Archive for the ‘H.S. Tariff Classification’ Category


 

Canada Imposes Provisional Safeguard Surtax On Seven Steel Products

Steel Surtax

On October 25, 2018, the Government of Canada imposed a provisional safeguard surtax of 25% on imports of certain steel products.

What Steel Products Are Affected By The Surtax?

  1. Heavy plate
  2. Concrete reinforcing bar (rebar)
  3. Energy tubular products
  4. Hot-rolled sheet
  5. Pre-painted steel
  6. Stainless steel wire
  7. Wire rod

A complete description of the products that are subject and their tariff classifications is found on the Department of Finances website.

What Countries Are Exempt From The Surtax?

  • United States
  • Chile
  • Israel or other beneficiary of the Canada-Israel Free Trade Agreement
  • Mexico
    • However, energy tubular products and wire rod imported from Mexico are subject to the provisional safeguard.
  • Developing countries
    • With the exception of imports of rebar from Vietnam, which are subject to the provisional safeguards.

What Are The Exceptions To The Surtax?

There is a specified quantity of these products that can be imported from each country, free from the safeguard surtax, under Tariff Rate Quotas administered by Global Affairs Canada (GAC). A shipment specific import permit must be obtained from GAC prior to final accounting of the Customs entry (within 5 days of customs release). Global Affairs has a Notice to Importers which includes detailed information about tariff rate quota and permits.

Quota will be issued to importers on a first come, first served, shipment-specific basis. Once the quota runs out, permit applications will be rejected and surtax will be applicable to imports of these products.

What Steps Should An Importer Take?

Review Your Steel Products

Review the steel products you import and compare them to the list on the Department of Finance website. Based on tariff, description and origin, are your steel products subject to the provisional safeguards?

If the products you import are subject to the provisional safeguards, you must advise your customs broker which products fall within the scope, in order to potentially reduce surtaxes by way of Tariff Rate Quotas.

For imports of any subject goods, we recommend copies of your Customs documents are provided a minimum of 48 hours in advance but no more than 5 days in advance of Customs clearance with a request for an import permit. Your Customs documents should include the statement “Goods Subject to Provisional Safeguards” and an indication of which items are subject.

Obtain Your Export and Imports Permits Act File Number

Ensure your companies Export and Import Permits Act File Number with GAC is open and active, then you are able to apply for a Tariff Rate Quota permits. You can check directly with GAC to determine the status of your file number. Once you have confirmation your file number is active, you can send your customs broker the number to add to your account information.

If the products you import are classified under the tariffs listed and originate in a subject Country but are NOT of the specifications listed, ensure your Customs documents include a detailed description and the statement “Goods Not Subject to Provisional Safeguards.”

If your Customs documents do not contain enough information to confirm if the products are subject or exempt, contact your customs broker to verify this information prior to final accounting.

Also, if surtaxes are not paid on subject goods at the time of import, CBSA can issue Detailed Adjustment Statements for the additional amounts and interest, as well as fines for non-payment.

Trade Advice You Can Trust

If you would like assistance verifying if your products fall within the scope of this order, Pacific  Customs Brokers expert Trade Advisors would be happy to assist you. Connect with an experienced Trade Advisor today to get your edge in the world of trade.

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Canadian Steel And Aluminum Importers Can Receive U.S. Surtax Relief At Time Of Import

Steel Railroad

You learned in Are You Eligible To Request Remission Of Canada’s New U.S. Surtaxes? how an importer can receive a refund on surtax paid in special circumstances of steel and aluminum imports. But as an importer of steel or aluminum, what if you could avoid paying the surtax at the time of import?

On October 11th, 2018, Canada Border Services Agency published the United States Surtax Remission Order. The Order notes that certain commodities can be relieved of paying the surtax at the time of import. To be relieved of surtaxes the items must be classified under the tariffs and be of the same description listed in Schedule 1 and Schedule 2 of the remission order. A description of the conditions these products must meet are listed below:

What Steel and Aluminum Commodities are Relieved of U.S. Surtax?

