AAEI filed comments with the Canada Border Services Agency (CBSA) on proposed regulations amending Canada’s valuation for duty regulations, urging Canada not to proceed with the proposed change.

The proposed regulations include a new definition for “sold for export to Canada” and change the current definition of “purchaser in Canada”. The CBSA says, “Canada’s regulatory framework on determining the value for duty of imported goods does not align with international consensus established at the World Customs Organization. This creates an unfair advantage for foreign-based importers as they can declare a lower priced sale in the trade chain to value their goods and pay less duty on imported goods.”

The CBSA says the last sale rule, by which the last sale to the buyer in the importing country, and not an earlier sale, should be used as a basis for determining the value for duty (VFD), does not apply in every case due to the complexities of global supply chains and the practical realities of international trade.

However, AAEI’s comments state that “proposed changes [are] flawed, raising uncertainties and potentially harming Canadian supply chains and inflation for consumers. Moreover, these changes may impact international companies with assets in Canada, affecting Canada’s global trade competitiveness.”

AAEI adds that the “proposed regulations are inconsistent with Canada’s obligations under Article 1 of the Agreement on implementing Article VII of the General Agreement on Tariffs and Trade 1994 (WTO Customs Valuation Agreement). The proposed regulatory text targets traditional domestic sales transactions and may substantially increase the VFD and taxes for Canadian resident importers. The approach appears to be aimed at domestic transactions, which could be detrimental to cross-border trade.”

In addition to urging that Canada does not proceed with the proposal, AAEI is recommending that Canada establish an interagency committee that would include private sector members to conduct a comprehensive review of the proposal and its potential impacts on Canada. “A collaborative approach is essential for making well-informed decisions.”