Archive for the ‘Importing into Canada’ Category


 

The Cost of Customs Compliance Part 2 | Not as Expensive as One Might Think

Image: The Cost of Customs Compliance Part 2 | Not as Expensive as One Might Think

Carrying on from last week’s Part 1 article, a customs compliance penalty often brings into question whether the customs broker can be held accountable if the importer is found to have errors in their import declarations. Since customs holds the importer of record (IOR) ultimately responsible for customs compliance, it is rare that an importer can shift the blame to their service providers or vendors who offered incorrect advice, submitted the declaration with erroneous information or lacked the expertise to catch potential problems with an imported item. Therefore, it is important to ensure your service provider evaluation includes the following:

  1. Does the customs broker have a process in place to review customs declarations for incomplete or inaccurate documentation prior to submission to customs?
  2. Does the customs broker offer Trade Advisory Services which can help with binding ruling applications on unclear product classifications or on new product purchases to determine any additional duties required and/or reporting requirements to other government departments?
  3. Does the customs broker clear all modes of transportation including courier shipments therefore ensuring consistency in both process and tariff classification?
  4. What is the level of certification, education and experience of the entry staff who are reviewing and submitting declarations on your behalf?
  5. Is your customs broker open during your hours of operation? If so, will they have an experienced representative available to answer questions about your specific account?

If your company’s supply chain requires the use of multiple customs brokers, we advise you to look into the following possible areas of inconsistencies.

Multiple Customs Brokers = Multiple Inconsistencies

We previously published an article on the Downside of Using Multiple Customs Brokers in which we highlighted two things to look out for when using multiple customs brokers.

Inconsistency between your chosen customs brokers:
Customs Broker ‘A’, who clears your incoming air shipments, may use a slightly different tariff classification code for your imported item than Customs Broker ‘B’ who clears the same item via highway transport. During our trade compliance seminars we often tell the tale of the outcome of three customs brokers classifying the same item and each coming up with their own justifiable explanation for their classification. This is a result of a highly complex harmonized system tariff schedule, the different experiences each of those brokers have had in their classification practice, as well as their understanding and application of the General Rules of Interpretation (GRI) as they relate to the item.

Difference in business process:
Not all customs brokers are created equal. Each has its own area of expertise and therefore business process. A courier company who offers customs brokerage as an added service has a priority to ensure speed and accuracy with the parcel delivery. A compliance broker, like us, Pacific Customs Brokers, specializes in ensuring their clients trading practices fall within Customs law. Our process differs in the the attention given to detail.

Review Your Entries to Mitigate Risk

As you can see from the areas of concern we have addressed in this article, and despite best efforts, an importer may be completely unaware of their shortfall in customs compliance. One way to review your customs broker’s accuracy is to review the declaration summary provided with the invoice against the following checklist:

  1. Has your vendor provided a full and accurate description of goods for classification purposes?
  2. Is the value declared on your vendor’s invoice correct and will it match your reconciliation to the vendor?
  3. Will you be receiving any additional invoices for value added costs such as royalties or commissions?
  4. Have all applicable discounts been declared and taken where applicable?
  5. Has the country of manufacture been declared correctly for all items on the invoice?
  6. Were all the items listed on the invoice received? Were there shortages or overages?
  7. Do you have properly completed certificates on hand for all items declared under a preferential tariff treatment, including North American Free Trade Agreement (NAFTA) Certificates of Origin?
  8. Has the Goods and Services Tax (GST) been correctly accounted for on all items?

 

We encourage you to reach out to our Trade Advisory team with any questions you may have regarding your customs compliance practices at askyourbroker@pcb.ca. We are here to help!

2017 Designation Maintenance Begins in our Professional Development Courses!

T if for Trade Compliance Education

A new year means a new start for most everything and this includes a reset to the maintenance requirements of your professional designations set forth by the credential’s governing body. We are well into the year now and our Professional Development Courses for fall 2017 are about to launch.

Whether you are a Canadian or U.S. Certified Customs Specialist (CCS), a Certified Trade Compliance Specialist (CTCS), a Certified Export Specialist (CES), a designate with the Law Society of British Columbia (LSBC) or accounting professional, taking any of Pacific Customs Brokers’ seminars and webinars will earn you maintenance points, credits and hours towards a variety professional designations.

