Archive for the ‘Trade Talk’ Category


 

USMCA Details | United States Mexico Canada Agreement | NAFTA 2.0

USMCA Details

The United States Mexico Canada Agreement (USMCA)

The U.S., Mexico and Canada reached a revamped NAFTA deal in the 11th hour on Sunday September 30th, 2018. NAFTA 2.0 has been renamed the United States Mexico Canada Agreement.

After more than a year of intense negotiations, the U.S., Mexico and Canada reached an agreement to update NAFTA. NAFTA dates back to 1994 when the pact was originally signed by all three countries to govern the $1.2 trillion worth of trade between the countries.

In August, the U.S. and Mexico resolved an issue over auto manufacturing but Canada and the U.S. still had some contentious points to resolve. The U.S. wanted Canada to open its dairy market to U.S. farmers and Canada wanted to preserve a mechanism for resolving disputes. These goals were eventually achieved which resulted in the new USMCA.

Auto Industry

Starting in 2020, to qualify for zero tariffs, a car or truck must have 75% of its components manufactured in the U.S., Mexico, or Canada, a boost from the current 62.5% requirement. In addition, also starting in 2020, cars and trucks should have at least 30% of the work on the vehicle done by workers earning at least $16 an hour, which will gradually move to 40% for cars by 2023.

Supply Management Agriculture Sector

Canada agreed to set new quotas for dairy imports from the U.S. Canada will still put tariffs on dairy products that exceed quotas. The new quotas will give the U.S. access to 3.6% of Canada’s market. U.S. farmers will now be able to export 120 million eggs into Canada the first year. This will grow 1% per year for the next 10 years. The chicken concession will allow 57,000 metric tons phased in over six years and in year 7 will increase 1% per year for the next 10 years.

Chapter 19

Canada wanted to keep Chapter 19 in place and in the end Chapter 19 remained intact. Chapter 19 allows the U.S., Mexico and Canada to challenge anti-dumping and countervailing duties in front of a panel of representatives from each country. In the past, Canada has successfully used Chapter 19 to challenge the U.S. on its softwood lumber restrictions.

Intellectual Properties Protections

The USMCA has a new IP chapter, which is 63 pages long and contains stricter protections for patents and trademarks, including biotech, financial services and even domain names. Copyright terms in Canada now extend for 70 years beyond the year the creator of the work dies, bringing Canada in line with those of the U.S. and Europe. The IP chapter also includes an extension of the length of time new biological drugs will be protected from generic drug competition, up 2 years from Canada’s previously agreed upon 8 years to 10 years of exclusivity. This was necessary for all sides to update this field as the original agreement was over 25 years old.

De Minimis Threshold

The de minimis threshold or the duty-free amount Canadians can buy in the U.S. and import into Canada without having to pay a duty has increased from $20 to $150. Mexico agreed to raise their de minimis from $50 to $100.

The tax portion of the de minimis threshold has been separated. The new rules will see the tax threshold rise to $40.

For example, when someone in Canada buys something online in the U.S. for $149 they will be spared the duty but they will pay anywhere from $17 to $22 in taxes depending on the province and the tax rate for that province.

Labor & Environmental Rights

Significant upgrades to environmental and labor regulations were made, especially in Mexico. Mexican trucks crossing the border must meet higher safety regulations and Mexican workers must have the ability to organize and form unions.

Chapter 11

Chapter 11 provided companies and investors a special process to resolve disputes with one of the governments of the agreement. The premise being that if an investor put money into a project and then the government changed the rules, there is a dispute process outside the court system where the investor could get their problem resolved. Chapter 11 is essentially gone with the exception of few industries such as energy and telecommunications.

USMCA Timeline

The USMCA will not go into effect right away. Most of the key provisions will not start until 2020. The leader of each country still has to sign the agreement, and then congress in the U.S. and the legislatures in Canada and Mexico have to approve it. This process is expected to take months.

How Will The USMCA Affect You?

You have the opportunity to get an early edge on your competitors with the advantage of a trade advisor. Pacific Customs Brokers has you covered with expert trade advisors who are able to help you navigate the changes that will affect you with the new United States Mexico Canada Agreement.

