M4.4 Trade Agreements Flashcards
What is a bilateral Trade Agreement?
Also called preferenial trade agreement
means 2 parties have agreed to grant each other preferential benefits including reduced duty rates.
could also be with a block of countries
Also referred to as reciprocating agreements
preferred tariff treatment
What is a unilateral Trade Agreements?
extends pref treatment with out a formal agreement
Canada doesn’t receive pref duty rates in return
referred to as agreement when they are more like a trade arrangment
What counties have a bilateral agreement with Canada?
Costa Rica, Chile, Peru and a block of counties ie European union and Canada
What are some unilateral trade arangements with Canada?
Least Developed Country Tariff (LDCT)
General Preferential Tariff (GPT)
Canada commited to stimulate the growth fo exports from these countires
What does Section 24(1) if the Customs Tariff Act state?
Goods are entitled to other than GT if:
1) Proof of origin
2) goods are entitled to that tariff treatment accordance with regs under section 16
in order to use other than GPT proof of origin must be provided and other origin requirements must be met
Does both Direct Shipment and Transhipment need to be considered wen determining the country of origin?
yes, defined in the Customs tariff Act to determine origin and the Pref tariff treatment.
What does Direct Shipment mean?
Goods are shipped direct to consignee in Canada on a through bill of trading
-Can go through another country uninterrupted(transfer to another is not interupted.
Can the Cost of Production be a factor in determining Origin?
Yes, processed or manufactured goods trade arrangements outline what is allowed when using the origin method that considers the costs of production.
What does Cost of Production include?
Materials
Labor
Factory overhead
What does Cost of Production not include?
Export packing cost
gross profit or renumeration of any person
What does the De Minimis rule mean
so small or little it doesn’t need to be considered
trade agreements allow for small percentageof non-originating materials to exclude when establishing origin
varies between tariff Treatments and may not apply to all goods.
How does Section 16(1) of the Customs Tariff Act Rules of Origin define “originate”
- if the whole of the value of the good is produced in that country unless Subsection 16(2) state something to the contrary.
What does subsection 16(2) of the Customs Tariff Act, Rules of Origin mean?
the Governer in Council may make regulations regarding origin of goods no entirely produced in a particular country.
What are the 2 fundamental basic criteria for determining origin?
Wholly produced
Natural goods and substantial transformation
What is the term for the method used when determining origin, which are found in the specific trade agreement?
Origin Criteria
Where can we find the list published by the WTO for guidelines to determine wholly produced goods?
This list is found in the Rivised Kyoto Agreement Annex K of Chapter 1
What are some goods that taken to be produced wholly in a given country (Kyoto Agreement)
Mineral products extracted from its Soil, waters seabed
Live animals born and raised
Products obtained from live animals
Products obtained from hunting or fishing
Products obtained by maritime fishing, or by vessel
Products obtained aboard a factory ship
Products extracted from marine soild or subsoil outside the country’s territorial as long as the country has sole rights to work that soil or subsoil
-Scrap and waste from Manufacturing and processing operations
Generally the more complex or processed a good is, the more likely another origin rule will be required to determine originating status
True
What doe Substantial Transformation mean ?
The imported product has undergone a change that alters its functions, it characteristic or it use.
Ie strawberry jam
Module 4.4: Trade Agreements and Determining Tariff Treatments Lesson 1 Summary
This lesson described some of the terms and conditions that are common to most trade agreements. It also taught you how to apply the product specific rules of origin.
Key points in Lesson 1 are:
trade agreements may be between two or more countries;
Canada has several bilateral and unilateral trade arrangements;
trade agreements can affect more than just the rate of duty;
certain requirements must be met in order to use a specific trade agreement;
direct shipment and transhipment can be conditions for a particular trade agreement;
the cost of production may be a factor in determining origin;
one of the ways in which goods may originate in a particular country is if the entire value of the goods is derived from production in that country;
certain trade agreements have product specific rules of origin that must be consulted to determine origin;
product specific rules of origin may involve a tariff shift or regional value content requirement;
there are two basic formulae that can be used to determine regional value content; and
the De Minimis rule applies only to the tariff shift portion of a product specific rule of origin.