Review and plan your maintenance for the second half of 2017 by clicking on the course’s name below:

(Fall registration opens at midnight on July 15, 2017)

  CSCB NEI LSBC
Webinar CCS CTCS CCS CES  
CDN Importing for Beginners Part 1
CDN Importing for Beginners Part 2
US Importing for Beginners Part 1 1
US Importing for Beginners Part 2 1
FDA Regulated Goods 2 2 1
CFIA Regulated Goods 2 2
NAFTA for Beginners Part 1 1 1
NAFTA for Beginners Part 2 1
 
Seminar
Shipping Perishables – NEW! 5 5 3 3
CDN Trade Compliance Part 1 5 5
CDN Trade Compliance Part 2 5 5 3
Exporting from Canada 5 5 3 3
US Trade Compliance Part 1 5 5 3
US Trade Compliance Part 2 5 5 3 3
HS Tariff Classification 5 6 4
Free Trade Agreements and Rules of Origin 5 5 5
Customs Valuation 5 3.5
CFIA 5 5
FDA 5 5 3
CTPAT 3 3 2 2

 

If you have never attended one of our Professional Development Courses before, the following information might help you decide on attending the next one.

Professional Development Courses – Webinars

Our webinars are designed to meet the demands of the global trade community. These live webinars are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. The benefits of attending an online course include:

  • Cost-effectiveness – More affordable than industry standards and some even offered complimentary
  • Global accessibility – Travel is removed from the equation for companies with multiple locations or branches
  • Convenience – Attend from the comfort of your desk
  • Concise training – In a fast-paced industry, efficiency becomes just as important as staying compliant
  • Industry recognized sessions – Earn points towards maintenance of your industry designations

Professional Development Courses – Seminars and Workshops

At these in-person sessions, you will learn the best practices on being compliant as an importer and/or exporter helping you expedite your commercial shipments rather than triggering costly delays. Our experts share their knowledge on international and cross-border shipping to keep you current with customs and participating government agency regulations.  The benefits of attending an in-person seminar or workshop include:

  • All day access – Get our experts to answer your questions one-on-one
  • Case studies and real-life examples – Examine other attendees’ trade compliance issues
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wide variety of seminar topics
  • Certificate of Completion – Receive a certificate for each course you attend
  • Handouts – Take home your own set of course material
  • Industry recognized sessions – Earn points towards maintenance of your industry designations
  • Networking – Connect with other like-minded professionals

For future reference, download your own 2017 Fall Trade Compliance Program today!

The Cost of Customs Compliance Part 1 | Is Compliant Trade Expensive?

Image: The Cost of Customs Compliance Part 1 | Is Compliant Trade Expensive?

We often field questions regarding the cost of compliance from importers. There is a misnomer that acting in compliance with Customs regulations is an expensive alternative to the status quo. “We’ve been doing it this way for years with no issue,” or, “I have never had any problems or heard of anyone who has,” and, “Customs is looking for criminals, not paperwork errors” are common phrases we hear. Compliance is seen by some businesses as having few financial benefits. With this view, trade compliance can be considered an unnecessary expense or in some cases, a bridge too far financially. But is compliance expensive?

As a compliance focused customs broker, we admittedly have a biased view on this topic: compliance is key. However, this view is not without merit. Working with both importers and Customs makes us privy to stories of delay, penalty, audit and in extreme cases, loss of importing privileges. We have seen all too frequently the impact these ramifications have on companies of all sizes and want to ensure our clients mitigate these risks.

To further expand on this, let us take a look at what makes a company compliant with trade regulations.

Areas of Compliance

Some of the standards that are expected of importers and their trade transactions include:

  • Accurate valuation of all imported items
  • Accurate application of the Harmonized Tariff Schedule
  • Accurate utilization of duty rates, including preferential claims to free trade agreements
  • Accurate marking of imported items
  • Knowledgeable logistics team who both understands and remains current with importing and exporting regulations
  • Staying apprised of the many potential antidumping and/or countervailing duty cases that may be applicable to an imported product
  • Correct and complete documentation

Now that we understand the primary principles of what makes a importer compliant, let us take a look at the associated costs.

