It is business as usual for Pacific Customs Brokers on Victoria Day, Monday, May 21st . Our doors remain ALWAYS Open 24/7 regardless of Statutory and Civic Holidays.
Victoria Day Weekend – Open for Business
Carrier Code Eligibility – What Does it Mean?
Since the Canada Border Services Agency’s (CBSA) announcement, that all commercial carriers are required to have a carrier code (effective April 1, 2011) there has been some confusion as to the true definition of a carrier, what qualifies a carrier for a carrier code and what to do at the border if you don’t have a carrier code.
CBSA defines a carrier as ‘the owner or person in charge of a conveyance (vehicle) that is engaged in international commercial transportation of commercial goods, empty cargo containers to be imported into Canada that aren’t for sale; and any other goods to be transported to Canada for a fee.
CBSA has provided the following examples of situations that do not qualify a carrier for a carrier code:
1) An importer transporting their own goods into Canada under the definition of “hand carried goods”. “Hand-carried goods” are defined as commercial goods carried by paying passenger onboard traveler’s commercial conveyances (bus, taxi, plane, ship, etc.) or commercial goods being imported and accounted for at the port of entry by the owner of a business, or an employee, driving a “not for hire,” non-commercial conveyance described as:
a) an owner of a business or an employee of a business driving a vehicle registered under the business (fleet car) transporting commercial goods for the business; or
b) an owner of a business or an employee of a business driving its own personal vehicle transporting commercial goods for the business.
2) The conveyance is the goods being imported. For example, a car dealer purchases a vehicle in the United States and drives the vehicle into Canada for commercial importation purposes. The vehicle is considered “hand-carried” goods.
3) A ships agent in the marine mode who is not directly engaged in the international commercial transportation of goods. For example, a ships agent who applies for a carrier code for the sole purpose of providing Advance Commercial Information (ACI) to the CBSA on behalf of other carriers under the ships agent’s carrier code.
4) Companies who do not own or operate a conveyance and are not involved in the actual transportation of goods. For example, a logistics provider who does not have an exclusive contract with a third party and hires that third party to transport the goods into Canada.
5) Companies who do not have a conveyance or cannot provide a history of leasing/renting vehicles for carrier purposes at the time they will be requesting a carrier code from the CBSA. For example, a company who is interested in becoming a carrier to transport goods into Canada; however, it intends to lease or purchase a conveyance once it determines its business volume and after it obtains a carrier code from the CBSA.
If you fall into any of the above noted categories, you will not be granted a CBSA assigned carrier code but this doesn’t mean that you can’t cross international borders. For instance, in the case of ‘hand carried goods’ a special type of entry can be done.
The customs broker assigned to handle the customs clearance of the goods will prepare a C-Type Entry for you. This is a comprehensive final accounting paper entry that can only be prepared when complete commercial paperwork has been provided. You can provide the documents to the assigned customs broker ahead of time so the C-Type entry can be prepared in advance. Upon your arrival at the border crossing, you will go see the customs broker so that they can give you the paper package for you to present to customs for release. Upon presentation of the paper package to the border service officer (BSO), a release decision will be made on the spot and you will be instructed by that BSO on how to proceed.
For more information, please contact Pacific Customs Brokers toll-free: 855.542.6644 and we’ll be happy to assist you.
Ocean Shipments and Importer Security Filing
You’ve made the decision to import into the USA. You have researched your product, found a supplier overseas, placed your order and received notice that the goods will be ready to ship soon. This is pretty easy, or so you think, until your supplier asks you who is going to file the Importer Security Filing (ISF).
So what exactly is an ISF?
The ISF, otherwise known as the Import Security Filing, is one of the most recent requirements impacting the supply chain for cargo arriving via ocean into the U.S. January 6, 2009, U.S. Customs & Border Protection phased in this new requirement in order to enhance their ability to target cargo by requiring additional information prior to loading. Improving their targeting capabilities this has resulted in fewer exams on low risk shipments.
So who is responsible for filing the ISF? The Importer of Record, usually the party who purchased the goods, is responsible for the ISF filing.
