Locator No.: 854A
Ottawa, March 10, 1998
FIRST-COME, FIRST-SERVED AGRICULTURAL TARIFF RATE QUOTAS
1. This memorandum provides an overview of first-come, first-served agricultural tariff rate quotas on the categories of wheat, barley, wheat products, and barley products, and the legislation and administrative guidelines that apply to them. For more information on tariff rate quotas, refer to Memorandum D10-18-1, Tariff Rate Quotas .
2. The implementation of the first-come, first-served tariff rate quotas (TRQs) on August 1, 1995, was part of the second phase in the removal of existing import restrictions and prohibitions from certain agricultural products under the World Trade Organization agreement on agriculture.
Legislative provisions contained in the Customs Tariff and the Export and Import Permits Act (EIPA) that are relevant to tariff rate quotas are set out in Memorandum D10-18-1. In addition, the following general import permits made under authority of the Export and Import Permits Act are relevant in the administration of first-come, first-served tariff rate quotas:
General Import Permit No. 20 Wheat and Wheat Products, and Barley and Barley Products authorizes the importation of first-come, first-served tariff rate quota goods classified under within access commitment tariff items.
General Import Permit No. 100 Eligible Agricultural Goods authorizes the importation of all agricultural tariff rate quota goods classified under over access commitment tariff items.
General Import Permit No. 3 Wheat and Wheat Products, and Barley and Barley Products for Personal Use authorizes the importation by travellers of first-come, first-served tariff rate quota goods classified under within access commitment tariff items.
1. Each of the goods subject to agricultural tariff rate quotas (TRQs) is represented in the List of Tariff Provisions set out in the schedule to the Customs Tariff by two discrete tariff items, one containing the phrase within access commitment, and the other the phrase over access commitment. Within access commitment refers to the import access quantity (quota) established for the goods by the Minister of Foreign Affairs. Imports within the established quota are classified under the within access commitment tariff item and are subject to significantly lower rates of customs duty than goods imported outside the quota, which are classified under the corresponding over access commitment tariff item.
2. Subsection 10(2) of the Customs Tariff provides that goods shall not be classified under a tariff item that contains the phrase within access commitment unless the goods are imported under the authority of a permit issued under section 8.3 of the Export and Import Permits Act and in compliance with the conditions of the permit. Memorandum D10-18-1 provides general information and administrative guidelines relating to TRQs administered using specific import permits (tariff rate certificates).
3. The Department of Foreign Affairs and International Trade (DFAIT) is responsible for issuing the permits required to import the agricultural TRQ goods included on the Import Control List established under the EIPA. In the case of goods subject to quota allocation, DFAIT issues specific import permits to importers who have been granted a quota allocation for the goods, or, in the case of margarine (for which quota is not allocated in advance), to importers who apply for these import permits prior to the quota being filled.
4. First-come, first-served (FCFS) TRQ goods are not subject to prior quota allocation or specific import permits. Instead, DFAIT has issued two general import permits (GIPs) to allow the commercial importation of these goods, one for within access imports, and the other for over access imports.
5. The within access GIP authorizes the importation of FCFS TRQ goods within a product category prior to the quota for those goods being filled. A quota is considered filled when the Minister of Foreign Affairs is of the opinion that the quantity of goods of a category imported in the quota year equals the import access quantity for that product category, and issues a notice to that effect. The import access quantity for each category of FCFS products is determined in accordance with subsection 6.2(1) of the EIPA. With the exception of the two situations described in paragraph 11, when the quota for a product category of FCFS TRQ goods has been filled, the within access GIP may no longer be used to authorize importation of those goods classified under the within access commitment tariff items, and all subsequent importations during the quota year are made under authority of the over access GIP.
6. The quotas for the categories of wheat, wheat products, barley, and barley products are monitored by Revenue Canada at the time these goods are accounted for. All imports accounted for under subsection 32(1), (3), or (5) of the Customs Act during the period beginning on the first day of the quota year and ending on the day on which the quota is filled are classified under the within access commitment tariff items. Imports of these goods accounted for after the day on which the quota is filled are classified under the over access commitment tariff items.
7. Revenue Canada monitors the importation of FCFS TRQ goods and counts all imports of within access commitment FCFS TRQ goods on the day on which the goods are accounted for, and makes information available to the public, customs regions, and DFAIT on the amount of quota used and the amount still available. Importers should keep themselves up to date regarding the quota remaining on the goods they plan to import, as it is the importers' responsibility to know the quota status when accounting for their goods. Goods are classified under within access commitment tariff items only where the goods are accounted for on or before the last day of the quota period as indicated in the notice by the Minister of Foreign Affairs. Prior to accounting for their FCFS TRQ goods, importers should communicate with the regional customs GATT/WTO contacts or consult the Customs Electronic Bulletin Board for information on the quota status (see paragraph 18).
