U.S. West Coast Container Ports — Contending with Congestion


West Coast Ocean CongestionThere is considerable and understandable concern within the trade community regarding the current West Coast trade disruptions, and the resulting delays and diversions of vessel cargo arriving and departing from West Coast ports.

The International Longshore and Warehouse Union and Pacific Maritime Association have been in negotiations since May 12, 2014 over a new West Coast longshore labor contract. The current six year labor contract expired at midnight on June 30, 2014 so the ILWA and PMA have been working to renew labor contracts by reaching an agreement on a new contract.

Back in June of this year we wrote a blog article regarding possible contingency plans that importers and exporters might consider in mitigating the disruptions that a Longshore strike could cause.  While a strike has not yet been called, and negotiations are continuing, we are ever aware of the growing disruptions and delays currently happening at all major West Coast ports.  Now might be a good time to review some of the alternative options, as there does not seem to be a projected return to normalcy in this matter, and it may get worse before it gets better.  A strike is not yet ruled out of the realm of possibility.

Particularly because there is no way to know when this situation might resolve, we suggest that you consider the options that we’ve put forward here, in addition to working with your overseas partners for minimizing disruptions as much as possible.

In addition to our suggested options reiterated below, U.S. Customs and Border Protection in Seattle has issued a Trade Information Notice updating the procedures that are available and to be taken in relation to the port congestion, particularly in regards to diversion of vessels.

The various scenarios outlined in the Trade Information Notice include:

  1. Vessel Diverted to Foreign Port and Discharged
  2. Vessel Diverted to Foreign Port Not Discharged
  3. Vessel Diverted to Another West Coast Port and Discharged
  4. Vessel Diverted to Another U.S. Port Not Discharged
  5. Vessel Diverted from Intended West Coast Port to Gulf or East Coast for Discharge
  6. Vessel Rests at Anchor and Not Diverted

 

U.S. Customs and Border Protection will continue to disseminate information as it becomes available. In addition, U. S. Customs has clarified that members of C-TPAT will experience “front-of-line privileges” upon resumption of normal business practices. To the extent possible and practicable the containers can be moved ahead of any non C-TPAT shipments awaiting exam, regardless of how long they have been there.

 

Alternative steps in dealing with the severe West Coast port congestion:

As a majority of imported retail goods are shipped through West Coast terminals and gates, a successful contract negotiation is of critical interest to all in the supply chain.  It is now clear that a new agreement will not be reached without considerable disruption, having a contingency plan in place in case of a strike, lockout or long-term disruption will help your business mitigate inevitable supply chain disruptions. Below are some alternative steps you could take to safeguard your shipments.

  1. Scope your alternatives – Develop a backup plan with an experienced logistics provider to ensure the proper flow of merchandise.
  2. Choose alternate port routings – Look at routing shipments to Canadian and East Coast ports not affected by these activities.
  3. Consider moving products via sea-ground options and/or air freight to minimize the impact of increased costs. Air might be a good choice for critical time-sensitive products.
  4. Transload, truck, and intermodal - Be prepared to consider multiple means of transportation, utilizing truck and intermodal as needed to keep products moving.
  5. Prepare for likely delays and stoppages at the ports as the disruptions and diversions continue.
  6. Stay updated on the status of the negotiations – Pacific Customs Brokers is monitoring the situation and will continue to post updates to the Trade News section of our website as they become available.

How Pacific Customs Brokers can help

Additionally, our affiliated companies Pacific Overseas Forwarding and PCB Sufferance Warehouse can help you devise a customized backup plan. We offer solutions from cross docking and clearing your goods to transporting them down to your North American destination. U.S. exporters might look to use our bonded warehouse as a destination to ship overseas bound cargo for container loading. Contact us to learn how one of our logistics specialists can help you prepare your contingency plan.

 

Have questions or concerns about the potential U.S. West Coast port strike? Use the comments section below to leave us your thoughts or email Ask Your Broker.