There are two types of Import Security Filings. The filing of an ISF10 (the most common type of ISF) applies to all containerized cargo shipments arriving into the commerce of the United States. The filing of an ISF5 applies to cargo that arrives but does not enter into the commerce of the United States. There are two scenarios for the ISF5: the first is for Freight Remaining on Board (also known as FROB) which covers cargo proceeding to a foreign port on the same vessel, and the second is for freight that is offloaded and traveling in-bond through the United States to a foreign destination. Basically, an ISF10 is like inviting someone into your house for dinner and an ISF5 is like waving hello to someone as they are walking by. Sounds easy enough!
So what are the requirements for filing an ISF?
For an ISF10 you will need to supply:
• Name and address of the Seller
• Name and address of the Buyer
• Importer of Record
• Consignee Number
• Name and address of the Manufacturer
• Name and address of the Ship-To Party
• Country of Origin
• Harmonized Tariff Schedule number or HTS for the Commodity
• Container Stuffing Location
• Consolidator
For an ISF5 you will need to supply:
• Name and address of the Booking Party
• Foreign Port of Unlading
• Place of Delivery
• Name and address of the Ship to Party
• Harmonized Tariff Schedule number or HTS for the Commodity
As the importer, you are responsible for filing the ISF 24 hours prior to the goods being loaded on the vessel; we recommend that you file your ISF 48 hours prior to ensure compliance. Good business practices dictate that you have a team in place to handle these requirements. Part of that team would be a reputable customs broker. You will find that receiving your goods is easier when you have a team in place. As we solidify our status as a global economy, importing regulations will continue to change as governments continue to refine their requirements and as the importer it is your job to try to keep up! That is why having a good team in place is so important.
Importer Security Filing is one of the latest and greatest changes to the supply chain, and complying with this regulation is easy if you file your information completely and timely. The prospect of importing into the U.S. is a worthwhile endeavour and ISF filing is just one more piece of the profitable puzzle. For more information, please contact Pacific Customs Brokers Inc. (USA) toll-free at 877.332.8534 and we’ll be happy to assist you.
Without a Customs Bond… Your Goods will be Denied into the U.S.
If you are an experienced U.S. importer, you are well aware of the requirement for a Customs Bond. If you are not, then this blog is for you.
A Customs Bond acts as a promissory note between the Importer of Record (IOR) and U.S. Customs and Border Protection (CBP). The bond secures payment of any duties, taxes, penalties or associated customs fees. Just like car insurance, customs bonds are provided by third party insurance providers commonly referred to as surety companies.
Required by law just like car insurance, the biggest difference is that instead of insuring your property, you are insuring the imported goods, and the Customs Bond basically indemnifies U.S. Customs and Border Protection, should you default on any of your obligations.
All commercial transactions and some personal importations require a bond. There are two types of bonds that satisfy this CBP requirement.
Single Transaction Bond
A Single Transaction Bond, otherwise known as a SEB, is good for a single entry into the United States. The single entry bond amount is calculated by combining the value of your shipment plus any duties and fees. In addition, you can typically expect to pay a fee for every $1000 worth of bond value.
Keep in mind that food products, electronics or anything that is subject to another government agency requires the bond to be calculated at three times the value of the shipment plus duties and fees. This can significantly increase the amount you pay per single entry bond (SEB) and possibly require special approval from the surety company which can delay your shipment.
Below is a list of other government agencies that require the value on an single entry bond to be tripled.
• U.S. Food & Drug Administration (FDA)
• Environmental Protection Agency (EPA)
• Fish & Wildlife (F&W)
• Federal Communications Commission (FCC)
• Consumer Products Safety Commission (CPSC)
• Bureau of Alcohol, Tobacco & Firearms (BATF)
• Department of Agriculture, Agricultural Marketing Services (AMS)
• Toxic Substances control Act (TSCA)
• All merchandise subject to Quota and/or Visa requirements
Continuous Transaction Bond
A Continuous Transaction Bond, otherwise known as a CTB, covers all merchandise entered into the commerce of the United States for a full year from the date that the bond becomes effective. A significant advantage to purchasing a CTB is the immediate savings in costs. Offered at a flat rate, you can expect to pay a much lower fee than purchasing a single entry bond every time you import.
A continuous transaction bond for high volume importers is the most efficient option available.
