United States Surtax Order (Other Goods): SOR/2018-153
Canada Gazette, Part II, Volume 152, Number 14
Registration
June 28, 2018
CUSTOMS TARIFF
P.C. 2018-962 June 28, 2018
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, pursuant to subsection 53(2) and paragraph 79(a) footnote a of the Customs Tariff footnote b, makes the annexed United States Surtax Order (Other Goods).
United States Surtax Order (Other Goods)
Definition of goods that originate in the United States
1 In this Order, goods that originate in the United States means the goods that are eligible to be marked as goods of the United States in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations.
Application
2 This Order does not apply to goods that originate in the United States that are in transit to Canada on the day on which this Order comes into force.
Surtax — tariff items set out in the schedule
3 Goods that originate in the United States that are classified under any of the tariff items set out in the schedule are subject to a surtax in the amount of 10% of the value for duty determined in accordance with sections 47 to 55 of the Customs Act.
July 1, 2018
4 This Order comes into force on July 1, 2018 or, if it is registered after that day, it comes into force on the day on which it is registered.
SCHEDULE
(Section 3)
| Surtax Order Col 1 | Surtax Order Col 2 | Surtax Order Col 3 |
|---|---|---|
0403.10.10 |
3307.10.00 |
7321.90.24 |
0403.10.20 |
3307.49.00 |
7321.90.29 |
0901.21.00 |
3401.30.00 |
7321.90.90 |
1602.32.11 |
3402.20.10 |
8418.10.10 |
1602.32.92 |
3406.00.90 |
8418.10.90 |
1602.50.10 |
3506.10.00 |
8419.19.00 |
1602.50.99 |
3808.91.10 |
8422.11.90 |
1702.20.00 |
3808.92.10 |
8433.11.00 |
1704.90.20 |
3808.93.10 |
8450.11.10 |
1704.90.90 |
3923.21.90 |
8450.11.90 |
1806.31.00 |
3923.29.90 |
8450.20.00 |
1806.32.00 |
3924.10.00 |
8903.10.00 |
1905.90.51 |
3924.90.00 |
8903.91.00 |
2001.10.00 |
4412.39.00 |
8903.92.00 |
2007.99.10 |
4412.99.90 |
8903.99.90 |
2009.12.00 |
4802.56.00 |
9401.61.10 |
2103.10.00 |
4811.59.00 |
9401.61.90 |
2103.20.10 |
4818.10.00 |
9404.21.00 |
2103.20.90 |
4818.20.00 |
9404.29.00 |
2103.90.10 |
4818.30.00 |
9404.30.00 |
2103.90.20 |
4822.10.00 |
9404.90.10 |
2103.90.90 |
4822.90.00 |
9404.90.90 |
2104.10.00 |
4909.00.00 |
9504.40.00 |
2202.10.00 |
7321.90.10 |
9608.10.00 |
2208.30.00 |
7321.90.21 |
9608.20.00 |
3304.30.00 |
7321.90.22 |
|
3305.30.00 |
7321.90.23 |
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
On May 31, 2018, the United States (U.S.) announced the imposition of tariffs on imports of certain steel and aluminum products from Canada (at the rates of 25% and 10%, respectively). In response to these measures, Canada announced its intention to impose surtaxes or similar trade-restrictive countermeasures against up to $16.6 billion in imports of steel, aluminum, and other products from the U.S.
Background
On March 8, 2018, the President of the U.S. signed two proclamations to impose, for national security reasons pursuant to Section 232 of the Trade Expansion Act of 1962, a 25% tariff on steel imports and a 10% tariff on aluminum imports from all countries except for Canada and Mexico, effective March 23, 2018. On March 22, 2018, the U.S. President signed additional proclamations exempting Canada, Argentina, Australia, Brazil, the European Union (EU), Mexico, and South Korea from steel and aluminum tariffs until May 1, 2018. On April 30, 2018, the President issued revised proclamations to extend the temporary exemptions from both steel and aluminum tariffs to Canada, Mexico, and the EU until June 1, 2018, on the grounds that the necessary and appropriate means to address the threat to national security posed by imports of steel and aluminum from those countries was to continue discussions towards a negotiated solution. The revised proclamations permanently exempted Argentina, Australia, Brazil, and South Korea from the steel and aluminum tariffs on the basis of negotiated outcomes between those countries and the U.S. (e.g. accepting volume-limiting quotas in place of tariffs).
On May 31, 2018, the U.S. announced that the temporary exemption from tariffs on imports of certain steel and aluminum products for Canada, Mexico, and the EU would not be extended. Accordingly, tariffs of 25% and 10% went into effect on steel and aluminum, respectively, imported from Canada at midnight, June 1, 2018.
In response to these measures, the Prime Minister announced the Government’s intention to impose surtaxes or similar trade-restrictive countermeasures against up to $16.6 billion in imports of steel, aluminum, and other products originating from the U.S., representing the value of 2017 Canadian steel and aluminum exports affected by the U.S. measures.
Canada continues to advocate for a full and permanent exemption from the U.S. tariffs.
Canada is the largest exporter of steel and aluminum products to the U.S. In 2017, Canada exported $7.2 billion of steel and $9.4 billion of aluminum to the U.S.
The steel industry is an important sector for the Canadian economy, which directly supports 23 100 middle-class jobs and contributes $3.9 billion to gross domestic product annually. The industry serves as a hub for other manufacturing activities and supports upstream and downstream industries that reinforce local and regional economies. There are 10 steelmaking firms in Canada, operating 16 steel mills in 5 provinces. Approximately 75% of Canadian steelmaking capacity is situated in Ontario and another 15% is located in Quebec.
