Border Pro for Carriers powered by Pacific Customs Brokers, introduces a number of new features which leverages technology developed to support the BorderPro iPhone app. A not so obvious feature – is the addition of short message service (SMS) and email subscriptions to PARS and SCN shipment entries.

Email and SMS subscriptions are now offered on both our website based PARS and SCN tracking pages, as well as our iPhone application. At the time of submitting your PARS or SCN number,  the user can also provide a valid email or SMS/mobile number. We will then confirm/validate that your PARS or SCN number is valid and then subscribe you to that tracking number. You will receive a subscription confirmation by SMS or email as well as an email or SMS for every status change to the point of release. Using this you can search once, subscribe and be notified as your shipment is prepared and released. This can also allow your dispatch office to enter the tracking number on behalf of trucks en-route and providing the drivers SMS or email address for receiving updates. Invalid entries will not be subscribed for reasons such as; the number does not match in our system. This may be because Pacific Customs Brokers is not the designated customs broker associated to the shipment or simply human error and the number was entered incorrectly.

Be sure to give this a try on your next SCN or PARS lookup, submit once – add your preferred method of getting tracking updates and you will be notified on all status changes for that given shipment. For more information, please visit our BorderPro for Carriers web pages or contact our carrier help desk for assistance with this new and exciting feature.

Watch for multi-PARS and SCN support later this year as we continue to develop the back end support for the BorderPro iphone app.

“What do we need an iPhone app for?” Was the question asked when I suggested attending an iPhone Developer Course in the 2011. After some convincing, I registered and flew to Atlanta, Georgia to attend the course. A year later, Pacific Customs Brokers releases ‘BorderPro’ iPhone application v1.

As the General Manager of Information Technology for Pacific Customs Brokers, it was obvious from the beginning, Pacific’s commitment to technology. In the early 1990’s, Pacific’s primary focus was to be established on the internet, with email services and websites. Shortly after, we developed a PDF document system (www.formlink.com) that allowed our clients to submit customs documentation directly through an online forms system, which is still used by many of our clients today for both U.S. and Canadian documentation. Almost 20 years later the technology landscape is quite different.  The focus now is on services and website users expect more than just marketing material. The reach of internet is everywhere and smartphones, iPhones and iPads are now commonplace. Mobiles are becoming the platform (some might argue it has already became the platform) and Pacific Customs Brokers recognizes the need for an iPhone Application for carriers.

The concept was a fairly simple one, create an iPhone app that exposes our PARS and SCN tracking lookups.  Our existing website based tracking is heavily used by many carriers servicing our clients for tracking the release status of shipments. Our development focus over the past 10 years has been on web-based solutions.  Developing an iPhone app required a change in our development process, a change in technology and a re-tooling of our backend web-services to leverage the iPhone platform.  An iPhone application is quite different from the fluid nature of developing website based applications.  With a website we can tweak on the fly, make changes, test and fix. The iPhone development is much more stringent – it is about getting it right before it is released.  For us this meant rethinking our design process, our marketing process and our development process from the ground up.

The ‘BorderPro’ iPhone app is a first for Pacific Customs Brokers, and a first in North America for a purpose built customs brokerage tracking application.  It provides direct lookups for both PARS and SCN entries into our backend systems – giving the end user real-time clearance status updates.  It also provides the end user the ability to subscribe to a SCN or PARS tracking feed and receive SMS/Text messages with up to date tracking changes for any number of PARS or SCN numbers.  Any client can easily track and get tracking updates from any iPhone anywhere, anytime of the day or night.

The BorderPro iPhone app is the result of close to a year of planning, testing, design, and learning and is clearly a stepping stone into the future for Pacific Customs Brokers.  Our IT team has plans for the next version of our iPhone app that will add new features and functionality to this platform making it even more useful to our customers, clients and partners.

During that time, Pacific has taken many twists and turns, but always committed to technology.

Learn more about the BorderPro iPhone app »

A driver’s cross border journey is so much more than picking up freight and proceeding with delivery. Crossing international borders, especially with commercial freight, means complying with the rules of the governing country.

There are many aspects for the carrier to consider when planning their journey: transportation permits, routes, road conditions, hours and what customs requirements apply to the goods on board.

While most entries must be transmitted to the CBSA electronically for review, there are a number of exceptions to this rule. Here is a list of those exceptions to help give you a better understanding of some of the reasons you or your driver may have to stop your journey along the way:

• Invoice lines in excess of 250 lines – When an invoice covers a large number of purchased goods, it can take a customs broker quite some time to key it line by line. This is why customs has allowed entries exceeding 250 lines to be presented as a paper entry to help expedite the clearance process.

• Multiple Highway Cargo Control Numbers at Frontier

• Courier Low Value Shipment rejected from consist

• Other government department permit or certificate required – There are certain goods that cannot be released electronically because they require a permit, certificate or license to be presented to CBSA. An example of this would be vehicles that require Form 1 or fire arms that require a special permit.

• System outage (ie. customs broker, CBSA or CFIA)

• Shortages, Entered to Arrive, Value Included – These goods are reported when the quantity of goods originally reported to the CBSA is different from that received by the importer or broker.

• Provisional – When the importer/owner or broker cannot establish a final value for duty of goods at the time of importation. In such cases, goods may be released under the interim accounting provisions.

