Possible Trade War: U.S. and Canada


 

Canada, the U.S. and Mexico Flags NAFTA

On June 1, 2018, the U.S. committed to a 25% tariff on imports of steel and 10% tariff on aluminum, on the European Union, Canada and Mexico. The tariffs have triggered retaliatory tariffs on U.S. goods and heightened the chance of a trade war.

The U.S. steel industry will initially benefit from the tariff increase through decreased international competition, driving up the price of U.S. steel and therefore the profits. These profits can be reinvested into the steel industry by improving their technologies and potentially providing more job opportunities.

A potential downfall to the tariff increase is retaliatory measures from U.S. trade partners, as is the case with Canada. Canada has announced $16.6 billion in retaliatory tariffs. The Canadian tariffs will go into effect July 1, 2018, and cover a broad range of commodities. Some, mainly unfinished iron and steel products will be hit with a 25% tariff, while others including many consumer products will be hit with a 10% duty.

 

If history repeats itself, trade policy experts warn tariff increases could cause future harm. An example of this was in 2002, when the U.S. enacted a tariff of 8% to 30% on international steel. The increased tariffs set off a chain reaction with the European Union responding with tariffs of its own and a number of countries disputed the tariffs at the World Trade Organization. The WTO ruled the U.S. violated the international trade agreements, and opened the door for sanctions and retaliation. Retaliation by the EU cost many Americans their jobs, and in late 2003 the U.S. Government reversed the sanctions.

Canada’s Stance

The tariffs could cost the Canadian economy over $3 billion a year.  According to the Canadian Steel Producers Association, Canada is the largest supplier of steel and aluminum to the U.S.  Approximately 90% of Canada’s steel is exported to the U.S. The price of steel and aluminum is going to go up as a result of these tariffs and jobs will be lost in Canada. Steel production employs around 22,000 people in Canada concentrated mainly in Ontario. Canada exports around 84% of its aluminum to the U.S., which represents around 8,300 jobs in the aluminum sector with the majority being in Quebec.

Canadian consumers can expect to pay more for products imported from the U.S. that are largely made of steel and aluminum which could apply to anything from cars, refrigerators, canned sodas and beer.

International Stance

China, and the European Union have also responded negatively to the U.S. tariff increases. Brazil contributes 13%, followed by South Korea at 10%, and Mexico at 9%. The original target China only imports 2% of the U.S. steel imports.

Along with fighting the tariffs at the World Trade Organization, European officials have been preparing levies on an estimated $3 billion worth of imported American products in late June. In a joint statement, ministers from France and Germany said the countries would coordinate their response.

Steel and Aluminum Statistics

Below you can see a few interesting statistics on Canada-U.S. cross-border steel and aluminum trade.

  • In 2017, Canada exported nearly $17 billion of steel and aluminum products into the U.S. (Statistics Canada)
  • More than $14 billion of steel crossed the Canada-U.S. border in 2017 (Canadian Steel Producers Association)
  • Canada exported $11.1 billion of aluminum and aluminum articles to the U.S. in 2017 compared to $3.6 billion of imports from the U.S. (Statistics Canada)
  • Close to 45% of Canada’s steel production is exported to the U.S.  Predominantly to Michigan, Ohio, Illinois, and New York.
  • Over 50% of American steel exports go to Canada.
  • Canada sent more than $5.6 billion of primary aluminum exports to the U. S. in 2016. New York, Kentucky, Michigan and Pennsylvania are the top destinations.
  • Between 2000 and 2015, Canada’s share of world aluminum production fell from 10% to 5%. For the U.S. from 15% to 2.7%. While China’s increased from 11% to 55%.
  • U.S. aluminum production fell following the 2008 financial crisis and recession. It was up 6.9% in 2018 from 2017.
  • Canadian aluminum production is down 7.6% for the first two months of 2018 compared to the same time in 2017.

The Beginning of the End for NAFTA?

With the likelyhood of eliminating multilateral trade agreements in favor of bilateral trade agreements. In order to have control over your trade in these uncertain times, you must arm yourself with the knowledge of what your duty rates will be without NAFTA, alternative countries of origin for your imported goods and freight quotations on getting your goods from your new origin to the final destination.

You can talk with our trusted trade advisors to determine your rate of duty without NAFTA. Click here to get in contact with a trade advisory expert today.

