Trade News

June 5, 2020

Opening of the Application Period for the Dairy Export Thresholds under CUSMA

As a result of Canada’s April 3, 2020 ratification of the Canada-United States-Mexico Agreement (CUSMA), the Minister of Small Business, Export Promotion and International Trade has opened the application period for the two new CUSMA export thresholds, effective June 3, 2020:

Skim milk powder (HS 0402.10) and milk protein concentrate (HS 0404.90)
Infant formula (HS 1901.10 and made of over 10% cow’s milk solids on a dry weight basis)

Year 1 of the export thresholds is for the remainder of the 2020 dairy year, i.e., July 2020. The below-threshold quantities (BTQs) for July only will be issued on an “on demand” basis to eligible processors, as defined in the Notices to Exporters. Eligible exporters can access the BTQs by applying for an export permit from July 1 to July 31. Permits will expire before August 1, 2020. There is no requirement for an allocation application.

Year 2 of the export thresholds is for the August 2020-July 2021 dairy year, and the BTQs will be administered via an allocation policy that requires interested parties to submit a completed application form and, if applicable, information on related persons.

Detailed information regarding the on demand process for Year 1 and the allocation application process for Year 2 is set out in the following Notices to Exporters: Skim Milk Powder and Milk Protein Concentrate and Infant Formula. The Notices also provide information on key dates, quantities, specific allocation policies, eligibility criteria and contact information.

Applications for export permits for Year 1 will be accepted beginning July 1, 2020.

The application deadline for allocations for Year 2 is July 3, 2020.

Year 2 BTQ allocations will be issued on July 13, 2020.

Impact of COVID-19 on the CUSMA dairy export thresholds application process
Given that access to certain Government of Canada facilities has been severely restricted, all applications for the BTQs are to be submitted electronically. Applications will not be accepted via facsimile or mail.

Click here for more information on the dairy export thresholds.

June 4, 2020

Auto Industry Receives CUSMA Rulebook

The three North American trading partners have wrapped up talks on uniform regulations to implement CUSMA’s rule of origin, including on autos, with less than four weeks before the deal is set to take effect July 1st.

The three countries releasing the uniform regulations, which still must go through a legal review and be translated to Spanish and French, clears one of the most challenging issues for CUSMA implementation. Officials in the U.S., Mexico and Canada have been working since March to craft the regulations, which include specific formulas and information on how automakers must comply with the new rules to qualify for reduced tariffs under CUSMA.

Automakers have long said complying with the rules will require time-consuming and costly changes. Some North American auto industry officials have expressed concern that they will not be able to comply with the deal’s rules as quickly as the Trump administration would like, given the economic fallout from the pandemic.

The regulations offer some possible flexibility — or at least clarity — for producers. For example, one part of the regulations explains that for producers whose fiscal year begins on January 1st, they can calculate their regional value content over the 18-month period from July 1st to December 31st, 2021.

CUSMA requires that 75% of auto content be made in North America, up from 62.5% from NAFTA.

Click here to read the Uniform Regulations.

(Source: Politico’s Morning Trade)

June 2, 2020

China Halts some U.S. Farm Imports, Threatening Trade Deal

Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans as Beijing evaluates the ongoing escalation of tensions with the U.S. over Hong Kong, according to people familiar with the situation.

State-owned traders Cofco and Sinograin were ordered to suspend purchases, according to one of the people, who asked not to be identified discussing a private matter. Chinese buyers have also canceled an unspecified number of U.S. pork orders, one of the people said.

Private companies haven’t been told to halt imports, according to one of the people.

The halt is the latest sign that the hard won phase-one trade deal between the world’s two biggest economies is in jeopardy.

While Chinese Premier Li Keqiang last month reiterated a pledge to implement the agreement that was inked in January, tensions have continued to escalate since then amid a standoff over Beijing’s move to tighten its grip on Hong Kong.

The measures to halt imports come after President Donald Trump on Friday lobbed a barrage of criticism at Beijing after it moved to impose controversial new national security legislation on Hong Kong.

Trump said the U.S. would begin the process of stripping some of Hong Kong’s privileged trade status, without detailing how many changes would take effect and how many exemptions would apply.

