Archive for the ‘Trade Compliance Education’ Category


 

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

 

 

 

 

 

 

Pacific Customs Brokers Newsletter Sign Up

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 [email protected]. We are here to help!

Your Designation Maintenance Begins with our Professional Development Courses

Image: Seminar Room

 

A new year means a new start and this includes a reset to the maintenance requirements of your professional designations set forth by the credential’s governing body. Your Professional Development starts with Pacific Customs Brokers.

Taking any of our seminars and webinars may earn you maintenance points, credits, and hours towards a variety of professional designations. Some examples of eligible designations are:

  • Certified Customs Specialist (CCS)
  • Certified Trade Compliance Specialist (CTCS)
  • Certified Export Specialist (CES)
  • Designate with the Law Society of British Columbia (LSBC)
  • Accounting Professional


Registration for Spring is now open!

Review and plan your professional development maintenance for the first half of 2018 by clicking on the course names below:

  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! 3 3
CDN Trade Compliance Part 1 5 5
CDN Trade Compliance Part 2 5 5 3
Exporting from Canada 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 5 5 5
Customs Valuation 5 5
CFIA 5 5
FDA 5 5 3
C-TPAT 2.5 2.5 2 2

 

If you have never attended one of our Professional Development Courses, 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 sessions are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. Benefits of attending an online course include:

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

Professional Development Courses – Seminars and Workshops

At our in-person courses you learn the best practices of being a compliant importer and/or exporter which will help you expedite your commercial shipments to and avoiding costly delay triggers. Our experts share their knowledge and stories on international and cross-border shipping regulations to keep you current with customs and partner government agency requirements.  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 hurdles
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wide variety of topics
  • Certificate of Completion – Receive a certificate for each course you attend
  • Handouts – Take home your own set of course material
  • Industry accreditation – Earn points towards maintenance of your industry designations
  • Networking – Connect with other like-minded professionals

 

Have questions or comments about any of our courses? Call 888.538.1566 or email us today!

TOP 5 MISTAKES WHEN COMPLETING A NAFTA CERTIFICATE OF ORIGIN

Packing slips, commercial invoices, customs invoices they are all documents that can be easily completed unlike a NAFTA Certificate! What I mean is… you are simply taking shipping or invoicing data – shipper, consignee, carrier name, description of goods, etc. and plugging it into the respective area on one of these documents.

How about the North American Free Trade Agreement (NAFTA) Certificate of Origin? Can you use the same document completion philosophy?  There is much more to a NAFTA Certificate than just “completing another form”.

At a quick glance at a NAFTA Certificate, one might assume that the answer is yes. Exporter — yes. Producer — yes. Importer, description of goods, blanket period — yes, yes, yes. Sounds like we”re on a roll! We read the NAFTA completion instructions, understand what data is required and we”ll just finish this form off to satisfy the foreign purchaser’s request. Right?

Wrong!

The main difference between a NAFTA Certificate and the aforementioned documents is that all the products you list on this document must qualify under the NAFTA Rules of Origin. That’s right – do not simply complete the document. There are rules that must be observed.

As we already noted, some fields on the NAFTA Certificate of Origin are fairly basic and you can easily fill them in. The focus of this article is to provide clarification on the less understood areas to raise awareness of their complexity.

Field 6 — Harmonized System (H.S.) Tariff Classification Number

As emphasized in a previous article, it is very important that the H.S. tariff classification is correctly assigned to each product, as the first six digits will determine which of the NAFTA “Specific Rules of Origin” will apply. In order to correctly qualify the product under these Rules, you must be sure the tariff classification is correct. If you are unsure regarding the tariff classification, please contact a customs broker for assistance.

Field 7 — Preference Criterion

The completion of this field is going to depend on where a product was sourced or manufactured, the extent of the manufacturing and transformation process, and/or the source and place of manufacturing for any raw materials. Note that the preference criterion chosen for one product might not be the same as for another, and each situation will need to be evaluated on its own merit.

Field 8 — Producer

Hey, you get a lucky break! This is one of the easier ones. YES, NO(1), NO(2), and NO(3) are your options. The ‘NO’ options of (1), (2), and (3) refer to what you are basing your NAFTA claim on — whether you ‘just know it is NAFTA eligible’ (1), or you have documentation from the producer that it is NAFTA eligible (other than an NAFTA) (2), or you have a voluntarily provided & accurately completed NAFTA Certificate from the manufacturer (3). We respectfully advise that you go for (3), as this assures that the actual producer has done his due diligence in confirming NAFTA eligibility of the product he is providing to you.