Costs of Compliance

Compliance costs can be internal, in the case of your in-house logistics or customs department conducting the work, or external when the work is contracted out to advisors such as our Trade Advisory Team. These costs vary greatly from company to company as each has their own internal costs and risks of non-compliance. Additional variants are based on the number of imported items within your company’s database, origin of sourced materials, complexity of the finished product and the time and resources required to accurately classify it. A compliance audit will highlight areas of concern and provide costs and time frames required to ensure that a company is in compliance with all of the pertinent regulations and processes.

Contact our Trade Advisory Team to assess your company’s compliance. We can address specific areas of concern or conduct an all encompassing audit.

Costs of Non-Compliance

The compliance costs described above are typically realized upfront. However, costs associated with non-compliance are realized throughout a company’s importing lifespan such as:

  • Overpaying or underpaying duty
  • Unintentional evasion of duties and other potential fees
  • Unintentional smuggling of commodities
  • Administrative Monetary Penalty System (AMPS) penalties which range from X – X for the first offense and increase for successive offensive of the same nature per instance.

Other costs such as loss of importing privileges or obtaining a flawed record with Customs can have ongoing impacts on a company’s bottom line. The costs of non-compliance are too great to gamble with.

Is My Company Compliant?

In evaluating your company’s compliance with trade regulations ask yourself the following questions; and if you are unsure of any of the answers, you may wish to reconsider your compliance program and practices.

  1. Does my procurement team fully understand international terms of sales (Incoterms®) and the many advantageous terms to use and how to avoid admissibility issues?
  2. Where did my logistics staff learn how to fill out trade related documents? If not my logistics team, who fills out these documents and who audits them to ensure accuracy?
  3. When was the last time the logistics staff attended refresher courses on trade regulations? How do I ensure that my staff knows what to watch out for? Who audits the Customs Broker’s work?
  4. How do we obtain regulatory updates related to the commodities we import? How are these updates implemented? Are we staying up to date with Customs publications?
  5. Who is our contact person on file with Customs and are they aware of what to do with the correspondence?
  6. Who valued, classified and labeled my imported items? Who maintains and updates this database? How did I ensure these activities were completed in compliance with the pertinent regulations? Do we have a written record of the work that was done, by whom, dated, and basis for the determinations made?
  7. How are my customs documents filed and for how long? Are they filed in accordance with Customs specifications?

In Summary

Yes, compliance with regulatory requirements is definitely an expense that all importers must contend with. However, in comparison with the much higher costs of non-compliance, it is a total bargain.

Being protective of your company’s bottom line is a vital business practice. However, the bottom line is trumped by Customs drawing the line. Do not let your trade practice reach a point where your business is negatively impacted. Educate your logistics team as the first step towards trade compliance.

Pacific Customs Brokers offers a variety of trade advising and trade compliance education methods for all budgets including free Youtube videos and blog posts, cost-effective seminars and webinars and customized on-site training sessions. Our fall Trade Compliance Education schedule is now available and registration opens on July 15, 2017! Contact us today to evaluate your company’s compliance with trade regulations.

4 Reasons a Personal Import Should Not Clear Customs Under Your Company Name

4 Reasons a Personal Import Should Not Clear Customs Under Your Company Name

Sometimes, an employee or owner of a company will ask their customs broker to clear a personal import using their company’s commercial import account. It is seemingly easier to clear goods under an established account rather than the alternative, BUT this has clear pitfalls that we want to bring to your attention.

We do not recommend clearing a personal import as commercial goods for these 4 important reasons:

  1. Provincial Sales Tax (PST) needs to be assessed. If a commercial import is cleared in the name of a business, the business will have to self-assess the PST, which is often forgotten or unknown. If the shipment is cleared correctly as a personal import, PST is assessed at the time of importation with the exception of goods that require registration, such as vehicles.
  2. The import is filed against the company’s business import number. This means the company is responsible for all audits, Administrative Monetary Penalty System (AMPS) or other queries from government agencies for the next 6 years!
  3. A personal import is exempt from some requirements that commercial importations are required to meet. An example of this is the requirement for North American Free Trade Agreement (NAFTA) certificates. Personal use goods importations can apply NAFTA tariff treatments without a completed NAFTA Certificate or Statement (to reduce the duty payable).
  4. The company has no financial interest in the shipment. In most cases, in order to act as the Importer of Record (IOR) for a shipment, a company or individual is required to be the buyer or seller of the items.

