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U.S. Border Fee Increase Illegal, CTA Says

TORONTO — The U.S. proposal to hike the fees that Canadian truckers pay for agricultural inspections at the border violates the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), the Canadian Trucking Alliance (CTA) says.

David Bradley, president of the CTA, says the proposal to increase the agricultural quarantine inspection (AQI) fees for commercial trucks (from $105 to $320 per year for trucks with a transponder) is similar to a 1999 attempt to introduce a U.S. Customs Service User Fee.

In a submission to the U.S. Department of Agriculture (USDA), the Canadian government says it agrees the fee increase "may not be consistent with U.S. international trade obligations" and "would have disproportionate and negative effects on Canadian commercial enterprises exporting to the United States."

“We believe these sorts of fees are inconsistent with the United States’ international trade obligations,” Bradley says. “Having our views and concerns reinforced by the Government of Canada was welcome and significant in 1999 and it is again this time.”

“Canadian commercial enterprises would be placed at a competitive disadvantage and could suffer de facto discrimination as compared to enterprises of other foreign countries under international trade obligations,” Canadian Government officials stated.  

Here’s what’s wrong with the fee increases, according to the CTA:

  • Fees are too high: The USDA wants to increase the APHIS fees from $150 to $320 per truck per year. In addition to the APHIS fee, truckers also pay a Consolidate Omnibus Budget Reconciliation Act fee of $100, putting the total cost at $420 per truck per year.
  • Fees apply to all trucks crossing the border: “How efficient and effective is it to be inspecting and charging APHIS fees to trucks that are, for example, importing auto parts into the United States on plastic pallets?” Bradley asked when the fees were announced in late April.
  • No risk assessment: “Commodities that present risk are the responsibility of the importer and the application of fees should be strategically allocated to importers based on the level of risk the goods present –[not to truckers],” the Alliance claims.
  • Puts toll on all U.S.-Canada trade: APHIS fees apply to all trucks crossing the border, regardless of whether or not the goods being imported are food and agriculture-related or whether the trailer is loaded or empty.

What’s more, the fee increases may be illegal.

Law firm Gowlings, which the CTA is consulting with, says: “The basic effect of NAFTA Article 310 is to prohibit the United States, as a Party to the NAFTA, from adopting any customs user fees other than those that existed at the date of the coming into force of NAFTA, which ultimately were eliminated for goods originating in Canada.”

Similarly, GATT Article VIII limits fees that apply to inspection and quarantine services.

Among other conditions, GATT requires customs fees to be “limited in amount to the approximate cost of the service.” Therefore, they must first involve a “service” rendered, and the level of the charge must not exceed the approximate cost of that “service,” the CTA and Gowlings explain.  

Gowlings lawyers commented: “The AQI fees cannot be considered as GATT-compliant customs users fees in that the fees are applied irrespective of whether an individual conveyance is actually inspected, and irrespective of the actual need for an inspection to be performed given the nature of the shipment and the goods.” 

Gowlings argues the AQI fees violate this requirement by charging a flat fee to the vast majority of shipments regardless of whether an inspection takes place. The fact the fee for commercial trucks can be paid on an annualized basis makes clear that the AQI fees are not in any sense relatable to the costs of services provided to an individual shipment.

This is not the first time the CTA has spoken against APHIS fee increases. The CTA successfully opposed a U.S. proposal to charge truckers new customs fees back in 1999 and in 2009, they opposed increases to the APHIS fees, which the USDA agreed not to go ahead with.

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