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WTO: Chicken and Chicken Products TRQ – Serial No. 946

Date: October 1, 2019

This Notice replaces Notice to Importers No. 878 dated September 30, 2016, and sets out the policies and practices pertaining to the administration of Canada’s tariff rate quota (TRQ) for chicken and chicken products under the World Trade Organization (WTO).

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

Definitions
Allocation policy
Eligibility criteria
Calculation of allocations
Utilization, transfer, return and under-utilization of allocations
Information related to import permits of chicken and chicken products
Related Links

1. Definitions

Chicken means a product that is included in items 96 to 104 on the Import Control List (ICL), namely chicken and chicken products falling under heading Nos. 01.05, 02.07, 02.09, 02.10, 16.01 and 16.02 in the list of tariff provisions set out in the Schedule to the Customs Tariff.

For the purposes of this Notice, all quantities of chicken are expressed in eviscerated equivalents pursuant to the List of EIPA commodity codes for chicken.

Further processing means the manufacturing of products that are on the Import Control List (ICL). Such products include, but are not limited to, patties, nuggets, fingers, rolls or roasts produced from chicken meat; it also means marinating, smoking or drying, coating or seasoning chicken meat.

Food service operator means a restaurant or food service company that is active in the Canadian foodservice sector in the chicken industry.

Non-ICL products means 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.

Processing means the slaughtering of chicken, cutting up of eviscerated chicken, de-boning of eviscerated or cut up chicken, or further processing of chicken meat.

Reserve means a quantity equivalent to the Chicken Farmers of Canada's (CFC) Market Development Program (MDP) level in the previous year, minus 51,988,040 kg, multiplied by 7.5%.

2. Allocation policy

To be eligible to apply, you must be active in the chicken industry at the time of application, and must remain active throughout the upcoming quota year.

Except for processors of non-ICL products, you must have been active in the chicken industry throughout the reference period to be eligible to apply.

Except for processors of non-ICL products, individual applicants and related persons applicants are eligible for only one allocation.

Note: All applicants must provide a list of related persons.

Processors of non-ICL products may also apply for an allocation as a processor or food service operator if you meet the relevant eligibility criteria.
If you received an allocation in the previous year and have submitted a complete application for the new quota year, you may receive an advance of up to 30% of your initial allocation in the previous year, subject to any under-utilization penalty that may apply.
If the total amount of quota requested for the production of non-ICL products exceeds the quantity available to processors of non-ICL products by 4.8 million kilograms, the Minister will reconsider the allocation policy.
The intent of the non-ICL allocation policy is to assist Canadian manufacturers to compete with like products that can enter Canada duty-free or at a low rate of duty.

3. Eligibility criteria

You are eligible to apply for an allocation if you are a:

Processor

that bought at least 250,000 kilograms of chicken and subsequently sold at least 250,000 kilograms of chicken and chicken products processed or further processed in the reference period in federally or provincially registered Canadian plants owned and operated by you.
You must exclude the following from your application:

products that were not processed in federally or provincially registered Canadian plants owned and operated by you;
products bought and sold for the export market;
non-ICL products;
products that you did not process (e.g. distribution sales);
products sold at the retail level to consumers;
products containing meat from old roosters or spent fowl; and
Intra-company transfers and transactions.

If you are a parent company submitting joint applications by affiliated firms, you must exclude the purchases and sales of any company, whether it’s the parent company or an affiliated company, that does not meet the 250,000 kilogram purchase, production and sales criteria as set out above.

Distributor

that bought (i.e., took ownership of and financial responsibility for) at least 220,000 kilograms and subsequently sold at least 220,000 kilograms of chicken in the reference period, using warehouses and trucks in carrying out this activity.
You may also qualify as a distributor if you are a retail company that:

has separate divisions that purchase and distribute chicken to non-affiliated companies; or
has central buying operations and sells to corporate or franchise stores (or co-op members), and that arranges delivery and charges the individual store for warehousing and for the chicken product.
Note: Companies that procure or sell chicken and chicken products on behalf of others without taking ownership of or financial responsibility for the products are not eligible to apply for an allocation.

You must exclude the following from your application:

products bought and sold for the export market;
non-ICL products;
products sold to related persons;
products sold at the retail level to consumers;
products containing meat from old roosters or spent fowl;
products bought from or sold to other distributors; and
live chickens.

Food Service Operator

that bought and subsequently sold at least 220,000 kilograms of chicken in the reference period.
You must exclude the following from your application:

non-ICL products;
products containing meat from old roosters or spent fowl; and
non-chicken purchases.

If you are a food service operator comprised of a parent company and various subsidiaries, the parent company must submit an application, accompanied by individual application forms and accountants’ letters for each individual affiliate or business brand.

Note: You must exclude any individual affiliate or business brand that did not buy and subsequently sell at least 220,000 kilograms of chicken in the reference period.

In the case of food service chains, only the application submitted by the system-wide brand owner of the chain is considered for an allocation. Individual entities within that chain (e.g. franchisees) are not eligible to apply for an allocation.