He also promised sanctions against Chinese and Hong Kong officials “directly or indirectly involved” in eroding Hong Kong’s autonomy, though stopped short of giving specifics.

Still, as China started to gradually reopen its economy from the virus-led lockdown, it had increased its pace of imports, including a more-than 1-million ton cargo of American soybeans in just two weeks in May, and rare purchases of U.S. soybean oil and ethanol.

But then tensions between the U.S. and China began escalating, with Trump blaming the Asian nation for misleading the world about the scale and risk of the coronavirus outbreak. The fallout filtered through to the commodities markets, with China opting to buy Brazilian soy instead of American beans.

(Source: BNN Bloomberg)

June 1, 2020

USTR Revokes Two Recently Granted Product Exclusions

In a Federal Register notice published last week, the Office of the U.S. Trade Representative has revoked two Section 301 product exclusions granted earlier this month.

Section 301 tariffs have been reinstated for the following two products:

Tumblers or disposable graduated liners for pitchers, of plastics, of a kind used in healthcare facilities (described in statistical reporting number 3924.10.4000)
Manually operated pill or tablet crushers of plastics, presented with attachable pouches of plastics for capturing and storing the resulting powders (8479.82.0080)

As a result of this change, these products will remain subject to the additional Section 301 tariff of 7.5%.

Click here to read the full notice by the Federal Register.

If you have any questions as a result of this change, please reach out.

Get in touch:

Matt Earish, COO, matt@carson.ca

May 28, 2020

WTO Members to Meet to Discuss COVID-19 Action Plan, Reforming the International Body

A group of World Trade Organization nations known as the Ottawa Group will hold a ministerial-level virtual meeting on June 8 to discuss how the 13 governments might produce a COVID-19 action plan on trade.

Canadian Trade Minister Mary Ng mentioned the meeting during an online discussion last week hosted by the Washington International Trade Association. An action plan related to the pandemic would look at transparency, digital trade and trade in medical devices, as well as the impact of COVID-19 on businesses and enhancing engagement from outside the government.

The Ottawa Group formed in October 2018 in the nation’s capital to find ways to overhaul the WTO. The initiative is led by Canada and includes Australia, Brazil, Chile, the European Union, Japan, Kenya, Mexico, New Zealand, Norway, Singapore, South Korea and Switzerland.

WTO Deputy Director-General Alan Wolff warned on Wednesday that a failure to overcome challenges facing the trading system could undermine social and economic gains made possible by the system following World War II.

“The next and most serious near-term challenge will be a likely series of second waves of the coronavirus with the potential for additional national restrictions placed on the availability of vaccines and pharmaceutical remedies outside of the country of invention and/or production,” Wolff said.

Any COVID-19 initiatives, most of which have been proposed by mid-size countries, that don’t get endorsed by the U.S., China and EU “might not prove reliable,” he added.

May 27, 2020

NAFTA Backs U.S. Softwood Lumber Decision, B.C. Hopes for Final Win

A NAFTA panel has backed the U.S. International Trade Commission’s decision regarding softwood lumber imports from Canada, but British Columbia’s industry group still hopes for an ultimate victory.

The U.S. Lumber Coalition says the decision affirms the USITC determination from December 2017 that the imports “materially injured” American producers and workers.

It says in a news release that the harm is caused by the Canadian government providing its lumber industry “massive subsidies” and dumping those products into the U.S. market.

The BC Lumber Trade Council says it is disappointed by Friday’s decision, saying it remains convinced that the determination that the U.S. industry is injured by Canadian lumber imports is “flawed and without merit.”

Despite the decision, it said Canada still has pending World Trade Organization and NAFTA challenges to the U.S. Department of Commerce’s underlying countervailing duty and anti-dumping duty determinations that have yet to be resolved.

Council president Susan Yurkovich says the group representing provincial producers is confident those proceedings will again support Canada’s position and rule the duties are unwarranted.

May 26, 2020

U.S. Bar and Restaurant Sales Increased by 25% As Lockdowns Lifted

Sales across U.S. bars and restaurants increased by 25% in the week ending with May 16 as some states eased coronavirus lockdown measures, according to a Nielsen CGA report.

