Eggs and Egg Products – CPTPP Tariff Rate Quota (TRQ) (Item 135 to 139 on the Import Control List)

Serial No. 915

Date: November 26, 2018

This Notice to Importers is provided pursuant to Section 6.2 of the Export and Import Permits Act (EIPA) and will remain in effect until further notice.

In brief

Imports of egg and egg products into Canada are subject to import controls under Canada’s EIPA.  Accordingly, an import permit is required for shipments of egg and egg products to enter Canada

Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, Canada agreed to establish a tariff rate quota (TRQ) of 19,006,158 dozen eggs equivalent.

The allocation period for the egg and egg products CPTPP TRQ extends from January 1 to December 31, inclusive.  Import permits for shipments of egg and egg products destined to the Canadian market are issued to allocation holders under Canada’s tariff rate quota (TRQ) for egg and egg products, which is administered by Global Affairs Canada

This Notice to Importers sets out the policies and practices pertaining to the administration of the CPTPP TRQ, including the allocation, underutilization, return and transfer policies.  This Notice also explains how to apply for import permits.

Summary of key dates and access quantity for the 2019 allocation year

• TRQ Year: January 1 to December 31
• Access Quantity: 5,566,667 dozen eggs equivalent
• Start of Application Period: November 26, 2018
• Application Deadline: December 12, 2018
• Reference Period for assessing applicant’s eligibility for an allocation: October 1,2017 to September 30, 2018
• Opening of the TRQ for imports: January 1, 2019
• Date for Returning Unutilized Quota: September 1, 2019 (no later than 12:00h, Eastern Time)

1. Purpose

1.1. The purpose of this Notice is to:

• set out the policies and practices pertaining to the administration of the CPTPP TRQ for egg and egg products;
• invite applications for allocations under the TRQ for the next quota year; and
• explain how to apply for import permits for imports of egg and egg products.

2. Definitions

“Eggs and egg products” means a product that is included Items 135 to 139 of the Import Control List (ICL).

“Market share” means an applicant’s level of activity in the egg sector in relation to the total activities of the other eligible applicants under this TRQ.

“Reference period” means the period of time used to measure an applicant’s activity in the breaking or grading of eggs in the Canadian egg sector. For the purpose of this Notice, the reference period is from October 1 to September 30 immediately preceding the applicable allocation year.

“Accountant” means a member in good standing of one of the professional accounting bodies in Canada, who is registered with his/her provincial professional organization to provide accounting services and is independent from the applicant (i.e., is not an owner, a partner, a director, or an employee of the company applying for an import allocation).

3. General information

3.1. Background

3.1.1. In accordance with its commitments under the CPTPP, Canada has established a TRQ for imports of eggs and egg products.

3.1.2. Under Canadian TRQs, in any given year, a predetermined quantity of imports of a good controlled under the EIPA can enter Canada at a lower rate of duty, while imports over this quantity are subject to higher rates of duty. The TRQs therefore have three components: an import access quantity negotiated with Canada’s international trade partners; a within access commitment rate of duty that applies to imports up to the access level; and a higher, over access commitment rate of duty for imports over the access level.

3.1.3. The within and over access rates of duty that apply to imports of eggs and egg products can be found in Canada’s Customs Tariff.

3.1.4. Pursuant to the EIPA and its corresponding regulations, when deciding whether to issue an import allocation or whether to consent to a transfer, the Minister shall take into account whether the import allocation holder has furnished false or misleading information in connection with any reports required by the Act or the regulations made under the Act or by any condition of an import allocation or import permit during the 12-month period preceding the period in respect of which the import allocation or transfer is to apply. Furthermore, the Minister may attach conditions to import allocations and/or to import permits, and may amend, suspend, cancel or re-instate import permits and allocations.

3.1.5. Failure by an applicant to provide any information requested by Global Affairs Canada under the EIPA or failure to comply with any condition of an authorization or permit issued pursuant to the EIPA may result in the rejection of the application for an allocation under the eggs and egg products TRQ, the reduction or cancellation of an authorization issued pursuant to the EIPA, or the cancellation of associated permits.

