Dairy boards don’t have standing to challenge pizza kits

Canada’s watchdog on cross-border trade says it can’t rule on a company importing pizza topping kits made with cheaper U.S. mozzarella, if the request for a ruling doesn’t come from another importer.

Canada’s 10 provincial dairy marketing boards, under the not-for-profit name BalanceCo, had sought a ruling from the Canadian International Trade Tribunal (CITT) during a appeal hearing last month in Ottawa, against imports of pre-packaged pizza toppings combining shredded mozzarella and sliced pepperoni from the U.S.

The packs were recently developed for import into Canada from the U.S. by J. Cheese Inc., an Ontario distributor, for a “particular customer” — namely the Toronto-based Pizza Pizza chain, which operates almost 700 Pizza Pizza and Pizza 73 outlets across Canada.

The packs are now classified for tariff purposes as a “food preparation” and thus aren’t subject to the tariff rate quotas (TRQs) imposed on dairy imports under Canada’s supply-managed dairy marketing system.

BalanceCo sought to appeal that classification, by asking the CITT for a ruling that the packs’ ingredients should be classified separately as mozzarella and pepperoni “for the purpose of ensuring the effective enforcement of the TRQs,” the CITT said in its decision Friday.

However, J. Cheese’s lawyers successfully argued during the April 9 hearing that BalanceCo “is not an importer and therefore could not request or be given an advance customs ruling” by the CITT against the Canada Border Services Agency (CBSA), which so far has allowed the pizza kits to be imported as food preparations.

The CITT’s ruling on Friday “should be as concerning to government as it is to Dairy Farmers of Canada,” DFC said in a separate release.

The trade tribunal, DFC said Friday, has essentially decided that “domestic industry is not in a position to raise issues about the clear breaches such as direct circumvention of the trade rules.”

“No intention”

However, the legislation governing the CITT limits the possible applicants for CITT advance rulings to either importers of goods in Canada, people authorized to receive such goods, or “exporters or producers of those goods outside of Canada.”

For its part, the CBSA argued at the hearing that the advance ruling regime is meant “to allow individuals interested in importing goods into Canada (including future or potential importers) to know the tariff classification and associated duty rate that would be applied upon importation… (so) a requester’s intentions should not matter because customs officers have no easy way of testing whether the requester intends to import the goods.”

J. Cheese, however, retorted that BalanceCo was not an “importer” because “there is no evidence that (BalanceCo) was in the import business and — by its own admission — it had no intention of importing the goods in issue,” the CITT noted.

“JCI argues that BalanceCo, therefore, did not request the advance ruling to potentially import the goods in issue, but rather to restrict their importation.”

The CITT agreed, finding that BalanceCo “could not be considered as having been an ‘importer’ in any reasonable sense of the term” and thus is “not an eligible applicant for an advance ruling.”

Thus, the CITT said, it has to dismiss BalanceCo’s appeal “for want of jurisdiction.”

All that said, the federal government still “has a clear policy of support for supply management,” DFC said Friday, and dairy farmers thus expect the government “will continue to demonstrate its clear role in upholding the mechanisms that support the (supply-managed dairy) system.”

DFC said Friday it would “review today’s ruling in the days ahead and will make decisions on possible courses of action shortly.”

Related stories:
Milk for restaurants’ mozzarella reclassified, May 1, 2013
Ont. cop, ex-cop charged in alleged cheese-smuggling ring, Sept. 29, 2012