November 2018

CPTPP to Take Effect by End of Year

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has now been ratified by seven signatories (Canada, Australia, New Zealand, Japan, Mexico, Singapore and Vietnam), meeting the minimum threshold for the trade deal to take effect on December 30, 2018. The deal will enter into force on December 30th for the initial six signatories and January 14, 2019 for Vietnam, with initial tariff reductions beginning December31st.

The 11 CPTPP participating countries are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

There was an economic incentive to have six countries on board by December31st, as some of the CPTPPs tariff cuts are immediate, but others, including the most sensitive agricultural and automotive products, will be phased out over timelines of a decade or more.

Benefits
The CPTPP is about opening new and growing markets, and better ways to increase and diversifytrade.

With a single set of rules for all member markets, companies can accumulate inputs from within any member of the agreement for production alone, or in combination with companies in another member country, to produce goods for sale within the agreement.

This one set of rules is what made the original NAFTA so special. But with more members, the CPTPP improves on what Canadian firms have had in North America by offering more sources of inputs and more markets into which to sell. And, unlike the USMCA, the CPTPP will grow even larger as new countries join as early as next year.

China is reportedly suddenly showing interest in joining the CPTPP. If true, this would give Canada a much-needed, and much better, alternative than negotiating one-on-one with China. Instead, we could negotiate as part of a team with other members that seek more in trade and better agreements.

Quick Facts

• The CPTPP represents a trading bloc of 11 countries with almost 500 million consumers and a combined economy worth of $13.5 trillion.
• Canada’s merchandise trade with its CPTPP partners was over $95 billion in 2017.
• Upon entry into force, 86% of CPTPP countries’ tariff lines will become duty-free.
• The CPTPP was signed on March 8, 2018, in Santiago, Chile. Canada, Australia, New Zealand, Mexico, Japan, Singapore and Vietnam have ratified the agreement through their respective processes.
• The CPTPP will enter into force 60 days after six of the signatories complete their domestic procedures and deposit their notice of ratification to the CPTPP Depositary (New Zealand) – this was accomplished October 30, 2018.

Duty Elimination Schedule

As soon as the agreement comes into force, 90% of Canadian tariffs on goods will be duty free.The Staging category for Canada is from implementation date to phase-in period to 12-year time frame duty reductions to duty free status.

Here is a list of category time lines:

• Category EIF – Duty elimination upon date of entry into force;
• Category B4 – Elimination in four annual stages to January 1 of year 4;
• Category B6 – Elimination in six annual stages to January 1 of year 6;
• Category B7 – Elimination in seven annual stages to January 1 of year 7;
• Category B11 – Elimination in eleven annual stages to January 1 of year 11;
• Category CA1 – Maintain at base rate during year 1 to year 8. Elimination in four annual stages starting in year 9. Duty-free January 1 of year 12;
• Category CA2 – reduced to one-quarter of the base rate in year 1 and maintained at that rate through year 11 and shall be eliminated to duty free January 1 of year 12;
• Category CA3 – reduced to a 5.5% duty rate on date of entry into force in year 1. Duty reduced to 5% in January 1 of year 2. Duty reduced to 2.5% duty rate January 1 of year 3. Duty rate 2% in year 4. Duty free in Year 5;
• Category TRQ governed by the terms in Appendix A TRQs of Canada’s schedule to Annex2-D.

Please refer to the Tariff Elimination Schedules for each country and the full text of the agreement.

Claiming the preferential treatment to CPTPP
The preferential treatment can be used if a certificate of origin is completed by the exporter, producer or importer. In reference in Article 3.20 and 3.21, if an importer completes the certificate of origin, they are required to provide documents or other information to support the certification. Failureto comply will lead to prohibition of issuing a certificate.

Format of the certificate of origin
The certification of origin:

• Need not follow a prescribed format;
• Be in writing, including electronic format;
• Specifies that the good is both originating and meets the requirements of this Chapter; and
• Contains a set of minimum data requirements as set out in Annex 3-B (Minimum Data Requirements).

The certificate of origin can be issued for each shipment or as a blanket certificate, and cannot exceed 12 months or for such longer period specified by the laws and regulations of the importing country.

The CBSA has advised that they hope to have CPTPP Implementation Customs Notice published in the next few weeks. The CPTPP Proposed Regulatory Amendments and Proposed New Regulations Customs Notice will follow soon after. Both notices will be published prior to the December 30 implementation date.