Processor of non-ICL products

that manufactures non-ICL products in your owned and operated Canadian establishments that are in good standing and have received processing licenses from the Canadian Food Inspection Agency (CFIA); and
sells these products at the wholesale level.
You must exclude the following from your application:
- products that have not been processed in Canada in CFIA-approved plants owned and operated by you;
- products for which you have not obtained a letter of opinion from the Canada Border Services Agency (CBSA);
- products for which you are unable to provide the finished product recipe, processing method and composition of the meat;
- products exported, or intended to be exported, from Canada;
- products for which only packaging was performed;
- products sold to related persons;
- products sold at the retail level to consumers;
- products containing meat from old roosters or spent fowl;
- meat-on-meat products, meaning products that contain meat other than chicken and turkey, and less than 7% of non-meat ingredients (excluding spices and seasonings);
- brochettes, meaning products composed of chicken and other ingredients on a skewer, pick or rod;
- mechanically separated meat;
- finely textured meat;
- naturally occurring and added chicken skin; and
- added fat.
Note: If you use marinated chicken in your non-ICL product, you must use the pre-marinated weight of the chicken in your application.
If you are related to a food service operator, you may be eligible to apply for an allocation provided that:
- you provide a written guarantee that the non-ICL products are for retail sale only;
- you undertake to pay for an independent auditor, approved by the Department, to evaluate and certify that the products are, and will be, produced and sold for retail sale only; and
- you undertake to have such evaluations done, at your own cost, as often as quarterly if so requested by the Department.

4. Calculation of allocations

Traditional processor, distributor and food service operator applicants

are each allocated the amount of quota that they were allocated in the previous year, as adjusted since (e.g. for under-utilization).

Non-traditional processor, distributor and food service operator applicants

are allocated the amount of quota that was allocated to non-traditional processor, distributor and food service operator quota holders in the previous quota year, multiplied by the percentage of growth in the TRQ, minus the reserve, and divided as follows:

Processors

62.55% is allocated to processors

30.5% of this amount is allocated on a market share basis and 69.5% is allocated on an equal share basis;
an individual processor allocation is calculated on a market share basis or an equal share basis depending on which is most advantageous to that processor;
a processor’s market share is calculated on the basis of the dollar difference between purchases and sales of processed product.

Distributors

26.81% is allocated to distributors on an equal share basis

Food Service Operators

10.64% is allocated to food service operators on a market share basis based on the total amount of chicken purchased by the food service operator:
- 70% is allocated to food service operators whose quantity (non-eviscerated equivalent) of chicken purchases is equal to at least 50% of their total quantity of meat purchases;
- 30% is allocated to food service operators whose quantity (non-eviscerated equivalent) of chicken purchases is less than 50% of their total quantity of meat purchases.
- the minimum amount allocated to a food service operator is 18,144 kilograms;
  - Note: In the case of a parent company with subsidiaries, the parent company’s allocation is the sum total of its eligible subsidiaries’ calculated allocations.

Processors of non-ICL products

are allocated any remaining quota (including the reserve) on the basis of one kilogram of import quota for each kilogram of chicken inputs used in the production of non-ICL products in the reference period.
- If the total amount of chicken requested for the production of non-ICL products exceeds the quantity available to processors of non-ICL products, the allocation is done on a pro-rata basis.
- If your non-ICL products are manufactured using ground meat, trim meat or diced meat, you are allocated quota only for these products.
- Any dark meat you require for the production of your non-ICL chicken products is supplied by the CFC Market Development Program (MDP). To obtain dark meat through the MDP, you should:
  - include the dark meat requirements in your quota application; and
  - contact us at (email address) to obtain a numbered and dated letter for each purchase order.
  - Note: If you are unable to access your specific dark meat needs through the MDP at prices competitive with U.S. product landed in Canada, you may apply for supplemental imports for these products. (See Notice to Importers Chicken and Chicken Products - Supplemental Imports)
If the amount of quota you are allocated for the production of non-ICL products is insufficient to meet your manufacturing needs, you may apply for supplemental imports through the Import-to-Compete program. Supplemental import requests are authorized only for the specific inputs you require for the manufacturing of your non-ICL products. (See Notice to Importers Chicken and Chicken Products - Supplemental Imports)

5. Utilization, transfer, return and under-utilization of allocations

If you are a processor, distributor or food service operator with an allocation of 100,000 kilograms or more, you may use up to 30% of your allocation in each quarter. Any portion of your allocation that you have not used in one quarter may be carried over to the next quarter.

Note: If your allocation amounts to less than 100,000 kilograms, you may use your allocation at any time during the quota year.

If you wish to transfer any portion of your allocation, you must submit a transfer request form.
You may return any portion of your allocation to the Department in writing by the prescribed return date.
If you use less than 90% of your allocation in one year, you may have your allocation adjusted downward by an under-utilization penalty in the following year.

Note: Any portion of your allocation that you transfer or return in accordance with the present policy is considered to have been used.

6. Information related to import permits of chicken and chicken products

For import control purposes, partially deboned products are considered to be boneless, therefore you must use the appropriate EIPA boneless chicken codes when requesting a permit. Examples of such products include:

fresh chicken breasts that have been partially deboned so that only the keel bone or cartilage remains;
boneless chicken breast, with or without skin, with part or all of the wing bone attached (generally referred to as Chicken Supreme).

Processed chicken - Adjustment for non-chicken ingredients:

If you are requesting a permit to import a processed chicken product that is on the Import Control List (i.e., products beginning with tariff codes 1601 or 1602), you may request that any breading, battering, salt and spices be deducted from the weight of the product. All other inputs, including water used in marination, are considered part of the chicken.
To be eligible to make use of this provision you must:

submit the product recipe and production procedures prior to applying for an import permit;
indicate the product number in the comment field on the import permit application form; and
list both the actual gross weight (in the QUANTITY field) and the actual net weight in the (DOCUMENT QUANTITY field) in the import permit application.

7. Related links

Date Modified:: 2019-10-07

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