3.2. Access quantity

3.2.1. The access quantity for the CPTPP eggs and egg products TRQ will be phased in over nineteen years.  The phase-in table can found in the text of the CPTPP under section 2-D, entitled Canada Appendix A Tariff Rate Quotas.

3.2.2. The 2019 access level for the CPTPP eggs and egg products TRQ is 5,566,667 dozens (egg equivalent).

3.2.3. The CPTPP TRQ quantities are to be allocated in priority for the importation of eggs for breaking purposes for further food processing.   

3.3. Allocation period

3.3.1. The quota allocation year for the eggs and egg products TRQ extends from January 1 to December 31, inclusive.

3.3.2. Eligibility for an allocation, and the size of that allocation, will be assessed on the basis of each applicant’s activities in the egg and egg product industry during the reference period of October 1 to September 30 immediately preceding the new quota year. An applicant must be a resident of Canada and be active in the Canadian eggs and egg products industry at the time of application, and must remain active regularly throughout the quota year for which they are seeking an allocation.

3.3.3. Being active regularly during the reference period and the allocation year is normally understood to mean monthly activity

4. Products covered

4.1. This Notice pertains to items 135 to 139 of the Import Control List (ICL), namely eggs and egg products falling under heading Nos. 04.07, 04.08, 21.06 or 35.02 in the list of tariff provisions set out in the Schedule to the Canada's Customs Tariff. Appendix 2 provides a detailed list of the products covered and their associated EIPA products codes.

4.2. Importers who require a determination as to whether the product they intend to import under this TRQ are encouraged to obtain an advanced tariff classification ruling from the appropriate regional client service office of the Canada Border Services Agency (CBSA).

5. Allocation policy

5.1. The CPTPP eggs and egg products TRQ is allocated to two groups, with priority granted to group A:

• Eligible federally-registered egg processed stations(breaking eggs); and
• Eligible federally-registered egg grading stations (table/ shell eggs)

5.2. The allocation to the breaking eggs group is calculated first in proportion to each federally registered egg processing station’s market share.

5.3. Once the requirements of the eligible breaking egg applicants have been met, the balance of this TRQ, if any, shall be allocated to eligible federally-registered egg stations (table/shell egg) proportional to each station's market share, adjusted for surplus declarations.

5.4. An eligible applicant’s market share is calculated on the basis of the dozens of eggs broken or graded by the applicant during the reference period in relation to the total market calculated within the group of eligible applicants.

5.5. In order to ensure that allocations are issued in economically viable quantities, applicants whose market share calculation does not result in a minimum 25,000 dozen allocation will normally not be issued an allocation.  Applicants are to specify the minimum volume they are willing to accept. Should an applicant’s market share calculation result in a volume lower than the specified volume, no allocation will be issued.

5.6. Applicants for an allocation are required to provide a list of related persons. Applicants should consult Appendix 5 for the definition of related persons as it applies for the purpose of this Notice.

5.7. In order to be granted an import permit for breaking or shell eggs, importers must, prior to importation, inform the Regional Office of the Canadian Food Inspection Agency (CFIA) in writing of the quantity of eggs expected to be imported, the date of importation and the identity of the federally registered establishment to which the eggs are to be delivered. 

5.8. All import allocations expire at the end of each allocation year and all applicants interested in receiving an import allocation must reapply each year.

6. How to apply for an allocation

6.1. Applicants who wish to apply for an allocation under the CPTPP eggs and egg products TRQ are invited to submit their application form (see Appendix 2) and any other relevant documents, no later than December 12, 2018 immediately preceding the opening of the quota year.

6.2. All applicants for an allocation are required to include as part of their application:

• a completed application form;
• a sworn affidavit; and
• a letter from an independent qualified professional (normally an accountant) verifying the information included in the application.

6.3. All appendices to the application should be in the exact format of the models attached to this Notice. Any changes to the wording of the appendices will normally not be permitted. Any change to the appendices should be discussed and submitted in advance to be validated by Global Affairs Canada.