Jan Brock | Author

 

 

 

 

 

 

Pacific Customs Brokers Newsletter Sign Up

 
 

CBSA Releases 2018 Departmental Plan


CBSA Departmental Plan

The CBSA Departmental Plan for the next two years supports the Government of Canada’s effort to improve travel and trade facilitation. The departmental plan covers a number of initiatives specific to various modes. The trade initiatives are as follows:

Pre-clearance for Cargo

CBSA will continue to advance the development and expansion of the pre-clearance program for cargo. In 2018-19 CBSA will work with U.S. Customs and Border Protection (CBP) on the Bi-national Rail Cargo Pre-screening Pilot. This Pilot involves CBSA Border Services Officers (BSOs) pre-screening rail cargo by viewing x-ray images of northbound rail cars at Rouses Point, New York. BSOs working with U.S Customs officers can note any irregularities and finish processing the goods in Canada. This pilot is the first time Canadian BSOs have worked in the U.S.  Additional pilot projects are being promoted. Canada is working to develop required legislative and regulatory frameworks to make this a reality. Bill C-23, the Preclearance Act,  is one example of this.

Marine Container Examination Facility

CBSA has invested in the new Marine Container Examination Facility at Roberts Banks, which is near completion. This is a joint project with the Vancouver Fraser Port Authority. This facility is scheduled to be operational in the summer of 2018.

CBSA Assessment and Revenue Management

The CBSA Assessment and Revenue Management (CARM) project is forging ahead. This project automates the processes to assess, collect, manage and report on revenue. It enables importers to self-assess and comply with Canada’s trade requirements. In 2018-19 CBSA will work with a third party vendor and external stakeholders to proceed with the design phase of the CARM project.

Improved Compliance and Duty Collection

The CBSA will conduct an analysis in 2018-19 to identify improvements in trade compliance and duty collection as identified in the 2017 Auditor General’s Report.

Anti-dumping and Countervailing

CBSA will implement new scope proceedings and anti-circumvention investigations to further strengthen the administration of the Anti-dumping and Countervailing Program.

Trusted Trader Mutual Recognition Arrangements

The CBSA intends to advance the Trusted Trader Mutual Recognition Arrangements (MRA) with China and EU and is pursuing an MRA negotiation with Hong Kong and Brazil.

Trusted Trader Corridor Concept

CBSA intends to pilot a Trusted Trader Corridor Concept (TTCC) in the highway mode. The TTCC is expected to create a seamless border experience where pre-approved, low-risk drivers with pre-approved low risk goods can cross the land border though an expedited process.

Harmonize C-TPAT and PIP

CBSA is moving to harmonize the Partners in Protection (PIP) program with the U.S. Customs-Trade Partnership Against Terrorism(C-TPAT) program with a focus to implement a joint application process for highway carriers.

Emerson FAST Lanes

CBSA intends to expand Free and Secure Trade (FAST) by adding FAST lanes in Emerson, Manitoba in late 2018

Revise Trade Appeal

CBSA intends to revise the internal Trade appeal process.

Additional Port Of Entry

And lastly the CBSA will continue to work closely with the Windsor-Detroit Bridge Authority to advance the Gordie Howe International Bridge project, which will add a new border crossing option at the busiest trade corridor between Canada and the U.S.

Advice You Can Trust

Pacific Customs Brokers strives to stay ahead of all CBSA and Canadian government initiatives. If you need any help regarding CBSA’s new initiatives please contact our experienced trade compliance team for expert trade advisory services.

Jan Brock | Author

 

 

 

 

 

 

Sign Up for PCB's Newsletter

 
 

Foreign Supplier Verification Program Frequently Asked Questions


FSVP Produce


What is the Foreign Supplier Verification Program (FSVP)?

FSVP is a program set in place by the Food and Drug Administration (FDA). This requires U.S. buyers to make sure they are importing from foreign producers that are manufacturing under the same standards as domestically made foods. It consists of various information retained by the U.S. importer such as hazard analysis of the producers, controls, monitors programs, and specific record keeping requirements.

What is the FSVP compliance date for importers subject to the Produce Rule?

All Importers whose large foreign suppliers are required to be compliant with the Produce Rule will also be required to be compliant with FSVP on July 26th, 2018.

Who is subject to the Produce Rule?

Growers and Manufacturers of vegetables and fruits that are normally consumed raw and that are fresh or minimally processes, such as cut and washed, are subject to the produce rule, such as tomatoes, cucumbers, and blueberries. This does not include frozen fruit or vegetables or items that need to undergo further processing (such as a process to minimize contamination or cooking). This would include squash, coffee beans, and navy beans.

What new information must I include on my invoices?

For your Customs Broker to clear your entry with the FDA, they will now need to know who the FSVP Importer is, the FSVP importer’s DUNS number, and the FSVP importers IRS number. Without this information, the entry will be held.

Who is the FSVP Importer?

The FSVP Importer must be a U.S. Company. When items have been sold this is usually the U.S. buyer of the goods. If there is not buyer, then it is the receiver of the goods in the U.S. If there is no final receiver, such as items going to a fulfillment facility, you can have a U.S. FSVP Agent indicated on the documents, who agrees to take on the responsibilities of the FSVP Importer.

