Posts Tagged ‘NRI’


 

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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Non-Resident Importing — Discover Your Unfair Advantage

seesaw-600With an improving U.S. economy and a comparable low Canadian loonie, U.S. companies continue to find different ways to cut costs while still looking to grow their sales and revenues. Creating or growing an export initiative to Canada right now can be one of the easiest ways to achieve great results. A stronger U.S. dollar and lower Canadian loonie, has encouraged Canadians to continue in online and cross-border shopping.

How can U.S. companies tap into the Canadian market?

As a U.S. business, that is currently not in Canada, you could look into expanding your market by exporting to Canada or, better yet, finding out how to do it better than your competition. Business Executive, John Rollwagen says, “the secret of business, especially these days, is to focus relentlessly on your unfair advantage — the thing you do that others don’t.”

What will give you an “unfair advantage” over other competitors?

Simply put, unfair advantage is just another term for competitive advantage. One suggestion is to look at the Non-Resident Importer program for U.S. exporters to Canada and how it may benefit your export growth strategy.

Who is a Non-Resident Importer (NRI)?

A Non-Resident Importer (NRI) is simply a company that is considered the Importer of Record for shipments going into Canada, even though the company does not have a physical presence in Canada. A Non-Resident Importer controls the customs release process and the costs associated with getting their products into Canada in a timely and cost-effective manner. Products are sold with an all-inclusive delivered price. The customer orders and pays for the product and waits for it to be delivered. No border hassles, no waiting for the courier company to arrive and collect extra charges. Ordered, paid and delivered. That’s it!

What are the benefits of being a Non-Resident Importer?

By becoming a Non-Resident Importer and acting as the Importer of Record, as a U.S. exporter you can:

  • Remove border hassles and unexpected fees for your Canadian customers
  • Provide price guarantee to leverage more sales
  • Capitalize on NAFTA  for your ‘Made in USA’ products
  • Simplify customs documents and reduce customs brokerage fees
  • Open doors to large retailers who will not agree to be the Importer of Record
  • Create a potential advantage over U.S. competitors without impacting profits
  • Position yourself on an even playing field with Canadian firms without the additional expense of a Canadian office, warehouse or distribution point
  • Leverage Canada’s trade agreements by shipping directly from participating foreign countries into Canada. There’s no need to land your goods in the U.S. first.

The Non-Resident Importer option can provide your company with that “unfair advantage” over other competitors who just export their products and never think about what happens when the goods cross the border and a delivery attempt is made. Think of how your customer service team could actually get a “thank you” and a compliment instead of complaints about unexpected duties, taxes or other related customs release fees. There are more opportunities and benefits that can be realized by becoming a Non Resident Importer, many specific to what you are currently doing or want to do in the future. In coming weeks, we will continue to explore this exciting option of your sales to Canada and all the considerations you should know before you begin.

Pacific Customs Brokers offers a Non-Resident Importer Program tailored to your company’s needs.We can guide you through the process and help you tap into the Canadian market. Contact us for more information and to get set up.

For those who are new to importing into Canada, our webinars on Importing for the Beginner [CA Series] will make a good start. In this two-part webinar series to get a step-by-step description of the importing process into Canada. Each part in the series is 60-minutes in length and will provide a comprehensive understanding of: the supply chain parties involved, compliance considerations, documents and forms, free trade agreements, and more.

Learn more and register »

 

What do you think of Non-Resident Importing as a competitive advantage? How will you use it in your business? Share your thoughts in our comments section below or email us at Ask Your Broker.

 

 

Why Am I Losing Money When Shipping to Canada?

Frustrations arising from cross-border shipping to Canada are always showing up in  my Google Alerts.  Most are from online auction type sellers who really do not understand the customs clearance process. Some try to save the customer’s money by  placing a false value on the goods which can result in even more costs for false declaration and lengthier delays for the receiver in Canada. Some e-sellers  refuse to ship to Canada altogether as they feel it is too much hassle and have lost money in  the transaction or received bad feedback from buyers.