 

Additional Resources:

 
 

NAFTA Certificate of Origin: Top 5 Mistakes and How to Avoid Them


NAFTA Certificate of OriginPacking slips, commercial invoices and customs invoices are all documents that can be easily completed. What I mean is that you are simply taking shipping or invoicing data – shipper, consignee, carrier name, description of goods, etc. – and plugging it into the respective area on one of these documents.

But how about the North American Free Trade Agreement (NAFTA) Certificate of Origin? Can you use the same document completion philosophy?

In a quick glance at a NAFTA Certificate of Origin, one might assume that the answer is yes. Exporter — yes. Producer — yes. Importer, description of goods, blanket period — yes, yes, yes. Sounds like we’re on a roll! We read the NAFTA Certificate of Origin completion instructions, understand what information is required and we finish this form off to satisfy the foreign purchaser’s request. Right?

Wrong!

The main difference between an NAFTA Certificate of Origin and the aforementioned documents is that all the products you list on this document must qualify under the North America Free Trade Agreement. That’s right – do not simply complete the document. There are rules that must be observed.

As we already noted, some fields on the NAFTA Certificate of Origin are fairly basic and you can easily fill them in. The focus of this article is to provide clarification on the less understood areas to raise awareness of their complexity.

Five Common Errors on a NAFTA Certificate of Origin:

#1. Field 6 — Harmonized System (H.S.) Tariff Classification Number

As emphasized in a previous article, it is very important that the H.S. tariff classification is correctly assigned to each product, as the first six digits will determine which of the NAFTA “Specific Rules of Origin” will apply (Go to page 141  to see the list).  If you are unsure regarding the tariff classification a customs broker can help.

#2. Field 7 — Preference Criterion

The completion of this field is going to depend on where a product was sourced or manufactured, the extent of the manufacturing and transformation process, and/or the source and place of manufacturing for any raw materials. Note that the preference criterion chosen for one product might not be the same as for another, and each situation will need to be evaluated on its own merit.

#3. Field 8 — Producer

Hey, you get a lucky break! This is one of the easier ones. YES, NO(1), NO(2), and NO(3) are your options. The ‘NO’ options of (1), (2), and (3) refer to what you are basing your NAFTA claim on — whether you ‘just know it is NAFTA eligible’ (1), or you have documentation from the producer that it is NAFTA eligible (other than an NAFTA Certificate of Origin ) (2), or you have a voluntarily provided and accurately completed NAFTA Certificate of Origin from the manufacturer (3). We respectfully advise that you go for (3), as this assures that the actual producer has done his due diligence in confirming NAFTA eligibility of the product he is providing to you.

#4. Field 9 — Net Cost

In order to properly complete this field, you will need to understand the NAFTA “Specific Rules of Origin” applying to a product to determine if Regional Value Content is a factor and whether the Net Cost method will be used. In this field, you will either show ‘NC’ if the Net Cost method was used, or ‘NO’ (all other situations). By the way — do not place a dollar amount in this field, as this merely indicates to a customs agency that you did not read the instructions!

#5. Field 10 — Country of Origin

This one sounds simple, doesn’t it? You would be amazed, however, at the number of NAFTA Certificate of Origins  we receive that indicate countries other than the U.S., Canada or Mexico (remember, it’s the North American Free Trade Agreement). Another common mistake is for someone to automatically assume that just because certain products are made in Canada, the U.S., or Mexico they qualify for NAFTA. In fact, if they do not qualify, they must not be listed on this document.

Sound complicated? In some cases, it is straight forward, but in so many others (for example, products with many foreign components), NAFTA qualification can be an onerous task. The point we are making is for companies and individuals to realize that much care needs to be exercised (before signing, please read the disclaimer at the bottom of the form so you understand your responsibilities).

Repercussions of incorrectly filled out NAFTA Certificate of Origins:

Your worst nightmare would be a situation where a company has been importing a product for many years assuming that it qualifies under NAFTA (i.e. duty free), then discovering through a customs audit that the goods do not qualify. Regular Canadian or U.S. duty rates range from duty free to over 200%; fines and penalties could also be assessed. Need we say more?

