New origin rules for Caribbean textiles

Summary#

The Regulations Amending the Commonwealth Caribbean Countries Tariff Rules of Origin Regulations (SOR/2023-211) change how goods qualify as “originating” in Commonwealth Caribbean beneficiary countries for Canada’s tariff rules. They set a 40% threshold for non-originating inputs and add specific rules for clothes and other textile products in Chapters 61 to 63. These rules take effect January 1, 2025.

What it does#

• Replaces the general rule so that, for most goods, materials or parts from outside the beneficiary country can be at most 40% of the ex‑factory price for the good to be treated as originating in a beneficiary country.
• Adds specific origin tests for textile and apparel items:
  • Goods in Chapters 61 and 62 qualify if they are cut or knit to shape and then sewn or otherwise assembled in a beneficiary country.
  • Goods in Chapter 63 qualify if they are cut or knit to shape and sewn or assembled in a beneficiary country, and the fabric used was produced in a beneficiary country or in Canada.
• Limits the special textile rules to the fabric or the parts knit to shape that determine the tariff classification, following the General Rules for the Interpretation of the Harmonized System.
• Says a good that qualified as originating keeps that status when it is transported outside the beneficiary country only if:
  • it stays under customs control while outside the beneficiary country, and
  • it does not undergo any further production or other operations outside the beneficiary country, except for basic handling needed to move or preserve it (for example, unloading, reloading, storing, separating from a bulk shipment).
• Comes into force on January 1, 2025.

Who's affected#

• Exporters and manufacturers in Commonwealth Caribbean beneficiary countries, especially those that make clothing, textiles, and related products.
• Canadian importers, retailers and wholesalers who buy garments or textiles from those countries and rely on preferential tariff treatment.
• Customs brokers and freight handlers who manage goods that are moved across borders while awaiting shipment to Canada.
• It is not fully clear from the text which specific countries are counted as “beneficiary countries” here; that term refers to the group defined elsewhere in the tariff rules.

Why it matters#

• The changes clarify what counts as “made” in a beneficiary country for the purposes of tariff preference. That affects whether goods can enter Canada with lower tariffs.
• For the garment and textile sector, the new rules make assembly (cutting/knitting to shape and sewing) the key test for origin, and require fabric for some items to come from beneficiary countries or Canada. That can influence where companies source fabric and where they do final assembly.
• The rules about keeping originating status during transport make it clearer when temporary moves outside the beneficiary country will not break a product’s eligibility for preferential treatment.