Field 9 — Net Cost

In order to properly complete this field, you will need to understand the NAFTA Specific Rule of Origin applying to a product to determine if Regional Value Content is a factor and whether the Net Cost method will be used. In this field, you will either show ‘NC’ if the Net Cost method was used, or ‘NO’ (all other situations). By the way…NEVER place a dollar amount in this field, as this merely indicates to a customs agency that you did not read the instructions!

Field 10 — Country of Origin

This one sounds simple, doesn”t it? You would be amazed, however, at the number of NAFTA Certificates we receive that indicate countries other than the U.S., Canada or Mexico (remember, it’s the North American Free Trade Agreement). Another common mistake is for someone to automatically assume that just because certain products are made in Canada, the U.S., or Mexico they qualify for NAFTA. In fact, if they do not qualify, they must not be listed on this document.

Sound complicated? In some cases, it is straight forward, but in so many others (for example, products with many foreign components), NAFTA qualification can be an onerous task. The point we are making is for companies and individuals to realize that much care needs to be exercised (before signing, please read the disclaimer at the bottom of the form so you understand your responsibilities).

Repercussions

Lets say we have a NAFTA Certificate that has all the boxes completed with what appears to be correct data.  We clear and account for the goods and bill you.  No duty is paid.  Then 11 months later or more (up to 4 years after the date of release),  Canada Border Services Agency (CBSA)  decides to audit that NAFTA.  They will go to the exporter with a NAFTA Verification questionnaire.  Let’s say CBSA comes to the decision that the goods actually do not qualify.  Guess who suffers for the exporter incorrectly completing the NAFTA?  Your Company.  You get the penalty applied to your importing profile and you have to remit the unpaid duty with interest.

 

So keep that in mind when you see NAFTA Certificates that are not properly completed.  Its a red flag that the supplier actually has no clue whether or not the goods qualify.

 

It should be noted that similar rules apply for any Certificate of Origin relating to a free trade agreement. For instance, if you grab a copy of a Canada-Chile FTA Certificate of Origin, you will notice many similarities.

Still baffled over the completion of this document, or whether or not your goods qualify under NAFTA? If you require advice or have questions related to NAFTA,   feel free to contact our Trade Compliance Department.

 

Earn Credits Towards Your Professional Development with Pacific Customs Brokers

Are you caught up on your professional development credits for 2016?

The responsibility of understanding and abiding by trade regulations falls upon all of us playing a part in global trade. We want to help your business import and export successfully. For this reason we offer a series of seminars and webinars that will educate you on just that and contribute to your professional designations’ maintenance requirements.

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 your professional designations.

Review and plan your maintenance for the second half of 2016 here.

  CSCB NEI LSBC
Webinar CCS CTCS CCS CES  
CDN Importing for Beginners Part 1
CDN Importing for Beginners Part 2 *5
US Importing for Beginners Part 1 1
US Importing for Beginners Part 2 *5 1
FDA Regulated Goods *5 1
CFIA Regulated Goods *5
NAFTA for Beginners Part 1 1 1
NAFTA for Beginners Part 2 *5 1 1
 
*Taking any three of these 1-hour events qualifies for 5 CCS points. To claim your points, contact Adriana Zamora with the three course names upon completion of the third.
 
Seminar
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
FTAs & Rules of Origin  5  –  5  –  –
Customs Valuation  5  –  3.5  –  –
CFIA  5  5  –  –  –
FDA  5  5  3  –  –
C-TPAT & PIP  2.5  2.5  2  2  –

 

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

Seminars and Workshops

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

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

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:

  • Global accessibility – Travel is removed from the equation for companies with multiple locations or branches
  • Cost-effectiveness – Complimentary part 1 and more affordable than industry standards
  • Concise training – In a fast-paced industry, efficiency becomes just as important as staying compliant
  • Convenience – Attend from the comfort of your desk
  • Industry recognized sessions – Earn points towards maintenance of your industry designations

Have a question about any of the seminars or webinars listed above? Use the comment section below or email Ask Your Broker.