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Jan Brock | Author

Safe Food For Canadians Regulations To Require License For Businesses

 

Safe Food for Canadians Regulations


Safe Food For Canadians Regulations (SFCR)

If you have a business providing food to Canadians, you will most likely be affected by the new SFCR being implemented January 15, 2019. The SFCR focus is to prevent unsafe foods from entering into Canadian marketplaces, as well as, providing faster means to eliminate unsafe foods when they manage to penetrate the marketplace.

How Will SFCR Affect Food Businesses?

Starting January 15, 2019, if you provide food to Canadians, and the food crosses provincial or territorial borders, you will be required to have a license under the SFCR.

The SFCR will also require you to have preventative controls, traceable goods, packaging requirements, and labeling standards to make sure your food is safe for Canadians.

As a food business, the Canadian Food Inspection Agency (CFIA) has a helpful tool to inform you;

  1. If you need a license,
  2. When you will need the license by, and
  3. How to apply for the license.

What Food Business Activities Will Require A SFCR License?

For more information on if you need a license, the CFIA has also produced a well structured guide “Food business activities that require a license under the Safe Food for Canadians Regulations”. This guide is helpful for the DIY (Do It Yourself) approach. It covers who will need a license and who will not. For instance, if you are going on a road trip across Canada and you have a few snacks, you will not need a license. However, if you are importing food into Canada, you will need a license if you are importing food additives, alcoholic beverages, and for all unprocessed foods listed in Schedule 1 of the SFCR.

An Expert Trade Advisor You Can Rely On

For those who do not want to study the requirements top to bottom, a customs broker or trade advisor will be able to help you navigate the new regulations of the SFCR beginning early 2019. You can contact one of our expert trade advisors today to help you simplify the complicated world of trade.

 

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Single Window Initiative Requires Additional Data For Your IID

Single Window Initiative

You have read What Is The Single Window Initiative (SWI) and learned how additional data will be required on Integrated Import Declarations (IID) for Customs release on all commodities regulated by Participating Government Agencies.

You will now need to include data elements in your IID that may have been previously reported after importation, or in paper format, and will become mandatory in January 2019.

This means you will need to provide more information to your Customs Brokers than you have in the past for all commodities regulated by Participating Government Agencies (PGA) such as Health Canada, and Environment and Climate Change Canada.

Is your commodity subject to Participating Government Agencies?

You can find out from our helpful What Does My Commodity Need? infographic.

What Regulated Commodities Will Be Affected By Single Window Initiative?

If your commodity is regulated by a Participating Government Agency you will be impacted by a Integrated Import Declarations. However, for some commodities the details have already been required for many years.

For example, the Canadian Food Inspection Agency (CFIA) requires all importers with commodities regulated by the CFIA to provide shipment details prior to entry releases. As a result, for goods regulated by the CFIA, you may not have to provide any additional data to your Customs Broker in order to clear these entries.

Cases where they would need information that they did not before IID’s include consignee contact information as well as requiring copies of documents such as import declarations. In cases where the consignee is different than the importers or manufacturers, you will need to include the consignee contact information in box 12 of your CCI.

All Participating Government Agencies, including the Canadian Food Inspection Agency, will prompt your Customs Broker to ensure the documentation you provide includes all of the data required for the IID.

The Canada Border Services Agency (CBSA) has provided a guideline indicating what data is required for each Participating Government Agency which you can check out in the links below. Please note that the information in these links is subject to change and is correct at the time of publishing.

Where Do I Report The Additional Data Elements On My Canada Customs Invoice?

If the products you import into Canada are regulated by any of these Participating Government Agencies, you will be required to add all of the data elements listed in the links above to your commercial or Canada Customs Invoice. Below are a few examples you can follow along to see how you can report the additional data elements.

Example 1: Consumer Product Safety, Regulated by Health Canada

Below is a summary of the additional data elements required for consumer Products regulated by Health Canada. Please note that although many of these elements are noted as optional, and only two as mandatory, you are recommended to include all elements in preparation of when/if the optional elements become mandatory, as well as to help Health Canada make a release decision.