6.4. The information that the applicant provides will be considered when allocating the TRQ. Global Affairs Canada retains the right to request additional information. Applicants may be required to provide evidence of their activities. Accountants may be asked to explain the procedures used in greater detail and may be asked to provide Global Affairs Canada with copies of all working documents. Any costs associated with a request for additional information will be borne by the applicant. Failure to provide information requested may result in the application being deemed incomplete.

6.5. The declaration in the application form allows Global Affairs Canada and its representative access to any information pertaining to the applicant in relation to the application for an import allocation or to subsequent applications for, or concerning the use of, import permits that is in the files of Agriculture and Agri-Food Canada or the Canadian Food Inspection Agency. Normally, applicants are informed of any such requests for information.

6.6. Section 18 of the EIPA forbids any person to knowingly induce, aid or abet any other person to contravene any of the provisions of the EIPA. Such contraventions by an applicant or its accountant may lead to prosecution for offenses under the EIPA.

6.7. Applicants are invited to send their applications by E-MAIL to the Eggs Mailbox. Applicants sending their application by e-mail should be prepared to present the original version of their application upon Global Affairs Canada’s request. Failure to do so may lead to the cancellation of any allocation issued pursuant to the application and/or the cancellation of associated permits.

6.8. Applications sent by MAIL or COURIER should be addressed to the eggs and egg products quota manager at Global Affairs Canada. The mailing address of the Trade Controls Policy Division can be obtained on the appropriate controlled product page on Global Affairs Canada’s website, under Contact Us.

6.9. Applications sent by facsimile will not be accepted. Only original applications will be accepted.

6.10. Applications postmarked after the deadline immediately preceding the opening of the quota year, or in a format other than that required, will not be considered. Lost applications will not normally be considered without acceptable proof that they were sent before the deadline (e.g., courier receipt).

7. Under-utilization, return and reallocation policies

7.1. Under-utilization policy

7.1.1. An allocation holder with a utilization rate less than 95% for breaking eggs and 90% for shell eggs in the previous quota year may have its allocation adjusted downward by an under-utilization penalty for the new quota year.^{Footnote 1}

7.1.2. For allocation holders that under-utilized in the previous quota year, allocations in the new quota year will be reduced by the percentage of the allocation not utilized in the previous quota year.^{Footnote 2}

7.1.3. Allocation holders that under-utilized during the previous quota year will be advised of the applicable under-utilization penalty before the allocations are finalized for the new quota year.

7.2. Return policy

7.2.1. Allocation holders of breaking eggs group may return any portion of the balance of their allocation no later than September 1 of the quota year. Any portion of an allocation that is returned by this date will be considered as having been used for purposes of administering the under-utilization policy in 8.1.1.

7.3. Reallocation policy

7.3.1. . Returned quantities will normally be made available seven days after the return deadline to eligible allocation holders in the breaking egg group who have not returned any unused quantity of their allocation. The reallocated quantity will be in proportion of the applicant’s allocation, or on demand if quantities still remain after the first offer.

8. Transfer policy

8.1. The Minister may allow the transfer of allocations between allocation holders. All requests for transfer of allocations must be referred to Global Affairs Canada for consideration. Requests must be made by way of the CPTPP Poultry and Eggs – Import Allocation Transfer Request Form.

9. Import permits

9.1. Types of permits

9.1.1. An import permit issued by Global Affairs Canada is required for every shipment of eggs and egg products covered by this Notice to enter Canada. For a given shipment, importers may either present a shipment-specific import permit or invoke the appropriate General Import Permit (GIP).

9.2. Shipment-specific import permits

9.2.1. Shipment-specific import permits are normally issued on demand to allocation holders up to the amount of their allocation under the CPTPP eggs and egg products TRQ. Shipments entering Canada under a shipment-specific import permit can normally do so at the within access rate of duty.

9.2.2. To claim the within access rate of duty for a shipment, the importer must present the shipment-specific import permit to CBSA at the time of final accounting.