• Prime & ETAs – When an item is too large to fit on one truck and transportation of the goods will be split up onto a number of trucks.

• Used self propelled vehicles – Goods that require US customs authorization to export before they will be CBSA released.

• Used machinery requiring inspection – Goods that may have soil or dirt present must be inspected to ensure that the proper cleaning precautions have been taken.

In any of the above cases, the customs broker will instruct you or your driver to come into their office to collect a paper package, which they will have prepared in advance.  After obtaining instruction from the customs broker, you will proceed to the customs booth and advise the border service officer (BSO) that you need to see your customs broker. The border service officer will instruct you where to park while you take care of your documentation.

Once you’ve visited the customs broker and have obtained the paper package, those documents need to be presented to CBSA for their release decision. If release has been granted, Customs will stamp your paperwork released and you may then proceed with final delivery.

Do your due diligence and always ensure that your entries are good to go before proceeding to the border. By doing this, it gives you and the customs broker an opportunity to communicate any special instructions to each other.

The rules for the lending of carrier codes are fairly straightforward.

Two Simple Rules:

• Bonded highway carriers may lend their code out to non-bonded carriers

• Non-bonded highway carriers cannot lend their code to any other carriers

Bonded highway carriers may contract with other non-bonded carriers to transport goods on their behalf because they have posted maximum security of $25,000. The bonded carrier must issue a Letter of Authorization to the non-bonded carrier in order for the non-bonded carrier to be able to proceed with the load. The contracting carrier (carrier borrowing the code) must produce, upon request, the Letter of Authorization signed by the originating carrier (the bonded carrier) at time of report. The Letters of Authorization must be printed on company letterhead and must adhere to the format outlined by the Canada Border Services Agency.

The bonded carrier lending his carrier code maintains full liability for the goods and the performance of the carrier they are lending it to. Any tracers or penalties will be issued to the authorizing bonded highway carrier. The bonded carrier is also responsible for controlling the distribution and validity of Letters of Authorization of being issued.

Before you lend or borrow a carrier code, do your due diligence and be aware of the rules and responsibilities involved.

For more detailed information and a sample of the Letter of Authorization.

Are you a non-bonded carrier that’s interested in becoming bonded? Visit Border Pro for Carriers  and/or call our Carrier Relations Liaison toll-free at 855.542.6644 for more information.

Many times, we as customs brokers receive phone calls from importers, shippers, dispatchers and carriers frantically trying to find out why their shipment is “stuck at the border”. Lucky for them, we are ALWAYS Open 24/7, with live reception and no voice mail.

Sometimes it is a very simple answer and other incidence’s are more complex. Below are some of the most common reasons why a shipment may be stuck at the border.

1. Documents make no mention of who the customs broker is to assist with the clearance.  “Customs Clearance- contact Pacific Customs Brokers 888.538.1566”

2. Documents are hard to decipher who the actual Importer of Record is. The Importer of Record (IOR) can be;

•  The receiver of the goods – usually called “consignee”
• The shipper (acting as a “Non-Resident Importer” (NRI) and already set up with a Canadian customs broker)
• A third party having their shipments drop shipped from another location and in most cases will also be acting as a “Non-Resident Importer”

3. Neither the shipper or the consignee have not set up anything formally with a Canadian customs broker to effect customs clearance.

4. The driver/freight company picking up freight only has a Bill of Lading and is not given any other documents such as a commercial invoice or Canada Customs invoice.

5. Documents/commercial invoice does not have enough information to be able to prepare the entry for presentation and clearance with Canada Border Services Agency (CBSA). Some of the information that can hold this up is:

• not enough information to  classify the goods (Tariff Classification)
• total value or individual values are missing
• country of manufacture is missing
• total number of pieces is missing
• weight is missing
• commercial invoice document only shows product numbers or abbreviated number & item name (no general description of what the goods are). See below for examples.

For example: – 1956842ftp clr scn/cpy/prnt (not an acceptable description)

-   1956842ftp – Scanner/copier/printer unit (an acceptable description)

6. The document is not the correct document to obtain a customs clearance (i.e. purchase order or pick ticket)

7. A few more reasons freight crossing the border is often delayed may be due to the actual commodity being shipped. Perhaps there are other government agencies that are involved in approving the goods for Customs clearance, such as items that are under control of Canadian Food Inspections Agency (CFIA).

They require CFIA approval and some commodities are under quota and require an Import Permit. Perhaps the goods are listed on the Import Control List and require an Import Permit, such as some steel items.   Meat shipments and those requirements are also extensive.

It is always a good idea to check with a customs broker for any special requirements or extra documentation and / or extra steps that may need to be taken to properly clear the goods across the border prior to ordering or shipping.

When in doubt, be sure to contact your customs broker. They’ll properly advise on what you need to do and what they need in order for your shipment (s) to avoid delays and have a seamless Customs clearance process.

There are instances when a shipment hasn’t been processed by the time a carrier arrives at the border. While the delays are frustrating there are usually specific reasons as to why this has occurred. Some of which you may be able to avoid with a better understanding of what causes them and what procedures you can follow to help ease your experience at the border.

The first step is to understand some of the reasons why your shipment hasn’t been set up:

• The customs broker never received the paperwork – Did you confirm with the customs broker that they received your fax or email?

