CPTPP Tariff Extended to Brunei

Summary#

The Order Amending the Schedule to the Customs Tariff (Extension of a CPTPP Tariff to Brunei) adds Brunei to the list of countries eligible for tariff treatment under the CPTPP. The change took effect, or is deemed to have taken effect, on July 12, 2023, so qualifying imports from Brunei can use the CPTPP tariff rules from that date.

What it does#

• Amends the Schedule to the Customs Tariff so that Brunei is listed as eligible for the CPTPP preferential tariff treatment.
• Lets importers who can prove their goods qualify under CPTPP rules pay the lower CPTPP tariffs instead of the normal rates.
• Takes effect on July 12, 2023.
• The Canada Border Services Agency will update its systems and notify importers through its normal channels.

Who's affected#

• Importers who bring goods into Canada from Brunei.
• Businesses that buy inputs or products originating in Brunei, including small businesses.
• The Canada Border Services Agency and customs brokers, who apply and monitor tariff rules.
• Broader Canadian industries that benefit from CPTPP market access more generally (examples cited include agriculture and agri-food, fish and seafood, forestry, services, and some industrial products).
• For now, the direct effect is small because two-way trade with Brunei was about $9.0 million in 2022 and duties collected were about $2,000 that year.

Why it matters#

• It lets qualifying goods from Brunei enter Canada at the lower CPTPP tariff rates. That reduces costs for importers and can lower prices for buyers further down the supply chain.
• The change fulfills Canada’s international commitment under the CPTPP after Brunei completed ratification. Without it, Canada would not be applying the agreed tariff treatment to Brunei.
• The immediate fiscal effect from Brunei is tiny, but full CPTPP implementation across all parties is projected to have larger economic effects (the government estimates about $652 million in annual duties foregone when all signatories have ratified, and potential long-term gains of $4.2 billion by 2040).