General information on the administration of TRQs for supply-managed products

Table of contents

1. General information
2. Applying for an allocation
3. Eligibility criteria and activity tests
4. Related persons
5. Transfer, return and under-utilization
6. Non-ICL products
7. Contact us

1. General information

1.1 Definition of tariff rate quota (TRQ)

• A TRQ is a quota that establishes a limit on the quantity of a product that may be imported at a lower (within access) rate of duty, but places no limit on the amount of product that may be imported at a higher (over access) rate of duty.
• The within and over access rates of duty that apply to imports of products controlled under the Export and Import Permits Act (EIPA) can be found in the schedule to the Customs Tariff.
• If you are uncertain about the tariff classification of a particular product or whether it is subject to a TRQ, you may contact the Canada Border Services Agency (CBSA).
• The CBSA is the only entity in Canada that has the authority to issue legally binding tariff classifications. Tariff classifications determined by other means, if found to be inaccurate, carry the risk of penalties and other potential costs to the importer of record.
• For a list of Canada’s TRQs for supply-managed (SM) products and for more information regarding the tariff classifications covered, consult the list of Notice to importers  and review the Definitions section of the Notices.

1.2 How a TRQ is administered

• The vast majority of Canada’s SM TRQs are administered by way of managed allocation.
• You always need an permit to import a product that is subject to a TRQ.
• Under the authority of the EIPA, only residents of Canada may obtain an allocation or import permit.
• For information about how a specific TRQ is administered, refer to the relevant Notice to importers.
• For TRQs administered by way of managed allocations, all applications must be submitted by the application deadlines. For information about the TRQ application period opening and closing dates, reference periods and the annual access quantities for each TRQ, see the Key Dates and Access Quantities document.
• Import permits are normally not issued retroactively for shipments that have already been imported into Canada, including under the authority of a General Import Permit (GIP), regardless of the importer’s TRQ allocation.
• For first-come, first-served TRQs (i.e. WTO Food Preparations and WTO Margarine), no allocation application is required and an import permit request can be submitted directly to the EICS Help Desk.
• For more information on how to apply for an import permit, visit Applying for an import permit.

1.3 How an allocation works

• An allocation is an amount of TRQ that is granted to an eligible applicant, and it functions like an account:
  • Assume, for example, that you are an allocation holder who has been granted an allocation of 100,000 kilograms under a cheese TRQ;
  • To use your allocation, you need to request shipment-specific import permit(s);
  • You may import the entire 100,000 kilograms under one permit, or you may draw down on your allocation gradually by importing the 100,000 kilograms of cheese in smaller quantities over the allocation year. You would need to request a permit for each shipment of cheese that you import.
• All allocations expire at the end of the TRQ year. You cannot carry an allocation over from one year to another.
• There are no property rights attached to an import allocation.  Under the EIPA, the Minister may amend, suspend, cancel or reinstate any permit, import allocation or other authorization issued or granted.

1.4 Validity period of an allocation

• An allocation is valid only for the TRQ year for which it was issued.
• You must submit an application on an annual basis and demonstrate that you are eligible for an allocation each TRQ year.
• Normally, if you have not applied one year you may still submit an application in subsequent years.
• Traditional/historical allocation holders must re-apply each year to retain the ability to qualify for a traditional/historical allocation.

1.5 Importing a product without an allocation

• If you have used up your allocation or did not receive an allocation, you can import eligible agricultural goods under the authority of a GIP 100.
• Products imported under a GIP 100 are subject to the applicable over-access duties.
• It is an offence under the EIPA to import products that are on the Import Control List (ICL) without the authority of a shipment-specific import permit or a GIP.

2. Applying for an allocation

2.1 How to apply for an allocation

• Step 1: Review the Notice to importers, including the policy on related persons, to see if you are eligible for an allocation.
  • Each TRQ is administered independently in accordance with the applicable policies. You may apply for an allocation under multiple TRQs. Normally, you must submit a separate application for each TRQ and demonstrate that you meet the applicable eligibility criteria and activity tests.
  • There may be cases where only one application is required for several TRQs. For example, only one combined application is required for chicken and chicken product TRQs under CPTPP, CUSMA and WTO.
• Step 2: Familiarize yourself with the Key Dates for the TRQ of interest to ensure that you submit your application on time.
• Step 3: Complete the application form.
  • Ensure that you attach all the required supporting documentation.
  • Incomplete applications will be returned without action.
  • Although you can submit an application without an EIPA file number, it is highly recommended that you obtain one in advance.
  • EIPA file numbers are also required to apply for a shipment-specific import permit.
  • If you do not have an EIPA file number, you can obtain one by submitting an Application for an EIPA File Number (PDF version, 168KB) form.
• Step 4: Submit your completed, signed and dated application.
  • Submit your application by email to the relevant email address.
  • Applications submitted via facsimile or by mail will not be accepted.
  • It is important that you provide complete, accurate and truthful information in your application. This information will be considered to determine your eligibility for an allocation and the amount for which you may qualify. The submission of inaccurate or untruthful information could, upon inspection of the information in question, result in the suspension or cancellation of any allocation, transfer or accompanying import permit, which was issued/approved on the basis of that information.
  • Corrections to applications submitted past the application deadline are normally not accepted as this may be considered a new application.
  • Global Affairs Canada (the department) may select any applicant for an inspection to ensure eligibility and compliance under the EIPA, its regulations and policies as outlined in the relevant Notices to importers.