For more information visit the FAQs issued by Global Affairs Canada or contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

Boom days over for Chinese economy

There was a time in the early 2000s when China appeared to be on a path to become the world’s largest economy. In less than 20 years (1992 – 2010), Chinese GDP rose by a staggering 1,100 per cent. But it was a different story thereafter, as economic growth fell to around 6 per cent. In addition, the current account surplus fell from 4 per cent to just over 1per cent of GDP and government debt ballooned.

At the same time, there was significant progress, particularly in terms of quality of life (Tens of millions have been betterhoused, 90 per cent of the poorest 100 million people have been lifted frompoverty).

Looking ahead, there will be more cooling of the economy, especially if there is no resolution of the trade war with the U.S., which could escalate in 2019. Government stimulus could help reverse some of the decline, but it is no longer an unlimited resource.

For more information, contact Debbie McGuire, Manager – Freight Solutions.

Prince Rupert port infrastructure projects

The Canadian Federal Government is investing $22 million in three separate projects at North America’s strategic gateway with Asia, the Port of Prince Rupert.

The following three major improvements will make the city’s transportation system stronger by addressing urgent capacity constraints and supporting growth at one of North America’s fastest growingports:

• Fairview-Ridley Connector will create a 5 km private-haul corridor, complete with two new rail sidings, which will drastically reduce downtown truck traffic.
• The expansion of the Port’s road rail utility platform on Ridley Island.
• Funding support of the engineering and design of CN’s mainline entry and exit from theGateway.

Most importantly for Canadian trade, these investments will ensure that speed and reliability are maintained at this important Asia-Pacific gateway as well as meeting its trade growth forecasts over the next decade.

For more information, contact David Lychek, Manager – Ocean & Air Services.

Terminology Explained

Rollovers or Rolled Cargo – Carriers have an economic incentive to overbook a vessel – and roll over the surplus to the next available vessel – just as airlines routinely overbook a plane to ensure it departs at full capacity. However, you can lessen your chances of being rolled over by following these simple tips:

• Try to avoid times of the year when capacity is tight – the weeks leading up to Golden Week and Chinese New Year.
• Book shipments at least two weeks in advance of the cargo ready date (the date that the cargo is ready for pick-up at the supplier).

	A recent addition to the city’s skyline is this one-of-a-kind museum

Global Spotlight Quiz

How many clues do you need to name the city in the geographical center of North America?

• The city’s name is a non-English word that means "muddy waters".
• Flooding is a constant concern because four rivers run through the city limits.
• Ranked as one of the fivecoldest cities in the world, the temperature drops to -30 degrees Celsius and below during the winter.
• An aboriginal trading center prior to the arrival of the Europeans, this city was at the heart of its country’s fur trade.
• Guinness World Records documents this city as being the site of world’s longest ice skating trail (8.5 kilometers).
• Location of the world-class Museum for Human Rights, a unifyingsymbol ofconcepts such as inclusion,freedom,equalityanddignity.

Click here to see the answer

For more information about shipping freight to or from this city, contact Debbie McGuire, Manager – Freight Solutions.

Quick Tip

How driving limits for truck drivers impact transit times

The following driving limits, imposed by the U.S. and Canada for safety reasons, could impact your transit times:

Canada – 13 hours driving within a day or 14 hours of on-duty time within a day. Drivers are required to take at least 10 hours off-duty time within a day. Two hours of the total 10 hours can be taken throughout the day, in blocks of no less than 30 minutes.

U.S.A – Drive a maximum of 11 hours in a consecutive on-duty window of 14 hours, with a 30-minute break at some point in the trip. Thereafter, drivers must be off duty for 10 consecutive hours. They are also not allowed to work more than 70 hours in eight days.

	Mark DeLuca, Customs Operations, Universal Logistics USA

At Your Service: Mark DeLuca, Customs Operations, Universal Logistics USA

Mark DeLuca joined Universal Logistics USA in November 2017, as a member of the Customs Operations team, working out of our Buffalo, New York office.

Mark has a solid understanding of U.S. import requirements to process shipments imported via various modes of transport, and is also assisting with U.S. truck freight bookings.

Mark can be reached by phone (716) 882-4100, ext. 1003 or by email.