Use of the GIPs for Commercial Importations
8. The within access GIP becomes effective each year on August 1 for each of the four FCFS categories of wheat, wheat products, barley, and barley products. The over access GIP, GIP No. 100, is in effect year-round for all non-FCFS TRQ goods, but may only be used for importations of any goods of the FCFS product categories when the quota for a particular category has been filled and the within access GIP ceases to apply to that category. At no time are both GIPs applicable to the same product category.
9. Goods imported under authority of the within access GIP are classified under a within access commitment tariff item and receive the within access commitment rate of duty. As the day on which the quota on a particular product category is expected to be filled approaches, the Minister of Foreign Affairs will issue a notice. This notice will state the day on which the quota for the product category will be filled. Any goods of that product category that are accounted for after the day set out in the notice, regardless of when they were imported, are imported under authority of GIP No. 100, and are classified under the over access commitment tariff item, which is subject to the higher over access commitment rate of duty. The within access GIP continues to be in effect for the remaining product categories until the quota for each of the categories has been filled. For example, the within access GIP may authorize the importation of wheat products and barley, while barley products and wheat may only be imported under authority of GIP No. 100 because the quotas for the latter two product categories have been filled.
10. It should be noted that the within access GIP applies only to goods which have been imported, released, and accounted for during a particular quota period. Goods accounted for after the day of the closure of the quota for a product category must be classified as over access commitment, even though they were imported, or imported and released, before the quota was filled, and while the within access GIP was in force. Goods imported, or imported and released while GIP No. 100 is in force for the goods are to be classified as over access commitment even if accounted for after the coming into force in the next quota year of the within access GIP for that category of goods.
11. There are exceptions to the classification of goods outlined in the above paragraph. Within access commitment tariff items may apply outside a quota period, but only when a supplemental permit is obtained, or when goods that are entered into warehouse during a quota period are ex-warehoused during an over access commitment period. For this purpose, within access commitment tariff items will remain active in the departmental Customs Commercial System (CCS) Control Files during an over access commitment period.
12. Where a shipment of FCFS TRQ goods has been short-shipped, the GIP in effect for that category of goods at the time of importation of the goods short-shipped will determine the tariff classification of those goods. That is, the within access GIP does not authorize the importation of goods which have not actually arrived in Canada. For example, if an importer determines that a shipment of goods imported during a period when the within access GIP was in force was short-shipped, the amount of the shortage must be imported and accounted for on or before the day on which the quota is filled in order to be eligible for classification under a within access commitment tariff item.
13. Importers are encouraged to obtain National Customs Rulings on the tariff classification of their wheat and barley products to confirm whether they are goods described on the Import Control List. These rulings will also assist Revenue Canada with effective and accurate quota administration, as the rulings help to ensure the accuracy of the quota count. Disputes and appeals will be reduced, and importers are provided with a greater degree of certainty regarding importations of TRQ goods on the Import Control List.
Tariff Classification of FCFS TRQ Goods General
14. The Appendix to this Memorandum contains information relevant to the tariff classification of selected goods in Chapter 19 of the List of Tariff Provisions set out in the schedule to the Customs Tariff . Importers should also refer to the Explanatory Notes to the Harmonized System of tariff classification, which provide information on the TRQ goods of Chapters 10, 11, 19, and 23.
Tariff Classification of FCFS TRQ Goods Originating in a NAFTA Country
15. Wheat and wheat products originating in the United States, and wheat and wheat products and barley and barley products originating in Mexico are not subject to the higher TRQ rates of duty. Importers should note that the over access commitment rates of duty are the same as the within access commitment rates for all wheat and wheat products of U.S. origin, and of all FCFS goods of Mexican origin. In order to allow accurate counting of import quantities against the quotas established for each of the four FCFS product categories, FCFS TRQ goods originating in a NAFTA country are classified in accordance with the tariff item applicable to them on the day of accounting. That is, the within access commitment tariff item will apply when the goods are imported and accounted for during a period that the within access GIP is in force for the product category, and the over access commitment tariff item will apply at all other times.
16. The Quota File is a system that has been designed to count commercial importations of FCFS TRQ products classified under within access commitment tariff items to determine when the quota for each of the FCFS product categories is filled or will be filled. It will also allow Revenue Canada to provide information to the importing public and DFAIT on quota levels such as the total quota limit for each product category, the amount of quota used, and the quota remaining. Quota levels are updated daily except for weekends and statutory holidays.
17. All quantities of FCFS TRQ goods classified under the within access commitment tariff items (except when imported by travellers and in the situations described in paragraph 11) are counted at the time of accounting. Where a grain equivalency conversion factor applies to a tariff item, that factor is applied by the Quota File to calculate the quantity of quota used and the quantity of quota remaining.
