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Administration of the North American Free Trade Agreement Provisions Relating to the Application of the Tariff Preference Levels for Textile and Apparel Goods

Notice to Exporters
Export and Import Permits Act

Serial No: 88
Date: January 12, 1996

Table of Contents


1. This Notice to Exporters replaces Notice to Exporters, No. 85 dated March 16, 1995 and amends Notice 70 dated December 15, 1993. This notice outlines the administrative policy and defines the criteria used in determining who qualifies as a "new entrant" for the purpose of providing access to exporters of the Tariff Preference Level (TPL) export quota for Wool apparel and made-up goods for 1996.

Allocation Criteria

2. The Tariff Preference Level (TPL) for exports to the United States of Wool apparel and made-up goods has increased by 1% (51,176) Square Meter Equivalents (SMEs) for 1996. This quota referred to hereafter as the "new entrant" pool, is available to 1) new entrant exporters who meet the criteria to qualify and 2) to those who had received access to the 1995 TPL but had not yet reached a level of 1000 SMEs. Exporters must request access to the new entrants pool and provide a projection of their 1996 requirements by January 31, 1996. Companies with TPL's of less than 1000 SMEs, will have their allocation increased to a level of 1000 SMEs. Companies that have not previously received allocation will have access to the remaining quota on a pro-rated basis up to a maximum share of 10% of the remaining total. Exporters will be notified of their allocation under this notice.

3. Exporters shall be deemed to be "new entrants" if they manufacture goods in Canada and are not affiliated with nor are they associated persons of present wool apparel allocation recipients.

4. Companies are affiliated if they are, or could be, controlled directly or indirectly, by another company (e.g., if the same General Manager manages two companies). To establish whichcompanies are affiliated, applicants for consideration as new entrants are asked to provide a list of affiliated companies and associated persons.

5. For the purpose of this Notice, the following persons are "associated persons", namely,

a) persons related to each other; or
b) persons not related to each other, but not dealing with each other at arm's length.

6. For the purposes of this Notice, persons are related to each other if,

a) they are individuals connected by blood relationship, marriage or adoption within the meaning of subsection 251(6) of the Income Tax Act;
b) one is an officer or director of the other's firm;
c) each such person is an officer or director of the same two corporations, associations, partnerships or other organizations;
d) they are partners;
e) one is the employer of the other;
f) they directly or indirectly control or are controlled by the same person;
g) one directly or indirectly controls or is controlled by the other;
h) any other person directly or indirectly owns, holds or controls 5% or more of the outstanding voting stock or shares of each such person; or,
i) one directly or indirectly owns, holds or controls 5% or more of the outstanding voting stock or shares of the other.

7. For the purposes of the TPL a manufacturer is a person in Canada that owns the fabrics at the time he uses them in the manufacture of the wool apparel and made-up goods for export, is primarily engaged in the design and manufacture of apparel and made-up goods, and in marketing of apparel and made-up goods to retail, corporate, industrial or institutional clients, and meets one of the following requirements:

a) owns or leases the equipment and premises in Canada in which he manufactures wool apparel and made-up goods and in which he performs at least 25% of the cutting and sewing or 75% of the cutting or 75% of the sewing of the wool apparel and made-up goods, or
b) where the cutting and sewing of wool apparel and made-up goods are performed on the persons' behalf in Canada, the person markets and sells these goods to retail, corporate, industrial or institutional clients at arm's length.

8. On October 1, 1996, any unused portion of the "new entrants" basket up to 75% of the original basket will be returned to the "growth pool". In addition, any unused portion of quota allocations up to 75% of the original allocation held by individual allocation recipients will be returned to the "growth pool".

9. On November 15, 1996, any unused portion of these baskets up to 90% of the original basket will also be returned to the "growth pool".

10. Quota placed in the "growth pool" will be made available on a "first-come", first-served" basis based on confirmed shipments. Allocation recipients will have to have fully utilized their allocations, including any allocation protected by returning up to 25% of a company's allocation by September 30, 1996, prior to accessing this portion of the TPL. Use of quota from the "growth pool" will be included in the 1996 performance level for the calculation of 1997 allocations.

11. Quota placed in the "new entrants" pools for Cotton or man-made fiber apparel and made-up goods, Cotton or made-made fiber fabrics and made-up goods, and Cotton or man-made fiber spun yarn will continue to be made available to all exporters on a "first-come first-served" basis until December 31, 1996.

Certificate cancellations

12. As indicated in Notice to Exporters, No. 70, in cases where certificates of eligibility are subsequently not used (because of cancelled orders, or for any other reason), exporters must promptly return the pink copy of the Certificate of Eligibility to the EIPB for cancellation.

Permit Fees

13. A fee will be levied for each permit or certificate issued in accordance with the Export and Import Permits and Certificates Fees Order.

Marilyn Friesen
Deputy Director
Textiles and Clothing Special Trade Policy Division
Export and Import Controls Bureau
Department of Foreign Affairs and International Trade
P.O. Box 481, Station "A"
Ottawa, Ontario
K1N 9K6

Telephone: (613) 996-3711
Facsimile: (613) 995-5137