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TPP Annex 2-D Tariff Commitments – Canada

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As I wrote time, the Trans Pacific Partnership (TPP) includes 30 chapters. Within Chapter 2 there is Annex 2-D which lists each country’s general notes relating to tariff schedules and provides a list of each country’s tariff elimination schedule.

Each country also lists, as Canada does, an appendix setting forth tariff rate quotas which allow only certain amounts of product entering a country.

Because Canada is a major trading partner, I reviewed the tariff schedule of Canada, its Appendix A – Tariff Rate Quotas (TRQ), and its 257-page Tariff Elimination Schedule. (Mind numbing.) The General Notes describe the elimination of customs duties and spell out categories where customs duties on originating goods “…shall be eliminated entirely, and these goods shall be duty-free on the date of entry into force of this Agreement for Canada.”

Canada also indicates there are certain goods which shall only be duty-free after four years, six years, seven years, 11 years, and 12 years. Canada and Japan have an agreement that they will consult within seven years after the agreement goes into effect “…with a view to increasing market access.”

The second Annex document for Canada is entitled “Tariff Elimination Schedule.” This schedule sets forth every item imported into Canada and describes the base rate or tariff on each product. It also indicates the tariff on the product or whether starting in year one the product comes into Canada and has a tariff levied on the product.

Lamb imported into Canada does not have a duty, with the exception of one category entitled “Of Mutton.” Presently there is a 2.5% tariff on mutton and that tariff disappears for the next 12 years.

Fowl play
For categories of fowl there are high tariffs per kilogram. The tariff rate schedule indicates that for several categories there are tariff rate quotas for the product. After the TRQ is met, in one case a $2.11 per kilogram tariff is applied. To be fair, TRQs do not appear to be too numerous.

Fish, cheese, honey, flower bulbs, shrubs, vegetables, corn, barley, wheat and hundreds of other products such as pig fat are listed in the schedule.

Wheat and barley present interesting facts. The wheat schedule is identified within the access commitment and over the access commitment. The category of wheat “within the access” presently has a 3.5% tariff. Wheat within this category, starting in year 1, is free from any tariff. Wheat in the “over access” category has a present tariff rate of $98.60/ton plus 7%. That amount is reduced to $89.63/ton in year one and by year 10, the tariff will be reduced to $9.68/ton and the 7% is reduced to 0.6%.

Corn, on the other hand, has a 5% tariff applied to it presently. When the TPP goes into effect, that tariff is eliminated immediately for the next 12 and subsequent years.

The third document in the Annex is entitled “Tariff Rate Quotas of Canada.” This section “…sets forth modifications to the Schedule to Canada’s Customs Tariff that reflect the tariff rate quotas (TRQs) Canada shall apply to certain originating goods under this Agreement.” This section certainly raises questions regarding the “fair deal” aspect of the TPP. The fine print in this section makes it clear that only certain quantities of product shall be permitted entry into Canada. Canada makes clear that its allocation of TRQs will be set each year and is applicable to the Canadian dairy, poultry and egg sector. This 25-page appendix describes TRQs for milk, which only allows 8,333 metric tons (MT) of milk into Canada for the first year. This amount is increased to 56,905 MTs and remains at that amount after year 19. Cream also has its own TRQ as does skim milk powders, cream powders, yogurt, and buttermilk. Cheeses of all types are permitted to enter Canada duty-free so long as they are under the specified TRQ as are ice cream and mixes.

Another category with a TRQ is broiler hatching eggs and chicks, turkeys, and eggs.

As one reads these lengthy and complicated documents it appears the results are headed in the right direction but slowly. Maybe too slowly!

(This article first ran in Farm Futures on Aug 22, 2016)

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