• The customs broker was not given ample processing time – Did you send your paperwork at the time you picked up the freight? Doing this gives the customs broker the maximum time to process the entry. The type of commodity imported and size of the entry also determines how much time is required to process it.

• There is pertinent release information missing – No invoice has been provided, country of manufacture is missing for all or some of the items, complete description of goods is not clear, licenses, permits or certificates are required and missing etc.

• The goods being imported can’t be set up under the PARS – Some examples: Prime & ETA, goods requiring inspection, used self propelled vehicles.

In any of these cases the driver will be directed (by the customs officer) to see the customs broker for further assistance. When arriving at the customs broker’s office you need to present them with all of the documents that you have:

•  The referral slip (yellow) from CBSA – Form E67(08)

• Canada Customs or Commercial Invoices

• Bills of lading

• Any licenses, permits or certificates

The customs broker will need to resolve the issue and resubmit to the CBSA for their release decision. These entries can be resolved either by electronic transmission or in the form of a paper package. ‘Failed PARS’ shipments are either released at the border or forwarded in bond for release at a later date.

To avoid a duplicate release of these shipments, the cargo control number (CCN) submitted with the PARS request must be re-used on a cargo control document. The CCN must be handwritten or typed on a blank cargo control document, Form A8A(B). This form is free and can be obtained from CBSA, your dispatch or the customs broker handling the clearance.

Carriers using their own pre-printed cargo control documents should cross out the existing bar-coded number and type or neatly handwrite the original failed PARS number in the “Previous cargo control No.” field. In either instance, the notation “Failed PARS” must be marked in the description field of the cargo control document.

Please note that handwritten/typed CCNs on A8A(B) forms will only be accepted when a PARS procedure fails. Carriers will be subject to a penalty under the Administrative Monetary Penalty System if they fail to comply with the bar-code requirements for all other reporting and release processes.

Failed PARS shipments should not happen regularly. If this is the case, please check with your customs broker to identify and resolve the problem.

Pacific Customs Brokers would like to wish you and your family a Merry Christmas & Happy New Year!

Thank you to our valued clients for your business and we wish you all the best of success in 2012!

Thank you to the all carriers, drivers, dispatchers for your continued support and referrals this past year!

Yours truly,

The Management & Staff of Pacific Customs Brokers Ltd.

It is business as usual for Pacific Customs Brokers on December 25, 2011 and January 1st, 2012. Our doors remain ALWAYS Open 24/7 regardless of Statutory and Civic Holidays.

Business is constantly changing but it’s your reaction to those changes that is important to the Canada Border Services Agency (CBSA).

Your unique 4-digit assigned carrier code identifies you to the CBSA. It’s very important to keep your account in good standing in order to prevent any delays at the border. The easiest way to do so is to communicate with the CBSA.

Some of the changes you need to communicate to the CBSA are:

• if your business is moving & a change of address applies
• if your business changes its name
• if you want to add/remove a vehicle to/from your fleet
• if you want to revise contact information

All of these updates can be done by calling, faxing or emailing the CBSA at:

• Telephone: 1-866-749-6623
• Fax: 613-957-9717
• E-mail: carrier-cargo@cbsa.gc.ca

You must indicate the name of your business, your carrier code and specify the information you wish to update.

There are times that the CBSA will send out questionnaires that require your response. If you are in receipt of one of these questionnaires, do not ignore it. Respond promptly to ensure that your account is not deactivated.

A carrier in good standing with the CBSA will benefit by being able to provide efficient service to their customers.

With the end of the year quickly approaching, now is an excellent time for North American importers and exporters to review and update their blanket NAFTA Certificates of Origin.

Since this is an annual project for those companies who create, collect and/or maintain blanket certificates, it is worthwhile reviewing the key areas to protect importers from potential financial repercussions.  As with many annual projects, one tends to lose track of the steps involved or even where to start.  Speaking from my own experience this weekend, you could compare this to putting up Christmas lights…Where did you store them? Which string do you start with?  Do you need to change any bulbs or alter the design?  How will you affix them to your house to make sure they stay up?  Are they still going to work?  Personally I’m convinced that a naughty elf is at work in the summer messing up my system, or maybe I just can’t remember what I did twelve months before!

Here are some best practices that you should consider while getting your 2012 NAFTA certificates in order.

Correctly Completed Certificates

For companies reviewing NAFTA Certificates of Origin (NCO’s) from their North American vendors, the first step is to ensure that at face value, the certificate has proper coding and is fully completed.  While this might sound like common sense you would be surprised how many certificates are missing information or contain unacceptable data (for instance, indicating a dollar value in the Net Cost column).  In order to assure accuracy of the data you need to have sufficient knowledge regarding the completion of the document, the basics of which are usually found on the second page of the NCO (NAFTA Certificate of Origin).  For further information you can also refer to our previous article that covers some of the more common mistakes  (5 Top Mistakes When Completing a NAFTA Certificate of Origin).  If you are unsure about your knowledge and ability to perform this step, enlist the services of a customs broker to perform the review on your behalf.  Pacific Customs Brokers offers a variety of services to cover verification, collection, review and maintenance of NAFTA Certificates of Origin.

