Guide to the Least Developed Country Tariff

Introduction

Purpose of this Guide

This guide provides an outline to the customs aspects under the Least Developed Country Tariff (LDCT), pursuant to the General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations.

Who Should Use this Guide?

This guide was developed to assist the trading community in understanding the customs aspects under the LDCT. Members of the textile and apparel industries, as well as members of the customs brokerage community in particular, may find the information and concepts presented in this guide to be useful.

While the guide seeks to be comprehensive, it should only be considered as a reference tool. 

Users of this guide may also find the following websites and webpages useful:

Market Access for Least Developed Countries

Background

Addressing poverty in the world's poorest countries has been a longstanding concern of Canadians. Worldwide, there exists an international consensus that bringing the world's poorest countries into the global economy is essential to their economic growth and development; without economic growth, poverty does not decrease.

Since 1983, Canada has provided unilateral tariff preferences to Least Developed Countries (LDCs) through the Least Developed Country Tariff (LDCT). The idea remains, in principle, to encourage foreign development in LDCs through duty-free and quota-free access to the Canadian market for exports from those countries, thereby promoting economic growth. 

In 2003, the Government of Canada expanded the product coverage under the LDCT to include textiles, apparel and footwear.

Objectives of the Least Developed Country Tariff

The objectives sought under the LDCT are:

  • reduce poverty in the world's poorest countries;
  • promote investment and development in the world's poorest countries; and
  • enhance economic development through the reduction of trade barriers by providing enhanced opportunities for access to the Canadian market.

Definitions

For ease of reference and for the purposes of this guide, unless otherwise specified:

Ex-factory price

The method of calculating the cost of producing a good. The ex-factory price is calculated as the total value of:

  • materials;
  • parts;
  • factory overhead;
  • labour;
  • any other reasonable costs incurred during the normal manufacturing process, e.g., duties and taxes paid on materials imported into a beneficiary country and not refunded when the goods were exported; and
  • a reasonable profit.

Note: Any costs incurred subsequent to the goods leaving the factory, such as freight, loading, temporary storage, are not included in the ex-factory price calculation.

Fabric
"fabric" means any good referred to in heading 50.07, 51.11 through 51.13, 52.08 through 52.12, 53.09 through 53.11, 54.07 through 54.08, 55.12 through 55.16, 58.01 through 58.07, 58.09 through 58.11, 59.01 through 59.11 or 60.01 through 60.06 of the List of Tariff Provisions set out in the schedule to the Customs Tariff.
Least Developed Country
A Least Developed Country (LDC) is a country or territory that is a beneficiary of the Least Developed Country Tariff.
Originating (good)
A good that satisfies the applicable rules of origin for the purposes of eligibility under a specific tariff treatment;
the Regulations
The General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations;
Rules of origin
The rules of origin as contained in the General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations for LDC entitlement to duty-free access to the Canadian market.
Yarn
"yarn" means any good referred to in heading 50.04 through 50.06, 51.06 through 51.10, 52.04 through 52.07, 53.06 through 53.08, 54.01 through 54.06 or 55.08 through 55.11 of the List of Tariff Provisions set out in the schedule to the Customs Tariff.

The Least Developed Country Tariff

Products Included / Not Included

With few exclusions, goods imported into Canada determined to be originating in an LDC will be granted duty-free status. Under the LDCT, over-access, supply-managed dairy, poultry and egg products are excluded from duty-free and quota-free entitlement. To verify whether the LDCT applies to a certain good (i.e. a tariff item number), please consult the "Applicable Preferential Tariffs" column of the Customs Tariff Schedule.

Duty-Free Access

The LDCT provides duty-free access into the Canadian market, to qualified imports (with proper proof of origin documentation) from LDCs.

Tariff Treatment

Eligibility under the Least Developed Country Tariff

To be eligible for the LDCT, goods must satisfy the legal requirements respecting:

  • the rules of origin;
  • certification of origin; and
  • direct shipment.

Other Tariff Treatments

In some cases, goods from an LDC may not qualify for duty-free status. In these situations the goods may still be eligible for the General Preferential Tariff (GPT), or Most-Favoured-Nation Tariff (MFN).

Tariff Treatment Codes for Least Developed Country Goods

Goods imported from an LDC should be accounted for under one of the following tariff treatment codes:

  • LDCT = 08
  • GPT = 09
  • MFN = 02

For additional information on the accounting of imported goods, please refer to departmental memorandum D17-1-10, Coding of Customs Accounting Documents.