  • Importer’s Contact Information: This includes a contact name at the Importer of Record company, telephone number and email address. In most cases, your Customs Broker will have this information as it will be their contact for your company on file. Therefore the information will be included on the IID and there would be no need for you to provide this on the CCI.
  • Manufacturer Contact Information: The manufacturer’s name, address, contact name, email and telephone will be required in box 12 of the CCI. If this is the same as the vendor, you can add it to box 1 as shown in the example.
  • License, Permit, Certificate or Other (LPCO) Information: If your consumer goods require a license, permit, certificate or other type of document such as a safety standard certification or product label, in order to enter the country, you need to make this available to your Customs Broker. Your Customs Broker will attach the LPCO as an image file in the IID. If it is not a document, but rather a number, please place it in box 12 on the CCI along with an indication of what number it is.
  • Item Specific Information: This information provides the individual details of the imported items which are to be included in box 12 of the CCI which includes:
    • Global Trade Identification Number (GTIN): This 14 digit number is used to identify products and services through a barcode. This is usually the UPC number.
    • Brand Name
    • Product Name
    • Manufacture Date
    • Batch/Lot Number
    • Unit Size and Unit of Measure
    • Intended End Use: Identify how the items will be used from one of the following options: Sale or distribution, education, resale, charitable, repair, immediate re-exportation.
    • Commodity Type: A Product Category must be listed. The category listed is dependant on the intended end use. Use the table below to identify the wording that should be listed in box 12.

Intended use

Product Category

For Sale of Distribution

Consumer product for infants (0-18 months)

Consumer product for infants (19 – 36 months)

Consumer product for infants (3-6 years)

Consumer product for infants (6-8 years)

Consumer product for infants (8-12 years)

Consumer product for infants (13+ years)

Consumer product for infants (all ages)

Consumer chemical

Cosmetic

Educational, resale, charitable, repair or immediate re-exportation

Consumer product (for all ages)


Using the information provided above for consumer products, and applying the example of stuffed toy animals, the Customs Invoice will require the additional data highlighted in the sample below.

Single Window Initiative - Consumer Goods

 

Example 2: Natural Health Products, Regulated by Health Canada

Below is a summary of the additional data elements required for natural health products regulated by Health Canada.

  • Importer’s Contact Information: This includes a contact name from the Importer of Record company, telephone number and email address. In most cases, your Customs Broker will have this information as it will be their contact for your company on file. Therefore your broker will include your information on the IID and there would be no need for you to provide this on the CCI.
  • Informational Contact: This is someone who has knowledge of the items being imported in the case that Health Canada would like further information about the product. Name, telephone number and emails address is required. If this is the same as the vendor or consignee, then you can place this information in those boxes. However, if it is different, place this information in Box 12.
  • License, Permit, Certificate or Other (LPCO) Information: If your consumer goods require a license, permit, certificate or other type of document in order to enter the country, you need to make this available to your Customs Broker. They will attach it as a image file in the IID. If it is not a document, but rather a number, please place it in box 12 on the CCI along with an indication of what number it is. See the table below for more information.
  • Item Specific Information: This provides details of the imported items included in Box 12 of the CCI;
    • Global Trade Identification Number (GTIN): A 14 digit number used to identify products and services through a barcode. This is usually the UPC number.
    • Brand Name: If there is no brand name available, a product name, active ingredient or chemical name of the commodity must be provided by the manufacturer.
    • Product Name
    • Manufacture Date
    • Batch/Lot Number
    • Intended End Use: Identify how the items will be used from one of the following options: Human therapeutic use, human clinical trial, special access, research and development, other.
    • Commodity Type: A Product Category must be listed. The category listed is dependant on the intended end use. Use the table below to identify the wording that should be listed.

Intended End Use

Documents Required (LPCO)

Human Therapeutic Use

  1. Site License – 5022
  2. Natural Product Authorization 023 or Homeopathic Medicine Drug Identification 5024

Human Clinical Trial

NHP Notice of Authorization (NOA) 5023

Special Access

Letter of Authorization (LOA) 5045

Research and Development

No Documents Required

Other

No Documents Required


Using the information provided above for Natural Health Products, and applying the example of green tea extract, the Customs Invoice will require the additional data highlighted in the sample below.