NAFTA Eligibility

A problem in the review process is verifying that the goods listed on the NCO are indeed eligible for NAFTA.  For importers this can be a huge challenge as they are relying on their foreign vendor to determine how their products qualify.  Remember, this isn’t just another document that is simply completed with trade data and a signature; there is a detailed process to determine if the goods qualify for NAFTA certification.  Here are some things you can do:

-        Check the certificate to determine who signed the document.  Generally a more senior employee will have exercised a higher level of care and due diligence.

-        Probe to discover if they use any amount of raw materials sourced from outside North America.  If so, ask the person who signed the certificate how they determined NAFTA qualification.  The response will be a good indicator of how carefully they conducted their review.  Tip:  Both U.S. and Canada Customs use the same strategy when conducting an audit.

-        You may also want to read the NAFTA De Minimis regulations and Specific Rules of Origin for the tariff classifications covering the respective products.  In some industries, there may be goods that are excluded from NAFTA if certain foreign materials are used.  It may worthwhile to be aware of these just in case your vendor has not researched it.

-        If there is any degree of uncertainty regarding their NAFTA knowledge, you may wish to suggest that they enlist the services of a customs broker or customs consultant to help them conduct a thorough review.  This step is highly recommended if they export large quantities within North America and have never undergone a formal qualification.

Some other compliance tips relating to NAFTA…

Review Each Customs Entry

Whenever NAFTA is claimed on a 7501 (U.S. customs entry) or B3 (Canadian entry) a valid NCO must be on file for those products.  Establish a process of checking every entry particularly if you are frequently importing new products.  This can be an area of concern if NAFTA is a topic only reviewed at the end of each year.  For instance, does your NAFTA management process have a procedure in place to obtain updated blanket NCO’s if you purchase new products part way through the calendar year?

Blanket or Individual NCO’s?

Decide whether to use blanket certificates of origin, which cover a 365 day period, or individual certificates (one time use).  For infrequent purchases it may be easier to have a vendor provide an NCO for each shipment.

NAFTA Maintenance

Have a system for tracking and maintaining these documents.  In Canada, import documents must be maintained for six years plus the current year (five years for the U.S.).  If you are chosen for a NAFTA verification audit by Customs authorities, could you locate your certificates and supporting documentation?

Increase Your Knowledge

We strongly suggest that you attend a NAFTA workshop or seminar to increase or refresh your knowledge, particularly if you manage many NCO’s, or manufacture and sell to North American companies.  Pacific Customs Brokers facilitates two NAFTA workshops a year – in November and January. Sign up today for the next NAFTA workshop to be held on January 19, 2012.

Use these practices to create or improve your NAFTA management process.  Penalties and potential duty charges may be significant if errors are found and neither customs’ agency will accept ignorance as an excuse (AMPS & the NAFTA Certificate of Origin)

If you need further information or have questions concerning this topic, please feel free to contact us.

The Pre-arrival Review System (PARS) allows customs brokers to submit release information (provided by the importer and carrier) to the Canada Border Services Agency (CBSA) for review and processing before the goods arrive in Canada. This speeds up the release or referral for examination process for the carrier when they arrive at the border with the freight.

In order for the system to be successful, all trade chain partners need to do their part. The carrier’s role is vital to the PARS process.

At the time the freight is picked up from the shipper, the carrier will affix a PARS sticker/label to the commercial documents and forward them to the customs brokers so they may set up the shipment with the CBSA in advance. When faxing the broker you must advise them what port you wish to cross ,  your estimated date & time of arrival, as well as your contact information in case the customs broker need to reach you.

The PARS sticker/label is made up of your carrier code and combined with a unique shipment number. This ‘PARS’ or cargo control number is critical because it identifies both the carrier and the shipment to the CBSA at the time of reporting and when release documents are presented.

Providing the customs broker and CBSA sufficient processing time will prevent you or your drivers from being delayed at the border. Always verify that the shipment has been set up and that you are good to proceed to the border. You can verify the status of your shipment by calling the customs broker direct or by using their online PARS look-up tool.

Under the PARS process, the customs broker will submit the release information to the CBSA either electronically or in paper format – depending on the release requirements for the goods being shipped. Goods that require permits, licenses or certificates will require additional processing time using PARS.

When you or your driver arrives at the Customs booth, the Customs officer checks all the commercial paperwork presented, and uses the bar-coded cargo control number on the PARS stickers to get access to the recommendation and also to determine whether or not the shipment can be released.

Just remember that the entry can’t be set up in advance under the PARS process, unless you do your part. So be sure to get your documents to the customs broker as soon as possible.

The Canadian Automated Export Declaration (CAED) Program was launched by Canada Border Services Agency, January 1st , 1998 as a fast, inexpensive and easy way of reporting your exported goods.

For those that a currently using CAED, there is a service patch for your current CAED Version. It is important to note that as of February 1st, 2012 that the 2011 version 11.00 is the only acceptable version of CAED.

For those not yet registered, for you convenience, there is a software demonstration provided at Statistics Canada for the CAED 2011 Version 11.00.

It should be noted that some steamship agents will no longer submit the export documentation as there is a push to get exporters to be use the Canadian Export Declaration System (CAED), and thus saving you the shipper/receiver to have to present the export documentation in person at the appropriate designated export office.

CAED is a great tool because it reduces your company’s exposure to the Administrative Monetary Penalty System (AMPS). It is important to note that shipments that require permits, you can still submit electronically, however, you must submit a hard copy of the CAED (B13A), along with a hard copy of the export permit in person to the designated export office at the place of exit.

