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Trade Regulations of Canada

Trade Policy and Economy

Canada's liberal trade regime has facilitated the economy's successful adjustment to a number of external shocks, and helps explain Canada's good economic performance during the last several years. However, productivity growth remains relatively slow, compared to other developed economies. Certain trade barriers still persist in some agricultural activities.

In the second quarter of 2007 gross domestic product grew 3.4%, down from 3.9% in the first quarter but more than double the average pace of growth in the last three quarters of 2006.

Domestic demand growth remained solid in the second quarter, with 4.3% growth compared to 2.8% in the previous quarter. Consumer spending, residential investment and business fixed investment all showed healthy gains. In August, the unemployment rate was 6% - the lowest level in the past three decades.

Import Controls and Licensing

Most goods can enter the Canada market without import restrictions. However, certain commodities are prohibited from importation under the provisions of the Canadian Customs Tariff regulations, while others are regulated under the Export and Import Permits Act. Regulated categories cover various agricultural products (poultry, eggs and dairy products), a number of textiles and clothing items, and certain steel goods.

The Export and Import Controls Bureau (TPI) is responsible for administering the Export and Import Permits Act. The import Controls List comprises textiles and clothing, agricultural products, steel products and weapons; whereas the Export Controls List contains agricultural products, refined sugar, peanut butter, textiles and clothing, weapons and nuclear energy materials and technology, dangerous goods etc.

All foods imported into Canada are subject to the Food and Drugs Act, which prescribes constituents and quality standards of each constituent, as well as labelling requirements.

Food that is labelled or advertised to the public as a treatment for any diseases or physical disorders may not be imported or sold in Canada. Food additives are strictly controlled.

Many alcoholic beverages have minimum age requirements and subject to provincial regulations and must be imported through the liquor commissions in the province where they will be consumed.

Cosmetics Notification Form must be submitted to the Health Protection Branch of Health Canada within 10 days of the first sale of a new cosmetic product to ensure that the new product complies with all regulatory requirements.

Canada has detailed drug regulations on pharmaceuticals, veterinary products, pesticides and disinfectants which are restricted or controlled under import permits.

The import, manufacture and use of potentially toxic substances, including new chemicals, polymers and biotechnology products are regulated by the Canadian Environment Protection Act and New Substances Notification Regulations.

Any claims about a product (or its packaging materials) being 'environmentally-friendly' must be accurate and in compliance with relevant laws. Claims that are ambiguous, misleading or irrelevant, or that cannot be substantiated should not be used.

Import quota controls on Hong Kong, China and other countries were eliminated when the WTO Textile and Clothing Agreement expired on January 1, 2005. Canada has also replaced all agricultural import restrictions with tariff-rate quotas.

Product Standards and Requirements

The National Standards System is the system for developing, promoting, and implementing standards in Canada. If certification of a product is required, it should be obtained before the goods are imported into Canada. Additional standards and requirements may be imposed at the provincial level. The contact point in Canada concerning product standards and requirements is the Standards Council of Canada.

Marking and Labelling

Country of Origin marking is required on many categories of imported merchandise. Goods with no proper country of origin indication cannot be released from Customs until they are suitably marked.

Canada requires bilingual labelling in English and French for most products, showing product identity declaration in common generic name, and net quantity declaration expressed in metric units of weight volume or numerical count, as applicable. Dealer's name and place of business must also appear on the labels.

Customs Tariff and Tax

Canada adopts the Harmonised System (HS) of the Tariff Schedules. All commercial imports are subject to customs duty and the goods and services tax (GST) unless exempted. Depending on the goods or their value, some other taxes may apply, e.g. excise tax on luxury items like jewellery and alcohol. Duties are assessed on the transaction value (the price actually paid or payable for the goods), including commission, brokerage, packing, royalties and transportation to the Canada point.

Hong Kong and China origin goods are eligible for the preferential tariffs under the Canadian General Preferential Tariff Scheme.

