Canada’s Arguments. 62. Canada’s principal objection to New Zealand’s interpretation lies with the phrase “an allocation” and with the interpretation of both words within that phrase. For Canada, the word “allocation” means a share of a TRQ that may be “granted to an individual applicant” that “provides the recipient certain rights, including the right to import [a] specified amount at the TRQ’s preferential rate.”52 According to Canada, the term “allocation” does not simply refer to a “portion” or volume of the TRQ and the “size of an allocation is indeterminate and irrelevant for the meaning of the term as used in Section D.”53 For Canada, this means that the Processor Clause does not concern the size of allocations or the proportionate amounts allocated to processors and non-processors, individually or as a group.54 According to Canada, “allocation” cannot have the broader meaning suggested by New Zealand of “a portion of the TRQ that may be granted to applicants (plural)–such as a processor pool.”55 For Canada, the distinction between an “allocation” and a “pool” turns on an “allocation” to a single applicant granting the right to import goods subject to the TRQ versus the reservation resulting from the pooling system, which creates an initially reserved volume of TRQ for a group of potential applicants, but does not grant anyone the right to import goods subject to the TRQ.56
Canada’s Arguments. 95. Canada argues that the term “TRQ quantities” in Article 2.29(1) means the specified amount allocated or granted to individual importers, not the full amount of the TRQ.81 Therefore, Article 2.29(1) only applies to importers that have already been granted an allocation and the only way to utilise an allocation is to convert it to use by importing product. The scope of the obligation is thereby limited to prohibiting a Party from arbitrarily preventing a person who has obtained a quota allocation from importing goods using the preferential tariff rate under a given TRQ for those imports.82 As Canada fully allocates its TRQs and importers with a TRQ allocation are able to utilise their allocation fully, Canada is providing the opportunity to utilise the TRQ fully and thus complies with the obligation.
Canada’s Arguments. 137. For Canada, the important interpretative element is what is meant by the phrase “fulfils the importing Party’s eligibility requirements” in Article 2.30(1)(a). Canada notes that Article 2.30(1)(a) does not contain any reference to a Party’s Tariff Schedule; it refers only to the importing Party’s eligibility requirements, which Canada interprets to be the eligibility requirements established by the Party as part of its discretion to employ an allocation mechanism rather than a FCFS system.112 For Canada, the use of the possessive “Party’s eligibility requirements” indicates 109 Rebuttal Submission of New Zealand paras. 87, 93; Opening Statement of New Zealand paras. 176-77. 110 Rebuttal Submission of New Zealand para. 91. 111 First Written Submission of New Zealand para. 111. 112 Initial Written Submission of Canada para. 164; Opening Statement of Canada at the Hearing para. 38. that Article 2.30(1)(a) covers the Party’s own eligibility requirements established as part of its own allocation mechanism.113 138. In discussing the eligibility criteria that are contained in Paragraph 3(c) of Appendix A to Canada’s Tariff Schedule, Canada contends that the requirements contained therein are the mandatory minimum but not the only criteria that Canada may apply. Canada accepts that it is not entitled to select market actors that do not meet the Paragraph 3(c) criteria, but so long as the market actors chosen by Canada remain within the limits of Paragraph 3(c), nothing prevents Canada from imposing additional criteria for who is eligible to apply for an allocation of its TRQs – including by limiting TRQ eligibility to specific market actors such as processors, further processors, and distributors.114 139. Canada finds support for its interpretation that the three criteria in Paragraph 3(c) are not exhaustive in the final sentence in Paragraph 3(c), which states that “[i]n assessing eligibility, Canada shall not discriminate against applicants who have not previously imported the product subject to a TRQ but who meet the residency, activity and compliance criteria.” For Canada, if Paragraph 3(c) exhaustively defined who is eligible for an allocation, there would have been no need to include this final sentence in Paragraph 3(c), as Canada would already be prevented from restricting TRQ eligibility to established importers.115
Canada’s Arguments. 167. Canada argues that New Zealand’s claims fall outside the scope of Article 2.29(2)(a) altogether. According to Canada, Article 2.29(2)(a) is applicable only to product-focused conditions, limits, and eligibility requirements and only those that relate to the actual use of a TRQ when importing a good. 168. Canada explains the term “utilisation of a TRQ for the importation of a good” does not include the allocation phase of TRQ administration because the word “utilisation” in this context emphasizes the actual use of the TRQ for the importation of a good.123 169. This interpretation of the scope of Article 2.29(2)(a) is supported by the items in the illustrative list it provides (specification or grade, end use, package size), which are all product focused. Furthermore, because Canada’s pooling system in its Notices to Importers are entirely directed at who is eligible to apply for a quota and not any product-focused requirements, the pooling system falls outside the scope of 2.29(2)(a).