The Rules of Origin

There are two methods under which goods from an LDC may be considered entitled to the benefits of duty-free access into Canada. Under the first method, all LDCT eligible goods must qualify under a wholly produced rule or a cumulative rule, whereby the manufacturing process of an LDC good involves value-added inputs or "cumulations" from other LDCs or Canada.

The second method is specific to textile and apparel goods.  Under this method, all LDCT eligible goods must qualify under a wholly produced rule or under one of the specific rules of origin, governing the country of origin of inputs and the manufacture of goods. The rule to be applied is dependent on the nature of the good exported from the LDC and whether the good is captured in Schedule 1 of the Regulations.

All goods that are entitled to the LDCT must be certified as originating in an LDC under one of the following rules.

Wholly Produced in One Least Developed Country Rule

A good originates in an LDC if the good is:

  • a. a mineral product extracted from the soil or the seabed of that LDC;
  • b. a vegetable product harvested in that LDC;
  • c. a live animal born and raised in that LDC;
  • d. a good obtained in that LDC from a live animal;
  • e. a good obtained from hunting or fishing in that LDC;
  • f. a good obtained from sea fishing or any other marine good taken from the sea by a vessel of that LDC;
  • g. a good produced on board a factory ship of that LDC exclusively from a good referred to in paragraph (f);
  • h. waste and scrap derived from manufacturing operations of that LDC;
  • i. a used good of that LDC imported into Canada for use only for the recovery of raw materials; or
  • j. a good produced in that LDC exclusively from a product or good referred to in any of paragraphs (a) to (h).

General 40% Least Developed Country Cumulative Rule

With the exception of those goods contained in Part A1 or B of Schedule 1 to the Regulations, all goods currently entitled to the benefits of the LDCT originate in an LDC if the value of the materials, parts or products originating outside that country, or in an undetermined location, and used in the manufacture or production of the goods is no more than 60% of the ex-factory price of the goods as packed for shipment to Canada.  In other words, at least 40% of the ex-factory price of the goods as packed for shipment to Canada must originate in one or more LDCs or in Canada.

To add, up to half of that 40% may include materials, parts or products originating in a country set out in Schedule 2 of the Regulations that is not an LDC.

As of January 1, 2015, yarns and fabrics are duty-free on an MFN basis and are now provided for under this rule.  The pre-2015 specific rules of origin pertaining to yarns and fabrics have since been repealed.

Specific Rules of Origin for Textile and Apparel Goods

Apparel

Goods listed in Parts A1 or A2 of Schedule 1 to the Regulations originate in an LDC if they are assembled in an LDC from fabric cut in that LDC or in Canada, or from parts knit to shape, provided that the fabric, or the parts knit to shape, are produced in:

  • a. any LDC or Canada from yarns spun or extruded in an LDC, a country set out in Schedule 2 of the Regulations,or in Canada, provided that the yarns do not undergo further processing outside an LDC, a country set out in Schedule 2 of the Regulations, or Canada, and the fabric does not undergo further processing outside an LDC or Canada; or
  • b. a country set out in Schedule 2 of the Regulations from yarns spun or extruded in an LDC, a country set out in Schedule 2 of the Regulations, or in Canada, provided that:
    • i. the yarns and fabric do not undergo further processing outside an LDC, a country set out in Schedule 2 of the Regulations, or Canada; and
    • ii. the value of any materials, including packing, that are used in the manufacture of the goods and that originate outside the LDC in which the goods are assembled is no more than 75% of the ex-factory price of the goods as packed for shipment to Canada.

When determining if goods set out in Part A1 or A2 of Schedule 1 to the Regulations are entitled to the LDCT by the application of paragraph 2(4)(a) or 2(4)(b) of the Regulations, only the fabric or parts knit to shape that determines the tariff classification of the good shall be considered. Any materials, parts or products such as threads, linings, interfacing, trims, zippers, buttons or fasteners may be disregarded. In the case where subparagraph 2(4)(b)(ii) of the Regulations is applied, exporters must ensure that the value of all materials, parts or products that originate outside Canada, or the LDC in which the goods are assembled, is no more than 75% of the ex-factory price of the goods as packed for shipment to Canada.