What is the proof of origin document requirement for
Tariff Treatments GT, MFN, AUT AND NZT?
Commercial Invoice/CCI
What is the proof of origin document requirement for
All preferential Tariff Treatment
Commercial Invoice / CCI
under 3300.00cad
What is the proof of origin document requirement for
Tariff Treatment GPT LDCT CCCT
Form A Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment GPT LDCT CCCT
Exporters Statement of Origin
What is the proof of origin document requirement for
Tariff Treatment CIAT
CIFTA certificate of origin
What is the proof of origin document requirement for
Tariff Treatment CT
CCFTA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment PT
CPFTA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment COLT
CCOFTA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment IT NT SLT
CEFTA Origin Declaration
What is the proof of origin document requirement for
Tariff Treatment CEUT (EU members -28 countries
CETA Origin Declaration
What is the proof of origin document requirement for
Tariff Treatment CPTPT (11 countries)
CPTPP Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment PAT
CPAFTA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment HNT
CHFTA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment KT
CKFTA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment UAT
CUFTA Origin Declaration
What is the proof of origin document requirement for
Tariff Treatment UST and MXT
CUSMA Certificate of Origin
What is the proof of origin document requirement for
Tariff Treatment UKT
CUKTCA Origin Declaration
What is the proof of origin document requirement for
Tariff Treatment LDCT
Certificate of Origin - Textile and Apparel Goods Originating in a Least Developer Country
Module 4.4: Trade Agreements and Determining Tariff Treatments Lesson 2 Summary
Key points in Lesson 2 are:
the rate of duty under the General Tariff is 35%;
countries that are signatories to the GATT are entitled to use MFN Tariff treatment;
signatories to the GATT may enter into separate trade agreements outside of MFN;
to qualify for the MFN, goods must be finished in a country that is entitled to MFN in the form in which they are imported;
to qualify for the MFN, not less than 50% of the cost of production of the goods is incurred by the industry of one or more countries that are beneficiaries of the MFN, or by the industry of Canada;
proof of MFN origin can be a Canada Customs Invoice, a commercial invoice, or other document that indicates origin;
each trade agreement contains rules of origin outlining how goods can or will qualify for a preferential tariff treatment;
not all tariff treatments apply to all tariff classification numbers;
the CBSA identifies the tariff treatment applied by the tariff treatment code filed;
the tariff treatment(s) for goods from a particular country are found in the List of Countries and Applicable Tariff Treatments; and
countries may be eligible for more than one tariff treatment.
A trade agreement is a legal agreement between two or more countries and is intended to provide benefits relating to trade in goods and services to its signatories.
True
The Australian and New Zealand Trade Agreements cover only a limited number of tariff classification items.
True
North Korea is a signatory of GATT.
False
In order to use the _______________, a Form A – Certificate of Origin is required.
General Preferential Tariff Treatment
RVC by TV Calculation
Transaction Value: $893.62
Value of Non-Originating Materials: $272.60
$893.62 - $272.60 = $621.02
$621.02 / $893.62 = 0.69
0.69 X 100 = 69%
Tariff Treatment codes
- Most-Favoured-Nation (MFN) 2
- Least Developed Country Tariff (LDCT) 8
- Chile Tariff (CT) 14
- Peru Tariff (PT) 25
- Honduras Tariff (HNT) 29
- General Tariff (GT) 3
Goods may not pass through another country for direct shipment to be considered.
False
When direct shipment is a requirement for a particular tariff treatment, goods must be shipped on a through bill of lading.
True
The Regional Value Content (RVC) is always expressed as a percentage.
tTrue
The CBSA can identify the tariff treatment used by the tariff treatment code indicated on the entry.
True
