Direct-shipment Rules Moved to Regulation

Summary#

This Order fixes January 1, 2025 as the day when section 229 of the Budget Implementation Act, 2023, No. 1 comes into force. That change lets the government move rules about “direct shipment” and “transhipment” out of the Customs Tariff and into regulations so they can be updated more easily.

What it does#

• Brings section 229 of the Budget Implementation Act, 2023, No. 1 into force on January 1, 2025.
• Removes the existing shipment rules found in sections 17 and 18 of the Customs Tariff and gives the Governor in Council the power to set shipment requirements in regulation instead.
• Enables new regulations (the upcoming Direct Shipment (... ) Regulations) to:
  • Allow more types of shipping documents to prove goods were sent directly to Canada.
  • Remove the current six-month limit on how long goods can be stored in an intermediary country and still qualify.
• The change follows public consultations and aims to align shipment rules with modern shipping practices.

Who's affected#

• Businesses that import goods into Canada under tariff preference programs, including those using the General Preferential Tariff, the Least Developed Country Tariff, the Most-Favoured-Nation Tariff, the Australia Tariff, and the New Zealand Tariff.
• Importers, exporters, freight forwarders, customs brokers and logistics companies who handle proof-of-shipment documents.
• Industries named in consultations such as retailers, the apparel sector, and the food and agriculture sectors.
• The Department of Finance and federal decision-makers who will write and update the regulations.

Why it matters#

• It should make it easier to claim preferential tariff rates by accepting modern and more varied shipping documents instead of one old-style document.
• Removing the six-month storage limit helps shipments that need to stay in storage longer still qualify for tariff preferences.
• Putting these rules in regulation (not hard-coded in the Customs Tariff) means they can be updated faster as shipping practices change.
• According to the government’s note, stakeholders supported the change after a 60-day consultation that produced 12 submissions. The Order is presented as having no expected financial, environmental, social, or legal impacts.