In this Notice, CBSA states “Remission is granted for those goods described in Schedule 1 and Schedule 2 attached to the remission order under the following conditions:

  • (a) the good listed in the schedule was imported into Canada on or after July 1, 2018 and subject to surtaxes;
  • (b) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the good;
  • (c) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation.
  • (d) the importer files, on request, the evidence or information that the Canada Border Services Agency requires to determine eligibility for remission;
  • (e) the importer agrees that it is subject, at any time, including after the remission, to review by the Canada Border Services Agency for the purpose of determining whether the information supplied by the importer under paragraph (c) or (d) is accurate and complete and whether the facts on which the Canada Border Services Agency relied or intends to rely to determine the eligibility for remission remain unchanged in all material respects; and
  • (f) at the time when the Canada Border Services Agency conducts the review referred to in paragraph (e), the Canada Border Services Agency must be able to conclude that the information supplied remains accurate and complete and that the facts remain unchanged in all material respects.
  • (g) goods described in Schedule 2 must be imported into Canada no later than December 31, 2018.” Canada border Services Customs Notice 18-16, october 11, 2018.

Proof in meeting these criteria must be provided.

What Other Commodities are Relieved of the U.S. Surtax?

Remission is granted for goods classified under tariff item No. 8903.10.00, 8903.91.00, 8903.92.00 or 8903.99.90 in the List of Tariff Provisions set out in the schedule to the Customs Tariff, excluding those that have been exported from Canada and then subsequently re-imported into Canada. Remission for these goods is granted under the following conditions as stated in the Notice:

  • (a) the good was imported into Canada on or after July 1, 2018 and subject to surtaxes;
  • (b) the good was both purchased under contract and sold under contract prior to May 31, 2018;
  • (c) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the good;
  • (d) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation;
  • (e) the importer files, on request, the evidence or information that the Canada Border Services Agency requires to determine eligibility for remission;
  • (f) the importer agrees that it is subject, at any time, including after the remission, to review by the Canada Border Services Agency for the purpose of determining whether the information supplied by the importer under paragraph (d) or (e) is accurate and complete and whether the facts on which the Canada Border Services Agency relied or intends to rely to determine the eligibility for remission remain unchanged in all material respects; and
  • (g) at the time when the Canada Border Services Agency conducts the review referred to in paragraph (f), the Canada Border Services Agency must be able to conclude that the information supplied remains accurate and complete and that the facts remain unchanged in all material respects.” Canada border Services Customs Notice 18-16, october 11, 2018.

CBSA further states that the remittance will only be granted if they were correctly classified under tariff item No. 8903.10.00, 8903.91.00, 8903.92.00 or 8903.99.90. The item could not have been exported from Canada and then re-imported, unless temporarily imported for repair, alteration or storage. Proof of meeting all criteria must be provided.

Are Goods Temporarily Imported Into Canada Relieved of U.S. Surtax?

Yes, if they were imported for repair, alteration, or storage and the following criteria are met as outlined by the Notice.

  • (a) the goods are exported immediately after having been repaired, altered or removed from storage, whichever occurs last, but no later than twelve months after the date on which the imported goods were released; and
  • (b) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the goods.
  • (c) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation;
  • (d) the importer files, on request, the evidence or information that the Canada Border Services Agency requires to determine eligibility for remission;
  • (e) the importer agrees that it is subject, at any time, including after the remission, to review by the Canada Border Services Agency for the purpose of determining whether the information supplied by the importer under paragraph (c) or (d) is true, accurate and complete and whether the facts on which the Canada Border Services Agency relied or intends to rely to determine the eligibility for remission remain unchanged in all material respects; and
  • (f) at the time when the Canada Border Services Agency conducts the review referred to in paragraph (e), the Canada Border Services Agency must be able to conclude that the information supplied remains true, accurate and complete and that the facts remain unchanged in all material respects.” Canada border Services Customs Notice 18-16, october 11, 2018.