Single Window Initiative - Natural Health Products

Example 3: Vehicles and Engines, Regulated by Environment and Climate Change Canada and Transport Canada

Below is a summary of the additional data elements required for on-road vehicles, engines and equipment regulated by Environment and Climate Change Canada (ECCC) and Transport Canada (TC). Please note there are two Participating Agencies involved in the importation of vehicles and engines.

**To understanding the info required by each PGA the data elements required from ECCC are in blue and Transport Canada are in red. All text appearing in black indicates that both of these agencies require this information.**

  • Importer’s Contact Information: This includes a contact name at Importer of Record company, telephone number and email address. In most cases, your Customs Broker will have this information as it will be their contact for your company on file. Therefore they will include that information on the IID and there would be no need for you to provide this on the CCI.
  • Informational Contact: This is someone who has knowledge of the items being imported in the case that ECCC would like further information about the vehicle or engine. Name, telephone number and emails address is required. If this is the same as the vendor or consignee, then you can place this information in those boxes. However if it is different, place this information in Box 12.

Exceptional Processing: The Transport Canada status of the of the vehicle/importer will establish all of the additional data elements required and must be provided or identified on the invoice using one of the following options:

  • Appendix F Pre-Cleared Importer (indicated on the invoice)
  • Appendix G Pre-Cleared Importer (indicated on the invoice)
  • Transport Canada Approved case-by-case approval for New, Canadian-specification vehicle purchased from foreign manufacturer with CMVSS approval letter
  • Transport Canada Approved case-by-case approval letter to accompany the documents for
    • New – Canadian-specification vehicles purchased from foreign manufacturer
    • New – Vehicles manufactured to the Federal Motor Vehicle Standards and purchased from foreign manufacturer
  •  Federal Motor Vehicle Safety Standards manufactured vehicle requiring inspection by the Registrar of Imported Vehicles (Indicated on the invoice)
  • Vehicles greater than 15 years old, except buses
  • Canadian-specification vehicles returning to the original owner
  • Vehicles Imported for parts
  • Non Regulated Vehicles: please visit Transport Canada’s site on no-regulated vehicles for more information

 

  • Make of Vehicle
  • Make of Engine
  • Model of Vehicle
  • Model of Engine
  • Model Year of Vehicle
  • Model Year of Engine
  • Engine Manufacturer Name
  • Vehicle Identification Number (VIN): 17 digit number
  • Engine Identification Number
  • Name of Engine Family
  • Chassis Info: If the chassis is manufactured by someone other than the final stage assembler, the following details are required:
    • Manufacturer name and address
    • Make
    • Model
    • Year
  • Vehicle Production: Date, Month & Year
  • ECCC Vehicle Class:  The type of vehicle class must be identified using the options listed in the table below.
  • TC Vehicle Class: The type of vehicle class must be identified using the naming convention listed in the table below.

ECCC Vehicle Class

TC Vehicle Class

Light-Duty Vehicles

Light-Duty Vehicles

Light-Duty Trucks

Light-Duty Trucks

Medium-Duty Passenger Vehicles

Medium-Duty Passenger Vehicles

On-Road Motorcycles

On-Road Motorcycles

Heavy-Duty Class 2B Vehicles with Installed Engine

Heavy-Duty Class 2B Vehicles w/inst

Heavy-Duty Class 3B Vehicles with Installed Engine

Heavy-Duty Class 3B Vehicles w/ins

Heavy-Duty Vocational Vehicles with Installed Engine

Heavy-Duty Vocational Vehicles w/in

Heavy-Duty Tractors with Installed Engine

Heavy-Duty Tractors w/installed eng

Incomplete Vehicles

Incomplete Vehicles

 

Vessels with installed marine engine

 

Vessels without marine engines

 

Snowmobiles

 

All-terrain vehicles

 

Utility vehicles

 

Off-road motorcycles

 

Incomplete Vehicles


  • Engine Class: The type of engine class must be identified as either On Road Heavy-Duty Engine – Incomplete or On Road Heavy-Duty Engine – Loose
  • Vehicle Manufacturer: Name and address
  • Criteria Conformance: Advise that the compliance label is attached or provide a letter from the manufacturer that it is in compliance.
  • Final Stage Assembler: If different than chassis manufacturer or vehicle manufacturer: Name and address
  • TC Affirmation Statement of Compliance: This statement is made by the importer and confirms that the vehicle meets all import requirements of Transport Canada.