2.2 Additional documents required to support your application

• You may be asked to provide documents including, but not limited to, purchase and sales invoices, proof of payment to your suppliers or from your customers, recipes, tariff classification rulings or letters of opinion from the CBSA, production reports, customer information, product specifications and laboratory analyses.
• Failure to provide the information or documents requested may result in your application rejected as incomplete or ineligible.
• You are responsible for all costs associated with obtaining the requested additional information, including third party audits.

2.3 Communication of allocation decisions

• You will be informed in writing if you qualify for an allocation and the amount of quota you have been allocated.

3. Eligibility criteria and activity tests

3.1 Purpose of eligibility criteria

• Eligibility criteria are used to determine whether an applicant is eligible to obtain an allocation under a TRQ or a permit to import products that are on the ICL.
• For example, in the case of poultry products, you may be required to demonstrate that you are a distributor, processor or food service provider of poultry products and meet eligibility criteria pertaining to the category under which you applied.
• Depending on the TRQ, sales to related persons cannot be included in an applicant’s total sales (this ensures these sales are not used to qualify for, or unfairly increase, an allocation).
• Information regarding which purchase and sales transactions should be included in your application can be found in the relevant Notices to importers or associated application forms.

3.2 Purpose of activity tests

• Activity tests are used in conjunction with the eligibility criteria, in order to measure an applicant’s level of activity in the industry.
• You need to demonstrate that you were active in the applicable Canadian sector, as stated in the relevant Notice to importers, in a defined 12-month reference period.
  • For example, you may have to demonstrate that you have manufactured, purchased or sold a certain minimum quantity of products in the reference period in order to be considered eligible for an allocation.
• If the TRQ for which you are applying is allocated on a market share basis, your level of activity, as compared with the level of activity of other eligible applicants in the reference period, will be used to determine the size of your allocation.

3.3 Demonstrating eligible activity regularly during the reference period and throughout / during the TRQ year

• This is normally understood to mean that you are able to demonstrate eligible activity in the relevant Canadian sector on a monthly basis.
• The type of eligible activity that you must demonstrate depends on the TRQ under which you are applying.
  • For example, if you are applying as a distributor, only eligible distributor activity should be included in your application. Specific eligibility criteria are included in each Notice to importers.

To see the activity tests that apply to the TRQ under which you wish to apply, review the relevant Notice to importers.

• Demonstrating eligible activity does not normally mean demonstrating a history of importing the products unless you are a traditional/historical quota holder applying for a traditional/historical allocation.

3.4 Distributor to distributor sales

• Sales to other distributors normally cannot be included in a distributor applicant’s total sales. This ensures that these sales are not used by multiple distributors to qualify for an allocation.
• Some TRQs allow distributors to include sales to other types of businesses.
• Information regarding which sales should be included in your application can be found in the relevant Notice to importers.

3.5 Definition of market share

• Market share means an allocation method that apportions a TRQ on the basis of an applicant’s level of activity in the reference period in proportion to the activity levels of other eligible applicants.

3.6 Definition of equal share

• Equal share means every eligible applicant gets the same amount of quota.

3.7 Definition of further food processing (secondary manufacturing)

• For the administration of TRQs with single processing end-use requirements (CETA Industrial Cheese, CPTPP Butter, CPTPP Industrial Cheese, CPTPP Yogurt and Buttermilk CUSMA Butter and Cream Powder and CUSMA Industrial Cheeses), further food processing (secondary manufacturing) means that the resulting further processed product is a product that is not covered by the TRQ in question.
• For the administration of TRQs with a double processing end-use requirement (CPTPP Milk, CUSMA Cream and CUSMA Milk), further food processing (secondary manufacturing) means that the tariff heading (first four digits) of the ingredient dairy product manufactured with the imported product is different than the resulting further processed product.

3.8 Residency requirements to obtain an allocation

• To receive an import allocation, you must be a resident of Canada and meet the eligibility criteria as identified in the relevant Notices to importers.

3.9 Applying for more than one allocation in a TRQ

• Depending on the allocation and eligibility criteria of a TRQ, you may or may not be able to apply under more than one portion of the TRQ.
  • For example, under the WTO Chicken and Chicken Products TRQ, you may be eligible to apply for an allocation under both the processor portion and the further processor (Non-ICL product processor) portion; but under the CETA Cheese of All Types TRQ, this is not possible.
• For details on whether or not you can apply for more than one allocation within a single TRQ, review the policy stated in the relevant Notice to importers.

