A surge in global demand for emergency health and safety related goods is one of the outcomes of the COVID-19 pandemic. The Government of Canada and its G20 partners are working to ensure the continued free flow of essential goods and services. Efforts to mitigate the spread of the coronavirus have included a focus on protecting the integrity of supply chains, and the reduction of tariffs and non-tariff barriers. The purpose of this outline is to provide a brief look at a few developments.
Customs Notice 20-19: Certain Goods Remission Order (COVID-19)
On May 6, 2020 the Canada Border Services Agency ("CBSA") issued Customs Notice 20-19 ("Notice 20-19") titled "Certain Goods Remission Order (COVID-19)". Notice 20-19 describes elements of the Certain Goods Remission Order (COVID-19), SOR-2020-101 (the "Order"). The Order provides remission from customs duty on eligible goods which are imported into Canada on or after May 5, 2020. Importers may claim this relief at the time of importation, or within two years of the date of importation. Notice 20-19 provides instructions on how to apply for the remission of customs duty.
Appendix A to Notice 20-19 describes the goods that are eligible for remission under the Order. Eligible goods fall under the following categories: face and eye protection; garments and the like; disinfectants/sterilization products; medical consumables; and other products. Appendix B to Notice 20-19 describes goods that are not subject to remission since they are eligible for Most-Favoured Nation ("MFN") duty-free tariff treatment. Appendix B non-eligible goods fall into the following categories: diagnostic test kits; face and eye protection; protective garments and the like; medical devices and equipment; thermometers; medical consumables; and other products. The notice states that remission is granted for eligible goods under the following conditions:
- The goods were dutiable and imported on or after May 5, 2020.
- No other claim for relief from duties was granted under the Customs Tariff, S.C. 1997, c. 36 in respect of the goods.
- The importer files evidence or information that the CBSA requires to determine eligibility for relief from duties upon request.
- The importer agrees that it is subject at any time to a CBSA review for the purpose of determining whether the evidence and information supplied by the importer supporting its claim for relief is accurate, complete, and unchanged.
- If and when the CBSA conducts a review it must be able to conclude that the evidence and information is accurate, complete, and unchanged.
- Any claims for relief under the Order must include all relevant documents that demonstrate that the imported goods match the list of goods in Appendix A, were imported into Canada on or after May 5, 2020, and were subject to customs duties.
The Notice can be found on the CBSA website.
Customs Notice 20-08: Imported Goods for Emergency Use in Response to COVID-19
On March 16, 2020, the CBSA issued Customs Notice 20-08, titled "Imported Goods for Emergency Use in Response to COVID-19" ("Notice 20-08"). Notice 20-08 sets out the conditions that must be met to provide relief of customs duty, goods and services tax and excise tax otherwise levied on such goods, if and when they are temporarily imported into Canada. Tariff item No. 9993.00.00 will allow for the relief of duty and tax for temporary import of goods for emergency reasons that have been imported by or on behalf of federal, provincial or municipal entities such as health care centers, as well as by or on behalf of first response organizations such as police, fire and local civil defense groups, including medical response teams. Persons and entities not listed in Notice 20-08 are not eligible for this relief. As of April 6, 2020, these goods may also be imported by or on behalf of public or private care residences, such as seniors' residences, retirement homes, nursing homes and shelters. Goods that have been temporarily imported into Canada will need to be exported whenever they are no longer required, except goods that have been consumed or destroyed during the emergency.
Customs Notice 20-12: Tariff Classification and Other Information to Import Medical Supplies
On March 31, 2020, the CBSA issued Customs Notice 20-12, titled "Tariff Classification and Other Information to Import Medical Supplies" ("Notice 20-12"). The purpose of Notice 20-12 is to help inform the commercial importing community of the tariff classification numbers and other potentially useful information for the importation of certain medical supplies. A detailed list of medical supplies and their corresponding tariff classification numbers is attached to Notice 20-12.
The Notice can be found on the CBSA website.
Minister of Health's Interim Order
On March 30, 2020, Canada's Minister of Health signed an interim order titled "Interim Order Respecting Drugs, Medical Devices and Foods for a Special Dietary Purpose in relation to COVID-19" (the "Interim Order"). Under the Interim Order, certain medical devices are permitted to be imported and sold even though they may not fully meet regulatory requirements. The Interim Order can be found on the Government of Canada website. According to the explanatory note to the Interim Order (an excerpt of which is reproduced below), the objective of the Interim Order is to protect Canadians from the COVID-19 pandemic.
To protect the health and safety of Canadians through exceptional importation of drugs, medical devices, and foods for special dietary purposes that are in shortage as a direct or indirect result of the COVID-19 pandemic by providing improved access to biocide drugs.
Importers seeking to rely on the Interim Order to import medical devices must submit a proposal to add their device to the List of Medical Devices for Exceptional Importation and Sale (the "List"). If approved, importers must notify Health Canada of their intention to import a designated device at least five calendar days before the day on which the device is to be imported.
As of April 27, 2020, there were 27 medical devices on the List. The vast majority of these devices are face masks. It is important to note that although these devices may not meet all regulatory requirements, sections 44 to 65.1 of the Medical Devices Regulations remain in effect.
World Trade Organization Report
The Interim Order and the customs notices illustrate how Canadian officials have taken immediate action in order to improve the availability of essential goods to help combat the COVID-19 pandemic. A recent report (described in more detail below) released by the World Trade Organization ("WTO") indicates that many other countries around the world are making similar efforts.
On April 27, 2020, the WTO released a report on the treatment of medical products in regional trade agreements (the "Report"). Some key points from the Report are summarized below. The Report can be found on the WTO website.
Key Points from the Report
- The share of exports by the world's top 10 exporters of medical products to their regional trade agreement ("RTAs") partners ranges from between 27 percent for China to almost 77 percent for the Netherlands. The majority of the top 10 traders in such products are EU member states.
- In their RTAs, WTO members had liberalized over 84 percent of these products by 2020.
- Developed countries that were surveyed had eliminated tariffs, both MFN tariffs, that is, tariffs that do not discriminate between trading partners, as well as preferential tariffs.
- The tariff eliminations occurred respecting medicine, medical equipment and personal protective products (compared to an average MFN rate of 0.2 percent and 2.4 percent respectively). Their average preferential rate for medical supplies is 0.5 percent compared to an average MFN rate of 1.8 percent.
- In developing and least-developed members, average MFN and preferential rates are higher, especially for medical supplies, medicines and personal protective products.
- The COVID-19 pandemic has highlighted the need for greater cooperation and efforts to reduce barriers to trade, including through increased mutual recognition agreements.
International trade in essential goods will remain brisk for in the near future. Miller Thomson has the local expertise and national bench strength to provide on respecting the sale, supply, distribution, purchase, importation, and exportation of essential goods. Please contact one of our legal counsel for more information.
Originally published 11 May, 2020.
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