 

Importers of personal use goods have 2 options for clearance:

  1. If items are being shipped to the buyer, for example in online shopping, they can self clear at the customs office closest to them once the shipment has arrived at the bonded warehouse in Canada. Unfortunately, this option can incur additional fees from the transportation company for bonding the load and can delay the delivery of the shipment. The importer will have to obtain a copy of the in-bond documents and then clear the shipment in person at their local Canada Border Services Agency (CBSA) office. Once cleared they will have to return a copy of the customs release to the carrier’s warehouse before the goods can be delivered. Depending on the carrier, the importer maybe able to meet them at the border and clear at the time of arrival. If you are transporting your personal import yourself, you are required to declare your imports at the border when you arrive. At that time customs will assess any duties and taxes payable.
  2. They can hire a customs broker to complete the customs declaration on their behalf. The use of a customs broker will incur additional brokerage fees. However the use of a customs broker will allow the shipment, in most cases, to clear customs electronically at the first point of entry and be be delivered soon after crossing the border. Using a customs broker will also ensure that all import requirements are met and help avoid delays.

    A broker can easily and swiftly assist the individual with a personal import as the CBSA has provisions for a customs broker to use their own business number (specific to personal importations) to clear personal shipments. We can even bill the charges to the commercial account so long as we have the correct authorization from the client.

The difference between personal use goods and personal effects importing:

There is a difference between personal use goods and personal effects imports. To understand the difference please visit our blog post on How To Import Personal Belongs vs Personal Use Goods.

Clearing the shipment correctly as a personal import is the desired and proper way to handle these clearances in order to ensure the import is entered into Canada in compliance with all requirements.

Need help with your personal use goods import? We can help. Call us anytime and tell us your import story toll-free!

CBSA Will Use a New Cargo Inspection System to Pre-screen Northbound US Cargo

Cargo Inspection System - Pacific Crossing 2017

 

CBSA will open the first land border

Gamma Ray Vehicle and Cargo Inspection System to improve processing of US Cargo

at Pacific Highway sometime in the summer of 2017.

Contributed by Jan Brock,

Senior Trade Advisor
Former Chief of Commercial Operations Pacific Highway crossing

Canada Border Services Agency (CBSA) announced in its Report on Plans and Priorities that it intended to invest in detection tools to assist the Border Services Officers with detecting high risk cargo.

Examinations may be performed with the use of specialized tools e.g. gamma ray imaging vehicle and cargo inspection system, ion scanners and detection dogs and may include a full or a partial offload of the goods to detect the presence of prohibited or restricted goods.” CBSA

 

Gamma ray imaging is a non-intrusive tool that cargo inspection services can use quickly and effectively to verify the presence of legitimate goods and to investigate suspicious and unknown materials. This technology assists with reducing border wait times and costs associated with cargo inspections.  

The Gamma Ray Imaging Vehicle and Cargo Inspection System being built at Pacific Highway is a stationary fixed location system contained within a building.

This technology performs the best for  detecting the presence of high density items  such as  steel or low density like narcotics.  It is capable of scanning an entire  semi truck and trailer ,intermodal shipping containers and automobiles for contraband.

This Cargo Inspection system  is a fast screening tool that will aid in facilitation of  cargo inspection at land borders. Large sized targets can be examined without unnecessarily opening or disturbing the contents of the load or incurring the cost of unloading or de stuffing the container.  

An offload will incur a cost to the importer, carrier and to CBSA cargo inspection services as it is very labour intensive.

The gamma ray image this system presents to the Border Services Officer (BSO) after the scan of the cargo and/or vehicle has been completed will assist in the officer’s decision on whether a more intrusive examination is warranted and the load may be redirected back to the warehouse for offload or destuffing by CBSA or the CBSA Contracted Cargo Inspection Service.

The efficiency, reduction in cargo inspection services and avoidance of costs associated with such action will make this new Cargo Inspection System a welcome addition to the Pacific Highway Port of Entry  and to Canadian Freight!

Have more questions on cargo inspection systems or cargo inspections services? Contact us and we are happy to assist.

For more detail please refer to the linked resource below :

Link: CBSA Report on Plans and Priorities

Want to learn more about the fundamentals of cross-border shipping? Attend a Customs Compliance Seminar hosted by Pacific Customs Brokers and learn from the experts.

Have questions or comments regarding importing to Canada? Leave them in our comments section below or email Ask Your Broker.