on Agriculture concluded in December 1993. This Agreement obliged Canada to convert its existing quantitative agricultural import controls to a system of tariff rate quotas (TRQs), which came into effect in 1995.
Under TRQs, imports are subject to low "within access commitment" rates of duty up to a predetermined limit (i.e., until the import access quantity has been reached), while imports over this limit are subject to higher "over access commitment" rates of duty. For most products, the privilege of importing at the within-access commitment rates of duty is allocated to firms through the issuance of import allocations (or "quota-shares"). Those with quota-shares receive, normally, upon application, specific import permits giving access to the within-access commitment rates of duty as long as they meet the terms and conditions of permit issuance. These conditions are normally described in Allocation Method Orders and in Notices to Importers. Imports in excess of access levels are permitted under General Import Permit No. 100 - Eligible Agricultural Goods, which allows unrestricted imports at the higher rate of duty. Canada continues to respect its access level commitments under the North American Free Trade Agreement (NAFTA), and where both WTO and NAFTA commitments exist, Canada applies the higher of the two for the product in question.
All tariff rate quotas (TRQs) are based on Customs Tariff item numbers. Therefore, when the TRQs came into effect in 1995, the Import Control List (ICL) was amended to replace references to named products (e.g. "turkey and turkey products") with tariff item numbers. However, for ease of understanding, the older product descriptions continue to be used in this report.
- Poultry and eggs
Effective January 1, 1995, Canada's chicken, turkey, broiler hatching egg and chick, shell egg and egg product quantitative restrictions were converted to TRQs.
Four product groups were maintained on the ICL in order to support supply management of poultry under the Farm Products Marketing Act and to support action taken under the World Trade Organization Act. These four product groups were:
- chicken and chicken products;
- turkey and turkey products;
- broiler hatching eggs and chicks; and
- eggs and egg products.
- Chicken and chicken products
Chicken was placed on the ICL on October 22, 1979. Pursuant to the NAFTA, the import access level for 2007 was 72,798,525 kg, expressed in eviscerated equivalent weight. Within-access commitment permits were issued for 72,798,525 kg.
While the import access level is set at 7.5% of the previous year's chicken production level, provision is made to issue import permits supplementary to the import access level, inter alia, if needed to meet overall Canadian market needs. During 2007, supplementary import permits were issued for 74,346,349 kg of chicken for re-export, and for 4,889,175 kg of chicken to help Canadian processors compete with foreign processors who export chicken-containing products that are not on the ICL. Of this latter amount, permits for 3,351,434 kg were issued in connection with the annual TRQ allocation and permits for 1,537,741 kg were issued throughout the year.
- Turkey and turkey products
Turkey was placed on the ICL on May 8, 1974. Pursuant to the NAFTA, the access level is set annually at 3.5% of the domestic production quota for that year or the WTO level of 5,588,000 kg, whichever is higher. In 2007, the WTO level was the higher of the two, and thus prevailed. In 2007, within-access commitment permits were issued for 5,403,010 kg in eviscerated weight. Provision is made for import permits supplementary to the import access level, inter alia, if needed to meet overall Canadian market needs. During 2007, supplementary import permits were issued for 819,820 kg for turkey for re-export, and for 60,752 kg of turkey to help Canadian processors compete with foreign processors who export turkey-containing products that are not on the ICL.
- Broiler hatching eggs and chicks
Broiler hatching eggs and chicks for chicken production were placed on the ICL on May 8, 1989. Pursuant to the NAFTA, the combined import access level for broiler hatching eggs and chicks is 21.1% of the estimated domestic production of broiler hatching eggs for the calendar year to which the TRQ applies. The combined annual import access level is divided into separate levels, of 17.4% for broiler hatching eggs and 3.7% for egg-equivalent chicks.