The aluminum industry directly employs over 8 300 Canadians and supports over 20 000 jobs in the processing industry in Canada. In 2016, it contributed $4.3 billion to the gross domestic product. There are three primary aluminum firms in Canada operating nine aluminum smelters (eight in Quebec and one in British Columbia). There are also a number of mills in Canada producing wrought aluminum products.
Both the Canadian steel and aluminum industries are part of an integrated North American manufacturing structure.
Objectives
The objective of these countermeasures is to encourage a prompt end to U.S. tariffs on Canadian steel and aluminum exports to the U.S., which significantly impact Canada’s steel and aluminum industries and threaten to undermine the integrity of the global trading system.
Description
The United States Surtax Order (Other Goods) establishes surtaxes of 10% on imports from the U.S. of other products (e.g. mainly finished consumer goods, such as whiskies and playing cards) under 79 tariff items covering $8.31 billion in imports from the U.S. in 2017.
Any applicable surtaxes will be calculated on the basis of the value for duty of the imported goods, as determined in accordance with sections 47 to 55 of the Customs Act. These surtaxes will apply in addition to any applicable customs duty imposed under the Customs Tariff.
These countermeasures will only apply to goods originating from the U.S., which shall be considered as those goods eligible to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations.
These countermeasures take effect on July 1, 2018, and will remain in place until the U.S. eliminates its trade-restrictive measures against Canada. They will not apply to U.S. goods that are in transit to Canada on the day on which these countermeasures come into force.
“One-for-One” Rule
The “One-for-One” Rule does not apply to the Order, as there is no change in administrative costs to business.
Small business lens
The Small business lens does not apply to the Order, as there is no change in administrative or compliance costs to small business.
Consultation
On May 31, 2018, the Government of Canada published a Notice of Intent to apply surtaxes or similar trade-restrictive countermeasures on a list of steel, aluminum, and other products covering $19.4 billion in annual imports from the U.S. The Notice of Intent formally launched a 15-day comment period (ending June 15) for Canadians to submit their views on the proposed countermeasures. The final list of products has been drawn from the list of products published in the Notice of Intent, taking into account views expressed during the comment period.
During the comment period, a total of 1 108 formal submissions were received, including from industry associations, large corporations, small and medium-sized enterprises, manufacturers, contractors, suppliers and distributors, food processors, retailers, provinces, and individual citizens.
Steel and aluminum producers expressed support for retaliation, as did the majority of submissions from individual Canadians. Downstream manufacturers of steel and aluminum-containing products generally expressed concerns with the negative impact of including certain products they import on the competitiveness of their Canadian operations. Importers of other products cited negative price and competitiveness impacts from the inclusion of products they import and sell in Canada.
All comments have been taken into consideration in determining the appropriate course of action.
Rationale
On May 31, 2018, Canada announced its intention to impose surtaxes or similar trade-restrictive countermeasures against up to $16.6 billion in imports of steel, aluminum, and other products from the U.S. The United States Surtax Order (Other Goods) establishes surtaxes of 10% on imports from the U.S. of other products under 79 tariff items covering $8.31 billion in imports from the U.S. in 2017. The United States Surtax Order (Steel and Aluminum) establishes surtaxes of 25% on imports from the U.S. of steel products classified under 131 tariff items covering $5.59 billion in imports from the U.S. in 2017, and surtaxes of 10% on imports from the U.S. of aluminum classified under 19 tariff items covering $2.66 billion in imports from the U.S. in 2017.
The countermeasures imposed respond directly to the unwarranted and unprecedented unilateral trade restrictions imposed by the U.S. against Canadian steel and aluminum exports. By taking this action, Canada is imposing trade measures on U.S. imports equal to the value of Canadian exports affected by U.S. steel and aluminum tariffs. The aim of this action is to encourage a prompt end to the U.S. tariffs, which negatively affect Canadian workers and businesses and threaten to undermine the integrity of the global trading system.
Canadian steel and aluminum producers are currently incurring significant costs and suffering serious economic harm due to the 25% and 10% tariffs imposed by the U.S. since June 1, 2018. These Canadian producers are now at a competitive disadvantage in the U.S. market, which has led to a loss in sales and increased financial burden. These impacts will have significant implications for the North American manufacturing sector, given the integrated nature of Canada–U.S. supply chains. In the long term, the C.D. Howe Institute estimates that U.S. tariffs could potentially reduce Canadian steel and aluminum exports by US$7.3 billion, which would result in a decrease in Canada’s real gross domestic product of 0.1% and lead to 6 000 jobs being lost.
Other U.S. trading partners affected by the steel and aluminum tariffs, including the EU and Mexico, have imposed retaliatory measures on steel, aluminum, and other products. The cumulative impact of retaliatory measures enhances the effectiveness of any one country’s retaliatory response.
Should the U.S. eliminate its trade-restrictive measures against Canada, these countermeasures will be repealed immediately.
The products covered by this Order have been selected to support political advocacy in the U.S., while also mitigating the potential negative impacts on the Canadian economy (e.g. by ensuring that alternative domestic or non-U.S. supply sources are available). Importers of these products may respond by choosing to pay the surtaxes or secure alternate sources of domestic or non-U.S. supply.
Implementation, enforcement and service standards
The CBSA is responsible for administering Customs Tariff legislation and regulations. In the course of its administration of the United States Surtax Order (Other Goods), the CBSA will inform the importing community of issues related to the administration of surtaxes.
Contact
Scott Winter
Director
Trade and Tariff Policy
Department of Finance
Telephone: 613-369-4034