Made-up Textile Articles

Goods listed in Part B of Schedule 1 to the Regulations originate in an LDC if they are cut, or knit to shape, and sewn or otherwise assembled in the LDC from fabric produced in any LDC or in Canada from yarns spun or extruded in an LDC, a country set out in Schedule 2 of the Regulations, or in Canada, provided that the yarns do not undergo further processing outside an LDC, a country set out in Schedule 2 of the Regulations, or Canada and the fabric does not undergo further processing outside an LDC or Canada.

When determining if goods set out in Part B of Schedule 1 to the Regulations are entitled to the LDCT by the application of subsection 2(6) of the Regulations, only the fabric or parts knit to shape that determines the tariff classification of the good shall be considered. Any materials, parts or products such as threads, linings, interfacing, trims, zippers, buttons or fasteners may be disregarded.

Examples - Practical Applications of the Specific Rules of Origin

Origin criteria "A" - Accumulation Rule

Goods entitled to the benefits of the LDCT and listed in Part A2 of Schedule 1 to the Regulations, can qualify as originating under one of the applicable rules of origin as identified in criteria A, D, E, or G.

Example: Wool of Yemen is combined with spandex of Hong Kong and sewing thread of India to manufacture wool socks in Yemen. Under the accumulation rule of origin criteria "A", a textile or apparel good may contain parts and materials originating outside an LDC, a country set out in Schedule 2 of the Regulations, or Canada and valued at no more than 60% of the ex-factory price of the good as packed for shipment to Canada. The wool of Yemen origin represents 35% of the ex-factory price. The sewing thread of India and spandex of Hong Kong represents an additional 7%. The accumulation rule allows for inputs from countries set out in Schedule 2 of the Regulations, such as Hong Kong and India, to be included in the 40% originating parts and materials requirement. The 35% input of wool from Yemen combined with the 7% sewing thread and spandex input from the countries set out in Schedule 2 of the Regulations exceed the 40% minimum input requirement under the accumulation rule. The socks therefore qualify for duty-free market access under the LDCT.

Origin criteria "B" - Yarn and Thread Rule

This criteria was repealed as of January 1, 2015.  Yarns and threads are duty-free on an MFN basis and are now provided for under the General 40% LDC Cumulative Rule.  Please refer to the section above entitled, "General 40% Least Developed Country Cumulative Rule".

Origin criteria "C" - Fabric Rule

This criteria was repealed as of January 1, 2015.  Fabrics are duty-free on an MFN basis and are now provided for under the General 40% LDC Cumulative Rule.  Please refer to the section above entitled, "General 40% Least Developed Country Cumulative Rule".

Origin criteria "D" - Apparel Rule 1

Apparel Rule 1 applies to apparel goods listed in Parts A1 and A2 of Schedule 1 to the Regulations.

Goods classified as articles of apparel are required to be assembled in an LDC. The fabric used in the assembly of such articles of apparel must be cut in that LDC or in Canada. In the case where the article of apparel is assembled from parts knit to shape, those parts must be knit to shape in any LDC or in Canada.

The fabric, or the parts knit to shape must be produced in any LDC or in Canada from yarns spun or extruded in any LDC, a country set out in Schedule 2 of the Regulations, or in Canada. The yarns or fabric, or parts knit to shape, must not undergo any further processing outside any LDC or Canada. In the case of yarns, they must also not undergo any further processing outside of a country set out in Schedule 2 of the Regulations.

Example: Dresses or skirts manufactured in Mali will qualify as originating and be eligible for duty-free LDCT provided that the dresses or skirts are assembled in Mali from fabric that has been cut in Mali or in Canada. The fabric must be produced in any LDC or in Canada from yarns spun or extruded in any LDC, a country set out in Schedule 2 of the Regulations, or in Canada.  The yarns or fabric must not have undergone any further processing outside any LDC or Canada.  The yarns as well, must not have undergone any further processing outside of a country set in Schedule 2 of the Regulations.

It should be further noted that in respect of goods listed in Part A2 of Schedule 1 to the Regulations, the exporter (who may also be the producer) has the option of certifying the goods under this specific rule (i.e. Apparel Rule 1) or under the more general LDC cumulative rule that requires a minimum of 40% LDC input.

Origin criteria "E" - Apparel Rule 2

Apparel Rule 2 applies to apparel goods listed in Parts A1 and A2 of Schedule 1 to the Regulations.

