15 July 2016
Canada Provides Duty-Free Treatment to Certain Manufacturing Inputs
The Canadian government has provided duty-free treatment to eleven types of manufacturing inputs in an effort to further reduce production costs for Canadian businesses and enhance their overall competitiveness. With this action, Canada is now the first G-20 country to eliminate all tariffs on machinery, equipment and inputs used in the industrial manufacturing sector.
As a result of industry specific requests for tariff relief, the government has eliminated the customs duties on the following products used in manufacturing:
- handles for brushes, brooms and mops classified under HTSCA 4417.00.10;
- embossed aluminium cans for use in the packaging of beverages classified under HTSCA 7612.90.91;
- metal heads used in the manufacture or production of various garden and household hand tools classified under HTSCA 8201.10.10, 8201.90.91, 8201.30.10, 8201.40.10, 8205.20.10 and 8205.59.10;
- electric accumulators used as a primary source of electric power for electric motorcycles classified under HTSCA 8507.60.20; and
- unfinished spectacle lenses classified under HTSCA 9001.40.40 and 9001.50.40.
Additionally, the government has clarified the wording of a tariff item (HTSCA 8507.20.10) amended by a similar order that was approved on 12 June 2014. Among other things, that order eliminated customs duties on certain leadacid batteries used in the production of smoke, fire or gas detection and alarm systems, including power supply panels and modules. The original wording required that these batteries be “used in the manufacture of” the systems but that language now reads “used in the initial installation of” the systems. Canadian authorities believe the revised wording better reflects the production process of these goods, specifically that the leadacid batteries are only integrated into the systems at the building site and not in the manufacturing plant, since they require special handling during transport.
The Canadian government has had a long-standing framework for considering the removal of tariffs on goods used in the production of other goods in order to enhance the competitiveness of Canadian manufacturers. In this particular case tariff relief was provided pursuant to section 82 of the Customs Tariff, which provides authority to amend the schedule to the Customs Tariff to provide tariff relief to “goods used in the production of other goods.”