Checklist for exporting commercial goods:

Canada Border Services Agency – Exporting Goods from Canada-A Guide for Exports and Customs D-Memorandum D20-1-1.

For further information that is not covered in the above topic, please reply to this blog and we’ll be happy to assist you.

The Canada Border Services Agency AMPS (Administrative Monetary Penalty System) legislation enables the CBSA to levy monetary penalties for non-compliance of specified regulations ranging from $100.00 up to $25,000.00 per infraction. This legislation is designed to promote compliance from all sectors of the importing community within the various CBSA regulations.

One of the major areas of concern under this legislation is the NAFTA Certificate of Origin (NAFTA). Section 35.1 of the Customs Act states that an Importer or Owner of goods must have a properly completed certificate of origin in their possession when claiming preferential tariff treatment for their goods. This means that in order to claim goods duty free under the NAFTA Agreement, you must have a properly completed NAFTA certificate on file, from your vendor, at the time the goods are accounted for with the CBSA.

Should the CBSA conduct an audit of your company and find that goods have been declared at a lower duty rate using a Preferential Tariff Treatment and a properly completed certificate of origin is not on file, the penalties for non-compliance of this regulation are as follows:

• 1^st Infraction – $1,000.00
• 2^nd. Infraction – $5,000.00
• 3^rd. Infraction – $10,000.00
• 4^th. and Subsequent Infractions $25,000.00

For anyone importing goods from the USA or Mexico the importance of this cannot be stressed strongly enough. Proof of Origin will be a major part of any Customs audit and obviously the cost of non-compliance is extremely high.

As an Importer of Record with the CBSA, it is your responsibility to ensure that all your US and Mexican suppliers provide you with an original, properly completed and signed NAFTA Certificate of Origin for all goods that you purchase from them.

If you do not have a NAFTA Certificate on file and one cannot be obtained within five (5) days from the date of release of the goods, the applicable duty must be paid on those goods. If a situation arises whereby you have to pay duty because you do not have a NAFTA Certificate available at the time of release, you can pursue a duty refund by providing a properly completed NAFTA Certificate within one year of the date of release of the shipment in question. Our Compliance team would be happy to work with you and your supplier to obtain the necessary certificate(s) for refund claims as required.

Should you have any questions regarding AMPS and your NAFTA or other Certificates of Origin please don’t hesitate to contact our office and a member of our Compliance team will be happy to assist you. You can also visit our website at www.pcb.ca for upcoming Trade Compliance Seminars on this and other important international subjects.

The direct to market program for Non-Resident Importer’s (NRI) can be key if you have the sales volume. While this is an excellent way to take advantage of lower duty rates for importing directly from an offshore country,valuation for Customs declaration remains a critical component of your customs compliance.

The United States and Canada differ on interpretation of the valuation rules. Lets take a look at the history and review how we arrived with customs valuation rules as they are today.

History:

“Governments have collected customs duties since the beginnings of international
trade. It is recorded that Athens applied 20 percent import duties on
corn and other goods, while the Romans, from well before the time of Julius
Caesar, depended upon customs revenues to support the expansion and maintenance
of their empire. And, where a tax must be collected, there will be
disputes over rates and methods….”

Today: In 1947, the General Agreement on Tariffs & Trade (GATT) negotiations concluded that the customs value should not be arbitrary or fictitious. Since then, there are agreements on how to determine the value for customs declarations.

Currently the valuation rules on are based on the implementation of the GATT Agreements. In 1994 the World Trade Organization established and implemented (based on those existing GATT agreements) the Customs Valuation Agreement (CVA) that all WTO members must abide by.  Valuation rules are necessary for many reasons and are valuable for use in:

• Determining and collecting revenue
• Producing trade statistics
• Implementing and monitoring trade agreements
• Monitoring quantitative restrictions (quota)

Still the interpretation of these rules are different for different countries.

The basic method for determining value is the transaction value method: the price paid or payable of goods being imported with certain adjustments when sold for export to the country of importation. This is where the interpretation has been the subject of many reviews and debates.

This is another significant difference between Canada and the USA with respect to a US company acting as a NRI and thinking they can use the ‘first sale rule’ for their direct imports into Canada.

In the US the “first sale rule” allows (under certain conditions) for the importers to use the price payable by the buyer (middleman) for imports into the USA. For example: a buyer (middleman) secures a sale of merchandise bought for $20,000. and then in turn sells the goods to the retailer for $30,000. The goods in the meantime are being exported from China into the USA with the final buyer being the importer. The value used meets the condition for using the valuation under the first sale rule. (lesser value of $20,000.).

Some countries in the World Trade Organization (WTO) have legislated and refined the interpretation of these valuations rules successfully while some have not.

Take the USA, Japan and the European Union, while they have had much discussion and even congressional reviews and debates, these countries still allow (with certain conditions met ) the “first sale rule”. Canada and Australia have already abolished the “first sale rule” through legislation 10 years ago.

Canada deems under the transaction value method that the value for customs be: the price paid or payable (with adjustments) by the first purchaser IN  Canada. In other words the value should be the last sales value before import and not the first sale. How does this change the example given above ?