Please contact your Customs Broker for the specific information that needs to be listed in this statement.

  • ECCC Affirmation of Statement Compliance: This statement is made by the importer and confirms that the vehicle meets all import requirements of Environment and Climate Change Canada (additional date and form will be required by Transport Canada).

Please contact your Customs Broker for the specific information that needs to be listed in this statement.

  • Country of registration (If previously registered)
  • Mileage/Odometer Reading (if used)
  • Title Status (if used)
  • Vehicle Status (if for parts)
  • Vehicle Condition: Normal Damage or Severe Damage (Not Roadworthy)

Using the information provided above for Natural Health Products, and applying the example of a Ford F150 Truck, the Customs Invoice will require the the additional data highlighted in this example.

Single Window Initiative - Vehicles

These examples highlight some of the data elements that were not necessarily included on your invoice prior to the Single Window Initiative, but will be mandatory starting April 2019.

You will need to provide all of the required data elements for your Customs Broker to be able to process your shipment release request. Additional charges may be applied to your Customs brokerage services if this information is not provided on the documentation.

When Should I Start Including The Required Data On My IID?

You should begin incorporating this information into your invoices now, then your shipments are not delayed at the border once IIDs become mandatory.

Need help understanding what Participating Government Agency regulates your commodity? You can contact us and speak with an expert Trade Advisor today.

How will you be affected by the Single Window Initiative? Tell us in the comments below.

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U.S. Customs To Pilot Test Blockchain Viability

blockchain

In September 2018, U.S. Customs and Border Protection (CBP) will start pilot testing the viability of blockchain technology in international trade. One of the first tests will be to see if they can successfully receive Certifications of Origin to identify if a product can qualify for preferential treatment under the North American Free Trade Agreement (NAFTA).

What is Blockchain?

Blockchain allows for digital information to be shared but not copied. It was originally created for financial transactions however, tech communities are starting to get more creative on what it can be used for. This includes smart contracts, transparent voting for elections, file storage, and in the world of trade, supply chain auditing.

Blockchain acts as a large database spread over a network of many, many computers. By not storing the data in any one location decentralizes the data. By decentralizing the data, it makes it difficult for a “hacker” to corrupt, thus making it a safe way for many people to access the data simultaneously.

Another interesting fact about blockchain is it can be setup to share with the entire public, or only shared with a few selected individuals. This allows for it to be used on massive scales, such as an election, or small scales, such as a one-on-one contract between you and a supplier.

History is another important factor. Blockchain has the ability to collect and maintain all transactions and previous data. In the trade industry this could be vital since records are required to be kept by Customs for multiple years in case of an audit. With a clear history that is accessible at any time, it can make it easier on Customs and the individual or business being audited.

What is Your Commodities Origin?

The goal is to certify the backstories of commodities are genuine. Is your sweater really made in Canada? Is every part from your laptop obtained or produced entirely in Canada, the U.S. or Mexico? Probably not, however with the assistance of blockchain technology and supply chain auditing, the answer could be quick and easy for CBP to discover.

Why This Potentially Helps U.S. Customs?

The reason CBP is excited for the viability of blockchain technology is because it can permanently verify transaction records in a fast and secure way. Being able to work fast and safe is any businesses dream, and CBP wants to start testing the technology in the early stages to make sure they are ready to handle the demand for blockchain technology once more companies adopt the relatively new idea.

How Supply Chain Auditing Can Help You?

It is easy to drown in the science behind blockchain technology, but what matters most to you is blockchain can allow you to do business easier and safer than before. The introduction of Electronic Data Interchange (EDI) has eliminated the need for faxing, mailing or hand delivering paper documents. By having a safe way to transport the same “paper documents” digitally in only a way where you, the sender, and CBP, the receiver, can access it, than business will become better for you.

If You Need An Expert

With pilot testing to begin in September it will be interesting to see what the findings are from CBP. This might be the first step U.S. Customs takes to adopting blockchain technology and electronic supply chain auditing. For the latest in trade news and expert advice feel free to contact an experienced trade advisor to help you navigate the world of trade.