While total sales rose 25% in the seven-day period compared to the week ending 9 May, overall velocity – the rate of change – now stands at a decline of 54%, compared to the pre-COVID-19 norm of more than an 80% decrease.

Nielsen noted that some states witnessed huge improvement in velocity trends as lockdown measures were lifted. In Texas, velocity is now at a drop of 32% below the pre-coronavirus norm. Velocity has grown week-over-week by 30% (May 9) and 21% (May 16).

While on-trade outlets remain closed to in-house dining and drinking in New York, California and Illinois, Nielsen said that sales velocity continues to improve on a weekly basis as consumers continue to embrace new forms of dining, including curbside pickup and delivery options.

May 25, 2020

New U.K. Tariff List Ramps Up Urgency of Canada-U.K. Trade Talks

The United Kingdom has revised its global tariff strategy, laying out for Canada and other trading partners the rates that will apply to their exports as of Jan. 1, 2021 — and in the process, setting out Britain’s starting position for future bilateral trade talks.

The new list published Tuesday replaces a temporary regime announced a year ago that would have cut tariffs on nearly all (an estimated 95 per cent) of what the U.K. imports — a hastily-developed scheme designed to the cushion the blow to British consumers of a sudden no-deal Brexit that, in March of 2019, appeared possible.

Under the new regime, Most Favoured Nation (MFN) tariff rates higher than zero will apply to about half of the products imported by the U.K. from around the world, or about 60 per cent of the value of its global trade, once it completes its transition out of the European Union trading bloc. The U.K. continues to negotiate the final terms of this exit.

Many trading partners, Canada included, want clarity on exactly how future trade between the EU and its former member will work before proceeding with their own bilateral talks with the U.K. Canada has had preferential trading terms with the U.K., its third-biggest export market, under its Comprehensive Economic and Trade Agreement (CETA) with the EU.

The CETA will continue to apply until the end of this year, but beyond that, the terms of Canada–U.K. trade are uncertain.

May 22, 2020

CBSA Revised Final Safeguard Surtax Rates to Heavy Plate, Stainless Steel Wire

Canada Border Services Agency introduced Final Safeguard Measures in connection with the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Exclusions), as well as on the Surtax on the Importation of Certain Steel Goods Remission Order (Surtax Remission Order), which came into effect on August 23, 2019.

Customs Notice 19-08 provides instructions, exemptions, and a schedule of rates with respect to the heavy plate and stainless-steel wire covered by these orders.

To see the full list of rates, tariff quotas, and schedule, as identified in Notice 19-08, click here.

The Surtax rates will be reduced during the scheduled period on imported goods absent a specific permit, or once imports of the goods exceed the applicable Global Affairs Canada tariff rate quota.

May 20, 2020

CBP Updates Guidance on Section 232 and 301 Claims, Extensions, and Corrections

Earlier this month, U.S. Customs and Border Protection issued Cargo Message 19-000260, which provides updated guidance on seeking retroactive product exclusions from the administration’s Section 232 and Section 301 trade enforcement measures. Click here to view.

Section 232 and Section 301 product exclusions may be retroactive for unliquidated entries and for entries that are liquidated but where the liquidation is not final and the protest period has not expired.

If a product exclusion has been granted, an importer of record may request a refund by filing a post summary correction for unliquidated entries or file a protest for entries that have liquidated but where the liquidation is not final and the protest period has not expired.

When a product exclusion is granted, an importer may submit a correction to request a refund on unliquidated entries up to 15 days prior to the scheduled liquidation date (generally within 300 days from the date of entry summary filing). If an entry summary is set to liquidate in less than 15 days or has already liquidated, the entry summary is beyond the filing period for correction. However, the importer may file a protest so long as it is filed within the 180-day period following liquidation of the impacted entry summaries.

Approved requests extend the liquidation of an entry summary for one year. When a product exclusion is granted, an importer may submit a PSC to request a refund on the entry summary(ies). If a product exclusion is not approved, no further action is taken, and the entry summary will liquidate as entered one year later than the originally scheduled liquidation date.

The status of Section 232 exclusion requests can be checked at the U.S. Department of Commerce here.

Section 301 exclusions are posted by the USTR here.