Proposed Regulatory Amendments and Proposed New Regulations Related to the Implementation of the Canada-Honduras Free Trade Agreement

Customs Notice 14-023

Ottawa, September 24, 2014

1. This customs notice announces regulatory amendments and a new regulation proposed by the Canada Border Services Agency (CBSA) in support of the implementation of the Canada-Honduras Free Trade Agreement (CHFTA). It is further proposed that these regulatory amendments and new regulations come into force on October 1, 2014, on the condition that the Governor in Council makes them.

Proposed Regulatory Changes

Certification of Origin of Goods Exported to a Free Trade Partner Regulations

2. It is proposed that the criteria in paragraph 2(c) of the Certification of Origin of Goods Exported to a Free Trade Partner Regulations be amended to refer to the case where goods are exported or are to be exported from Canada to Honduras. It is also proposed to amend paragraph 3(b) of the Regulations to include reference to goods exported or to be exported from Canada to Honduras.

Exporters’ and Producers’ Records Regulations

3. It is proposed that the definition of “advance ruling” set out in the Exporters’ and Producers’ Records Regulations, be amended to include reference to the advance ruling provision of the CHFTA.

Free Trade Agreement Advance Rulings Regulations

4. It is proposed that paragraph 2(d) of the Free Trade Agreement Advance Rulings Regulations be amended to expand the classes of persons eligible to apply for an advance ruling to include producers in Honduras of a material used in the production of goods produced in Honduras. With respect to the modification or revocation of an advance ruling, it is proposed that subparagraph 14(a)(iii) be amended to include reference to goods exported from Honduras and the provisions of Chapter Four of the CHFTA. With respect to the modification or revocation of an advance ruling, it is proposed that subparagraph 14(a)(vi) be amended to include reference to goods exported from Honduras and the provisions of Article 3.8 of the CHFTA. It is proposed that paragraph 14(b) of the Regulations be amended to include reference to goods exported from Honduras and that a new subparagraph be added to that paragraph in order to reference an interpretation agreed to by Canada and Honduras regarding Chapter Three or Four of the CHFTA. It is proposed that paragraphs 14(e) to (g) of the Regulations be amended to include references to goods exported from Honduras. It is proposed that paragraph 14(h) of the Regulations be amended to include a new subparagraph such that an advance ruling can be modified or revoked in order to conform with a modification of Chapters Three, Four or Five of the CHFTA.

Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations

5. It is proposed that paragraph 2(b) of the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations be amended to include reference to Honduras so that proof of exportation of the goods to Honduras is required when accounting for the goods under section 32 of the Customs Act.

Refund of Duties Regulations

6. It is proposed that the title to Part 5.1 of the Refund of Duties Regulations be amended to make reference to Honduras. It is also proposed that section 23.1 of the Regulations be amended such that Part 5.1 of the Regulations applies to the granting of a refund of duties paid on goods imported from Honduras on or after October 1, 2014, and for which no claim for preferential tariff treatment under the CHFTA was made at the time the goods were accounted for under subsection 32(1), (3) or (5) of the Customs Act. It is also proposed that paragraph 23.3(b) of the Regulations, respecting the amount of refund of duties, be amended to include the CHFTA.

Proof of Origin of Imported Goods Regulations

7. It is proposed that the heading before section 6 of the Proof of Origin of Imported Goods Regulations be amended to make reference to the CHFTA.

8. It is proposed that subsection 6(1) of the Regulations be amended to require the importer or owner of the goods for which preferential tariff treatment under the CHFTA is claimed, to furnish to an officer, as proof of origin for purposes of section 35.1 of the Customs Act, a certificate of origin for the goods that is completed in English, French or Spanish at the times set out in section 13 of the Regulations.

9. It is proposed that subsection 6(2) of the Regulations be amended to exempt the importer and owner of goods from the requirement of subsection 35.1(1) of the Customs Act if he importer or owner furnishes to an officer, at the time prescribed by paragraph 13(a) of the Regulations, a written and signed declaration, in English tor French, certifying that the goods originate in Honduras and that a certificate of origin, for the goods, is in the importer’s possession.

10. It is proposed that subsection 6(3) of the Regulations be amended to exempt the importer and owner of casual goods for which benefit of the preferential tariff treatment under the CHFTA is claimed from the requirement of subsection 35.1(1) of the Customs Act, if the goods are entitled to the preferential tariff treatment under the CHFTA pursuant to the CHFTA Rules of Origin for Casual Goods Regulations.

11. It is proposed that subsection 6(4) of the Regulations be amended such that the importer and owner of commercial goods for which the estimated value is less than $1,600, and for which the benefit of preferential tariff treatment under the CHFTA is claimed, be exempt from the requirements of subsection 35.1(1) of the Customs Act if the requirements set out in subsection 6(4) of the Regulations are met. It is also proposed to add a reference to Honduras in subparagraphs 6(4)(b)(i) and (ii).