In 2007, the combined import access level was set at 141,439,963 eggs. Within-access commitment permits were issued for 116,261,130 hatching eggs and 20,589,009 egg-equivalent chicks, for a combined total of 136,850,139. Provision is made to issue import permits supplementary to the import access level, inter alia, if needed to meet overall Canadian market needs. During 2007, supplementary import permits were issued for 11,150,376 hatching eggs for market shortages and for 1,260,000 hatching eggs due to the avian flu.
- Shell Eggs and egg products
Eggs and egg products were placed on the ICL on May 9, 1974. Pursuant to the NAFTA, the import access level for shell eggs is calculated at 1.647% of the previous year's domestic production. For 2007, this converted to 8,730,484 dozen eggs. Within access commitment import permits were issued for 8,718,958 dozen eggs.
Pursuant to the NAFTA, the import access levels for egg powder and liquid, frozen or further-processed egg products is calculated at 0.627% and 0.714% of the previous year's domestic production, respectively. For 2007 this amounted to 501,867 kg and 2,176,260 kg, respectively. Within-access commitment permit issuance totaled 452,206 kg for egg powder and 2,150,406 kg for liquid, frozen or further processed eggs.
In 1996, an allocation for eggs for breaking purposes only was introduced. This resulted from a WTO commitment to increase the import access quantity to a level greater than the NAFTA access level at the time. The WTO level, 21,370,000 dozen eggs in 2007, continues to be higher than Canada's NAFTA access level. The “eggs for breaking purposes” allocation is equal to the difference between the WTO and NAFTA commitment levels. The 2007 import access level for eggs for breaking purposes only was 5,531,091 dozen eggs. During 2007, within-access commitment permits were issued for this category of eggs for 5,160,453 dozen eggs.
While the basic access levels are fixed each year, provision is made to issue import permits for eggs or egg products supplementary to the import access level, inter alia, if needed to meet overall Canadian market needs.
With regard to shell eggs, supplementary permits were issued to import 410,221 dozen to accommodate market shortages.
For powdered eggs, no supplementary import permits were issued for market shortages.
In 2007, supplementary permits for 948,826 kg of liquid, frozen and further processed egg products were issued for market shortages.
For eggs for breaking purposes, supplementary permits for market shortages were issued to import 3,469,340 dozen eggs.
For powdered eggs, no supplementary import permits were issued for re-export.
For liquid, frozen and further processed egg products, import permits for 1,694,704 kg were issued for re-export.
For eggs for breaking purposes, no supplementary import permits were issued for re-export.
Import permits are required for importing inedible egg products into Canada, although for monitoring purposes only. Permits were issued for 452,063 kg for this type of product in 2007.
2. Dairy Products
Quantitative restrictions in 11 categories of dairy products were converted to TRQs in support of supply management under the Canadian Dairy Commission Act and action taken under the World Trade Organization Agreement Implementation Act. These products are:
- butter (implemented on August 1, 1995);
- cheese of all types other than imitation cheese (implemented on January 1, 1995);
- buttermilk in dry, liquid or other form (implemented on January 1,1995);
- fluid milk (implemented on January 1, 1995);
- dry whey (implemented on August 1, 1995);
- evaporated and condensed milks (implemented on January 1, 1995);
- heavy cream (implemented on August 1, 1995);
- products consisting of natural milk constituents (implemented on January 1, 1995);
- food preparations (implemented on January 1, 1995 under 1901.90.33);
- ice cream and ice cream novelties in retail packaging (implemented on January 1,
1995); and
- yoghurt (implemented on January 1, 1995).
- Butter
The access level for butter was 3,274,000 kg for the quota year from August 1, 206 to July 31, 2007, of which 2,000,000 kg was reserved for imports from New Zealand. The entire TRQ was allocated to the Canadian Dairy Commission. Within-access commitment import permits were issued for the full TRQ amount. Supplementary import permits for butter and butteroil for re-export were issued for 13,734,404 kg. Supplementary import permits for other purposes totaled 7,431 kg.