Goods classified as articles of apparel are required to be assembled in an LDC. The fabric used in the assembly of such articles of apparel must be cut in that LDC or in Canada. In the case where the article of apparel is assembled from parts, those parts must be knit to shape in any country set out in Schedule 2 of the Regulations.

The fabric, or the parts knit to shape must be produced in a country set out in Schedule 2 of the Regulations from yarns spun or extruded in any LDC, a country set out in Schedule 2 of the Regulations, or in Canada. The yarns or fabric, or parts knit to shape, must not undergo any further processing outside an LDC, a country set out in Schedule 2 of the Regulations, or Canada.

The value of any materials, including packing, that are used in the manufacture of the goods, that originate outside the LDC in which the goods are assembled, must not be more than 75% of the ex-factory price of the goods as packed for shipment to Canada. For greater certainty, any parts, materials or inputs used in the production of the goods that have entered the commerce of any country other than an LDC or Canada lose their eligibility under LDCT.  As well, any materials used in the manufacture or production of the good that originate in Canada are deemed to have originated in the LDC where the goods are assembled.

Example: Those same dresses or skirts manufactured in Mali will be eligible for duty-free LDCT provided that the dresses or skirts are assembled in Mali and the fabric used in the manufacture of the dresses or skirts is produced in a country set out in Schedule 2 of the Regulations from yarns spun or extruded in an LDC, a country set out in Schedule 2 of the Regulations, or in Canada. The yarns and fabric cannot undergo further processing outside an LDC, a country set out in Schedule 2 of the Regulations, or Canada. When using fabric manufactured in a country set out in Schedule 2 of the Regulations, the value of any materials, including packing, which does not originate in Canada or the LDC where the dresses or skirts are assembled must not exceed 75% of the ex-factory price of the goods as packed for shipment to Canada.

It should be further noted that in respect of goods listed in Part A2 of Schedule 1 to the Regulations, the exporter (who may also be the producer) has the option of certifying the goods under this specific rule or under the more general LDC cumulative rule that requires a minimum of 40% LDC input.

Origin criteria "F" - Made-Up Textile Articles Rule

The Made-Up Textile Articles Rule applies to those goods listed in Part B of Schedule 1 to the Regulations. Such goods must be cut, or knit to shape, and sewn or otherwise assembled in the LDC from fabric, or parts knit to shape, produced in any LDC or in Canada from yarns spun or extruded in any LDC, a country set out in Schedule 2 of the Regulations, or in Canada.

The yarns or fabric or parts knit to shape must not undergo any further processing outside an LDC or Canada. In the case of yarns, they must also not undergo any further processing outside of a country set out in Schedule 2 of the Regulations.

Example: Wool yarn is produced in Afghanistan (or in a country set out in Schedule 2 of the Regulations, or in Canada) and exported directly to Bangladesh (or another LDC or Canada), where it is further produced into wool fabric. The wool fabric is shipped directly to Lao People's Democratic Republic for further production into a good classified as "Made-up Textile Articles". The production process of the finished good in Lao People's Democratic Republic must include cutting or knitting to shape of the fabric as well as sewing or otherwise assembling in that country.

Origin criteria "G" - Wholly Produced Rule

In order to be eligible under the wholly produced (or wholly obtained) rule, the subject goods must not contain any foreign materials or parts sourced or originating from outside that LDC from which the goods are exported. For greater certainty, "wholly obtained" does not mean a good purchased in an LDC.

Example: Consider cotton harvested in Burundi. The cotton is processed into yarn or thread in Burundi and manufactured into blankets in Burundi, and exported from Burundi to Canada. The goods are wholly obtained, produced and manufactured in Burundi.

For additional information regarding the LDCT Rules of Origin, please refer to departmental memorandum D11-4-4, Rules of Origin Respecting the General Preferential Tariff and Least Developed Country Tariff.

Certification (Proof) of Origin

According to section 4 of the Proof of Origin of Imported Goods Regulations, to claim the LDCT benefits, importers must declare that they have the required proof of origin in their possession:  A Form A (Certificate of Origin); an Exporter's Statement of Origin; or a Form B255 (Certificate of Origin – Textile and Apparel Goods Originating in a Least Developed Country).

The importer makes this declaration on Form B3-3 (Canada Customs Coding Form), by inserting Code 8 for LDCT in Field No. 14, "Tariff Treatment". Also, the importer declaration field on Form B3-3 must be completed with the signature of the importer. For further instructions concerning Form B3-3, please refer to departmental memorandum D17-1-10 (Coding of Customs Accounting Documents).

