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2014 Federal Budget: Seven Important Changes That May Not Be Headline-Grabbing, But That Could Affect Your Business

Reading Time 5 minute read

International Trade & Customs Law Bulletin

The Minister of Finance (Canada), the Honourable James Flaherty, tabled the 2014 Federal Budget ("2014 Budget ") on February 11th, 2014 announcing a number of measures that will impact international and internal trade.

The impacts of several budget measures may be felt in the following notable areas:

  • Market access and tariff reduction
  • Regulatory cooperation and the Hazardous Products Act
  • Modernizing Canada's intellectual property framework
  • Consulting on a "Made-in-Canada" branding campaign
  • Strengthening internal trade
  • Improvements to the Canadian sanctions regime
  • Moving Forward with the Detroit River International Crossing

Market Access and Tariff Reduction

Global market access will continue to be guided by the Government's Global Markets Action Plan released in November, 2013. The 2014 Budget does not provide further specifics but reiterates that the plan, which identifies several target markets for Canadian businesses, will guide global market access for Canadian companies for the next several years. 

In respect to tariffs, the 2014 Budget proposes to eliminate the 20% Most-Favoured-Nation rate of duty on imported Mobile Offshore Drilling Units. This comes as the Mobile Offshore Drilling Units Remission Order, extended in 2009 until 2014, is set to expire. This measure will permanently eliminate tariffs on mobile offshore drilling units used in offshore oil and gas exploration and development.  Amendments will be made to the Customs Tariff to reflect this change and will be effective in respect of goods imported into Canada on or after May 5, 2014.

The 2014 Budget also proposes to provide a full assessment by the year's end of the consumer impact of the 2013 tariff elimination on baby clothing and certain sports and athletic equipment.  These tariff reductions were valued at roughly $79 million.  The assessment, which specifically relates to the price gap" on those goods, is intended to guide future decisions on tariff reduction.

Additionally, the longstanding customs duties exemption for articles imported for use by the Governor General will be amended to make the Governor General subject to the same tariff rules as other Government office holders.

Regulatory Cooperation and the Hazardous Products Act

Under the auspices of the Canada-U.S. 2011 Regulatory Cooperation Council Action Plan the 2014 Budget will introduce amendments to the Hazardous Products Act, with subsequent regulatory amendments. The amendments are intended to align and synchronize the implementation of common classification and labelling requirements for workplace hazardous chemicals. This trade facilitation measure is estimated to create $400 million in increased productivity and decreased health and safety costs.

Modernizing Canada's Intellectual Property Framework

Consistent with several changes that were previously announced in regards to the Canada-EU Comprehensive Trade and Economic Agreement the 2014 Budget  proposes to ratify or accede to the  Madrid Protocol, the Singapore Treaty, the Nice Agreement, the Patent Law Treaty and the Hague Agreement. These treaties have previously been tabled in Parliament and will create amendments to the Patent Act, the Trade-marks Act and the Industrial Design Act. This trade facilitation measure is intended to ease the administrative burden of filing for trademark protection by allowing companies to file with the International Bureau of the World Intellectual Property Organization, the organization which governs trademark protection in several countries that have ratified those agreements.

Consulting on a "Made-in-Canada" Branding Campaign

The 2014 Budget states that the Government will undertake consultations to develop a "Made-in-Canada" branding campaign as a tool to encourage consumers—both in Canada and internationally —to choose such products. A private sector steering committee will be established to lead the development of a "Made-in-Canada" consumer awareness campaign.  In presenting the initiative, the Government makes reference to Australia's success with such branding campaign.  This may have implications for what constitutes Canadian products and therefore on applicable rules of origin.

Strengthening Internal Trade

The 2014 Budget makes several commitments regarding internal trade. The 2014 Budget states that the Government will work to develop an Internal Trade Barriers Index; an index modelled on the Services Trade Restrictiveness Index of the Organisation for Economic Co-operation and Development.  This index will highlight inter-provincial trade issues that stand to be improved.  The 2014 Budget also proposes that the Government will seek to further coordination and integration initiatives such as BizPaL, the online portal for federal, provincial, territorial and municipal permits and licences.

The 2014 Budget also notes the Government will introduce amendments to the Importation of Intoxicating Liquors Act to allow Canadians to take beer and spirits, in addition to wine, across provincial boundaries for their personal use. These amendments are intended to build on recent federal legislative initiatives removing federal prohibitions on individuals from moving wine from one province to another for personal use.

Improvements to the Canadian Sanctions Regime

The 2014 Budget states that the Government will adopt new administrative measures and propose legislative and/or regulatory amendments as necessary to improve the effectiveness of its targeted financial sanctions regime and reduce the compliance burden. For example, the government notes that businesses must currently use 19 separate lists of sanctioned individuals and entities from five different domestic and international websites.  The Department of Foreign Affairs, International Trade and Development will take the lead and consultations with stakeholders may be expected. 

Detroit River International Crossing ("DRIC")

The 2014 Budget proposes to provide $470 million over two years on a cash basis for the new Detroit River International Crossing.  These funds will come as part of the $631 million that the Government has committed to the DRIC project and will be used to support necessary procurement and project delivery activities, which will be governed by a public-private partnership.  $100 billion worth of trade passed between Canada and the US using Windsor-Detroit corridor in 2012 and that passage currently handles 30 per cent of Canada-U.S. trade that crosses the border by truck.

The authors recognize the research and drafting assistance of Sean Stephenson in the writing of this bulletin.


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