In order to declare the lesser value ($20,000.) the importer must be the middleman and must reside in Canada.  If the middleman happens to be a USA company acting as a NRI for their sales to Canada and has their goods shipped directly from the offshore country they buy from, the value used for customs must be the price paid or payable by the first Canadian purchaser, not the price paid by the middleman under the “first sale rule”

This is critical to the NRI and compliance under valuations rules for doing business in Canada. Many USA companies do not realize this difference and declare the sales price they paid, leaving them at risk in the event of an audit by CBSA.

If you are a NRI selling to Canada, review your procedures and ensure you are using the correct valuation for Canada. When in doubt contact Pacific Customs Brokers for a complete review of the valuation methods and regulations for your imports into Canada.

As the Importer of Record for transactions made with the Canada Border Services Agency, CBSA, it is extremely important that your company is aware of their obligations regarding compliance with Customs regulations. Of the myriad regulations that you face as an Importer, three very important regulations to be aware of are the “Administrative Monetary Penalty System – AMPS”, “Self Adjustments and Reason to Believe”, and “Compliance Verification Audits”.

Administrative Monetary Penalty System (AMPS)

AMPS is a penalty regime designed to “provide the Agency with a means to deter non-compliance by its client (the Importer), and thereby to encourage compliance.  AMPS ensure a level playing field for all Canadian businesses by ensuring that there is a cost for non-compliance.  To this end, AMPS is designed to be a remedial rather than a punitive program”.  There are over 300 specific situations that can trigger an AMPS penalty to be issued.  AMPS penalties can range from $150.00 per transaction up to $25,000.00 for multiple infractions.

Self-Adjustment – Reason to Believe

Each time that a shipment is cleared through Customs, an electronic transaction is presented to the CBSA which provides among other information, the quantity, description, tariff classification and value of each product in that particular shipment or transaction.  This constitutes a declaration under subsection 32(1), (3) or (5) of the Customs Act.

If it becomes apparent after the original declaration, (transaction), has been acquitted with the CBSA, that there has been a change in tariff classification, country of origin, or value for duty, for any reason, the importer is required to make a correction to the declaration whether or not the correction results in duty or GST owing to the CBSA, or is revenue neutral.

An Importer has an obligation to file any corrections within 90 days of having a “Reason to Believe”, that an incorrect declaration has been made.  “Reason to Believe” can take on a number of different forms.  You may receive a NAFTA Certificate of Origin from your vendor that has a different classification on it than what has been declared to Customs, you may receive a corrected invoice which has a different country of origin than what has been declared, or you may discover that your vendor has been providing an incorrect or incomplete description or pricing on their invoices.

Any of these, and other instances can trigger the requirement for a correction to be filed with the CBSA for the affected transaction or transactions.  Corrections may be required from the earliest date of having “Reason to Believe” that an incorrect declaration has been made to a maximum of four years.  The specific provisions that cover this can be found in Customs Memorandum D11-6-6.

If you are unsure if you have corrections that require filing and have not done so, a member of our Trade Compliance Team can assist you in making that determination through a self-audit process.  If it is discovered that corrections are required within the 90 day time limit then they should be dealt with immediately.  If it is discovered that corrections are required past the 90 day time limit, it may be to your advantage to file a Voluntary Disclosure.  If Customs accept a Voluntary Disclosure, it may mitigate the payment of AMPS penalties and punitive interest on any duty or taxes owing to the CBSA.  Very important however, is the fact the corrections must be filed even if they are revenue neutral. For further information on the Voluntary Disclosure process please contact our office.  It is important to note, that should your company be chosen for a Compliance Verification Audit prior to filing required corrections the Voluntary Disclosure is no longer an option and AMPS penalties and punitive interest may apply.

Compliance Verification Audit

Should the CBSA choose your company for a Compliance Verification Audit; you will be asked to provide a number of sample transactions for them to review.  The verification could be for tariff classification, valuation, country or origin or a combination thereof.  For tariff verification for example, you will be provided with a letter requesting copies of transactions that the CBSA wish to review.  You may also be asked to provide samples of the products in question.  At the conclusion of the review, a letter will be sent outlining the CBSA findings.  If the CBSA makes a determination that all transactions were filed in accordance with the regulations, they will issue a letter to close the audit.  If the CBSA determine that there are corrections required, and the “Reason to Believe” is determined to be the date of the final verification letter; corrections would be required to be filed on any affected transactions from the date of the final verification letter, including 12 months from the date of the last fiscal year end.  However, if it is determined that there was “Reason to Believe” that an error had been made in the tariff classification, prior to the verification audit, corrections may be required to be filed on transactions going back four (4) years from the date of the final verification audit letter.  Furthermore, in this scenario, the CBSA can issue AMPS penalties of $150.00 per transaction to a maximum of $25,000.00 for each correction required to be filed.  It is important to note, that any CBSA findings and subsequent corrections and/or penalties are subject to appeal.  Please see Appendix “A” for a list of the current CBSA National Audit Priorities.

We hope that you will find this information helpful and urge you to take the steps within your company to ensure that those who need to be aware of this information are made aware of it.  As an Importer with the CBSA your company should be aware of all compliance requirements, and have mechanisms in place within your company to ensure that all information transmitted to the CBSA is as accurate as possible.  It is very important that your company have a plan in place to make sure that any corrections that are required to be made are being addressed.  Should your company have any corrections to file at this time, or on an ongoing basis, we are certainly able to provide this service for you.