It should be noted that similar rules apply for any Certificate of Origin relating to a free trade agreement. For instance, if you grab a copy of a Canada-Chile FTA Certificate of Origin, you will notice many similarities.

Still baffled over the completion of this document, or whether or not your goods qualify under NAFTA? If you require advice or have questions related to NAFTA,  please contact one of our Trade Compliance Specialists. They will help you take full advantage of the benefits provided by NAFTA.

Additionally, take an in depth tour of NAFTA, by attending an upcoming NAFTA Workshop wherein you will gain a better understanding of NAFTA, learn how to manage NAFTA compliance and utilize this free trade agreement to your benefit.

 

You may also leave your comments or questions on completing a NAFTA Certificate of Origin in the comments section below.

Related Blog Articles:

Related Customs Forms:

 Related Video:

 
 

What the Results of the U.S. Midterm Elections Mean for Canadian Business


U.S. flagThe “State of America” After the Midterm Elections: AmCham Panel Discussion

The American Chamber of Commerce – Pacific Chapter is hosting a panel discussion analyzing the outcome and implications of the 2014 U.S. midterm elections for Canada.

Come hear experts discuss:

  • the Obama Presidency and the new Congress
  • the U.S. and the world economy
  • America’s leadership in the world
  • Where the U.S is today, economically, politically and socially with implications for Canada

Panel members:

  • Jock Finlayson, Vice President and Chief Policy Advisor, Business Council of British Columbia
  • Richard Johnston, Canada Research Chair in Public Opinion, Elections, University of British Columbia
  • Mario Conseco, Vice President, Public Affairs, Insights West
  • Marit Rehavi, Assistant Professor, Canadian Institute for Advanced Research, University of British Columbia

 

Event details:

Date: Thursday, November 20, 2014
Place: TD Tower – 29th Floor, 700 West Georgia, Vancouver
Time: 5:00 pm – 7:00 pm
Cost: Members: no charge, Non-Members: $20

[Note: Tickets will not be mailed; we will confirm your purchase by email and names will be confirmed at the door.]

RSVP: Please complete and return this registration form via email to AmCham Canada – Pacific Chapter at amchamvancouver@gmail.com

RSVP Deadline: Tuesday, November 18, 2014

Sign up now as seating is limited.

 

Sponsored by:

  • TD Bank

 

 
 

The Most Crucial Aspect of Global Trade: HS Tariff Codes


HS Tariff CodesEvery commodity that clears through customs must have an accurate and correct Harmonized System code (HS code) applied to it. This code identifies the item to Canada Border Services Agency (CBSA), as well as indicates the duty rate payable.

The Canada Customs Invoices or Commercial Invoices prepared must provide enough detail to identify the goods and correctly establish the H. S. tariff classification code.

Tariff classification can be very complex and speaks to the essential character of the article being imported:

  • What article is being imported?
  • What is the article made of?
  • What is the item used for?

Almost 200 countries, representing about 98 percent of world trade use the Harmonized System as a basis for trade negotiations collecting international trade statistics, quota controls, rules of origin and for statistical and economic research and analysis.

Anatomy of an HS Code:

The HS code is a 10 digit code. The first six (6) digits of the HS code are universal (meaning that all countries use the same first six digits to classify a commodity); the remaining four (4) digits that make up the HS Code are unique from country to country and used for statistics.

Classifying commodities correctly is key with regards to the importer paying the correct amount of duty and avoiding Administrative Monetary Penalty System (AMPS) penalties, or worse, seizure of your goods.

The Customs Tariff book is a comprehensive list of all HS codes laid out in 99 chapters; the progression being from raw products to the most highly processed. These 99 chapters are also broken into 21 sections for ease of reference. The tariff book contains over 10,000 detailed tariff options. In order to select the correct tariff code, you or your customs broker are required to understand the rules contained in the tariff book, and have detailed knowledge of the item(s) being imported.