9.2.3. For a shipment-specific import permit to be considered valid, the name on the permit must match exactly the name of the importer on CBSA’s B3-3 Canada Customs Coding Form and related documents at time of final accounting. Furthermore, the quantity on the permit must be the same as the net quantity on the Customs invoice. It is incumbent on the recipient of the permit to ensure that a permit application is made in the name of the importer of record and includes the correct quantity. Questions about the proper procedures to fill out customs entry documents should be addressed to local CBSA officials.

9.2.4. Individual allocations may be credited for shipments which are returned to the exporting country because of rejection by the CFIA. Importers wishing to avail themselves of this provision must submit to Global Affairs Canada, within two weeks from the date of the rejection, the inspection certificate and related export documents showing that the shipment has been exported from Canada. These documents must bear the applicable import permit number. No credit will be made after the end of the quota year.

9.3. General import permits

9.3.1. The GIP that applies for eggs and egg products is General Import Permit (GIP) No. 100 – Eligible Agricultural Goods. There is no limit to the quantities of eggs and egg products that can enter Canada under the GIP; however, such imports will be subject to the higher over access rate of duty.

9.3.2. Shipment-specific import permits will not be issued for shipments already imported into Canada under the authority of the GIP, regardless of the importer's allocation.

9.4. How to apply for a permit

9.4.1. Information about the permit application process, including information about fees, the monthly billing system, and information required from applicants, is available on the Global Affairs Canada website: Applying for an Import Permit.

10. Contact us

10.1 Names and direct phone numbers for quota manager(s), permit officer(s), and the Help Desk are available on the Global Affairs Canada website: Contact Us.

10.2. For directory assistance, you may call 343-203-6820.

Appendices

Appendix 1 – Application form for a share of the eggs and egg products TRQ (PDF, 55 KB)

Application form | PDF 160 KB

Appendix 2 - List of EIPA commodity codes for eggs and egg products

Appendix 3 – Accountant's Letter

(For Companies Applying For A Share Of The CPTPP Egg and Egg Products TRQ)

Accountant's Letterhead

To: Global Affairs Canada
Re: [Applicant name]
[Applicant File Number]

At the request of [applicant name] and as required by the current CPTPP TRQ Notice to Importers performed the following procedures in connection with [applicant name] application form for an import allocation for [shell eggs] [egg products] [eggs for breaking purposes] portion of the eggs and egg products tariff rate quota for the next quota year ("the application").

I enquired of [applicant name] and confirmed that the company will continue to do business in the next quota year as a [grading station] [processed egg station] as outlined in Notice to Importers Eggs and Egg Products – CPTPP TRQ (item 135 to 139 on the Import Control List).

Procedures performed and findings

1. I read the application and the Notice.

2. I reviewed the sales invoices and/or summary sheets listing these invoices (provided they show detailed information of these invoices) of [applicant name] covering sales made in the reference period of October 1 to September 30 immediately preceding the next quota year having a total of [quantity] [dozens] or [kilograms] and a total of [amount] dollars of [eggs] and/or [egg products] for:

• (i) the name and address of the seller and the purchaser;
• (ii) the quantity of the eggs or egg products purchased;
• (iii) the type of eggs or egg product sold [e.g., graded, ungraded, liquid whole, yolk or whites]; and,
• (iv) the cost (being an amount greater than nil) of the [eggs] or [egg products] purchased.

The following exceptions, including exceptions to arms-length transactions were found:

3. I compared the type of eggs or egg products described in the sales invoices and/or summary sheets listing these invoices, inspected above, to the types permitted in Items 135 to 139 of the Import Control List (ICL) detailed in Appendix 1 of the Notice and found that the type of eggs or egg products described was of a type included on the ICL.

The following exceptions were found:

4. I compared the total dollar amount of each of the sales invoices inspected and/or summary sheets listing these invoices, to cancelled cheques (or other banking records or cash disbursement documentation) and found them to be in agreement.

The following exceptions were found:

5. I examined and, where necessary, recalculated the conversion of sales of eggs or egg products as reported in [applicant name] sales journal from October 1 to September 30 immediately preceding the next quota year into dozens for shell egg and eggs for breaking purposes, and into kilograms for egg products. The calculations were mathematically correct.