As your Customs Broker, we make every effort to provide you with whatever tools and information we can to ensure that your company is as proactive as possible with the CBSA. We hope that in this way we can help to lessen your exposure to any penalties or fines.  As part of our ongoing efforts, we offer a number of informative Trade Compliance Seminars throughout the year dealing with Customs Compliance among other subjects. We can also provide on-site seminars to any number of employees that you feel would benefit from them and we would be more than happy to discuss this option with you.

Should you have any questions on any of the above, please do not hesitate to contact our office at anytime.

Previously, we introduced you (U.S. company) to the Non-Resident Importer (NRI) Program for exports to the Canadian market. In this segment, we’ll provide excellent reasons as to why shipping your overseas goods directly to Canada is the way to go.

One of Canada’s passions is hockey, therefore, this is great market to sell hockey sticks. If you are a U.S. company wanting to sell hockey sticks into Canada, this is not a problem. But it is a problem if the hockey sticks are initially imported into the USA from China first and then exported to Canada. The reason being, the hockey sticks will then attract duty. Considering your duty and freight cost to re-export to Canada, the price is no longer competitive as a Canadian firm can import the same hockey stick duty free direct from China. This is where the option of being an NRI is a cost benefit to your company. You can utilize the NRI option for a direct to market cost savings to import the hockey sticks duty free into Canada direct from China.

Many U.S. companies do not export from their locations in the USA. They have enough sales volume to bring the goods into Canada directly from the offshore country without ever landing in the USA and can then take advantage of Canada’s trade agreements with other countries. Just one of the benefits of being a Non-Resident Importer!

Let’s look at another example of how you can use the NRI option to your benefit – perhaps you export (not as an NRI) high end walking sticks made in Italy to Canada. These walking sticks are so desirable, you have no trouble selling them to the Canadian market, despite the Canadian consumer has to pay tax and 7% duty to import them.

With the product, you offer a lifetime warranty of a free replacement, should any of the walking sticks break or crack but the customer will still be responsible for the duty & taxes on the free replacement. The customer is not so happy. If you shipped as the a Non-Resident Importer, the customer would not endure anymore costs. Your customer in Canada is extremely pleased with your hassle free replacement warranty and spreads the word.

You decide to use the NRI option for all your sales to Canada and find you can actually reduce the cost by acting as the NRI due to your weekly volume of shipments to Canada.  Your phone starts ringing, and your website traffic increases with even more orders for the beautiful lifetime guaranteed Italian walking stick!  A true success story!

For more information on NRI option and how it can benefit your sales in Canada, contact us at shipmentstocanada@pcb.ca and get a jump on other exporters to Canada who are not taking advantage of the Non-Resident Importer option.

After months of effort, you successfully establish a solid foreign source for a product line. You have met with the manufacturer and are confident with the company and their ability to produce a quality product that meets your criteria and time frame. You have determined packaging and labeling requirements, sought out a good freight forwarder to manage the movement of the goods, and have carefully researched the customs clearance process with your customs broker. Terms of sale, financing, tariff classification, import documents – everything is in order. In short, you have done all your homework to purchase the right product for the right price to get it to the right place at the right time.

So would you anticipate paying any other costs to import your goods? Probably not – because you have carefully covered all possibilities. However, let’s look at some of those unexpected fees that could occur. Some which are preventable and some which could happen even if you have done everything correctly.

Customs exams: Most of these are totally unavoidable. As the front line of defense for goods entering a country, any Customs agency in the world has the right to examine goods and will never divulge their process for determining which shipments are examined and which are not. In particular, you can probably expect an increased chance for an exam if you are importing from overseas for the very first time, or if you import from countries which could be deemed to be a higher risk.

Potential costs? Full ocean container inspections start around $850. Less Than Container Load (LCL) shipments are significantly lower and start around $35.

Canadian Food Inspection Agency (CFIA) exams: There are many other government departments involved with the importation of goods, however, the CFIA is the predominate one. They are Canada’s watchdog when it comes to imports of food, meat, fruit & vegetables, plants and flower bulbs to name but a few of the products under their governance. This also gives them the authority to conduct their own examinations independently from Canada Customs. Quite often these examinations are done on site for regular importers, however, the CFIA will determine this based on their own criteria. Currently wood packaging is a huge target on their radar due to the various types of bugs which can hide in untreated or raw lumber.

Potential costs? There are usual costs that the CFIA issues for standard inspections (http://www.inspection.gc.ca/english/reg/cfiaacia/feesfrais/feesfraise.shtml) but if goods are held in detention the costs could be over $100/hour. When it comes to improper wood packaging or if they find bugs (dead or alive) inside a shipment, the repercussions could be substantial – $1000 and upward. If they deem the risk too high, they can refuse the entry of the goods into Canada. Are these avoidable? The latter situation is however the CFIA works in a similar approach to Customs and has the right to examine shipments as they determine.

Demurrage, detention and storage fees: These are fees usually assessed for rail or ocean freight movements when free time has expired. The amount of free time that you have to move the container from the dock or rail yard will largely depend on several factors: the mode of transportation (rail or ocean), the terminal location (for example, Vancouver could be different than Montreal), and the shipping line or freight consolidator (in the event of less than container load freight). Your best course of action is to communicate closely with your freight forwarder or customs broker to verify who is looking after the final delivery once the container arrives at the terminal.

