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Notice to Exporters

Peanut Butter for Export to the United States (Item 5201 on Canada’s Export Control List)

Serial No. 184

Date: November 7, 2012

This Notice replaces Notice to Exporters No.152 dated October 19, 2007, and will remain in effect until further notice.

This Notice is provided pursuant to the authority of the Export and Import Permits Act (EIPA) and its corresponding regulations.

In Brief

The United States administers a global tariff rate quota (TRQ) for imports of peanut butter. The quota year extends from January 1 to December 31, inclusive.

Canadian exporters have access to a 14,500,000 kilogram country-specific reserve within the US import TRQ.

While there are no quantitative restrictions on the export of peanut butter to destinations other than the United States, all peanut butter exports are subject to export controls under Canada’s EIPA. Exporters wishing to export peanut butter to countries other than the United States may invoke a general export permit.

This Notice to Exporters sets out the policies and practices pertaining to the administration of the peanut butter export quota, including the allocation, under-utilization, return, and reallocation policies. This Notice also explains how to apply for export permits.

Table of Contents

1. Purpose

1.1. The purpose of this Notice is:

to set out the policies and practices pertaining to the administration of Canada’s export quota for peanut butter destined for the United States;

to invite applications – from current allocation holders as well as new applicants – for allocations under the Canadian export quota for the next quota year; and

to explain how to apply for export permits for shipments of peanut butter destined for the United States and to countries other than the United States.

2. General Information

2.1. Background

2.1.1. In accordance with its commitments under the World Trade Organization (WTO), the United States established a TRQ for imports of peanut butter in 1995.

2.2. Access Level

2.2.1. The United States administers a country-specific reserve of 14,500,000 kilograms for imports from Canada.

2.2.2. To facilitate stable and predictable export marketing for Canadian exports of peanut butter to the United States, the Government of Canada administers a 14,500,000 kilogram export quota, and issues export permits for all shipments of peanut butter destined to the United States.

2.2.3. There are no quantitative restrictions on the exportation of peanut butter to destinations other than the United States. Exporters wishing to export peanut butter to countries other than the United States may invoke GIP No. 31.

2.3. Allocation Period

2.3.1. The allocation period for Canada’s export quota for peanut butter destined to the United States extends from January 1 to December 31, inclusive.

3. Products Covered

3.1. Tariff Items

3.1.1. Peanut butter is defined as a good classified under tariff item No. 2008.11.10 in the List of Tariff Provisions set out in the Schedule to the Customs Tariff. The applicable U.S. tariff item number for peanut butter is 2008.11.05 of the Harmonized Tariff Schedule of the United States (HTSUS). Peanut butter was added to Canada’s Export Control List (ECL), a regulation established under the Export and Import Permits Act (EIPA), as item 5201, to ensure orderly export marketing.

3.1.2. Exporters that require a determination as to whether the product they intend to export is eligible under the US import TRQ are encouraged to contact the National Commodity Specialist Division, US Customs Border Protection (CBP), Department of Homeland Security.

3.2. Canada’s Country-Specific Reserve

3.2.1. Only goods that are "product of Canada" may enter the United States under Canada’s country-specific reserve.

4. Allocation Policy

4.1. Allocation Method

4.1.1. The peanut butter export quota is allocated to two groups:

eligible applicants that were allocation holders in the previous year, to the extent of their previous year’s allocation, as adjusted since, (e.g., for under-utilization); and

eligible new applicants, to the extent of the availability of quota within the (up to 100,000 kilogram) new entrants pool.

4.2. Eligibility

4.2.1. To be eligible for an export allocation, all applicants must demonstrate their active involvement in the manufacturing and export of peanut butter to the United States. Export permits will normally be issued on request to firms having a share of export quota, up to the limit of that share, subject to compliance with conditions described in paragraph 4.2.2 below.

4.2.2. Exporters are required to submit monthly, a summary report of all exports made under the authority of permits issued. The following information should be provided in the report: name of exporter, date of export, export permit number, U.S. consignee, U.S. Customs Entry number, invoice number and quantity exported (in kilograms). A sample form is contained in Appendix 1 and for your convenience an electronic version may be requested and will be provided by e-mail. This report is required by the 15th day of the month following the month that the actual export took place in and should be forwarded to the attention of the peanut butter TRQ quota manager by e-mail (see Contact Us in section 8 of this Notice). Exporters are required to retain copies of all associated documentation related to these exports and produce such records upon request.