The proof of origin must be presented to the CBSA upon request. Failure to do so will result in the application of MFN or an alternative, more appropriate tariff treatment and the application of Administrative Monetary Penalty C152, "Importer or owner of goods failed to furnish proof of origin upon request."

When requested by the CBSA to present the proof of origin, the importer may be required to provide a complete and accurate translation in English or French.  An importer may be requested to submit further documentation to substantiate the origin of the goods, such as bills of materials and purchase orders.

Appendix C of D11-4-4 may prove helpful when determining the applicable proof of origin requirements.

Form A (Certificate of Origin) or Exporter's Statement of Origin

Goods, other than textile and apparel, must be certified as entitled to the benefits of the LDCT on a Form A (Certificate of Origin) or an Exporter's Statement of Origin.  Exporters (who may also be the producer of the goods) must apply the rules of origin contained in the Regulations, to determine the eligibility of their goods under the LDCT.  In most cases, exporters should find the Exporter's Statement of Origin easier to complete and provide than the alternate Form A.

Form A (Certificate of Origin)

The applicable LDCT rules of origin are explained in departmental memorandum D11-4-4 and are further detailed as origin criteria in the instructions to completing the Form A (Certificate of Origin). An excerpt of the Form A origin criteria is as follows:

P for LDCT means 100% of the goods is produced in the LDC (as defined in subsection 2(1) of the Regulations);

F for LDCT, means, at least 40% of the ex-factory price is produced in the LDCT beneficiary country. The existing 40% of the ex-factory price of the goods as packed for shipment to Canada may also include a value of up to 20% of the ex-factory price of the goods from countries set out in Schedule 2 of the Regulations;

G for LDCT, means at least 40% of the ex-factory price was cumulatively produced in more than one LDCT beneficiary country or Canada. The existing 40% of the ex-factory price of the goods as packed for shipment to Canada may also include a value of up to 20% of the ex-factory price of the goods from countries set out in Schedule 2 of the Regulations.

Exporter's Statement of Origin

The same LDCT rules of origin apply when completing an Exporter's Statement of Origin, as those that would be applied if a Form A (Certificate of Origin) were to be completed.  The Exporter's Statement of Origin must be completed and signed by the exporter in the LDC in which the goods were finished. The statement may be written out on a Form CI1 (Canada Customs Invoice), a commercial invoice, or on an entirely separate document. The information required in the statement must be provided in its entirety for goods to qualify for the LDCT.

If the statement is provided as a separate document from the invoice, the statement must reference the applicable invoice number(s). If the statement is for multiple invoices, the invoice numbers must be identified within the statement. A statement with an attached list of invoice numbers will not be acceptable.

See Appendix C for the Form A (Certificate of Origin) or Exporter's Statement of Origin template.

Form B255 (Certificate of Origin - Textile and Apparel Goods Originating in a Least Developed Country)

Textile and apparel goods must be certified as entitled to the benefits of the LDCT on the Form B255 (Certificate of Origin - Textile and Apparel Goods Originating in a Least Developed Country). The rules of origin specific to textile and apparel goods are explained in departmental memorandum D11-4-4. D11-4-4 also provides guidance on the specific origin criteria under which goods must qualify, as well as detailed instructions for completing the certificate. These instructions and criteria are also available on the reverse side of the original document. An excerpt of the LDCT origin criteria for textile and apparel goods is as follows:

Preference Criteria

A The good is produced in a LDC and the value of the materials, parts or products originating outside that LDC, or in an undetermined location, and used in the manufacture or production of the good does not exceed 60% of the ex-factory price of the good as packed for shipment to Canada. For the purpose of this criterion, any materials, parts or products that originate in any other LDC or Canada may be deemed to originate in that LDC.  In addition, any materials, parts or products originating from a country set out in Schedule 2 of the Regulations and having up to 20% of the ex-factory price may be deemed to originate in that LDC. This criterion does not apply to goods listed in Part A1 or Part B of Schedule 1 to the Regulations.

B Repealed.

C Repealed.

D The good is listed in Part A1 or Part A2 of Schedule 1 to the Regulations and has been assembled in a LDC from fabric cut in that LDC or Canada, or from parts knit to shape, and the fabric (or parts knit to shape) has been produced in any LDC or Canada from yarns spun or extruded in a LDC, a country set out in Schedule 2 of the Regulations or Canada and the yarns or fabric have not undergone further processing outside a LDC or Canada; in addition, the yarns have not undergone further processing outside a country set out in Schedule 2 of the Regulations. Note: This criterion applies if the fabric (or parts knit to shape) is produced in any LDC or Canada.

