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Canada Provides Duty-Free Treatment to Inputs Used in Agri-Food Production

The Canadian government is providing effective on 16 January duty-free treatment to a range of inputs used mainly in agri-food production in an effort to lower production costs for Canadian businesses and enhance their overall competitiveness. Inputs covered by this measure include certain fruits and vegetables, cereals and grains, spices, fats and oils, food preparations and chocolate products. Canadian authorities indicate that this action delivers on a 2016 budget commitment, is consistent with long-standing tariff policy, and follows broad-based measures initiated in 2009 and 2010 to make Canada a tariff-free zone for industrial manufacturers.

In certain instances, such as where the affected tariff items include both inputs and goods for retail sale, Canada has created new tariff classifications to afford duty­free status only to goods used in processing. Moreover, Canadian authorities have adopted revenue-neutral technical changes to the tariff schedule in order to simplify its structure. Specifically, when the measure creates a duty­free item in a subheading where there are already other duty­free items, one new tariff classification has been created to replace all of the duty­free items of that subheading, which facilitates the classification of goods. Canada estimates that the removal of these duties will result in annual duty savings of about CAN$48 million.

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