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

TradeTalk |BC Trees and Trade Agreements

Softwood, Hardwood and Forestry - NAFTA Re-Negotiations

 

A year after the initial signing of the Trans-Pacific Partnership (TPP) on February 4th, 2016, the U.S. pulls out and presses forward on renegotiations of NAFTA as well. Will these U.S. Trade actions impact Hardwood, Forestry Trade or Softwood Lumber Agreement negotiations between the U.S. and Canada?

With the October 12, 2015 expiration of the Softwood Lumber Agreement (SLA) and looming concern over tariff increases due to the December 16, 2016, United States Department of Commerce decision to initiate countervailing and anti-dumping investigations into imports of certain Canadian softwood lumber products the conversation and its topics seems to have changed between these two countries – or has it? Let’s have a look at what the goals for the forestry industry were in that conversation by both sides, and then let’s look realistically on the status of those goals today.

On the U.S. side the concern is:

Q – Were too many concessions made to get trades agreements in place (TPP or NAFTA) or others?

Q – Are U.S. companies facing hardships because of current lumber trading activities?

 

On the Canadian side of the conversation:

Q – Did the Canadians press more feverently to get the TPP Agreement signed?

Q – Why claim our crown land lumber is subsidized – it has been proven otherwise in court.

Hardwood, Softwood and BC Trees:

 

Let us first take a look at Forestry and TPP. According to Joel Neuheimer Canadians did press into it, and for what appears to be clear reasoning and benefit to Canada:

The reason, as noted by Joel Neuheimer, Senior Director of International Business at the Association of Canadian forest products , is that with this ratification, the industry will be opening new outlets and increase the level of exports on the international market, particularly to countries such as Japan, Vietnam and Malaysia.

Canadian forestry companies export about $33 billion worth of goods each year In more than 180 countries, primarily in Asia.

NOTE*** NOT primarily in the U.S. as many believe.

The TPP Agreement would have removed customs barriers for Canada’s forest products currently subject to tariffs of up to 31% in Vietnam, 40% in Malaysia, 20% in Brunei and 10% in Japan as reported by Etienne Dumont / Canadian Broadcasting Corporation.

NAFTA Renegotiations

 

Second, let’s review the NAFTA Re-negotiations and their impact on softwood lumber.

Trevor Nichols, of Castanet News says – There is hope for softwood lumber!

According to Mr. Nichols, B.C. Premier Christy Clark, while speaking at a breakfast event in West Kelowna on January 27, said Trump’s promise to rebuild the American economy might work in Canada’s favour.

 

“While the Americans are getting more protectionist, Donald Trump, as a builder, knows intuitively that residential housing starts is a major driver for economic growth for Americans. They cannot grow their housing industry without Canadian softwood going into their country, because it’s just too expensive to build and buy without our lumber.

Because the U.S. can’t produce enough lumber on its own to drive residential building, it’s actually in the country’s best interest to make sure Canadian lumber is filling the void.”

Nick Arkle, the co-CEO of Gorman Bros. Lumber Ltd. agrees with Clark, saying Canadian lumber is “critically important” to the U.S.

Additionally, B.C. Forest Minister Steve Thomson shares his thoughts here:

“Since 1982, softwood lumber exports from Canada to the U.S. have been subject to five rounds of U.S. trade litigation. “This is round 5 of this process and the Canadian industry has always been successful in defending its softwood lumber policy,” said Thomson.”

Local update February 05, 2017 | B.C. Forest Minister Steve Thomson flew to Ottawa on Sunday to start working toward a new trade agreement on softwood lumber with the U.S. as officials anticipated release today of the latest U.S. International Trade Commission report on their investigation into the import of Canadian softwood lumber.

You can read this full article in more detail | HERE

For access to a copy of the Fed Register notice issued which means that preliminary reviews are starting for the softwood tariffs listed, you can review what is published so far in regards to the Softwood Lumber Agreement negotiations  HERE  a full scope has not been written as yet.

We know that you also want to know how to have your voices heard in that discussion, especially when you are directly affected.

You have questions:

  • How are the field experts responding to the Trade Deals / Negotiations/ Issues?
  • What are the experts discussing amongst their peers??
  • How is your voice heard in these conversations?

One way to share your voice is to publish your concerns, insights, ideas or expertise online. Each week we publish and share industry news, our insights and reports that impact you as our readers. Do you have something that you would like us to share? Ask? Research for you? Let us know and we will add your requests to our weekly research and publishing goals.

 

TRADE PERSPECTIVES | The Conversation – NAFTA Re-Negotiations

 NAFTA

How to stay informed and get involved in the NAFTA conversation.

 

Sometimes we come across the most interesting people when we are researching the “State of Affairs” through the lens of North American Businesses. This week researching NAFTA we learned about Rosemary Coates. She has  an interesting perspective because of her  real world, hands on experience that she brings into her writing. Her article below, focused on the Mexico and U.S. cross-border challenges, and she has a point of view we hear being shared broadly. Let us introduce you and please let us know if you share her views or have another you believe we need to share as well!.

Coates is an expert in Supply Chain Dispute Resolution and she is the best-selling author of: 42 Rules for Sourcing and Manufacturing in China and Legal Blacksmith – How to Avoid and Defend Supply Chain Disputes. Ms. Coates lives in Silicon Valley and has worked with over 80 clients worldwide. She is also an Expert Witness for legal cases involving global supply chain matters. She is a globally savvy leader that understands not only supply chain, she understands history.

 

She writes this in her most recent article for Supply Chain Management Review (http://www.scmr.com/) :

 

“There are economists who say NAFTA has already caused the loss of so many jobs to the lower-cost environments in Mexico. They argue that instead of doing nothing, we should take every opportunity to raise tariffs, eliminate NAFTA and close our borders to immigrants and trade.

But we have gone down this pathway before with the Smoot-Hawley Tariff Act of 1930, which raised tariffs on about 900 products. Historians blame Smoot-Hawley for triggering the Great Depression of the 1930s.

For sure, NAFTA has its problems. The import/export paperwork to keep track of goods moving across the borders can be onerous. And the special rules for truckers from Mexico have taken a toll on American truckers. But overall, most economists think NAFTA has had a net positive effect on the US economy.

I hope we have learned our lesson from American history”

 

Rosemary shared these sentiments eloquently. We expect that we will not see too much hardship occur between Canada and the U.S. border trade under the new negotiations. We have not thus far, and we see reasons to stay focused on business as usual.

When topics as broad as free trade re-negotiations, tariff amendments, any type of international border barriers to business are being discussed many of us want to be the fly on the wall that hears the discussion. We try to be that fly on the wall for you, our valued readers.

We know that you also want to know how to have your voices heard in that discussion, especially when you are directly affected.  

You have questions:

  • How are the field experts responding to the NAFTA renegotiations?
  • What are the experts discussing amongst their peers??
  • How is your voice heard in these conversations?

One way to share your voice is to publish your concerns, insights, ideas or expertise online. Each week we publish and share industry news, our insights and reports that impact you as our readers. Do you have something that you would like us to share? Ask? Research for you? Let us know and we will add your requests to our weekly research and publishing goals.