Modernization of the General Preferential Tariff (GPT) Agreement

The Conservative Government of Canada has been focused on modernizing international trade agreements and procedures to stay competitive internationally. Dilas International Customs Brokers will be monitoring and tracking their progress every step of the way to ensure that our clients are always informed. Every Customs broker on our team is genuinely interested in any changes relating to duty rates, since it is an essential aspect of properly servicing our clients.

General Preferential Tariff (GPT)

The General Preferential Tariff (GPT) was originally implemented in 1974 as a method for promoting the industrialization of developing countries. The agreement offered preferential duty rates and duty-free treatment to imported products coming from any of the 175 developing countries specified in the original agreement.

Time for Review and Revisions

The 2012 Economic Action Plan committed Canada to conducting a comprehensive review of Canada’s GPT agreement. The global economic landscape has changed drastically in the last forty years, and the Canadian Government wants to ensure that the GPT is benefiting the countries that need this type of assistance the most.

The Conservative Government also intends to modify the list of beneficiary countries by removing any that no longer require their assistance. The proposed changes will potentially remove 72 countries from the current list, including China, India, Hong Kong, South Korea, Thailand, Turkey, Malaysia, Indonesia, Brazil, and Peru. These countries now have mature trade economies and are leaders in global imports.

Country of Origin is Critical

The GPT agreement specifies that at least 60% of the total value of the merchandise must be created from supplies originating in a country that qualifies for the lower GPT. Importers will need to practice extra caution if their goods are manufactured from any materials originating in countries that are no longer included in the revised GPT agreement, especially if there are no other corresponding trade agreements.

How Will this Affect Your Business?

Canadian importers will need to review their current import countries of origin to determine whether the proposed modernization will have a financial impact, and to what extent. Any Customs broker at Dilas International can help you determine which countries will be affected and how it will change your pricing structure. Make sure to keep in mind that some countries may be losing GPT status, but they still have free trade agreements with Canada and therefore will still receive eligible tariff preferences under those separate agreements.

Any importers that may be impacted by the proposed GPT elimination should conduct a full review of their operations and options, including how these changes may impact their company’s bottom line. It may be necessary to accelerate purchases prior to the proposed July 1, 2014, implementation date while you work on developing new supply sources and business strategies. Please feel free to contact anyone at Dilas International Customs Brokers if you have questions on the GPT modernization