Archive for the ‘Importing into the U.S.’ 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.

Subscribe to Newsletter | ACI eManifest

 

Jan Brock | Author

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.

Pacific Customs Brokers Newsletter Sign Up

7 Reasons to Invest in Customs Compliance

PCB helpWith today’s fast paced business climate time is limited and precious. There is always a long list of tasks to accomplish so why would you take valuable time out of your busy schedule to attend an educational course?

Like any good business person worth his or her salt, let’s examine the Return on Investment (ROI). Obviously the course topic has to have some relevance to your business. Here are some questions a potential attendee may ponder on as they contemplate the decision to attend or not:

  • Is there a way my company can save money?
  • Will it improve a process?
  • Will it provide potential insight to solve a problem?
  • Will it provide valuable knowledge to move a project along?
  • Is the topic one that cannot easily be ignored? (e.g. compliance issues)

What is Customs Compliance?

Customs compliance refers to importers and exporters meeting all of the requirements governing the movement of their commercial goods across the border. To be trade compliant is to ensure that the tariff classification, origin and valuation of goods are all accurately declared in accordance with legislative requirements and that the appropriate duties and taxes are paid. There is a clear obligation under the Customs Act to provide true, accurate and complete trade information including a proper description of the goods, as well as correcting erroneous information regardless of dutiable status. Furthermore, an essential part of customs compliance is to ensure that all import requirements are met such as having the appropriate import permit. Failure to meet all import requirements violates the control measures that are in place to protect the economy, the environment and the health of citizens.

 

The Importance of Customs Compliance:

In recent years, the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CBP) have shifted much of their emphasis from import inspections to post-audit verifications. The responsibilities put upon Importers of Record (IOR) have steadily increased as all members of the supply chain endure higher scrutiny from customs officials. Now more than ever it is imperative that the IOR maintain a high level of sophistication, demonstrate due diligence, ensure they understand their responsibilities, implement internal sets of controls and procedures for best practices as well as understand the consequences of non-compliance.

International trade no longer stands on the sidelines of corporate awareness. It is being transformed from an operational function into an evolving eco-system that helps mitigate organizational risks and strategically drives value. In order to do business efficiently, smart businesses need to strike a balance between ensuring timely movement of cross-border goods and complying with complex regulatory systems designed to ensure safe, verifiable cross-border transactions. Effective global customs planning can help improve a company’s bottom line.

 

Benefits of Attending a Customs Compliance Course:

1. Gain Insight on Key Trade Topics

A well designed course will help you gain a better understanding of key trade topics, teach you how to manage customs compliance and utilize free trade agreements to your benefit. The substantial knowledge you receive will aid in completing accurate documentation, understanding logistics and getting a feel for how transactions move through the regulatory process.

2. Stay Current on Customs Regulations

In our industry, where we deal with customs and other government agencies, regulations are ever-changing. A customs compliance course can be a convenient way for trade professionals to stay ahead of new regulations with international trade.

3. Avoid Possible Penalties and Risks By Being Informed

Customs agencies and other government departments emphasize the importance of compliance. This is monitored through increased enforcement and could result in monetary penalties to the importer. One of the most important reasons to attend a course is the knowledge and guidance you will receive from the presenters with regards to the steps your organization will need to take to become more compliant with government agencies.

4. Cost-effective Training and Knowledge Refreshment Tool for Logistics Professionals

Courses make for excellent training for someone in a new role, a new employee, or training for yourself. Quite often we have repeat attendees who regularly register on an annual or bi-annual basis. Part of our education program (PCB Learning Center) covers general overviews of importing or exporting, but we also offer training on specific subjects (e.g. North American Free Trade Agreement, H.S. Tariff Classification, Customs Valuation, etc.), thus providing an excellent opportunity for companies to utilize them as a cost-effective training tool.

5. Access to Customs Compliance Experts

A well designed course should include adequate time for audience participation or a valid opportunity at the conclusion to get answers to your questions. A live seminar gives you the chance to personally speak to the presenter(s) or other subject matter experts. We all agree that sometimes the best experiences occur when there are excellent inquiries that promote further ideas and discussion, particularly when you thought you were the only one with that challenge.

6. Reasonable Time Commitment

The ability to obtain some specific knowledge in a short period of time is an added benefit. Night school courses are requisite for more in-depth subject learning but often you need something that is less intensive but still provides substantial knowledge.  Half or full-day seminars or on-demand videos are an excellent way to get a quick update.

7. Networking – Make Valuable Professional Connections

A live course allows you to network and learn alongside other like-minded professionals, coming away with increased knowledge and understanding. Perhaps you will encounter a person who had a similar business problem to yours, or people who can share their own experience on a certain issue and provide you with valuable insight.

Here is a quote from an attendee at one of our recent Customs Compliance Seminars  “… it’s always interesting to have an informal conversation with compliance people from other industries,” which brings up another great point – where else would you have a chance to rub shoulders with people of similar business interests?

Hopefully this has inspired you to take the next step in your customs compliance education. Check out our PCB Learning Center to find a perfect resource today!

We hope you’ll join us and encourage you to share this with colleagues and business partners who might find it useful.

Do you have questions about PCB Learning Center’s education program? Leave us a comment in the section below!

FDA Food Facility Registration Renewal Opens October 1st 2018

 

About the Food Safety Modernization Act (FSMA) program:

The Food Safety Modernization Act (FSMA) improves the registration process by ensuring, among other things, that the FDA has accurate contact information for each facility. The new registration form also includes new categories of foods. These new categories will help FDA rapidly communicate with the right facilities in the event of an emergency.

Food producers and manufacturers have long been required to register with the Food and Drug Administration. Facilities can register online, via mail or fax. If your company is not domestic (not located within the U.S.) you will be required to assign a U.S. agent in your registration. See below for more information on assigning a U.S. agent.

The U.S. Food and Drug Administration (FDA) issued further information and guidance regarding registration requirements for domestic and foreign manufacturers, processors, packers or holders of food for human or animal consumption based on changes made by the FDA Food Safety Modernization Act (FSMA) to the Federal Food, Drug, and Cosmetic Act (FD&C Act).

Biennial registration renewal for food facilities begins at 12:01 AM on October 1, 2018. The updated food facility registration system is accepting food facility registration renewals.

Who must register?

Under the Food Safety Modernization Act (FMSA), all domestic and foreign facilities that manufacture, pack or store food, food ingredients, pet foods or dietary supplements are required to renew their registration with the FDA before the end of 2018 and to re-register every two years thereafter. This represents a change from the previous registration requirement for food facilities. The re-registration form contains new food categories, and requires more detailed and updated contact information.

How to re-register a domestic company?

To submit a registration renewal to FDA, a food facility is required to submit required registration information to FDA, including the additional registration information.

If you are affected by the new regulations, you may re-register your food facility online.

How to re-register if not a domestic company?

Pacific Customs Brokers offers the following services:

  • Act as your U.S. Agent
  • Assist with FSMA re-registration
  • Answer your queries regarding FDA requirements

Contact Pacific Customs Brokers for assistance with food facility registrations or the FSMA. To stay current on this topic, you may also want to subscribe to Pacific Customs Brokers trade updates.

Do you have questions on the FDA food facility re-registration? Share them in our comments section below or email Ask Your Broker today.

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.

 

Subscribe to Newsletter | ACI eManifest