Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada-Ukraine Free Trade Agreement Implementation Act Passes Second Reading In Canada’s Senate

Posted in Canada's Federal Government, Canada-Ukraine FTA, Cross-border trade, Customs Law

Cyrstal Ball MoneyOn March 7, 2017, BillC-31 “An Act to implement the Free Trade Agreement between Canada and Ukraine passed second reading in Canada’s Senate.  Bill C-31 is now being reviewed by the Senate of Canada Standing Committee on Foreign Affairs and International Trade.  After the Report is prepared by the Standing Committee on Foreign Affairs and International Trade, Bill C-31 returns to the Senate for third reading and debate.  After third reading, the Canada-Ukraine Free Trade Agreement (“Canada-Ukraine FTA”) can be ratified.

Canada has agreed to reduce most customs duty rates to “free” or 0% immediately upon implementation on goods that meet the rules of origin.  Pursuant to Chapter 2 of the Canada-Ukraine FTA, each party shall reduce or eliminate customs duties on goods originating in either party in accordance with the tariff elimination schedules in Annex 2-B.  In Article 1 of Annex 2-B, Canada agrees to eliminate customs duties on all goods in Chapters 1-97 of the Harmonized System that provides for Most-Favoured-Nation rate of duty, with the exception of any goods Canada has listed in Annex 2-B (which is a short list).

We have prepared the following chart, which sets out the H.S. Chapters and Canada’s commitments to reduce customs duties when the Canada-Ukraine FTA enters into force:

H.S. Chapter Description 2016 MFN Rate of Duty In Canada What Canada’s Schedule Says
1 Live animals Up to 238% Some items duty free immediately

 

Some items excluded from duty relief

2 Meat and edible meat offal Up to 249% Some items duty free immediately

 

Some items excluded from duty relief

3 Fish and crustaceans, mollusks and other aquatic invertebrates Up to 5% Entire Chapter is duty free immediately
4 Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included Up to 313.5%

 

Some items duty free immediately

 

Some items excluded from duty relief

5 Products of animal origin, not elsewhere specified or included Free Entire Chapter is duty free
6 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage Up to 16% Entire Chapter is duty free immediately
7 Edible vegetables and certain roots and tubers Up to  $10.31/kg Entire Chapter is duty free immediately
8 Edible fruit and nuts; peel of citrus fruit or melons Up to 14.5% Entire Chapter is duty free immediately
9 Coffee, tea, maté and spices Up to 3% Entire Chapter is duty free immediately
10 Cereals Up to 94.5% Entire Chapter is duty free immediately
11 Products of the milling industry; malt; starches; inulin; wheat gluten Up to $397.30/tonne Entire Chapter is duty free immediately
12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder Up to 10% Entire Chapter is duty free immediately
13 Lac; gums, resins and other vegetable saps and extracts Free Entire Chapter is duty free
14 Vegetable plaiting materials; vegetable products not elsewhere specified or included Free Entire Chapter is duty free
15 Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes Up to 218%

 

Some items duty free immediately

 

Some items excluded from duty relief

16 Preparations of meat, of fish or of crustaceans, mollusks or other aquatic invertebrates Up to 253% Some items duty free immediately

 

Some items excluded from duty relief

17 Sugars and sugar confectionery Up to $30.86/tonne Some items duty free immediately

 

Some items excluded from duty relief

18 Cocoa and cocoa preparations Up to 265% Some items duty free immediately

 

Some items excluded from duty relief

19 Preparations of cereals, flour, starch or milk; pastry cooks’ products Up to 267.5% Some items duty free immediately

 

Some items excluded from duty relief

20 Preparations of vegetables, fruit, nuts or other parts of plants Up to 17% Entire Chapter is duty free immediately
21 Miscellaneous edible preparations Up to 277% Some items duty free immediately

 

Some items excluded from duty relief

22 Beverages, spirits and vinegar Up to 11% Some items duty free immediately

 

Some items excluded from duty relief

23 Residues and waste from the food industries; prepared animal fodder Up to 205.5% Some items excluded from duty relief
24 Tobacco and manufactured tobacco substitutes Up to 13% Entire Chapter is duty free immediately
25 Salt; sulphur; earths and stone; plastering materials, lime and cement Up to 2.5% Entire Chapter is duty free immediately
26 Ores, slag and ash Free Entire Chapter is duty free immediately
27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes Up to 12.5% Entire Chapter is duty free immediately
28 Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes Up to 6.5% Entire Chapter is duty free immediately
29 Organic chemicals Free Entire Chapter is duty free
30 Pharmaceutical products Up to 6.5% Entire Chapter is duty free immediately
31 Fertilizers Free Entire Chapter is duty free
32 Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks Up to 6.5% Entire Chapter is duty free immediately
33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations Up to 8% Entire Chapter is duty free immediately
34 Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, “dental waxes” and dental preparations with a basis of plaster Up to 6.5% Entire Chapter is duty free immediately
35 Albuminoidal substances; modified starches; glues; enzymes Up to 270% Some items duty free immediately

 

