Canada is one of the developed countries which joined the project granting GSP to Least Developed Countries, Developing Countries and territories under the initiative of UNCTAD from 1974 up to now. Presently, there are 175 countries/territories that gain benefits from Canada’s GSP Scheme.
From 1 July 2014 onward, Canada will announce the implementation of the revised version of its GSP Scheme. In this revised version, Canada will exclude some developing countries whose economies have gained highly increased benefits from the country list of its GSP Scheme in which there are 72 countries comprising of Thailand, China, Indonesia, Korea, India and so on. Laos is not in the list of country which will be excluded. (Click here for details)
The Generalized System of Preferences of Canada includes two types as follows:
General Preferential Tariff (GPT) treatment
It is a preferential treatment granted to more than 100 developing countries, by reducing or exempting from normal tariff rate (MFN) certain agricultural and industrial products. However, most of garments, footwear and chemical products do not benefit from reduced or exempted tariff rate for developing countries.
Special treatment for LDCs
LDCs receive treatment more favorable treatment than developing country, by obtaining an exempted tariff rate and unlimited quota for most products, except some agricultural products even though there is no tariff at all, but the quota is limited, such as: milk, chickens and eggs. Laos is one of the LDCs, thus we receive treatment under this arrangement.
Rules of Origin: ROO
ROO used for DCs and LDCs are also different. The requirement for LDCs is easier than DCs. For example, the Value added required for LDCs is 40% while for DCs it is 60%.
To receive preferential treatment for general products from Laos under the Canada GSP Scheme the ROO requirement need to be met as follows:
1. Wholly Obtained or Produced products: WO. These are basically agricultural products (plants, animals), manufactured agricultural and mineral products and so on.
2. Products that are produced with imported raw materials should meet the Substantial Transformation requirement as having at least 40% of value added.
However, if they are textiles or garment products the production should begin from fabric or parts that have originated from another LDCs or DCs which also attracts GSP, or from Canada.
Under Canada GSP is an incorporated cumulation which means that countries receiving GSP that are Developing countries can cumulate origins/materials between them. LDCs can cumulate origins/materials with each other, and also can use origins/materials of DCs to be cumulated, but should not exceed 20% of factory price of the products. Besides that, DCs and LDCs can use origins/materials of Canada to be cumulated.
Certificate of origin
For products to be eligible for preferential treatment they have to be produced strictly complying with the Rules of Origin requirement and have a certificate of origin as reference document.
Documents which can be referenced for origin under Canada’s GSP as the following :
1. Certificate of Origin Form A or Exporter’s statements (for general products) ; or
2. Form B255 (for textile products from LDCs)
The product certificate of origin as a reference document mentioned above does not require the official signature and stamp of the exporting country, meaning that the exporters may sign themselves. Hence, exporters have no need to request the certificate of origin documents from government authorities. They simply need to sign, but they need to ensure that the products given certification have been strictly produced complying with the Rules of Origin requirements.
Consignment is one of the requirements for considering giving preference. In principle, products which that are eligible for tariff reduction or exemption must be consigned directly from the exporting country to Canada.
In case of consigning through a third country, products may be also given preferenced, if:
a. products are under the control of customs of the third country.
b. Products have not undergone any operations in the third country other than unloading, reloading, or operations required to keep them in good condition.
c. They do not enter into the trade or consumption in the intermediate country.
d. They do not remain in temporary storage in the intermediate country for a period exceeding six months.
In order to receive preferential treatment, Lao exporters must follow the origin requirements as follows: 1) products must originate in Laos 100% such as : agricultural and mineral products ; or 2) if raw materials, parts or products originating outside Laos are imported, the products must follow the requirement of substantial transformation and the value added must not be lower than 40%. For textile products, the production process must use fabric or parts from other LDCs, GSP DCs or Canada. Besides that, it must also follow the consignment requirement strictly.
For further information about Canada GSP, you can contact :
Certificate of Origin Division, Department of Import and Export,
Ministry of Industry and Commerce
Tel/Fax: 021-450255, email: email@example.com