In order to be eligible for any of these above noted exemptions, the products must both be of a tariff item and description listed in the Department of Finance notice found here: List of Goods Subject to Remission of Countermeasures on Certain Steel and Aluminum Goods from the U.S.

You must also provide proof of meeting these criteria to CBSA. If working with a Customs Broker, you will need to provide supporting documentation to them in order to receive these exemptions.

What If You Already Paid the U.S. Surtax?

If you have already paid surtax on items listed in this post, and would like for us to submit a claim for remission of the surtaxes paid, please provide documentation and/or product literature which proves your product is one of those listed in the linked document above for each import transaction. The CBSA will require this proof in order to review and process the claim for refund of the surtaxes paid. Note: Additional charges will apply for preparing and submitting the request for the refund.

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How The Proposed Tariffs Affect You In The U.S.-China Trade War

China U.S. Trade War Proposed Tariffs

For the second time in July the U.S. government has placed additional tariffs on products exported from China and imported into the U.S.  If the proposed tariffs were actioned, there would be changes for both American and Canadian importers. How will the additional tariffs on Chinese manufactured goods affect trade between the United States and Canada?

The Proposed Tariffs Effect On Canadians

Canada is already in the midst of a trade war with the U.S.  Now Canada is unwittingly affected by the trade war between the U.S. and China because many items proposed for additional tariffs are manufactured in China, exported to Canada and then finally exported into the U.S.  The additional tariffs levied against Chinese goods are applicable to goods manufactured in China without regard to the previous country of export.

Canada has enjoyed a long standing trade partnership with the U.S.  Canadian companies often act as Non-Resident Importers; handling all of the import requirements including payment of duties and taxes. This has allowed Canadians to sell their goods to companies in the U.S. as seamlessly as a U.S. company. This allows Canadian exporters to expand their market beyond the Canadian border.

The third list of tariffs released on July 11th cover consumer goods such as furniture, seafood, automobile parts, televisions and video equipment, which we see our clients from Canada ship on a daily basis.

Even though the trade war is between the U.S. and China, other countries are affected because they, like the U.S., have their goods manufactured in China.

Many of the items on the proposed list such as furniture and seafood, which are normally duty free, will be dutiable at 10% if the proposed tariffs are actioned.

If you are a Canadian company who exports Chinese manufactured products into the U.S. you will need to consider how you will address the increase in cost of exporting to Americans.

The Proposed Tariffs Effect On Americans

Over 75% of the new tariffs target machinery for manufacturing goods, electrical equipment, televisions, recorders, bicycles, bicycle parts, and automobile parts: all merchandise which is in high demand with american consumers. With the U.S. being a consumer based economy, where the consumer is interested in paying the lowest price possible, this new legislation would have an adverse effect on the U.S. economy.

In short order, the increase in costs to bring goods into the U.S. will increase costs for producers, importers and ultimately the consumer. This is never a popular solution, however the U.S. has tried to entice China to come to the table to discuss revising their unfair trade practices.  

The additional tariffs were initiated to combat Chinese regulations that require companies wishing to do business in China partner with a chinese company and share the technology associated with their products leading to violations of both intellectual property rights and World Trade Organization (WTO) rules.

Some economists say that a more appropriate way to combat these unfair trade practices would be to band together with other countries and take their concerns to the WTO to initiate a lawsuit against China.

In the long run, if the two countries can come to a satisfactory solution to the root of the issue the U.S. will benefit greatly and the trade deficit will balance out.

The Proposed Tariffs Affect On U.S. Import Bonds

How will the increased duties affect your import bond? Bond limits are set based on duties, taxes and fees paid in a 12 month period. With the increased duties, higher bond limits may be required. In addition to the higher bond limits, the surety company may request financial documents and collateral to secure the bond.

Your Guide To The Proposed Tariffs

This is a retaliatory move by the U.S. to address concerns of intellectual property rights.