A provincial sales tax is assessed on all imports to British Columbia (7.5% of the duty paid value), Manitoba (7%), Prince Edward Island (10%), Quebec (7.5%) and Saskatchewan (6%). In addition, a broad-based value added sale tax, known as the goods and services tax is levied at 7%. In the three Atlantic Provinces (Newfoundland, New Brunswick and Nova Scotia), these taxes were combined to form a harmonised sales tax at a standard rate of 15% for all goods and services. Excise taxes are also charged on automobiles, automobile air-conditioners, and some petroleum products.

Under the Special Import Measures Act, the Government imposes countervailing duties on imported goods that cause injury to Canadian industry through subsidies in the country of origin and anti-dumping duties on goods at prices that are less than their selling price in the country of origin.

Currently Canada imposes anti-dumping duties on several imports from the Chinese mainland including bicycles and bicycle frames, carbon steel fasteners, laminated flooring, leather safety footwear, waterproof footwear with plastic/rubber bottoms, rubber waterproof footwear, fresh garlic, copper pipe fittings, wood slats, hot rolled carbon steel and high-strength low alloy steel plate, hot rolled carbon and alloy steel sheet and strip etc.

Canada may also invoke China-specific safeguard against imports from China if such imports are being imported in such increased quantities or under such conditions as to be a significant cause of market disruption to domestic producers of like or directly competitive goods in Canada. The first case was initiated in July 2005 and involved self-standing barbeques for outdoor use from China. In that instance, the Canadian International Trade Tribunal allegedly found evidence of market disruption and established a 15% safeguard duty for a period of three years.

The Canada Revenue Agency can assist traders to determine the proper tariff classification, value for duty, origin, and the duty and tax rates that apply, and will provide written rulings on request.

Documentary Requirements

A complete documentary package should be presented to the Customs when the imported goods arrive at the country's border. The package includes:

1) Cargo Control Document prepared by the carrier based on the shipper's information;

2) Commercial Invoice indicating the buyer, seller, country of origin, price and detailed description of the goods with quantity and unit price;

3) Import permits, health certificates and examinations as required by other Federal government departments: e.g. the Canadian Food Inspection Agency examines and gives permits for some meat products, and all restricted or controlled drugs require an import permit from Health Canada; the Department of Foreign Affairs and International Trade requires import permits for textiles and clothing;

4) Certificates of Origin for claiming lower customs duty rates for goods from USA and Mexico (under North American Free Trade Agreement), Israel (under Canada-Israel Free Trade Agreement) or Chile (under Canada-Chile Free Trade Agreement) or Form A Certificate of Origin applies to goods covered by the Generalised System of Preferences;

5) Bill of Lading to satisfy the direct shipment condition of preferential tariff treatment - goods must be shipped on a through bill of lading from the country of origin to a consignee in Canada;

6) Other documents include Insurance Certificate, Packing List, Pre-shipment Inspection and pro-forma Invoice as requested.

Consumer Protection

The Federal Hazardous Products Act prohibits certain items as being too dangerous to permit their usage. These goods cannot be imported, sold, or advertised in Canada. The manner of selling, advertising, labelling and packaging of a wide range of products likely to be in danger to the health or safety of the public, including any products or substance that is poisonous, toxic, flammable, explosive or corrosive is also regulated. These items can be imported, sold or advertised only as stated under regulations.

Hong Kong's Trade with Canada

Canada is currently Hong Kong's 18th largest trading partner. Total exports to Canada were valued at HK$ 19.8 billion in the period of Jan-Sept 2007, comprising mainly telecommunications equipment and parts, apparel, textile fabrics, footwear, toys and games originated chiefly from mainland China. Amounting to HK$ 8.8 billion, Hong Kong's imports from Canada comprised mainly nickel, raw fur skins, semi-conductors and electronic valves/tubes, telecommunications equipment and parts. Please click here for the market profile of Canada.