All imported items must be classified in the Harmonized Tariff System (HTS) using the General Rules of Interpretation and other aids.

 Commodities entering Canada are classified based on:

  1. Six (6) Universal General Interpretive Rules (GIR) and
  2. Three (3) Canadian Rules

 The Six Universal General Interpretive Rules (GIR):

Rule No.1:

The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or notes do not otherwise require, according to the following provisions.

Rule No.2:

2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.

2. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.

Rule No. 3:

3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

3 (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

3 (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to Rule 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

3 (c) When goods cannot be classified by reference to Rule 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Rule No. 4:

Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.

Rule No. 5:

5. In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein:

5(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This Rule does not, however, apply to containers which give the whole its essential character.

5(b) Subject to the provisions of Rule 5 (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.

Rule No.6:

6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purpose of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.

The Three Canadian Rules:

1. For legal purposes, the classification of goods in the tariff items of a subheading or of a heading shall be determined according to the terms of those tariff items and any related Supplementary Notes and, mutatis mutandis, to the General Rules for the Interpretation of the Harmonized System, on the understanding that only tariff items at the same level are comparable. For the purpose of this Rule the relative Section, Chapter and Subheading Notes also apply, unless the context otherwise requires.

2. Where both a Canadian term and an international term are presented in this Nomenclature, the commonly accepted meaning and scope of the international term shall take precedence.

3. For the purpose of Rule 5 (b) of the General Rules for the Interpretation of the Harmonized System, packing materials or packing containers clearly suitable for repetitive use shall be classified under their respective headings.

 

Correctly understanding and interpreting the General Interpretive Rules (GIR), and using them to apply the most accurate HS code, is the basis of tariff classification. A customs broker has years of practice using the GIR to apply true and accurate HS codes chosen from the 99 Chapters of the Customs Tariff book.

 

The Explanatory Notes

In addition to the GIRs contained in the Customs Tariff, a second publication, the Explanatory Notes, is used to assist in correctly classifying commodities. The Explanatory Notes is a list of definitions, explanations and rules that apply to and clarify headings and subheadings in the Customs Tariff.

As well as identifying the commodity and duty rate to CBSA, the HS code also indicates if the product requires additional clearances from other government agencies such as the Canadian Food Inspection Agency (CFIA) or Natural Resource Canada (NRCan).

 

Advanced Ruling

In the event that there is no obvious classification that fits the item being imported, an Advanced Ruling should be requested. An advanced ruling ensures that the item will be classified to CBSA’s satisfaction and there will be no penalty for misclassified items. This is recommended for any item that is not clearly stated in the Customs Tariff or appears to have more than one equally applicable tariff.

Should you get an advanced tariff classification ruling from CBSA?

Not all goods require an advanced ruling from customs in order to be properly classified, however the process remains complex and all imported items must be classified in the Harmonized Tariff System (HTS) using the General Rules of Interpretation and other aids. Getting an advance ruling ensures that the tariff classification number used is deemed correct by the CBSA. The advance ruling provides certainty to the importer, or his or her representative, as to how goods are to be classified and thereby facilitates the documentation and other governmental department requirements for clearing goods at the border.

 

Proper classification is the starting point of compliance. A thorough knowledge of the Harmonized System is essential for anyone involved in global trade. If you would like to further your understanding of tariff classification and find the correct commodity codes for your goods, attend our upcoming H.S. Tariff Classification Workshop. In this hands-on session you will learn how to classifying goods and parts , understand the complexities of the various rules of interpretations of the H.S. Tariff System, gain a better understanding of how duties are determined and learn about preferential tariff treatments. Register today!

 

Have questions or comments on H.S. tariff classification? Post your thoughts in the comments section below or email us at Ask Your Broker.