- Cheese
The access level for cheese has been fixed since 1979 at 20,411,866 kg. Under the provisions of a December 1995 Agreement between Canada and the European Communities (EC), 66% of the TRQ is allocated to cheese imports from the EC and 34% to imports from non-EC sources. Within-access commitment import permits were issued for 20,411,866 kg of cheese, and permits for re-export were issued for 3,847,798 kg. Supplementary import permits for other purposes totaled 1,371,982 kg.
- Powdered buttermilk
The 2007 access level for powdered buttermilk was 908,000 kg. The TRQ is reserved exclusively for imports from New Zealand. Within-access commitment import permits were issued for 614,233 kg. The low usage under the TRQ was due to market conditions. Supplementary import permits for re-export were issued for 20,191 kg of powdered buttermilk product.
- Fluid milk
The fluid milk access level in 2007 was 64,500 tonnes, which represents estimated annual cross-border purchases by Canadian consumers. The goods are imported under General Import Permit No. 1 - Dairy Products for Personal Use. On January 26, 2000 General Import Permit No. 1 was amended. The $20 limit in value for each importation of fluid milk imports for personal use was removed. Supplementary import permits for re-export totaled 15,678,468 kg. Supplementary import permits for other purposes totaled 54,684 kg.
- Dry whey
The dry whey access level in the quota year from August 1, 2006 to July 31, 2007 was 3,198,000 kg. Within-access commitment import permits were issued for the full TRQ amount. Supplementary import permits for 7,380,955 kg of dry whey were issued for the manufacture of animal feed. In addition, supplementary imports for re-export totaled 999,586 kg.
- Evaporated and condensed milk
The access level for evaporated and condensed milk in 2007 was 11,700 kg. The TRQ is reserved exclusively for imports from Australia. There were no within-access commitment import permits issued due to shortage of supply. Supplementary import permits for re-export were issued for 2,046,903 kg. Supplementary imports for other purposes totaled 1,850 kg.
- Heavy cream
The heavy cream access level in the quota year from August 1, 2006 to July 31, 2007 was 394,000 kg for sterilized cream having a minimum of 23% butterfat and sold in cans having a volume not exceeding 200 ml. The entire TRQ was utilized. Supplementary import permits were issued for re-export for 3,469,083 kg. Supplementary import permits for other purposes totaled 16,603 kg.
- Products consisting of natural milk constituents
The access level for these products in 2007 was 4,345,000 kg, and within-access commitment import permits were issued for 4,207,571 kg. Supplementary import permits for re-export were issued for 1,369,194 kg.
- Food preparations
The access level in 2007 for food preparations classified under 1901.90.33 was 70,000 kg, allocated on a first-come, first-served basis. The TRQ covers ingredients for the manufacture of confectionery and other food products, and for soft-serve ice cream. Within access permit issuance totaled 1,728 kg. Supplementary import permits for re-export were issued for 42,276 kg.
The access level for food preparations classified under 1901.90.31, 1901.90.53, and 2106.90.93 is zero and there are no associated TRQs. However, supplementary import permits for re-export were issued for 42,276 kg of products classified under 1901.90.33, for 43,191 kg of products classified under 1901.90.53, and for 490,785 kg of products classified under 2106.90.93. Supplementary import permits for other purposes were issued for 23 kg of products classified under 1901.90.31 and for 165,646 kg of product classified under 2106.90.93.
- Ice cream and yoghurt
The access levels in 2007 were 484,000 kg for ice cream and 332,000 kg for yoghurt. Within-access commitment import permit issuance in 2007 totaled 424,643 kg for ice cream and 332,000 kg for yoghurt. Supplementary import permits for other purposes were issued for 186,082 kg for yogurt.
- Skimmed and whole milk powder and animal feed
The access level for these products is zero, and there is no associated TRQ. However, supplementary import permits for re-export were issued for 2,741,098 kg of skimmed milk powder, for 23,874,810 kg of whole milk powder, and for 27,505 kg of cream powder. Supplementary permits for other purposes were issued for 8,386 kg of skimmed milk powder and for 6,482 kg of whole milk powder.
