George Reid comments in the National Post on the elimination of tariffs on Canadian heavy oil containing diluent in the Canada-United States-Mexico Agreement (CUSMA).
CUSMA includes a rule of origin amendment to allow up to 40 per cent of non-originating diluent in pipelines for transportation of crude oil without affecting the status of the oil as a product eligible for duty free treatment. This has been a longstanding Canadian industry request. This technical issue has resulted in upwards of $60 million a year in duties and other fees on Canadian crude exports to the U.S.
“This is a modernization of the agreement,” said George Reid, a trade and investment lawyer at Bennett Jones LLP in Toronto, adding the scrutiny on diluents added a tariff cost to Canadian exports as well as a “compliance cost” since companies spend millions proving their diluent originated in Canada. Reid is confident the new rules are a win for oil companies.