4.3. Applications for Allocations

4.3.1. Applicants that wish to apply for an allocation under the peanut butter export TRQ are invited to submit their application form (EXT1685-1) no later than December 1, immediately preceding the opening of the quota year. The application form is available on the Foreign Affairs and International Trade Canada (DFAIT) web site (a paper copy will be provided upon request): Application Form for an Allocation (EXT1685-1) (PDF*, 1.05 MB).

4.3.2. All information provided by applicants is subject to verification by officials of DFAIT. If the applicant fails to provide any information requested by DFAIT, the application may be declared incomplete and the applicant may be denied a share of the US peanut butter TRQ.

5. Under-Utilization, Return and Reallocation Policies

5.1. Under-utilization Policy

5.1.1. An allocation holder with a utilization rate less than 90% in the previous quota year may have its allocation adjusted downward by an under-utilization penalty for the new quota year.

5.1.2. For allocation holders that under-utilized in the previous quota year, allocations in the new quota year will reflect the previous year’s actual level of use during the previous year (assessed in kilograms or based on percentages, whichever is lower).

5.1.3. Allocation holders that under-utilized during the previous quota year will be advised of the applicable under-utilization penalty before the allocations are finalized for the new quota year.

5.2. Return Policy

5.2.1. Allocation holders may return any portion of the balance of their allocation no later than the return deadline of August 1. DFAIT will notify allocation holders in writing should export quota become available as a result of returns made before the August 1 deadline.

5.2.2. An allocation holder with an allocation:

a. of less than 500,000 kg (in the current allocation year) with an average rate of return over 50% in the two previous consecutive quota years may have its allocation adjusted downward in the new quota year by a return penalty of 20% of its average returns during the two previous consecutive years;

(in the current allocation year) with an average rate of return in the two previous consecutive quota years may have its allocation adjusted downward in the new quota year by a return penalty of 20% of its average returns during the two previous consecutive years; b. greater than or equal to 500,000 kg with an average rate of return over 25% in the two previous consecutive quota years may have its allocation adjusted downward in the new quota year by a return penalty of 20% of its average returns during the two previous consecutive years.

5.3. Reallocation Policy

5.3.1. Quantities collected from the application of the under-utilization and return penalties will be put toward the new entrants pool as required.

5.3.2. Any portion of the (up to 100,000 kilogram) new entrants pool derived from under-utilization or return penalties that remains unallocated (due to lack of demand from eligible new applicants) will be reallocated on an equal share basis to existing allocation holders (that were subject neither to under-utilization nor return penalties) for use within the new quota year.

5.3.3. Any quantities above 100,000 kilograms derived from under-utilization or return penalties will be permanently re-allocated on an equal share basis to existing allocation holders (that were subject neither to under-utilization nor return penalties).

6. Permanent Transfer Policy

6.1.1. The Minister may, at his sole discretion, consent to the permanent transfer of an allocation from one allocation holder to another allocation holder or to an eligible new applicant. All requests for permanent transfers of export allocations must be sent to DFAIT.

6.1.2. Allocation holders with an allocation greater than 100,000 kg that have been authorized by the Minister to transfer permanently any portion of their allocation may have one percent of the transferred quantities earmarked for the new entrants pool. If there are no eligible new applicants, or if sufficient amounts of quota are made available through the return and under-utilization penalties to create the new entrants pool on an annual basis, the earmarked quantities will be made available to the transferee for use within the quota year. The earmark will continue to be made available to the transferee for use within successive quota years until the earmark has been completely drawn upon for the new entrants pool.

6.1.3. If there are multiple earmarks available (resulting from multiple permanent transfers), they will be drawn upon, as needed, on a pro-rata basis, based on the size of the transferees’ total allocations at the time that the earmarks are drawn upon. Earmarks will be drawn upon for allocations to eligible new applicants as needed, only during quota years when the new entrants pool is not fully supplied through returns and/or under-utilization penalties.

7. Export Permits

7.1. Types of Permits

7.1.1. An export permit is required for every shipment of peanut butter covered by this Notice.

7.2. How to Apply for a Permit

7.2.1. Information about the permit application process, including information about fees, the monthly billing system, and information required from applicants, is available on the DFAIT website: Applying for an Export Permit.

7.2.2. Exporters that wish to apply for an export permit are required to submit Form EXT1466, "Application for Permit", which can be obtain on the DFAIT website (a paper copy will be provided upon request): Application for Import/Export Permit (PDF* 95.24 KB)

8. Contact Us

8.1. Names and direct phone numbers for quota manager(s), permit officer(s), and the Help Desk are available on the DFAIT website: Contact Us.

8.2. For directory assistance, you may call 613-944-0773.