Lastly, do not wait until the last minute to decide on the best option for your importing needs. Bonds need to be secured in advance of goods arriving into the United States, otherwise you risk your goods being delayed. For more information, please contact Pacific Customs Brokers Inc. (USA) toll-free at 877.332.8534 and we’ll be happy to assist you.
Free Trade Agreements: Four Insightful Tips
Most Canadian companies are familiar with the North America Free Trade Agreement (NAFTA) and the responsibilities they assume when receiving the benefits of duty free status on their imported goods. The agreement has been in effect for almost 20 years, and the process and regulations have been well documented.
Over the last four years, Canada has also entered into Free Trade Agreements (FTA’s) with several other countries including Colombia, Peru, Panama, and Chile to name a few. With the relative ease in which Canadian importers enjoy the benefits of NAFTA, they can also take advantage of the same on purchases from other participating countries.
The following are some tips to consider when evaluating your costs and responsibilities.
Determine if your method of shipping will allow the goods to qualify
FTA’s are deals made between countries who desire increased reciprocal trade on goods manufactured in their respective countries. This means that in order to receive the benefits of the FTA, the goods need to be made in the respective country and shipped directly to Canada. In most cases this is easily accomplished. However, in some instances, usually depending on the quantity of the product purchased or the distance between the shipper and Canadian consignee, it is necessary to transfer the goods through a third country. A transportation scenario like this can still meet the FTA rules, but there are some conditions that must be met. For example: A large shipment of cut flowers is shipped from Colombia on an aircraft destined for Miami (a popular North American transportation hub for South American goods). Within the shipment are flowers for Canadian and U.S. destinations. Upon arrival in Miami, the allotment for U.S. purchasers is customs cleared and delivered accordingly. The balance of the shipment for Canada is briefly held in a bonded warehouse and then placed into a truck for further transportation to the Canadian destination. In this instance, if the Canadian importer wishes to claim duty free benefits under the Canada-Colombia Free Trade Agreement, he will need to have proof that the goods were moved “in bond” through the U.S. and never entered the commerce of the U.S.
Have sufficient vendor knowledge of the FTA
Make sure your foreign supplier has sufficient knowledge of the Free Trade Agreement. Like NAFTA, the person completing and signing the FTA Certificate of Origin (another condition that must be met in order to claim FTA benefits) is declaring that all statements are true and accurate; in other words, that due process has been observed and the goods listed actually qualify. While the foreign supplier is responsible to supply the respective FTA Certificate of Origin, the Canadian importer is responsible for duties, fines and penalties if Canada Border Services Agency (CBSA) makes a re-determination at a later date and discovers that the goods do not qualify. If you have reservations regarding the validity of the supplier’s claim, you may wish to pay the regular (Most Favoured Nations) rate of duty.
Verify the tariff classification and duty rate
As you would do with any other foreign purchase, verify the correct tariff classification and duty rate for the products that you wish to import. Our previous blog covers the reasons of this important step – ‘Determining the Correct Tariff Classification – How Important Is it?’. In reference to FTA’s, the obvious assumption is that goods imported under free trade should be duty free. In most cases this is correct but there are a few things to watch.
- Certain goods may fall into a FTA “staging category”. In FTA language, a “staging category” means that Canada and the other country decide to reduce the base duty rate over a period of years (i.e. 10% duty falls to 8%, then 6%, etc.).
- There might not be a break on the duty rate. In other words, Canada may not be providing duty free status or a reduced duty rate for specific products from these countries.
- Be mindful of products where an import permit or quota is required in order to achieve duty free status. Generally this refers to certain food products such as dairy or wheat products. The duty rates could be extremely high so use extra caution.
Be aware of the rules under the respective FTA that you are claiming
Not all FTA’s are created equal. FTA’s follow similar formats and rules; terms like tariff shift, de minimis, and regional value content are used uniformly. However, like everything else, there are exceptions and variations. Sometimes these fall in your favour, but more often there could be rules that disallow your claim for duty free status. Do your research carefully.
When in doubt, please check with your customs broker, customs consultant, or trade lawyer for their advice. Trade agreements were endorsed to provide advantages for importers and exporters; understand the responsibilities in order to make wise decisions.
In order to access the respective Canadian free trade agreements, go to Foreign Affairs and International Trade Canada.