Some items excluded from duty relief

36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations Up to 6.5% Entire Chapter is duty free immediately
37 Photographic or cinematographic goods Up to 6.5% Entire Chapter is duty free immediately
38 Miscellaneous chemical products Up to 15.5% Entire Chapter is duty free immediately
39 Plastics and articles thereof Up to 6.5% Entire Chapter is duty free immediately
40 Rubber and articles thereof Up to 15.5% Entire Chapter is duty free immediately
41 Raw hides and skins (other than fur-skins) and leather Free Entire Chapter is duty free
42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silk-worm gut) Up to 15.5% Entire Chapter is duty free immediately
43 Fur-skins and artificial fur; manufactures thereof Up to 15.5% Entire Chapter is duty free immediately
44 Wood and articles of wood; wood charcoal Up to 9.5% Entire Chapter is duty free immediately
45 Cork and articles of cork Free Entire Chapter is duty free
46 Manufactures of straw, of esparto or of other plaiting materials; basket-ware and wickerwork Up to 11% Entire Chapter is duty free immediately
47 Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard Free Entire Chapter is duty free
48 Paper and paperboard; articles of paper pulp, of paper or of paperboard Free Entire Chapter is duty free
49 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans Free Entire Chapter is duty free
50 Silk Free Entire Chapter is duty free
51 Wool, fine or coarse animal hair; horsehair yarn and woven fabric Free Entire Chapter is duty free
52 Cotton Up to 8% Entire Chapter is duty free immediately
53 Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn Free Entire Chapter is duty free
54 Man-made filaments; strip and the like of man-made textile materials Up to 8% Entire Chapter is duty free immediately
55 Man-made staple fibres Up to 8% Entire Chapter is duty free immediately
56 Wadding, felt and non-wovens; special yarns; twine, cordage, ropes and cables and articles thereof Up to 16% Entire Chapter is duty free immediately
57 Carpets and other textile floor coverings Up to 14% Entire Chapter is duty free immediately
58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery Free Entire Chapter is duty free
59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use Up to 18% Entire Chapter is duty free immediately
60 Knitted or crocheted fabrics Free Entire Chapter is duty free
61 Articles of apparel and clothing accessories, knitted or crocheted Up to 18% Entire Chapter is duty free immediately
62 Articles of apparel and clothing accessories, not knitted or crocheted Up to 18% Entire Chapter is duty free immediately
63 Other made up textile articles; sets; worn clothing and worn textile articles; rags Up to 18% Entire Chapter is duty free immediately
64 Footwear, gaiters and the like; parts of such articles Up to 20% Entire Chapter is duty free immediately
65 Headgear and parts thereof Up to 15.5% Entire Chapter is duty free immediately
66 Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof Up to 7.5% Entire Chapter is duty free immediately
67 Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair Up to 15.5% Entire Chapter is duty free immediately
68 Articles of stone, plaster, cement, asbestos, mica or similar materials Up to 15.5% Entire Chapter is duty free immediately
69 Ceramic products Up to 8% Entire Chapter is duty free immediately
70 Glass and glassware Up to 6.5% Entire Chapter is duty free immediately
71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewelry; coin Up to 8.5% Entire Chapter is duty free immediately
72 Iron and steel Free Entire Chapter is duty free
73 Articles of iron or steel Up to 8% Entire Chapter is duty free immediately
74 Copper and articles thereof Up to 9.5% Entire Chapter is duty free immediately
75 Nickel and articles thereof Up to 3% Entire Chapter is duty free immediately
76 Aluminum and articles thereof Up to 6.5% Entire Chapter is duty free immediately
77 (reserved for possible future use)
78 Lead and articles thereof Free Entire Chapter is duty free
79 Zinc and articles thereof Up to 3% Entire Chapter is duty free immediately
80 Tin and articles thereof Up to 3% Entire Chapter is duty free immediately
81 Other base metals; cermets; articles thereof Free Entire Chapter is duty free
82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal Up to 11% Entire Chapter is duty free immediately
83 Miscellaneous articles of base metal Up to 7% Entire Chapter is duty free immediately
84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof Up to 9% Entire Chapter is duty free immediately
85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Up to 9% Entire Chapter is duty free immediately
86 Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds Up to 11%

 

Entire Chapter is duty free immediately
87 Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof Up to 13% Some items duty free immediately

 

Some items customs duties reduced over 8 years

88 Aircraft, spacecraft, and parts thereof Up to 15.5% Entire Chapter is duty free immediately
89 Ships, boats and floating structures Up to 25% Entire Chapter is duty free immediately
90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof Up to 8.5% Entire Chapter is duty free immediately
91 Clocks and watches and parts thereof Up to 14% Entire Chapter is duty free immediately
92 Musical instruments; parts and accessories of such articles Up to 7% Entire Chapter is duty free immediately
93 Arms and ammunition; parts and accessories thereof Up to 7.5% Entire Chapter is duty free immediately
94 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings Up to 15.5% Entire Chapter is duty free immediately
95 Toys, games and sports requisites; parts and accessories thereof Up to 8% Entire Chapter is duty free immediately
96 Miscellaneous manufactured articles Up to 8% Entire Chapter is duty free immediately
97 Works of art, collectors’ pieces and antiques Up to 7% Entire Chapter is duty free immediately

There are other restrictions such as quotas and rules of origin that must be considered.

The Canada-Ukraine FTA should be in effect soon after ratification by Canada.  Canadian importers should start to consider what opportunities are available to import goods originating in Ukraine on a duty free basis.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com.  For more information about Canada’s customs laws and the Canada-Ukraine FTA, please go to the LexSage web-site.