Canada Selectively Withdraws GPT Benefits


On December 22, 2012, the Canadian government solicited views on the withdrawal of general preferential tariff (GPT) status from imports of beneficiary countries. It was proposed that the withdrawal would be discriminatory to the detriment of countries that are classified for two consecutive years as high income or upper-middle income economies according to the latest World Bank income classifications, or have a share of world exports that is equal to or greater than one percent for two consecutive years according to the latest World Trade Organization trade statistics. After a period of consultation, Canada proposes, in its 2013 Budget that it move forward with and withdraw GPT benefits from 72 high income or export competitive countries, including all G-20 nations. Changes will take effect on January 1, 2015, and will be extended for a period of 10 years. The economic condition analysis will be applied every two years and will be applied prospectively.

Countries benefiting from Least Developed Country Tariff status for textile and apparel that is partially contingent on GPT originating inputs will not suffer as they will continue to be able to rely on amended Rules of Origin which safeguard this ability.

It was stated by the government that the purpose of these changes is to reflect the significant shifts in the income levels and trade competitiveness of certain developing countries. Noteworthy from the elimination list are: Argentina, Brazil, Cuba, China, Hong Kong, Russia, the Republic of Korea, and Singapore. Query whether this will fuel a ramping up of FTA negotiations between South Korea and Canada?

This was seen coming for some time given shifting tides of global trade/economics. In addition, many of the eliminated countries benefit from other tariff relief regimes. This should be taken into account by importers into Canada for future sourcing purposes.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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