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Ottawa plugs ‘pizza kit’ hole in cheese tariff wall

Canadian importers of “pizza kits” of shredded mozzarella and sliced pepperoni from the U.S. will now have to eat a heavier tariff on that mozza.

The federal government on Nov. 22 quietly passed a ways-and-means motion clarifying the tariff classification on “pizza topping food preparations,” otherwise known as “pizza kits,” as used by some pizza restaurants.

The kits have been under fire from Dairy Farmers of Canada (DFC) and provincial dairy marketing boards for over a year as “a blatant example of circumvention of the government’s tariff system” on cheese imports.

The government’s Nov. 22 motion requires that the cheaper U.S. mozzarella in such kits be classified under the tariff lines for fresh cheese — regardless of their packaging.

The clarification, which took effect Nov. 29, effectively stops importers from classifying their U.S. kits as a “food preparation,” which until now had exempted the kits from Canada’s tariff rate quotas (TRQs) on dairy imports.

According to a May ruling from the Canadian International Trade Tribunal (CITT), the U.S. kits are a designer product developed by Ontario importer and distributor J. Cheese Inc. (JCI), for use by a Canadian customer.

JCI’s customer, according to CITT, has been Toronto-based Pizza Pizza, which in Canada operates 605 Pizza Pizza outlets and 89 “Pizza 73” outlets.

“A signal”

Vancouver Island dairy farmer and DFC president Wally Smith said Friday the organization had recently heard “hints” that the government planned to make a move on pizza kits, but hadn’t been told of the exact timing.

Smith hailed the government’s motion as “a signal to dairy farmers and to the public that this government means what they say,” in terms of protection for Canada’s supply-managed dairy marketing system and the TRQs that support it.

The Canadian Restaurant and Foodservices Association, a longtime critic of Canada’s dairy pricing framework, on Tuesday ripped the government for having “suddenly shut down a pizza cheese import process that the courts have twice upheld.”

“Weeks ago we presented to both the (Canadian Dairy Commission) and the federal government proposing a collaborative approach to set dairy prices and to modernize the current dairy system,” CRFA CEO Garth Whyte said in a release. “It is clear the CDC and the federal government are not listening.”

The CITT in May shot down a request from Canada’s 10 provincial dairy marketing boards for an advance customs ruling on JCI’s pizza kits. The tribunal cited legislation which required that such a request could only come from another importer.

Apart from tariffs that limit their use of cheaper imported mozza, pizza restaurants have also previously criticized Canada’s milk classification system which, until June this year, required cheese processors to pay a higher rate for the milk used to make cheese for fresh pizzas, compared to the milk used to make cheese for frozen pizzas sold by grocers.

The federal government in June launched a new milk class for mozza used to make fresh pizzas, saying it would “lower costs for restaurants that prepare and cook pizzas on-site.” — Network

Related stories:
Dairy supports to rise one per cent Feb. 1, Dec. 18, 2013
Dairy boards don’t have standing to challenge pizza kits, May 6, 2013
Milk for restaurants’ mozzarella reclassified, May 1, 2013
Ont. cop, ex-cop charged in alleged cheese-smuggling ring, Sept. 29, 2012


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