4. Related persons

4.1 Information on related persons

• The criteria for determining whether individuals or companies applying for an allocation are related are set out in the Information concerning related persons.
• If you are uncertain whether you are related, you should list the individuals or companies to whom you may be related and seek an assessment from the department.

4.2 Submission of applications by related persons

• Before applying for an allocation, check the Notice to importers to see if there are any restrictions on related persons.

Related persons are normally eligible for only one allocation under a given TRQ.

• In the case of separate applications from related applicants involving a parent company and one or more subsidiaries, only the application nominated by the parent company is considered by the department.
• If the parent company does not make such a nomination in writing, the department makes the choice.

5. Transfer, return and under-utilization

5.1 Transfer

• Under many TRQs, you may transfer any portion of your allocation to other allocation holders within the same TRQ, but there may be some restrictions depending on the TRQ.
• As each TRQ is administered independently, an allocation is not transferable between different TRQs.
• All allocation transfer requests must be submitted to the department for consideration by way of a Transfer Request Form.
• The use of an allocation by any entity other than the allocation holder (e.g. power of attorneys, formal or informal agreements, etc.) is contrary to the legislation and regulations governing the administration of TRQs and may result in the suspension/cancellation of allocations and/or the cancellation of import permits.

5.2 Return

• Under many TRQs, you may return a portion of your unused allocation without incurring a penalty as long as you notify the department in writing no later than the applicable return deadline.
• Returned quantities may be reallocated among eligible applicants. The applicable reallocation policies for each TRQ are provided in the relevant Notice to importers.

5.3 Application of under-utilization penalty

• The under-utilization rate is a mechanism to encourage maximum use of a TRQ.
• If you do not reach the predetermined utilization, you may be subject to an under-utilization penalty if you apply for an allocation the following year.
• The applicable utilization rate for each TRQ is set out in the Notice to importers.
• You will be advised of any under-utilization penalty that applies to you before the allocations are finalized for the new allocation year.

5.4 Calculation of the under-utilization penalty

The following example uses kilograms (kg) as the unit of measure.

• Step 1: Calculation of the allocation holder’s utilization rate (%):

• Step 2: If the allocation holder has not met the minimum utilization rate for that TRQ, we calculate the under-utilization penalty as follows:

For Example:

• In the year 2023, Company A received an initial allocation of 1000 kilograms in a TRQ where the minimum utilization rate to avoid an under-utilization penalty is 90%.

• This means that Company A had a total utilization rate of 83.33% in the year 2023.
• In 2024, Company A applies for an allocation under the same TRQ and, based on the criteria set out in the policy, would be eligible for an allocation of 1,500 kg. However, because Company A utilized only 83.33% of its allocation in 2023, the company’s allocation for 2024 is reduced by 250 kg (i.e., 16.67%). As such, Company A’s initial allocation in 2024 is 1,250 kg.

6. Non-ICL products

6.1 Description of Non-ICL products

• Non-ICL products are products that are not on the ICL, and that are domestically manufactured to compete with similar imported products entering Canada duty-free or at a low rate of duty.
• Non-ICL products include “specially defined mixtures” (SDMs) of chicken or turkey products classified under tariff codes 1602.31.11, 1602.31.92, 1602.32.11 and 1602.32.92 of the Customs Tariff.
• Chicken or turkey products are also considered as non-ICL products if they are classified under the following tariff codes:
  • 19.02 – Pasta;
  • 19.04 – Rice preparations;
  • 19.05 – Pastry;
  • 20.04 – Other vegetables prepared or preserved, frozen;
  • 20.05 – Other vegetables prepared or preserved, not frozen;
  • 20.06 – Fruits and vegetables preserved by sugar;
  • 21.03 – Sauces and preparations;
  • 21.04 – Soups;
  • 21.06 – Food preparations.

6.2 SDMs

• SDMs are defined as:
  • SDMs of tariff items 1602.31.11, 1602.31.92, 1602.32.11 and 1602.32.92 means a product containing partially or fully cooked, including par-fried, chicken or turkey where 13% or more of the total weight of the product is comprised of goods other than the following listed goods: chicken, turkey, breading, batter, oil, glazing, sauces, other coatings, or bastes, or any added water (including that used in marination, glazing, sauces, other coatings, bastes, breading or batter). For the purposes of this definition, whether 13% or more of the total weight of the product is comprised of goods other than the listed goods shall be determined by calculating the total weight of listed goods contained in that product as a percentage of the total weight of the product.
• Contact the CBSA for letters of opinion for new non-ICL products: CBSA.SDM-MDS.ASFC@cbsa-asfc.gc.ca.

7. Contact us

• Specific enquiries can be directed to the Supply-managed Trade Controls Division.