3. Margarine
The TRQ for margarine was introduced on January 1, 1995. The import access level for 2007 was 7,558,000 kg. Within-access commitment permit issuance totaled 3,735,280 kg.
4. Beef and veal
The restrictions on imports of non-NAFTA beef and veal established under the Meat Import Act were converted to a TRQ on January 1, 1995. The TRQ applies to all imports of fresh, chilled and frozen beef and veal imported from non-NAFTA countries (excluding Chile) and in 2007 was 76,409 tonnes. Of this total, 35,000 tonnes were reserved for imports from Australia and 29,600 tonnes were reserved for imports from New Zealand. The balance of the TRQ (11,809 tonnes) was reserved for imports from all CFIA-certified countries, including Australia and New Zealand once their country-specific reserves were fully used. Within-access commitment import permit issuance in 2007 totaled 48,422,156 kg.
Since May 20, 2003, the government has made changes to the supplementary import policy on three occasions in order to support domestic beef and veal producers in facing the challenges and uncertainty brought on by Bovine Spongiform Encephalopathy (BSE). The changes have provided domestic producers with greater opportunities to supply the Canadian market while the government works to restore full access to export markets, and were developed in close consultation with industry stakeholders. The policy was modified in 2005 and again in 2007. Since that time, supplemental imports have been limited to those situations where neither the specific product nor reasonable substitutes are available in Canada at competitive prices. No supplementary import permit was authorized in 2007.
5. Wheat, barley and their products
The restrictions imposed on imports of wheat, barley and their products under the Canadian Wheat Board Act were converted to TRQs on August 1, 1995. These TRQs are administered by Canada Border Services Agency on a first-come-first-served basis using an August-July year. Importers may cite General Import Permit No. 20 - Wheat and Wheat Products, Barley and Barley Products to import goods at the lower rate of duty. Once the access levels are filled, importers must cite General Import Permit No. 100 - Eligible Agricultural Goods on Customs entry documents to import goods at the higher rate of duty. The following annual (August 1 to July 31) TRQ levels for wheat, barley, wheat products and barley products apply:
Wheat:………………………..... 226,883 tonnes
Wheat products:……………. 123,557 tonnes
Barley:……………………....... 399,000 tonnes
Barley products:…………….... 19,131 tonnes
Imports in the period from August 1, 2006 to July 31, 2007, were 47,966 tonnes, 131,352 tonnes, 123,008 tonnes, and 25,509 tonnes in these four product categories, respectively. Supplementary imports for barley products for market shortages were issued for 1,961 tonnes.
6. Frozen pork from the European Union
Frozen pork under tariff item 0203.29.00 was added to Canada’s Import Control List (ICL), pursuant to subsection 53(2) and section 79 of the Customs Tariff, under the European Union Surtax Order. Effective on August 1, 1999, the government established a tariff rate quota (TRQ) for frozen pork imported from the European Union (EU), whereby pork imports in excess of 2,970,000 kilograms during any 12-month period commencing on August 1 are subject to a 100% surtax. The TRQ is allocated on a first-come, first-served basis, whereby import permits are normally issued to importers on demand until the TRQ has been filled in a given year.
During the period from August 1, 2006 to July 31, 2007, import permits were issued for 2,966,465 kg.
(c) Steel products
Carbon steel products (semi-finished steel, plate, sheet and strip steel, wire rods, wire and wire products, railway-type products, bars, structural shapes and units, and pipes and tubes) were initially placed on the ICL, effective September 1, 1986, following a report by the Canadian Import Tribunal recommending the collection of information on goods of this type entering Canada. Speciality steel products (stainless flat-rolled products, stainless steel bars, wire and wire products, alloy tool steel, mold steel and high speed steel) were added to the ICL, effective June 1, 1987, pursuant to an amendment to the Act providing for import monitoring of steel products under certain conditions. The current mandate for the steel monitoring program extends until August 31, 2011.
The purpose of placing carbon and speciality steel on the ICL is to provide more timely and precise steel import data.