18. The public may obtain quota level information by dialing the toll-free number 1-800-594-0986 for a recorded message. The quota levels are also posted on the Customs Electronic Bulletin Board, which is accessible to the public by modem, by dialing the toll-free number 1-800-267-5979. Users must acquire a communications software package and set up their computer in the following manner, prior to dialing the number: ANSI Terminal, Baud Rate 2400, Parity N, Bit 8, and Bit Stop 1. This service is free of charge to the public.
19. Departmental officers can also obtain quota level information by accessing the Quota File Inquiry transaction within the Control Files subsystem of the CCS.
20. All agricultural TRQ products are controlled goods. Therefore, the LVS provisions may not be applied to TRQ products, and these goods are to be accounted for on Form B3, Canada Customs Coding Form, using the tariff classification numbers in the List of Tariff Provisions set out in the schedule to the Customs Tariff .
21. A GIP (GIP No. 3) was implemented on August 1, 1995, for the importation of FCFS TRQ goods by travellers. This GIP authorizes travellers to import unlimited quantities of wheat, barley, wheat products, and barley products for personal use under the within access commitment tariff items. The exemptions of Chapter 98 of the List of Tariff Provisions set out in the schedule to the Customs Tariff apply for these goods.
22. For more information on the administration of tariff rate quotas, please contact:
Admissibility Programs Division
Customs and Trade Administration Branch
555 MacKenzie Avenue
Ottawa ON K1A 0L5
Telephone: (613) 954-6027
Facsimile: (613) 952-1698
23. For more information on the administration of other tariff rate quotas, refer to Memoranda D10-18-7, Tariff Rate Quota on Cut Roses From Israel or Another CIFTA Beneficiary, D10-18-8, The Tariff Rate Quotas on Dry Onions and Fresh Strawberries Under the Canada-Chile Free Trade Agreement, and D10-18-9, Tariff Rate Quotas on Certain Agricultural Products that are Entitled to the Benefit of the Mexico Tariff . The latter will be published shortly.
The following information is meant to assist importers to determine the tariff classification of various products of wheat and barley in Chapter 19 of the List of Tariff Provisions set out in the schedule to the Customs Tariff .
1901.20- Mixes and doughs for the preparation of bakers' wares of heading No. 19.05
The Explanatory Notes to heading No. 19.01 (note 7, page 147) include ready-mixed doughs, consisting essentially of cereal flour with sugar, fat, eggs or fruit (including those put up in moulds or formed into final shape). The products of subheading No. 1901.20 are neither cooked nor partially cooked. Note (e) on page 147 of the Explanatory Notes directs that fully or partially cooked bakers' wares, the latter requiring further cooking before consumption, are provided for in heading No. 19.05.
1905.90.20 - - - Bread, leavened with yeast;
In addition to containing cereal flours, salt, and yeast, bread of tariff item No. 1905.90.20 may contain small amounts of additives to enrich the bread or to act as dough improvers to achieve certain qualities in the finished product, and different kinds of cereal grains and other ingredients such as seed, cheese, and raisins.
Examples of bread which may be classified under tariff item No. 1905.90.20 are: various breads such as raisin, cheese, pita, multi-grain, rye, wheat, etc., bagels, soft bread sticks, various rolls and buns, special dietary breads leavened with yeast, etc.
1905.90.31 and 1905.90.33 - - - - Other bread, containing 25% or more by weight of wheat, in packages of a weight not exceeding 11.34 kg each, within access commitment (1905.90.31) or ...over access commitment (1905.90.33)
1905.90.34 and 1905.90.35 - - - - Other bread, containing 25% or more by weight of wheat, in bulk or in packages of a weight exceeding 11.34 kg each, within access commitment (1905.90.34) or ...over access commitment (1905.90.35)
The breads of tariff item Nos. 1905.90.31, 1905.90.33, 1905.90.34, and 1905.90.35 are not leavened with yeast, and contain 25% or more by weight of wheat. These tariff items provide for unleavened breads (other than for sacramental purposes of tariff item No. 1905.90.20) and chemically leavened breads, such as bread leavened with baking soda. Examples of other breads of tariff item Nos. 1905.90.31, 1905.90.33, 1905.90.34, and 1905.90.35 are: special dietary breads, not leavened with yeast; unleavened Passover bread; tea biscuits; scones, etc.
1905.90.59 - - - - Other
This tariff item provides for sweet breads which are easily distinguished from breads leavened with yeast of tariff item No. 1905.90.20, in that they contain significantly larger amounts of butter, eggs, sugar, and/or milk than do breads leavened with yeast. An example of goods provided for in this tariff item are cinnamon rolls.
Admissibility Program Division
Customs and Trade Administration Branch
Customs Act, subsections 32(1), (3) and (5)
Customs Tariff, subsection 10(2)
Export and Import Permits Act, subsection 6.2(1) and section 8.3
SUPERSEDED MEMORANDA D
D10-18-6, January 13, 1997
D10-18-1, D10-18-5, D10-18-7, D10-18-8, D10-18-9