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How To Kick Trade Anxiety Out of Your Business In 4 Steps

Trade

Watching the news these days really takes the gusto out of trade plans. Compared to previous years, trade nowadays seems far more risky. Each day we field calls from worried importers…

“Will there be surtax applied on my goods in the future?”

“Will NAFTA dissolve?”

“I signed a year long commitment to purchase goods that now carry an unreasonable amount of duty. What can I do?”

 

Whether you are currently importing or looking to expand into an international market, you may share these queries. And although there are many questions left to be answered at this time, it does not mean you cannot take action to alleviate some of the uncertainty and accompanying anxiety.

So here are our top 4 tips on how to curb your trade anxiety and forge forward with your trade plans.

Step 1: Arm Yourself With Trade Knowledge

Perhaps step away from the news feed and do some research on what can and cannot happen. Can NAFTA be dissolved overnight? Nope. Is there an existing bilateral trade agreement between Canada and the U.S.? There sure is. However, it is out of date and will take some work to make it current. Can you claim back surtax paid if it is significantly harming your business? Possibly. There are certain criteria to meet, but it is an option. The point here is that you need to understand what options you have, how quickly you need to move and how your company will be impacted if and when the trade winds change. In times of uncertainty, get as certain as you can.

You can seek this council from International Trade Lawyers, who are perfect for large companies or Trade Advisors for small to medium sized businesses. Both will gain an understanding of your questions and lay out the options you have currently as well as bring any potential issues to your attention. Together you can create an action plan for some of the expected outcomes.

Step 2: Research Financing and Other Trade Support Opportunities

There are many opportunities for financial assistance that go unutilized. There are entire government entities that have a sole purpose of facilitating trade by offering support. Here in Canada importers can work with EDC, or Economic Development Canada, who provide risk insurance, financing and working capital assistance to companies wanting to expand internationally.

Recently, the Government of Canada announced a Surtax Remittance process where those companies negatively affected by the imposed surtaxes that came into effect on July 1st, 2018 can apply for a refund. For more information to determine if your company is eligible read our blog Are You Eligible To Request Remission Of Canada’s New U.S. Surtaxes?

The Canadian Trade Commissioner Service is available to all Canadian companies looking to expand into new markets. They will team you up with your own Trade Commissioner who specializes in your industry. This partner will help you map out an export plan and connect you with their extensive list of network contacts across the globe.

Step 3: Spread Your Goods Thin

The advice we give out the most these days is diversify, diversify, diversify. Although it is not the goal, some companies may find themselves in a situation when one of their clients can make or break them financially. This is a dangerous situation to be in, especially if your client is from another country and you are acting as the non-resident importer in order to deliver your goods to their door.

So our advice is to begin seeking additional markets in which to sell your goods. Regardless of the current trade landscape, diversification can create sales stability. However, like all business ventures, it is not without its share of risk. Utilizing organizations such as EDC and the Trade Commissioners Services can help you in this area.

On the flip side, if you find yourself purchasing your goods from one international supplier, now is the time to look for alternatives. If you are locked into a purchasing agreement, speak to your supplier and determine if your long standing relationship can relieve some of the financial impact you may be experiencing from unexpected and increased duty.

Working with a Freight Manager and Trade Advisor can help you source from Countries that may offer preferential duty treatments or have a current Free Trade Agreement in place. A Freight Manager can help you determine the shipping costs from this new location. From there you can calculate your anticipated landed costs from these new locations and compare it to your current costs.

Step 4: Do It Now

Let’s say you are walking down a forest trail when a bear steps on to your path. Hopefully your instinct is to freeze and back away slowly as the experts advise. Reacting to threats in trade should not have the same approach. Do not freeze and back away. Do not even pause to ‘see what plays out’. Act NOW. Buy, sell, trade your heart out because few duties are retroactive (typically only found in antidumping and countervailing cases where companies were found to have been undercutting the domestic market), and they can not tax what is already in the country. So, do not wait, act now.

If you are new to importing internationally, know that the setup process typically only takes a couple of days provided the paperwork is filled out correctly and completely. Working with a Customs Brokers allows for swift business registration and import bond implementation.

Do you have unanswered questions regarding your trade future? Leave us a comment below and one of our experienced Trade Advisors will reach out to you.

Lisa Stevenson

 

 

 

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