The program is global in nature. There are no quantitative restrictions, and permits are issued upon the submission of a completed application form.
In 2007, a total of 268,805 permits were issued, covering the importation of 8.5 million tonnes of steel with a reported value of $10.6 billion.
(d) Weapons and munitions
Pursuant to items 70 to 73 and 91 of the ICL, an import permit is required to import into Canada all small- and large-calibre weapons, ammunition, bombs, pyrotechnics, tanks and self-propelled guns. As well, all components and parts specifically designed for these items also require import permits.
Firearms classified as restricted or non-restricted, and their parts, are exempted from an import permit provided that they are for sporting or recreational use.
Manufacturers and businesses, licenced by the Provincial Chief Firearms Officers, may import prohibited weapons, prohibited firearms and prohibited devices, under strictly controlled conditions.
Issuance of import permits
Section 14 of the Act stipulates that:
“No person shall import or attempt to import any goods included in an Import Control List except under the authority of and in accordance with an import permit issued under this Act.”
Section 8(1) authorizes the Minister to:
"...issue to any resident of Canada applying therefore a permit to import goods included in an Import Control List, in such quantity and of such quality, by such persons, from such places or persons and subject to such other terms and conditions as are described in the permit or in the regulations."
Authority is provided under section 12 of the Act for the making of regulations prescribing the information and undertakings to be furnished by applicants for permits, the procedure to be followed in applying for and issuing permits, and the requirements for carrying out the purposes and provisions of the Act.
Section 5 of the Import Permit Regulations (C.R.C., c. 605) provides for the issuance of general permits authorizing the import of specific goods up to specified limits or subject to specified conditions.
The following is a statistical summary of applications for import permits processed in 2007 for agriculture and dairy products, steel products and weapons and munitions;
permits issued ………………………303,360permits denied ……………………… 3,854
permits cancelled…………………… 16,053
Import certificates and delivery verification certificates
The issuance of import certificates and delivery verification certificates is provided for under section 9 of the Act and under the Import Certificate Regulations (C.R.C., c. 603). Import certificates enable an importer to describe goods in detail and to certify that he/she will not assist in their disposal or diversion during transit. Such assurances may be required by the country of export before permitting the shipment of certain goods, most notably munitions and strategic goods. An import certificate is not an import permit and does not entitle the holder to import the goods described on the certificate into Canada. Delivery verification certificates may be issued following arrival of the goods in Canada to enable an exporter of goods to Canada to comply with requirements of the exporting country.
In 2007, the Department issued 4,166 import certificates and 384 delivery verification certificates.
2. EXPORT CONTROLS
Section 3 of the Act provides that the Governor in Council may establish a list of goods, to be called an Export Control List, including therein any article the export of which the Governor in Council deems it necessary to control for any of the following purposes:
- to ensure that arms, ammunition, implements or munitions of war, naval, army or air stores or any articles deemed capable of being converted there into or made useful in the production thereof or otherwise having a strategic nature or value will not be made available to any destination where their use might be detrimental to the security of Canada;
- to ensure that any action taken to promote the further processing in Canada of a natural resource that is produced in Canada is not rendered ineffective by reason of the unrestricted exportation of that natural resource;
- to limit or keep under surveillance the export of any raw or processed material that is produced in Canada in circumstances of surplus supply and depressed prices and that is not a produce of agriculture;
- to implement an intergovernmental arrangement or commitment;
- to ensure that there is an adequate supply and distribution of the article in Canada for defence or other needs; or
- to ensure the orderly export marketing of any goods that are subject to a limitation imposed by any country or customs territory on the quantity of the goods that, on importation into that country or customs territory in any given period, is eligible for the benefit provided for goods imported within that limitation.
