Comprehensive Review of the Allocation and Administration of TRQs for Dairy, Poultry and Egg Products: Phase II – Definitions

Activity:  Business operations under which an applicant demonstrates their involvement in a particular sector of the value chain, which normally includes the production, processing, use or sale of the product covered by the TRQ.

Activity Criteria: Specific criteria that further define a given eligibility criterion, and can be used to calculate the TRQ quantities allocated to individual Eligible Applicants. For example, further to the example in Eligibility Criteria, a chicken processor may also have to meet a threshold of minimum production and/or sales of the concerned product during the applicable reference period, and demonstrate that it has been active a certain number of months during the reference period. The quantity of production or sales they declare could be used to calculate their Allocation as a percentage of the total production or sales declared by all Eligible Applicants.

Allocation: The proportion of the total quota that is awarded to an individual Eligible Applicant.

Allocation Caps: A policy that sets a maximum limit on the allocation that any Eligible Applicant can receive under an individual TRQ; surplus is redistributed to remaining Eligible Applicants, and thereby encourages a broader distribution of the TRQ.

Allocation Method: The method by which the available quota is distributed throughout the value chain and to individual Eligible Applicants.

Chronic Return Penalty: A policy that applies reductions to those applicants’ Allocations who have returned a significant percentage of their Allocation over two or more consecutive years.

Distributor:  An establishment that buys the product covered by the TRQ and resells it to other not-related businesses. A retailer is not considered a distributor.

Eligible Applicant: An applicant that meets the relevant Eligibility and Activity Criteria associated with the TRQ for which they have applied; they became Allocation Holders upon receipt of an Allocation.

Eligibility Criteria: General criteria used to determine who is eligible to obtain an Allocation under a TRQ. For example, in the case of chicken products, applicants are required to demonstrate Activity as distributors, processors or food service providers.

Equal Share: All Eligible Applicants receive an equal Allocation.

First come, first served: There is no allocation process. Eligible importers may import product at the lower within access rate of duty up to the access level. Once that amount is reached (i.e., once the TRQ is filled), imports will be subject to the higher over access rate of duty.

Food Service: A restaurant or food service company that is active in the Canadian foodservice sector in the chicken industry.

Further Processor: An establishment that processes the product covered by the TRQ into another product in its own provincially-licensed or federally-registered facility. Food service establishments are not considered to be further processors.

Historic: Allocations that are issued to traditional allocation holders.

Market Share: All Eligible Applicants receive an allocation proportional to their respective market shares in relation to the total market calculated under the TRQ.

Minimum Allocations: A policy that sets a minimum limit on the Allocation any Eligible Applicant may receive. The limit can be a fixed minimum set by the Department. It can also be a minimum quantity that an applicant indicates they wish to receive, and should the allocation calculation result in less, they will not be issued an Allocation.

Non-ICL Products: Products that are not on the Import Control List and that are domestically manufactured using products that are on the Import Control List to compete with like imported products entering Canada duty-free or at a low rate of duty.

Normally Active: The minimum number of months of Activity during the Reference Period.

On-Demand: There is no formal allocation process, applicants contact the Department to ensure that they meet the eligibility and activity requirements of the TRQ and if they do, an allocation is issued.

Processor: An establishment that manufactures or completes primary processing of the product covered by the TRQ in its own provincially-licensed or federally-registered facility.

Production: The amount of product covered by the TRQ that the applicant produced in their own provincially-licensed or federally-registered facility during the reference period.

Pro-rata Share: Eligible Applicants receive an Allocation in proportion to their request as compared to the total amount requested from all Eligible Applicants.

Re-allocation of Return Quota: A process for the distribution of returned quota to other eligible Allocation Holders under a TRQ.

Reference Period: A period of time during which applicants’ Activity is measured.

Retailer: An establishment whose primary business function is the purchase of the product covered by the TRQ and its subsequent resale directly to the final consumer.

Return Policy: A policy that allows Allocation Holders that are unable to utilize their Allocations to return all, or part, of that Allocation to the Department. Returns must occur before the return-date deadline to avoid Under-utilization penalties.

Tariff Rate Quota (TRQ):  A quantity of import access that Canada agrees to provide to trading partners each year at zero or low rates of duty, as agreed in certain trade agreements.

Traditional: A group of allocation holders who were active before the initial TRQs began. These quotas were granted in proportion to their historical activity. Some of these quotas, upon the approval of the Minister of International Trade, were transferred over the years.

Transfer Policy: A policy that defines the normal procedures the Department will follow when processing Allocation Holders’ requests to transfer all or a portion of their Allocation to another Allocation Holder within the same TRQ.

Sales: The amount of product covered by the TRQ that the applicant sold during the Reference Period.

Under-Utilization policy: In order to encourage utilization of a TRQ, the Department will penalize Allocation Holders that do not import. Allocation Holders subject to the penalty will have their Allocations in the upcoming year adjusted downward in proportion to the amount they did not utilize.

Use: The amount of product covered by the TRQ that the applicant further processed in their own provincially-licensed or federally-registered facility during the reference period.