Canada’s Tariff Rate Quota System
Importing is an opportunity to bring new products to the local market and its consumers. However, foreign goods coming into a country can also be a threat to domestic industries. As such, a government may implement specific protection policies to regulate imports and improve domestic production. In Canada, the Tariff Rate Quotas (TRQ) are among the protection policies that have been adopted. The following is an overview of Canada’s TRQ system.
Tariffs, Quotas, and the Tariff Rate Quotas
A tariff is a tax fee that is charged on goods coming into a country. They not only offer protection but are also a source of revenue for the government. On the other hand, quotas are limits imposed by the government on the quantity of a particular good that can be imported into a country. This is seen to be more effective in protecting trade as compared to tariffs.
Tariff rate quotas aim to restrict imports by combining the above protection policies. Instead of limiting the quantity or value of a product altogether, it allows a lower tariff rate on imports of a given product below a specified quantity. Once this limit has been exceeded, the goods will be subject to a higher tariff rate.
TRQ Administration
There are two ways in which a TRQ can be administered in Canada. That is, on a first-come-first-served basis or through managed allocation. According to the Exports and Imports Permits Act (EIPA), only residents of Canada are allowed to obtain an import permit. TRQs cover a variety of products including wheat, dairy products and poultry.
For How Long Does an Allocation Remain Valid?
An allocation will remain valid only for that TRQ year for which it was issued. This means that allocations cannot be forwarded from one year to another. Applications must be submitted annually. You will also need to demonstrate your eligibility for an allocation each TRQ year.
How to Apply For an Allocation
Confirm Eligibility
The first step when applying for an allocation should be to confirm whether you are eligible for one. You can do this by reviewing the Notice to Importers as well as the policy on related persons.
It is important to note that each TRQ is administered independently and in line with the pertinent policies. You are allowed to apply for an allocation under more than one TRQs.
Take Note of Opening and Closing Dates
Applications for allocation are usually open for a limited amount of time. It is therefore essential that you take note of these key dates for your TRQs of interest. This is to ensure that you make all your applications in time.
Complete the Application Form
Upon receiving your application form, you must fill it entirely. You also need to ensure that you attach any supporting documents that may be required. Failure to do so will result in incomplete applications, which will be void.
Submit Your Completed Application
Your application should be submitted via email to the relevant email address depending on your product. Note that submissions done through fax or mail will not be accepted. The information you provide through your application will then be used to determine whether you are eligible for an allocation and the amount you qualify for.
Eligibility Criteria
Certain eligibility criteria are used to determine who can obtain an allocation for a TRQ or an import permit. For instance, specific products will require you to show that you are a distributor, processor, or food service provider.
One of the main methods used to supplement the eligibility process is the activity tests. These are used to measure how active an applicant is in the relevant industry.