The Export Control List (ECL) comprises seven groups, as follows:
Group 1: Dual Use List
Group 2: Munitions List
Group 3: Nuclear Non-proliferation List
Group 4: Nuclear-Related Dual Use List
Group 5: Miscellaneous Goods
Group 6: Missile Technology Control Regime List
Group 7: Chemical and Biological Weapons Non-Proliferation List
Groups 1 and 2 encompass Canada's multilateral strategic commitments under the Wassenaar Arrangement. Groups 3, 4, 6 and 7 represent our multilateral commitments under the various non-proliferation regimes designed to control the proliferation of weapons of mass destruction (chemical, biological and nuclear weapons) as well as their delivery systems. Group 5 comprises various strategic and non-strategic goods and technologies which are controlled for other purposes, as provided in the Act. It also includes goods of U.S. origin. This provision is intended to prohibit the diversion of US origin goods through Canada.
Softwood Lumber
Effective April 1, 2001 the Department of Foreign Affairs and International Trade introduced a national softwood lumber monitoring program. The objective of this monitoring program was to collect data respecting softwood lumber exports to the United States for all Canadian provinces and territories. This monitoring program was replaced on October 12, 2006 with the Canada-United States Softwood Lumber Agreement.
The Agreement creates a stable, predictable bilateral trade environment for Canadian producers. It revoked U.S. countervailing and anti-dumping duty orders, returned to Canadian exporters over $5 billion in duties collected by the United States since 2002, and safeguarded the provinces’ ability to manage their forest resources. It is a seven-year agreement with an option to renew for two additional years.
The Governor in Council placed softwood lumber on the Export Control List (ECL), item 5104, which has the effect of requiring permits issued by the Minister of International Trade for exports to the United States. Export permits are issued under the authority of section 7(1) of the Export and Import Permits Act, while fees are levied under the authority of section 9(1) of the Financial Administration Act. Any person who holds a permit to export softwood lumber to the United States is required to keep records relating to its issuance for 60 months after the date of issuance of the permit.
From January 1, 2007 to December 31, 2007, exports of softwood lumber totalled 19.04 billion board feet.
The following is a statistical summary of softwood lumber permit applications processed in 2007:
permits issued.....................249,932
permits rejected………………………..1,162
permits cancelled ……………………..9,884
Agri-food products
As part of its implementation of WTO commitments, the United States established TRQs for imports of peanut butter, certain sugar-containing products (SCPs) and refined sugar. Within these TRQs, Canada receives a country-specific quota allocation. The U.S. Government administers these TRQs on a first-come, first-served basis. In order to help ensure the orderly export of these programs against Canada’s country-specific quotas, Canada placed these products on the Export Control List (ECL). Accordingly, in order to comply with the Act and to benefit from the in-quota U.S. tariff rate, Canadian exports of peanut butter, certain SCPs and refined sugar to the United States require an export permit issued by the EICB. There are no quantitative restrictions or permit requirements for Canadian exports of these products to non-U.S. destinations.
- Peanut butter
Peanut butter was placed on the ECL on January 1, 1995. Within the U.S. peanut butter TRQ of 20,000 tonnes, the United States provides a country-specific quota to Canada of 14,500 tonnes. During 2007, permits were issued for 12,610,714 kg, indicating that the quota was 87% utilized.
- Sugar-containing products
Sugar-containing products (SCPs) were placed on the ECL on February 1, 1995. The U.S. SCP TRQ is 64,773 tonnes and applies to imports of certain SCPs falling under Chapters 17, 18, 19 and 21 of the Harmonized Tariff Schedule of the United States. The quota year for SCPs is from October 1 to September 30.
In September 1997, Canada and the United States exchanged letters of understanding, under which Canada obtained a country-specific quota of 59,250 tonnes within the U.S. SCP TRQ. The understanding also provides that only goods that are "product of Canada" may benefit from Canada's country-specific reserve. In 2007-2008, export permits were issued for 58,692,502 kg of SCPs, indicating that the quota was 99% utilized.
- Refined sugar
Refined sugar was placed on the ECL on October 1, 1995. The U.S. refined sugar TRQ is 60,000 tonnes (raw equivalent). The quota year for refined sugar is from October 1 to September 30.