E The good is listed in Part A1 or Part A2 of Schedule 1 to the Regulations and has been assembled in a LDC from fabric cut in that LDC or Canada, or from parts knit to shape, and the fabric (or parts knit to shape) has been produced in a country set out in Schedule 2 of the Regulations from yarns spun or extruded in a LDC, a country set out in Schedule 2 of the Regulations or Canada and neither the yarns nor the fabric have undergone further processing outside a LDC, a country set out in Schedule 2 of the Regulations or Canada and the value of any materials, including packing, that are used in the manufacture of the good and that originate outside the least developed country in which the good is assembled is no more than 75% of the ex-factory price of the good as packed for shipment to Canada. Any materials used in the manufacture of the good that originate in Canada are deemed to have originated in the LDC for the value calculation. Note: This criterion applies if the fabric (or parts knit to shape) is produced in a country set out in Schedule 2 of the Regulations.

F The good is listed in Part B of Schedule 1 to the Regulations and was cut (or knit to shape) and sewn or otherwise assembled in a LDC from fabric produced in any LDC or Canada from yarns spun or extruded in a LDC, a country set out in Schedule 2 of the Regulations or Canada and the yarns and fabric have not undergone further processing outside a LDC or Canada; in addition, the yarns have not undergone further processing outside a country set out in Schedule 2 of the Regulations.

G The good is 'wholly obtained or produced entirely' in the territory of the LDC.

For the template Form B255 (Certificate of Origin - Textile and Apparel Goods Originating in a Least Developed Country), please refer to Appendix C.

For ease of reference, the table below (Table 1) illustrates the applicable origin criteria for goods listed under the various Parts of Schedule 1 to the Regulations.

Table 1: Applicable origin criteria for textile and apparel goods

  • Applicable
  • Not applicable
Goods of HS Chapters 50-63 which are not listed in Schedule 1 of the Regulations
Origin Criteria "A" subsection 2(3) Origin Criteria "B" subsection (2.2) Origin Criteria "C" subsection (2.3) Origin Criteria "D" paragraph 2(4)(a) Origin Criteria "E" paragraph 2(4)(b) Origin Criteria "F" subsection 2(6) Origin Criteria "G" subsection 2(1)
Applicable repealed repealed Not applicable Not applicable Not applicable Applicable
Goods as set out in the Schedule 1 to the Regulations
Goods Origin Criteria "A" subsection 2(3) Origin Criteria "B" subsection (2.2) Origin Criteria "C" subsection (2.3) Origin Criteria "D" paragraph 2(4)(a) Origin Criteria "E" paragraph 2(4)(b) Origin Criteria "F" subsection 2(6) Origin Criteria "G" subsection 2(1)
A1 - Apparel Goods Not applicable repealed repealed Applicable Applicable Not applicable Applicable
A2 - Apparel Goods Applicable repealed repealed Applicable Applicable Not applicable Applicable
B - Made-up Textile Articles Not applicable repealed repealed Not applicable Not applicable Applicable Applicable

For additional information on the Form A (Certificate of Origin) and the Form B255 (Certificate of Origin - Textile and Apparel Goods Originating in a Least Developed Country), please refer to departmental memorandum D11-4-4, Rules of Origin Respecting the General Preferential Tariff and Least Developed Country Tariff.

Direct Shipment Requirements

To be eligible for the LDCT, goods must also satisfy the following shipping requirements.

Shipping Requirements

The goods must be shipped directly on a through bill of lading (TBL) to a consignee in Canada from the LDC in which the goods were certified. Evidence in the form of a TBL (or a copy) showing that the goods have been shipped directly to a consignee in Canada must be presented to the CBSA upon request. An importer may be requested to submit further documentation to substantiate the TBL, such as sales order, report of entry documents, and cargo control documents.

The TBL is a contract to convey goods from one point to another. It is to ensure the direct shipment of goods from the country of origin to a consignee in Canada. The TBL is one single document that is issued prior to the goods beginning their journey when the carrier assumes care, custody, and control of the goods and will usually contain the following information:

  • the identity of the exporter in the country of origin;
  • the identity of the consignee in Canada;
  • the identity of the carrier or agent who assumes liability for the performance of the contract;
  • the contracted routing of the goods identifying all points of transhipment;
  • a full description of the goods and the marks and numbers of the package; and
  • the place and date of issue.