The following exceptions were found:

6. I enquired of [name and title of individual responsible for the application] whether all related applicants and all related persons as defined in Appendix 5 to the Notice were described in the application. [Name of individual responsible for the application] responded that all such related applicants and all such related persons were described in the application.

The following exceptions were found:

7. I compared the name, address and percentage of share ownership of all shareholders owning 5% or more of the total voting shares as described in [applicant name's] register of share ownership to the application and found them to be in agreement.

The following exceptions were found:

These procedures do not constitute an audit of the application and therefore I express no opinion on the application.

This letter is for use solely in connection with [applicant name] application for a share of the [eggs] or [egg products] portion of the TRQ for the next quota year.

I am a professional member in good standing of an institute, society or association of accountants incorporated by or under an Act of the Legislature of this province, whose normal professional activities include the performance of independent audits of financial statements, and am qualified to express an opinion on financial statements for third party use.

City: ____________________________________________________

Accountant: ______________________________________________

Accountant signature: ____________________________________

Date _____________________________________________________

Name of partner: _________________________________________

Membership Number with National Professional Organization:
_____________________________________________________________

Membership Number with Provincial Professional Organization:
_____________________________________________________________

Province: ________________________________________________

Appendix 4 – Affidavit for applications for a market share of the eggs and egg products TRQ

I, [NAME OF PERSON], a resident of the county or municipality of , in the province of , make oath and say as follows:

1. I am employed by [applicant name] as a [job title].
2. The information contained in this affidavit pertains to [applicant name] application form for an import allocation for the [shell eggs] [egg products] or [eggs for breaking purposes] portion of the eggs and egg products tariff rate quota (TRQ) for the next quota year (“the application”).
3. [Applicant name] does and will continue to do business through the next quota year as a [grading station] and /or [processed egg station] as outlined in Notice to Importers Egg and Egg Products – CPTPP TRQ (Items 135 to 139 on the Import Control List).
4. I examined [applicant name] sales invoices covering the reference period October 1 to September 30 immediately preceding the next quota year having a total of (quantity) [dozens] or [kilograms] and a total of [amount] dollars of eggs or egg products.
5. I compared the total dollar amount of each of the sales invoices to banking records (or other financial documents indicating that full payment had been received) and found them to be in agreement.
6. I examined and, where necessary, recalculated the conversion of sales of eggs or egg products as reported by [applicant name] sales journal from October 1 to September 30 immediately preceding the next quota year into dozens for shell eggs and eggs for breaking purposes, and into kilograms for egg products. I confirm that the calculations were mathematically correct.
7. I confirm that all related applicants and all related persons as defined in Appendix 5 to the Notice were described in the application.
8. I am listing the name, address and percentage of share ownership of all shareholders owning 5% or more of the total voting shares as described in [applicant name] register of share ownership and confirm that the register of share ownership matches the list in the application.
9. I agree that any information provided by me or my firm to Global Affairs Canada in support of my firm’s application for a share of the eggs and egg products TRQ is subject to review by an independent public accountant (or an accountant named by Global Affairs Canada), if and as required by Global Affairs Canada, and that all costs related to work by the accountant shall be borne by [applicant name].
10. I understand that the information provided by me in this affidavit will be used to assess [applicant name] application for a share of the eggs and egg products TRQ. I realize that section 17 of the Export and Import Permits Act (EIPA) forbids any person from furnishing false or misleading information and forbids knowingly making any misrepresentation in any application pursuant to the EIPA. I am aware that section 18 of the EIPA forbids any person from knowingly inducing, aiding or abetting any other person in contravening any of the provisions of the EIPA.
11. I confirm that all information provided in the application is accurate and complete.

