Wednesday, July 16, 2014

Cheese ruling worth $30 million

The federal government’s change in import rules stopped $30 million worth of cheese imports in pizza kits purchased by Pizza Pizza from a supplier in the United States, and the U.S. government is angry that Canada made the change without consulting the U.S.

The Manitoba Cooperator learned about the value of the imports, and U.S. complaints, via a report prepared by senior agricultural specialist Darlene Dessureault at the U.S. Embassy in Ottawa and approved by the embassy’s agricultural attache, Jeff Zimmerman.

Dessureault valued the imports by J. Cheese Inc. of Toronto at $30 million a year and revealed that they went to Pizza Pizza of Toronto which has more than 620 outlets across the country plus about 90 Pizza 73 stores.

Dessureault said Canada’s move not only slapped a tariff of 246 per cent on the cheese in the kits for pizza toppings, but also raises concerns that Canada might make similar changes to apply to other blends that contain dairy products. New Zealand has also expressed concerns.

The Manitoba Cooperator says Dessureault’s report ripped Canada’s “assertion” that the kits were “packaged in a specific manner to circumvent Canada’s tariff structure.” 

Such a claim, Dessureault wrote, “implies a level of subterfuge on the part of the importer/exporter that is difficult to establish.”

She says that in fact J. Cheese Inc. obtained an advance ruling in 2006 on whether a fresh-cheese tariff would apply to the kits, so Canadian officials would have been well aware of the situation.

U.S. trade officials have since called out Canada on the clampdown “at both the bilateral and multilateral levels,” the report says.

For example, U.S. officials made note of the change during a January meeting of the World Trade Organization’s (WTO) committee on agriculture, saying they disagree with Canada’s use of the term “circumvention.”

She says U.S. exporters “remain concerned that Canada will continue to resort to parliamentary procedures, without any advance notification or consultation to affected parties, to give effect to domestic tax and tariff changes and restrict trade it deems a threat to its domestic dairy industry’s interests.”

That’s a reference to the Harper government’s inclusion of the tariff-rule change in its budget.