How does this affect Foreign suppliers?

Although the FSVP Importer is technically the U.S. company, there is a large amount of information that the FSVP Importer is required to have on file and verified regarding your manufacturing facility. These can range from lab results, your food safety plans, and other information. If you do not have these available, but they are a requirement for the U.S. company to buy your goods and bring them into the state, they may move on to purchasing from someone who has provided them the required information.

Also, as the foreign supplier, if you are the Importer of Record as well, you will need to make sure you speak with your buyers to confirm with them that they are aware of the FSVP rule, are working to be in accordance with it before July 26th, and that they have provided you their DUNS number and email address.

What does the FDA consider a Large Foreign Supplier?

FDA considered a large facility a facility that is neither a small or very small supplier. This would be a business (including any subsidiaries and affiliates) employing 500 full-time equivalent employees or more.

FDA also lists the definition of full-time equivalent as: “a term used to represent the number of employees of a business entity for the purpose of determining whether the business qualifies for the small business exemption. The number of full-time equivalent employees is determined by dividing the total number of hours of salary or wages paid directly to employees of the business entity and of all of its affiliates and subsidiaries by the number of hours of work in 1 year, 2,080 hours (i.e., 40 hours × 52 weeks). If the result is not a whole number, round down to the next lowest whole number.”

Where can I ask more questions regarding the Foreign Supplier Verification Program?

You can call us anytime to find out more information on importing produce into the U.S. and all the subsequent regulations and governing authorities such as the FDA.

You can stay informed by signing up to our email newsletter. These emails consist of general trade information, regulatory updates and event notifications. Click the button below to stay informed on the latest trade information, regulatory updates and Pacific Customs Brokers events.

Sign Up for PCB's Newsletter

 
 

Importing Trailers | Crossing The Border


Importing Trailers

A pain point for any carrier, dispatcher or driver is not feeling prepared for arrival at customs. Without the proper documentation and pre-arrival preparation, clearances can take hours, and in the worst cases, days. No carrier, dispatcher or driver wants to spend hours at the border, and no importer wants to wait longer for their goods.

Pacific Customs Brokers has put together a how to guide on how the arrival and Customs clearance process works for the carrier when importing trailers.

The main problem carriers, dispatchers and drivers run into, is that trailers often require a hard copy paper Transport Canada Form 1 to be submitted with the declaration of the goods. With most declarations being submitted to Customs electronically, the inclusion of a paper document requiring a paper declaration submission does change the dynamics of the entry.

Importing Trailers Under The Transport Canada Pre-Clearance Program

When notified in advance, the paper declaration is submitted to Canada Border Service Agency before the goods and the driver arrive at the border. This action is often performed by the importer/agent physically located at the port.

To find out if the paper package has been delivered to Customs you are welcome to call us and we can inform you. Unlike electronic submissions, our online PARS check will not be able to advise the status beyond being received in our office.

When the carrier arrives at the border they approach the Customs booth, and present their PARS barcode to the officer. The Customs officer will process the clearance into Canada, complete any inspections necessary, and advise the release status of the shipment.

The processed Form 1 will be returned to the importer or their agent for record keeping.

Importing Trailers Under Standard Transport Canada Regulations

Although notified in advance, the paper declaration is submitted to Canada Border Service Agency at the time the carrier arrives at the border.  

Upon arrival, the driver should advise the CBSA officer at the booth that they are required to see a Customs Broker. CBSA will allow the driver to pull over and report to Pacific Customs Brokers or their agent and allow them to walk over to the Pacific Customs Brokers office to pick up the paper declaration package.

Once they pick up the paper package, the driver will return to Customs commercial building and present the package to the Customs officer. The Customs officer will process the clearance into Canada, complete any inspections necessary, and advise the release status of the shipment.

The processed Form 1 will be returned to the importer or their agent for record keeping. If the importer requires a copy of the Form 1 to be delivered with the goods, we can request that CBSA release the document to the driver rather than returned to the broker.

How Does The Carrier Know If The Goods Are Pre-Clearance Or Standard?

Please contact the importer to confirm if their goods are part of the Transport Canada Pre-Clearance program. If not, goods would be subject to standard Transport Canada regulations.

What If Pacific Customs Brokers Is Closed?

Our office at Pacific Highway is open 24/7.

The hours of our Huntingdon office is 8:00am – 4:30pm. The best practice is to cross during business hours. If advance notification is provided, you will find the paper package in a yellow envelope with the PARS number and name of the carrier in the afterhours bin located in the main Customs building.

For all other ports please contact us 24/7 for agent information.

Pacific Customs Brokers

Feel free to contact Pacific Customs Brokers 24/7/365 for all of your customs brokerage and freight forwarding needs. The knowledge and trade expertise we provide can save you time at the border and keep you compliant with customs to avoid costly administrative penalties.