Potential costs? Based on the aforementioned factors the rates for a full container range from about $100 to $200 per day. In many cases the daily rate will continue to increase if freight remains at the terminal longer than three days.

AMPS penalties: AMPS is an acronym for the Administrative Monetary Penalty System which came into effect in 2002.  AMPS covers a wide range of importing and exporting infractions where the penalties are administered by the CBSA (Canada Border Services Agency) and could be issued at either the time of entry into Canada, or during an audit or import review. To view the entire master penalty document go to:  AMPS – Master Penalty Document.

Potential penalty amounts? There is a broad range of penalties from $150 per instance to $25,000. It is important to note that in most cases penalties increase with subsequent occurrences of the same infraction therefore if you do receive an AMPS penalty please put procedures in place to avoid future penalties which can only become more costly.

Avoidance? The best method is to have a solid understanding of your responsibilities as the importer of record and to build a compliance program with your customs broker. For a review of some of the key areas, please refer to our previous blog -Topics You Should Include When Documenting Your Import Process.

No one likes unpleasant, particularly costly, surprises especially at a time when profit margins are slim and time frames are short. The intent of this information was to make importers aware of some of the unforeseen situations so they can be best prepared when making a foreign purchase. As always, please feel free to contact Pacific Customs Brokers, if you should have questions or need assistance. Better to ask than assume.

According to the Canadian Border Services Agency (CBSA) Courier Low Value Shipment Program Moratorium Update, the Courier Low Value Shipment Program (LVS) was implemented in 1993 and was meant to streamline and expedite the processing of authorized participants’ low value courier shipments. In 2010-2011, 32 Million Courier LVS Program shipments were processed. Due to the extensive benefits and privileges afforded to its participants, more stringent eligibility requirements have become necessary to ensure program integrity.

In addition to the existing requirement for participants to be bonded carriers, the CBSA proposes to restrict participation in the program to:

1. companies that are approved Partners is Protection (PIP) members, in addition, Courier LVS Program shipments must be imported and transported by approved PIP carriers;
2. companies that will allow the CBSA the use of their proprietary systems for report, release and risk assessment purposes; and
3. companies that will also transmit their pre-arrival cargo data to the CBSA as they do today for high value shipments.

The ultimate vision for the Courier LVS Program is that pre-arrival, report and release data will be input directly into a CBSA system, such as the case with the regular commercial process today. The new eligibility requirements will ensure that the Courier LVS Program is harmonized with the other CBSA import streams and World Customs Organization international standards. The Program will continue to provide an expedited service within a secure environment and operate within the CBSA mandate by providing a proper balance between facilitation and security.

New applicants will be required to meet the first two requirements prior to being accepted. Current participants will be given until December 31, 2011 to comply.

Need more information? Pacific Customs Brokers is pleased to offer “Partners In Protection” Consulting, as well as a series of Trade Compliance Seminars on topics varying from U.S. and Canadian Customs Compliance, NAFTA Rules of Origin, Harmonized System Tariff and Classification Workshop, U.S. Food and Drug Administration, and Canadian Food Inspection Agency.

If you would like further information on any of these topics, please send an email to info@pcb.ca and we’d be pleased to assist.

U.S. exports to Canada are a popular topic these days. As most of us are aware, the U.S. economy has taken a huge plunge, therefore, U.S. businesses are now expanding their sales outside of the U.S. As a Canadian & U.S. Customs Broker with offices on both sides of the border, Pacific Customs Brokers knows first hand the benefits of international trade between these neighboring counties. If you are a U.S. company, then perhaps the Non-Resident Importer option may be your biggest advantage when selling your goods to Canada.

With similarities in people, language and the close shipping proximity, exporting to Canada can be the most lucrative and easiest export market for the U.S. Canada is the leading export market for 36 of the 50 U.S. States and is a larger market for U.S. goods than all 27 countries of the European Union”. “The United States and Canada share the world’s largest and most comprehensive trading relationship, which supports millions of jobs in each country.

Why choose the Canadian Market:

• Potential market of over 33 million people

• Market Potential for 15% of your U.S. sales

• U.S. to Canada exports rose 21% in 2010

• 23% of everything the US exports is exported to Canada

• 80% of Canadians live within 60 miles of the US/Canada border

• It is the least expensive country to export to when it comes to time and expense

 By looking at the Non-Resident Importer option, you can sell to Canada in a domestic selling environment:

• Remove the border hassles and surprise fees for your customers

• Provide price guarantee to leverage more sales

• Take full advantage of your Made in USA products because of our North American Free Trade Agreement (NAFTA)

• Simplified customs documents and reduced brokerage fees

• Open doors to large retailers

• Create a potential advantage over US Competitors without impacting profits

• Position yourself on an even playing field with Canadian firms without the additional expense of a Canadian office, warehouse or distribution point.

For further information on the Non-Resident Importer option and how it benefit your sales strategy, please email Pacific Customs Brokers at shipmentstocanada@pcb.ca

It is business as usual for Pacific Customs Brokers on B.C. Day, Monday, August 1st, 2011. Our doors remain ALWAYS Open 24/7 regardless of Statutory and Civic Holidays.