Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada's CITT Recommends that the Minister of Finance Eliminate Tariffs on Certain Tuxedo Fabrics

On Febuary 5, 2008, the Canadian International Trade Tribunal (CITT) recommended to the Minister of Finance that tariff relief be granted as soon as possible, for an indeterminate period of time, on importations from all countries of woven fabrics, with or without backing, solely of yarns of textured polyester filaments, of a weight not exceeding 225 g/m², of tariff item No. 5407.52.90, for use as facing or braids in the manufacture of tuxedos.

On June 22, 2007, the CITT received a request from Peerless Clothing Inc. (Peerless) of Montréal, Quebec, for the removal, for an indeterminate period of time, of the customs duty on importations from all countries of woven fabrics, made of polyester, with or without backing, for use as facing in the manufacture of men’s or boys’ tuxedos.

As of January 1, 2008, the subject fabrics, classified for customs purposes under tariff item No. 5407.52.90, are dutiable at 14 percent ad valorem under the Most-Favoured-Nation (MFN) Tariff and the Costa Rica Tariff, and are duty free under the United States Tariff, the Least Developed Country Tariff, the Mexico Tariff, the Canada-Israel Agreement Tariff and the Chile Tariff.

Peerless claimed that there is no domestic production of fabrics identical to or substitutable for the subject fabrics. This claim was not contested by any domestic fabric producers. The CITT found that the tariff relief requested by Peerless would provide net economic gains for Canada.

It is important to note that Peerless had requested that the the CITT recommend that the tariff relief be retroactive to June 2007.  The CITT would not make a retroactive recommendation.  The CITT indicated that it has stated in previous cases "that it will not consider recommending such relief other than in exceptional circumstances." The CITT opined that Perless had not provided any evidence to support a retroactive recommendation.

This case is a good example of a textile reference and the potential for importing businesses to obtain relief in appropriate cases.  As a result of this request, it is estimated that Peerless will save $25,000 in customs duties per year.

Importers of fabrics who cannot acquire the needed textile products from Canadian producers should consider making a textile reference request and seek elimination of non-recoverable customs duties.  If the textile product is not produced in Canada or a substitutatble product is not produced in Canada, there is a good chance that the request will not be opposed and the relief will be granted.  Please contact Cyndee Todgham Cherniak, Michael Flavell, Geoffrey Kubrick or Martin Masse at Lang Michener to discuss the opportunities further.

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