Tuesday, November 27, 2018

The Standing Senate Committee on Foreign Affairs and International Trade has the honour to table its

TWENTIETH REPORT

Your committee, which was authorized to examine the subject matter of those elements contained in Division 13 of Part 4 of Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, has, in obedience to the order of reference of Wednesday, November 7, 2018, examined the said subject-matter and now reports as follows:

Division 13 of Part 4 of Bill C-86

On November 21, 2018, your committee held a meeting and heard from officials from Global Affairs Canada and the Department of Finance Canada; no other witnesses have approached your committee to testify on the subject matter. Following that testimony, your committee offers the following comments.

Division 13 of Part 4 of Bill C-86 amends the Export and Import Permits Act (EIPA). The EIPA allows the Government of Canada to control the export and import of certain goods through permit requirements. In relation to the control of imports, the Governor in Council can include goods that it deems necessary to control on the Import Control List for a number of purposes outlined in the Act. Under subsection 5(6) of the EIPA, the Governor in Council can include goods on the Import Control List to facilitate actions taken pursuant to certain sections of the Customs Tariff that address customs duties, tariff rate quotas, surtaxes and specific special measures.

Clause 415, the only clause included in Division 13 of Part 4 of Bill C-86, amends subsection 6.2(1) of the EIPA. That subsection currently provides the Minister of Foreign Affairs the authority to determine import access quantities, to determine a method for allocating those quantities, and to issue import allocations for certain goods included on the Import Control List. However, the subsection provides that the Minister can take those actions only for the purpose of implementing an “intergovernmental arrangement or commitment.”

Clause 415 provides the Minister of Foreign Affairs with the authority to take the actions listed in the EIPA subsection 6.2(1) for an additional purpose. Essentially, the amendment provides the minister with the authority to take those actions in relation to goods included on the Import Control List pursuant to the above-mentioned subsection 5(6) of the EIPA. According to the government officials, the change to the EIPA would allow the Government of Canada to facilitate the implementation of certain trade actions that are taken under the Customs Tariff that may require the use of import permits, such as safeguard measures used to respond to import surges that may harm Canadian producers and workers or other trade measures used to respond to actions taken by other countries that adversely affect Canadian trade.

The witnesses reminded your committee that on October 11, 2018, the Government of Canada announced provisional safeguard measures on seven steel products and directed the Canadian International Trade Tribunal (CITT) to inquire into and report on the importation of those products. During the study of Clause 415, government officials highlighted that the change to the EIPA is relevant to the implementation of possible final safeguard measures that could be imposed by Canada on imports of certain steel products. They explained that, should the CITT recommend final safeguard measures on those imported steel products following its inquiry, the Government of Canada may consider implementing such measures in the form of tariff-rate quotas, an action enabled by the Customs Tariff.

However, under the current provisions of the EIPA, the import permits required to implement a tariff-rate quota based on the Customs Tariff would be allocated on a first-come, first-served basis, a situation that could be disruptive for Canadian industries, according to officials. The government witnesses explained to your committee that the amendment to the EIPA provided by Clause 415 is required to authorize the Minister of Foreign Affairs to determine import access quantities for those goods that have been added to the Import Control List to implement a tariff-rate quota, and to determine how those quantities would be allocated to importers of such goods. The officials explained that the change would provide more predictability to importers in the context of the implementation of trade actions that may require the use of import permits, such as those that might be required for certain steel products subject to a tariff-rate quota. They also remarked that the amendment would address a concern voiced by stakeholders during consultations concerning the implementation of potential steel safeguards.

Finally, although it is sought in the context of the possible final safeguard measures that could be imposed by Canada on imports of certain steel products, the committee underscores that the amendment would authorize the Minister of Foreign Affairs to take the actions listed in subsection 6.2(1) of the EIPA for all goods that have been added to the Import Control List pursuant to section 5(6) of that Act.

Your committee has no objections to the change proposed in Division 13 of Part 4 of Bill C-86.

Respectfully submitted,