Proposed New Regulation

CHFTA Verification of Origin Regulations

12. The new CHFTA Verification of Origin Regulationsare proposed to implement the verification provisions of Articles 5.6 and 5.7 of the CHFTA as well as provisions of the to-be-published Memorandum of Understanding Between Canada and the Republic of Honduras Concerning Uniform Regulations for the Interpretation, Application and Administration of Chapter Five of the Free Trade Agreement between Canada and the Republic of Honduras (the “Uniform Regulations”). The Regulations describe the process to be followed by officers when verifying claims for preferential tariff treatment under the CHFTA including:

  • (a) The methods in addition to a verification visit by which the verification of origin of goods may be conducted. These are by reviewing:
    • (i) a verification questionnaire completed by the exporter or producer of the goods or a producer or supplier of a material;
    • (ii) the written response from those persons to a verification letter;
    • (iii) other information received from those persons.
  • (b) The information that must be included in a verification letter or questionnaire, which is:
    • (i) the identity of the customs administration and the name and title of the officer who is sending the letter or questionnaire;
    • (ii) a description of the goods or materials that are the subject of the verification or origin;
    • (iii) the period within which the letter must be answered or the questionnaire must be completed and returned (which must be a minimum of 30 days beginning on the day on which the letter or questionnaire is received).
  • (c) The extension of time available for the answer to the letter or return of the questionnaire, which is as follows:
    • (i) the producer or supplier of a material may, on a single occasion and within the period specified in the letter or questionnaire, make a written request asking for an extension of that period to the customs administration. The extension may be granted for a period of not more than 30 days;
    • (ii) the exporter or producer of goods may on a single occasion and within the period specified in the letter or questionnaire, make a written request asking for an extension of that period to the customs administration. The extension may be granted for a period of not more than 30 days unless the exceptional circumstances set out in the Uniform Regulations established under Article 5.12 of the Agreement apply.
  • (d) The premises or place in Honduras that are prescribed premises or places for the purposes of a verification visit. These are the premises or place of the exporter or producer of goods and a producer or supplier of material.
  • (e) The conditions that must be met before an officer may conduct a verification visit. These are:
    • (i) an officer sends a written notice to the person whose premises or place is to be the subject of the visit, to the competent authority of Honduras at least five business days before sending the notice to the person, and, if requested by Honduras, to the Embassy of Honduras located in Canada. This notice must specify:
      • - the identity of the customs administration on whose behalf the notice is sent;
      • - the name and title of the officer(s) who will conduct the visit;
      • - the name of the person whose premises or place is to be the subject of the visit;
      • - the date and the place of the visit;
      • - the object and scope of the visit, including a description of the goods or materials that are the subject of the verification of origin; and
      • - the legal authority for the visit.
    • (ii) the person whose premises or place is to be the subject of the visit consents in writing to it.
  • (f) Allowing a person who receives a notice of intent to conduct a verification visit on their premises to, on a single occasion and within 15 days after the day on which the notice is received, request a postponement of the verification visit by sending a written request for postponement to the officer who sent the notice. The postponement may be for a period not exceeding 60 days beginning on the day on which the notice is received or for any longer period that is agreed to by the customs administration.
  • (g) Providing that the verification visit is postponed if, within 15 days after the day on which it receives the notice, Honduras sends a written request for the postponement to the office of the officer that issued the notice. The postponement may be for a period not exceeding 60 days beginning on the day on which the notice is received, or for any longer period that is agreed to by Honduras and the customs administration.
  • (h) Allowing for a person who receives a notice of a verification visit to designate two observers, whose participation is limited to observation, to be present during the verification visit.
  • (i) Setting out an obligation on the person who designates observers to identify them to the officer(s) conducting the verification visit.
  • (j) Establishing requirements for the exporter and producer of goods to meet, the failure of which may result in denial of preferential tariff treatment. These requirements are to:
    • (i) maintain records relevant to the determination of origin with respect to the goods in accordance with Articles 5.6 and 5.7 of the CHFTA;
    • (ii) provide the officer(s) conducting the verification of origin with access to the records; and,
    • (iii) if applicable, reply to each verification letter or complete and return each verification questionnaire to the officer within the applicable time period.
  • (k) Establishing that the period within which consent to the verification visit is to be provided in writing by the exporter or producer is 30 days after the day on which the notice of intention is received. If consent is not received within that period, preferential tariff treatment may be denied.
  • (l) Requiring that notice of the intent to re-determine the origin of goods under section 59(1) of the Customs Act be sent with a statement by the officer indicating that the goods that are the subject of a verification of origin are not eligible for preferential tariff treatment under CHFTA and specify the date as of which preferential tariff treatment under CHFTA may be denied or withdrawn in respect of the goods that are the subject of the verification of origin. Additionally, this notice must provide the period during which the exporter or producer of the goods may provide written comments or additional information regarding the origin of those goods (which must be no less than ten days).
  • (m) Providing that a verification letter, a verification questionnaire, the notice of intention to conduct a verification visit sent to the person whose premises or place is to be the subject of the visit, and the notice of intent to re-determine the origin of goods must be sent by a means that produces confirmation of receipt.

Additional Information

13. For more information from within Canada call the Border Information Service at 1-800-461-9999. For more information from outside of Canada call 204-983-3500 or 506-636-5064 (long distance charges will apply). Agents are available Monday to Friday (08:00 – 16:00 local time/except holidays). TTY is also available within Canada at 1-866-335-3237.

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