Sign Up for PCB's Newsletter

 
 

How To Become A Trusted Trader To Improve Your Customs Clearances


Trusted Trader Program


What Is A Trusted Trader Program?

Trusted trader programs, otherwise known as, Authorized Economic Operator (AEO) programs create Customs-to-business partnerships with the goal of securing the supply chain and facilitating legitimate low risk trade. Trusted companies are considered low risk by Customs administrations and are examined or held up significantly less than regular companies when importing or exporting goods.

Customs Goal: Secure International Trade

The growth of global trade and increasing security threats to the movement of goods internationally, forces Customs administrations to focus on securing international trade. The World Customs Organization (WCO) developed the Framework of Standards to Secure and Facilitate global trade (SAFE). The framework sets a harmonized set of standards that Customs administrations can follow in developing their trusted trade programs.

SAFE’s Four Core Elements:

  • Harmonization of advance electronic cargo information.
  • Each country that commits to SAFE commits to employing a consistent risk management approach to address security threats.
  • On the request of the Customs administration of the receiving nation, the Customs administration of the sending nation will perform an outbound inspection of high-risk containers and cargo.
  • Definition of benefits that Customs will provide to businesses that meet minimal supply chain security standards and best practices.

How Can My Company Create A Trusted Relationship With Customs?

You can become a trusted trader when you prove to Customs you have high quality internal processes that will prevent goods in international transport to be tampered with.

To do this your company will have to:

  • Ensure the integrity of your information (i.e. what you say is in the container is actually in the container)
  • Ensure the integrity of your companies employees since they have access to your goods and information about the goods you have in your containers.
  • Secure access to your companies premises to prevent unauthorized persons to put unwanted goods in your containers.

If you successful meet these criteria then Customs will have greater trust in your company and perform less or no examinations on the goods you import and export. There are currently about 35-40 WCO countries internationally who have introduced trusted trader programs.

PIP, C-TPAT & Trusted Trade

North America trusted trade programs are as follows; in Canada the program operates under the name Partners in Protection (PIP), in the United States it is known as Customs Trade Partnership Against Terrorism (C-TPAT) and in Mexico the program is simply called the Authorized Economic Operator.

Partnerships are also in place between various countries’ Customs administrations to extend trusted trader benefits. These partnerships are known as Mutual Recognition Arrangements (MRAs) and allow trusted trade companies to receive border facilitation benefits in other countries.  Trusted trade members who wish to receive MRA benefits must grant their respective program the consent to share the agreed upon information.

Canada Border Services Agency (CBSA) has MRAs with the following foreign trusted trade programs:

  • U.S. Customs and Border Protection and C-TPAT
  • Japan Customs and its AEO
  • Korea Customs and its AEO
  • Singapore Customs and its AEO program
  • Mexico and its AEO program
  • Australia Customs and its Australian Trusted Trader Program (ATT)

United States Customs and Border Protection (CBP) has MRAs with the same countries CBSA has and in addition to those:

  • New Zealand and its Secure Export Scheme program
  • Jordan and its Golden List program
  • European Union and AEO program
  • Taiwan and its AEO program
  • Dominican Republic and its AEO program

The Benefits Of Trusted Trade Programs

  • Facilitates trade for approved importer, exporters, carriers and others in the supply chain as they are recognized as low risk.
  • Approved companies have enhanced marketability and global competitiveness.
  • By being considered low risk trusted trade companies are less likely to experience border delays due to examinations.
  • Trusted trade companies can also enjoy faster access to the border and business resumption benefits in the event of border disruptions. This results in time savings, less risk for perishable goods and a more predictable border clearance.
  • Trusted trade companies also reduce their risk of potential tampering with their shipments as they have had to meet various security measures to qualify for a trusted trade program.
  • Trusted trade companies generally have direct contacts with specific Customs Authorities should issues arise.
  • Use of logos and materials identifying trusted trade status.

How To Become A Trusted Trader

The process for accreditation as a trusted trader in any specific country generally involves completing a long and detailed assessment whereby the company must demonstrate the following:

  1. Compliance history with Customs
  2. Financial viability
  3. Cargo and premise security
  4. Trading partner security
  5. Secure record keeping
  6. On going on site validations and audits.
  7. Possible administrative fee.

You Can Have An Expert On Your Side

You have access to trusted and experienced brokers at Pacific Customs Brokers, who are active members in CBSA’s PIP and CBP’s C-TPAT programs. If you are interested in PIP or C-TPAT membership please contact us directly. You can be stepped through the application process by one of our trade advisory experts.

 


Jan Brock | Author

 

 

 

 

 

 


Pacific Customs Brokers Newsletter Sign Up