 
 

eManifest Regulatory Update — Current Status Outlined


Update ArrowThe Border Commercial Consultative Committee (BCCC) of the Canada Border Services Agency recently released a regulatory update regarding the ACI eManifest program, the details of which can be found below. While this document does not address the burning question of when compliance will become mandatory, it does offer some insight into the process and where we stand as of right now and hints that the “coming into force date” will be sometime in early 2015.

Regulatory Process

There are numerous steps prescribed by the Treasury Board Secretariat (TBS) in order to develop and implement regulatory amendments. The process has been outlined at the previous two BCCC meetings, and the CBSA has completed the majority of the process. The remaining steps are as follows:

  • The regulatory amendment package again requires “blue-stamps” from the DoJ.
  • Signed regulatory amendment package submission is then again presented to Privy Council Office (PCO)
  • The regulatory amendment package is again presented at a Treasury Board meeting (meetings are dependant on Parliament being in session).
  • The registration of the regulations can then occur along with their publication in Part II of the Canada Gazette. This is the mandatory “coming into force” date.

 

Current Status of the eManifest Regulatory Amendments:

  • Stakeholder issues and concerns have been heard and will be addressed through the regulatory process and the CBSA’s responses will also be contained within the final published RIAS.
  • All stakeholders that sent comments have been sent )either via email or mail) individual letter outlining the CBSA’s responses to your comments/concerns.
  • The regulatory amendments create and revise pre-arrival requirements. Any concerns viewed as “outside the purview” of the regulatory amendments )such as comments regarding the release of commercial goods, or comments regarding the carrier code application process) will be addressed by the appropriate areas within the CBSA and further consultation will take place.

Stakeholder Comments: A Thematic Overview

  • The CBSA received numerous stakeholder comments during the pre-publication period, all of  which were supportive of eManifest, and has been able to successfully address all concerns which were raised.
  • There were three specific requirements which required further clarification and education to resolve stakeholder queries:
    • ACI reporting of Empty Conveyances (Highway Carriers)
    • ACI reporting of Marks and Numbers on Cargo Submissions (Highway Carriers and Freight Forwarders)
    • ACI reporting of the Harmonized System (HS) Code on House BIll and supplementary cargo submissions (Freight Forwarders)

 

Proposed Solutions:

  • To assist carrier in providing pre-arrival empty conveyance information, the CBSA provides free of charge bar coded lead sheets through the eManifest Portal. Portal users can input data and print multiple lead sheets in advance for generic empty loads and the driver can keep a supply of printed lead sheets on hand in each vehicle.
  • Education of stakeholders is key in order to convey that they do not have to submit data that they do not visually see on a package (Marks and Numbers) or shipping document (HS Code). The CBSA will educate through the regulatory responses and program outreach.

 

Current Status of the eManifest regulatory amendments

  • At this time, the CBSA does not have an anticipated “coming into force” mandatory date, but the date is projected to be in early 2015. The Agency has committed to provide all stakeholder advance notice of the “coming into force date”/
  • The “coming into force” date will be communicated through various venues such as emails to current EDI clients and committee members (e.g. BCCC eManifest Sub-Committee), website postings, communiques, etc.
  • The CBSA will continue to work with clients to assist them with compliance with the new requirements.
  • The CBSA thanks the early adopters of eManifest and recommends that all other clients who have not yet begun transmitting begin now as the “coming into force date” will occur in the near future.

 

As always, Pacific Customs Brokers’ Border Pro for Carriers, strives to bring the latest updates on cross-border regulations. If you have any questions about ACI eManifest, how to register or  how it will affect your business, please contact our Border Pro eManifest Team at 855.542.6644  or via email at emanifest@borderpro.ca. We also welcome your questions regarding ACI eManifest and its implementation in our comments section below.

 

Pacific Customs Brokers’ Border Pro for Carriers offers a full and self eManifest filing service option that can take the hassle of getting registered with CBSA off of your plate.
For the latest updates on eManifest visit the Carrier News section of our website regularly or sign up for our weekly Border Pro newsletter. Additionally, you’ll find the ‘Your Broker Knows’ YouTube channel to be an excellent resource.