The United States Trade Representative (USTR) will be holding a hearing August 20th-23rd on the impact the proposed tariffs will have if imposed. In order to appear at the hearing, submission must be made before July 27th, which must include a summary of the expected testimony. Written comments can be submitted to the USTR from now until August 17th, 2018.

A decision on if the additional 10% tariff will be imposed or not is expected to be announced at the end of August, after the hearings.

This 10% will be in addition to the already imposed 25% tariff on $34 billion worth of goods from China that came into effect on July 6th, 2018. China retaliates with a reciprocal tariff increase on U.S. commodities imported into China.

How You Can Prepare For The Proposed Tariffs

As a business it is best for you to be proactive in your approach to the impending changes. Contacting a trade professionals for advice on how the proposed legislation could affect your company will provide you with the knowledge to make quick decisions when change inevitably comes.

This includes understanding;

  • What country has the most cost effective solution to source your materials from,
  • Determining your rate of duty if there were changes to the proposed tariffs or NAFTA,
  • Education to make yourself prepared for current practices and future changes, as well as,
  • Freight costs to get your products from your source to you.

All of these services are provided to you by our Trade Advisory experts in Canada and the U.S. Contact us to start a conversation with a Trade Advisor today.

 

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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

 

 

 

 

 

 

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How Bombardier may Avoid Anti-Dumping and Countervailing Duties

It was announced earlier this week that Bombardier, a Canadian rail and air transport manufacture and AirBus, an aeronautics maker from France, have struck a deal which will avoid the U.S. anti-dumping and countervailing duties that were to be imposed on them upon importation.

 

How are some companies able to avoid these duties while others are not?

The Background

In 2016 Bombardier landed a contract to sell 75 of their C-Series jets to Delta Airlines in the U.S. In a move that was considered to be protectionist, U.S. air plane manufacture Boeing argued that Bombardier was able to sell their jets to Delta at low cost due to Canadian government subsidies. This complaint was heard by the U.S. Commerce Department which ruled in agreement with Boeing. The result was an almost 300% combined countervailing and anti-dumping duty to be placed against Bombardier C-Series jets upon importation into the U.S.

What are Anti-Dumping and Countervailing Duties?

In our previous post The Potential Perils of Anti-Dumping and Countervailing Duties, we explain anti-dumping and countervailing duties. In a nutshell, the intent of anti-dumping is to protect domestic industry through a government imposed increased duty on foreign imports and importers that it believes are priced below fair market value, and below what they would normally sell the goods from in their own domestic market.

 

Countervailing, is an import tax imposed on certain importers, and importers that may receive subsidies from their country which allows them to sell the goods for under market value in the U.S. Market. Countervailing is also referred to as anti-subsidy duties.

Why Were the C-Series Jets Considered to be Unfairly Subsidized?

The Government of Quebec’s has a 49.5% interest in the C-Series jets. Additionally, the Canadian Government  provided a $344-million dollar loan to Bombardier when sales for the jet were lagging.

How Will Bombardier Possibly Avoid Paying Anti-Dumping and Countervailing Duties?

As mentioned above, anti-dumping and countervailing duties are imposed on foreign importers. If the company manufactures goods within the U.S., they are no longer foreign nor would there be an import.

 

Bombardier partnered with Airbus on the C-series jet recently, which effectively provided a 50.01% interest to Airbus. The C-series jet will not be manufactured in Canada, but on a secondary Bombardier assembly line at the U.S. Airbus facility. Therefore any sales into the U.S. would not be considered foreign and import duties not applicable.

What’s Next?

It is too soon to tell if this move by Bombardier and Airbus will indeed successfully avoid countervailing and anti-dumping duties. In some cases where an importer avoids anti-dumping and countervailing duties by moving manufacturing they could still face these duties and taxes on the parts they import. It is expected that there will be research into this deal and subsequent comment for the U.S. Commerce Department in weeks to come.

Which view do you take on this story? Has the U.S. unfairly penalized Bombardier or has Canada unfairly subsidized them? Please leave a comment below.