Note: A TBL that does not include all points of transhipment may be accepted, if these are set out in related shipping documents presented with the TBL.

On a case-by-case basis, an amended TBL may be accepted as proof of direct shipment where documentation errors have occurred and the amended TBL corrects an error in the original document. In such cases, the carrier must provide proof that the amended TBL reflects the actual movement of the goods as contracted when the goods began their journey. Documentation presented must clearly indicate the actual movement of the goods.

Air cargo is usually transshipped in the air carrier's home country even if no transshipment is shown on the house air waybill. Therefore, where goods are transported via airfreight, the house air waybill is acceptable as a TBL.

Transshipment

Under the LDCT treatment, goods may be transshipped through an intermediate country, provided that the conditions prescribed by section 18 of the Customs Tariff are met, as follows:

  • they remain under customs transit control in the intermediate country;
  • they do not undergo any operation in the intermediate country, other than unloading, reloading or splitting up of loads or any other operation required to keep the goods in good condition;
  • they do not enter into trade or consumption in the intermediate country; and
  • they do not remain in temporary storage in the intermediate country for a period exceeding six (6) months.

For more information on shipping requirements and transshipment, please refer to departmental memorandum D11-4-4, Rules of Origin Respecting the General Preferential Tariff and Least Developed Country Tariff.

Verification of Origin

Origin verifications on goods imported from an LDC will be initiated by the CBSA through the issuance of an origin verification questionnaire/letter to the exporter/producer of the goods that is the subject of the verification.

The exporter/producer will complete the questionnaire or respond to the verification letter as directed and return the completed document(s) to the CBSA. An origin auditor will review the document(s) and determine, based on the information provided, whether the goods meet the requirements of the rules of origin, do not meet the requirements or if additional information is required.

If it is determined that the goods do not meet the requirements of the rules of origin, a CBSA official will issue a "Notice of Intent to Deny". This will serve as notice to the exporter/producer that the goods do not qualify for the LDCT. The goods at issue will be determined dutiable at the next most beneficial rate of duty - either the GPT or the MFN. This entitlement will depend on the eligibility of the goods and the proof of origin requirements that are available to the customs officer(s). Note that the Form A (Certificate of Origin) or an Exporter's Statement of Origin is a requirement for entitlement to the GPT.

If the origin auditor determines that an on-site visit is required, they may issue a notification of intent to visit the premises of the exporter/producer. As well, the on-site visit notification will be sent to the designated official of the country in which the exporter/producer is located.

If the exporter/producer consents to the on-site visit, a verification team will visit the premises of the exporter/producer to perform an origin verification of the goods under review. Upon completion of the on-site visit, the CBSA will issue a preliminary report to the exporter/producer, outlining the results of the visit.

Upon review of the information in Canada and at the conclusion of the origin audit, the CBSA will issue a final report detailing the findings under the audit. This report will be sent to the exporter/producer, with a notice of decision on the status of the goods vis-à-vis duty-free LDCT entitlement.

Additional Information

For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside 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: 1-866-335-3237.

Appendix A - List of Countries Entitled to the Least Developed Country Tariff

Please refer to the following CBSA webpage: List of Countries and Applicable Tariff Treatments.

Appendix B - General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations (LDCT-Specific Rules)

For the complete Regulations, please refer to the following Department of Justice webpage: General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations.

As of January 1, 2015, the sections, subsections and schedules relevant to the LDCT are as follows:

Appendix C - Templates for Certification (Proof) of Origin

Form A (Certificate of Origin) or Exporter's Statement of Origin (template)

For the Form A (Certificate of Origin), please refer to Appendix A of departmental memorandum D11-4-4, Rules of Origin Respecting the General Preferential Tariff and Least Developed Country Tariff.

For the Exporter's Statement of Origin template, please refer to Appendix B of departmental memorandum D11-4-4, Rules of Origin Respecting the General Preferential Tariff and Least Developed Country Tariff.

Form B255 (Certificate of Origin – Textile and Apparel Goods Originating in a Least Developed Country) (template)

For the Form B255, Certificate of Origin – Textile and Apparel Goods Originating in a Least Developed Country, please refer to the following CBSA webpage: Form B255.

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