In September 1997, Canada and the United States exchanged letters of understanding, under which Canada obtained a country-specific quota of 10,300 tonnes, raw equivalent (i.e., 9,579 tonnes refined sugar), within the U.S. refined sugar TRQ. The understanding also provides that only goods that are "product of Canada" may benefit from Canada's country specific reserve. In 2006-2007, the refined sugar export quota was 100% utilized.
The following summary of agricultural export permits processed in 2007 includes applications for peanut butter, SCPs and refined sugar:
Permits issued …………………...……6,225
Permits rejected…………………………..40
Permits cancelled………………………..262
Area Control List
Section 4 of the Act provides for the control of "any goods to any country included in an Area Control List" (ACL). Currently there are on two countries on the ACL; Myanmar (Burma) and Belarus.
Automatic Firearms Country Control List
The Act provides for the establishment of an Automatic Firearms Country Control List (AFCCL). Only countries on this list are eligible to receive automatic firearms as defined in ECL items 2-1 and 2-2.
They are:
Australia, Belgium, Botswana, Denmark, Finland, France, Germany, Greece, Italy, Latvia, Netherlands, New Zealand, Norway, Poland, Portugal, Saudi Arabia, Spain, Sweden, United Kingdom and United States.
Issuance of export permits
An export permit is required before any item included in the ECL may be exported from Canada to any destination, with the exception (in most cases) of the United States. This requirement enables Canada to meet international commitments, such as its commitment to prevent the proliferation of missile technology and biological, chemical and nuclear weapons. Nuclear material and equipment, logs, automatic firearms, pulpwood, roe herring and red cedar bolts and blocks are among the goods requiring permits for export to the United States. Permits are also required to export any goods to countries on the ACL. In 2007, 10,684 individual permits were issued, 43 permit applications were denied, 576 permit applications were withdrawn, and 89 permits were cancelled.General Export Permits (GEPs)
The Act provides for the issuance of general permits authorizing the export of certain designated goods to all destinations or to specified destinations. GEPs are intended to facilitate exports by enabling exporters to export selected goods without applying for individual permits. They also provide a means of identifying goods for which exports to countries on the ACL are restricted. The GEPs in effect during 2006 included:
GEP EX. 1: Goods with a value of less than $100, household articles, personal
effects, business equipment required for temporary use outside
Canada and personal automobiles
GEP EX. 3: Consumable stores supplied to vessels and aircraft
GEP EX. 5: Forest products
GEP EX.18: Personal computers
GEP EX.27: Nuclear-related dual use
GEP EX.29: Eligible industrial goods
GEP EX.30: Certain industrial goods to eligible countries and territories
GEP EX.31: Peanut butter
GEP EX 37: Chemicals and Precursors to the United States
GEP EX 38: CWC Toxic Chemical and Precursor Mixtures
3. OFFENCES
Penalties are listed in section 19 of the Act
as follows:
“(1) Every person who contravenes any provision of this Act or the regulations is guilty of:
- (a) an offence punishable on summary conviction and liable to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding twelve months, or to both; or
- (b) an indictable offence and liable to a fine in an amount that is in the discretion of the court or to imprisonment for a term not exceeding ten years, or to both.
(2) A prosecution under paragraph (1)(a) may be instituted at any time within but not later than three years from the time when the subject matter of the complaint arose."
Section 25 of the Act delegates responsibility for the enforcement of the Act to all officers as defined in the Customs Act (section 2(1)). The Department of Foreign Affairs and International Trade entrusts the enforcement of the Act to the Canada Border Services Agency, and to the Royal Canadian Mounted Police.
Export control enforcement actions for 2007
Voluntary compliance continued to be a key element in Canada's export control system in 2007. The Canada Border Services Agency (CBSA) referred 236 detentions of export shipments to Foreign Affairs and International Trade Canada (DFAIT), as well as a further 49 post-export queries, to determine the applicability of export controls. CBSA also undertook, in cooperation with DFAIT, 4 investigations into suspected violations of the EIPA.