Sworn before me at the City of ________________________________________in the province

of______________________, on this ____________ day of ________[Month]of ______ [Year]

Notary Public, Justice of the Peace or Commissioner of Oaths

______________________________________

Signature and printed or typed name of swearer

Appendix 5 – Information concerning related persons

1. For the purposes of this Notice to Importers, persons are related to each other and are related persons if they are:

• relatives of one another;
• corporation and
  • a person who controls the corporation,
  • any person who is a member of a related group that controls the corporation,
  • any person who is a relative of any person who controls the corporation, or
  • any person who is a relative of any person who is a member of a related group that controls the corporation; or
• two corporations
  • controlled by the same person, related group, or unrelated group,
  • one of which is controlled by one person and that person is a relative of a person who controls the other corporation,
  • one of which is controlled by one person and that person is a member of a related group that controls the other corporation,
  • one of which is controlled by one person and that person is a relative of any member of a related group that controls the other corporation,
  • one of which is controlled by one person and that person is a relative of each member of an unrelated group that controls the other corporation,
  • one of which is controlled by a related group, a member of which is also a member of another related group that controls the other corporation,
  • one of which is controlled by a related group, a member of which is a relative of any member of another related group that controls the other corporation, or
  • one of which is controlled by a related group, each member of which is a relative of at least one member of another related group that controls the other corporation.

2. Notwithstanding section 1, for the purposes of this Notice to Importers, persons shall normally be deemed related to each other and to be related persons if they are not dealing with each other at arm's length in respect of the import, purchase and/or sale of the products covered by this Notice.

3. (1) For the purposes of this Notice to Importers:

• “arm’s length” means the relationship that exists between parties that are self-interested, who are seeking to maximize their respective positions, and who act severally and independently from each other - it is a question of fact whether persons not related to one another within the meaning of section 1 of this appendix were at a particular time dealing with each other at arm's length;
• “common connection” may be evidenced by, for example:
  • a provision in a formal agreement,
  • conduct, or
  • a business or family relationship;
• “economically dependent” means a state when the ongoing operations of a corporation depends upon the majority of its business volume coming from one source;
• “person” means an individual or a corporation;
• “related group” means two or more persons that have a common connection;
• “relative(s)” are persons connected by blood, marriage, common-law partnership, adoption or affinity regardless of age or relationship;
• “unrelated group” means two or more persons that have no common connection.

3. (2) For the purposes of this Notice to Importers:

• “control” means ownership of such a number of shares as carries with it the right to a majority of the votes in the election of the board of directors.
  • In addition to this definition, the following also applies
    • (i) ownership of more than one-third of the shares and less than a majority of the shares of a corporation may be presumed to constitute control of that corporation unless it can be established that the corporation is not controlled in fact by the owner of those shares
    • (ii) a person who has an option or a right under a contract, in equity or otherwise, in any capacity, to shares in a corporation, or to acquire shares in a corporation, or to control the voting rights of shares in a corporation may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the person who has this option or right;
    • (iii) where any person, related group, or unrelated group owns a large debt of a corporation which may become payable on demand or a substantial investment in retractable preferred shares that person, related group, or unrelated group may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the owner(s) of that debt or retractable preferred shares
    • (iv) where a corporation has commercial activities, contractual agreements, or arrangements with any person, related group, or unrelated group that could make this corporation economically dependent on this person, related group, or unrelated group, then that person, related group, or unrelated group may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the person, related group, or unrelated group that has commercial activities, contractual agreements or arrangements with that corporation
    • (v) where any person, related group, or unrelated group possesses unique expertise or experience that is critical for the ongoing operations of a corporation that person, related group, or unrelated group may be presumed to control that corporation unless it can be established that the corporation is not controlled in fact by the person, related group, or unrelated group that possesses the unique expertise or experience
• “control in fact” means an ability to change or determine the composition of the board of directors or an ability to direct the business and affairs of the corporation.

4. For the purposes of this Notice to Importers:

• (a) where two corporations are related to the same third corporation within the meaning of this Notice to Importers, they are related to each other;
• (b) a corporation can be controlled or controlled in fact by a person, related group, or unrelated group notwithstanding that the corporation is also controlled by another person, related group, or unrelated group;
• (c) a person can be considered to be related to himself, herself, or itself for the purpose of establishing that persons are related to each other and are “related persons”.