Have you been faced with this situation?

1. Why do my customers in Canada want me to ship USPS?

This could be because it is cheaper to do so.

2. When I ship via postal service why does my customer in Canada send me a message four weeks later informing me they did not receive the package and I should resend it?

It could be because there is no traceability and it might be lost or stolen.

3. When I ship using a small parcel courier why do they hold my package hostage until the customer pays all the customs charges? Often the customer refuses to pay and the parcel company ships the package back and charges me for it.

Using the small parcel courier now provides you with the ability to track your package, but does your customer in Canada know what to expect to pay in  extra customs charges when the goods are delivered? If they don’t they may feel the charges are too high and it is no longer worth buying the product.

4. When I ship using the “other” small parcel company, why do they bill me all kinds of customs charges but the customer still gets their package?

The small parcel courier is on a customs program called the Low Value Shipment Courier program (LVS), in which the courier is allowed to declare and deliver the package and then that small parcel company sends out a letter stating how much they owe in duty, taxes and brokerage. If the Canadian customer does not respond, the “other” small parcel courier’s service guide directs them to bill the charges back to the shipper for any unpaid customs charges.

“Regardless of any payment instructions to the contrary, the sender is ultimately responsible for payment of duties and taxes if payment is not received.”

5. Why is my business losing so much money when selling to Canadians?

See 2, 3, and 4 above.

Have you explored all your options when shipping and selling to customers in Canada?

Before you ship or sell your products to customers in Canada, do your homework and consider calling a Canadian customs broker who can assist you in:

  • understanding the complexities of the cross-border transaction
  • save you money in fees
  • avoid unnecessary hassles at the border and with angry Canadian customers
  • streamline your shipments for a speedy delivery and a less costly transaction

The Non-Resident Importer option may be one solution. Preparing your Canadian customer on what to expect and having a solution in place may be another. Contact us before you finalize your next sale, and we will work with you and your Canadian customer to help both of you make a smooth cross-border transaction.

Do you have further questions about shipping to Canada? Feel free to ask them in the comment section below.

CBP VS CBSA Valuation History

Shipments to Canada - Non-Resident Importers The direct to market program for Non-Resident Importer’s (NRI) can be key if you have the sales volume. While this is an excellent way to take advantage of lower duty rates for importing directly from an offshore country,valuation for Customs declaration remains a critical component of your customs compliance.

The United States and Canada differ on interpretation of the valuation rules. Lets take a look at the history and review how we arrived with customs valuation rules as they are today.

History:

Governments have collected customs duties since the beginnings of international
trade. It is recorded that Athens applied 20 percent import duties on
corn and other goods, while the Romans, from well before the time of Julius
Caesar, depended upon customs revenues to support the expansion and maintenance
of their empire. And, where a tax must be collected, there will be
disputes over rates and methods….

Today: In 1947, the General Agreement on Tariffs & Trade (GATT) negotiations concluded that the customs value should not be arbitrary or fictitious. Since then, there are agreements on how to determine the value for customs declarations.

Currently the valuation rules on are based on the implementation of the GATT Agreements. In 1994 the World Trade Organization established and implemented (based on those existing GATT agreements) the Customs Valuation Agreement (CVA) that all WTO members must abide by.   Valuation rules are necessary for many reasons and are valuable for use in:

  • Determining and collecting revenue
  • Producing trade statistics
  • Implementing and monitoring trade agreements
  • Monitoring quantitative restrictions (quota)

Still the interpretation of these rules are different for different countries.

The basic method for determining value is the transaction value method: the price paid or payable of goods being imported with certain adjustments when sold for export to the country of importation. This is where the interpretation has been the subject of many reviews and debates.

This is another significant difference between Canada and the USA with respect to a US company acting as a NRI and thinking they can use the ‘first sale rule’ for their direct imports into Canada.

In the US the “first sale rule” allows (under certain conditions) for the importers to use the price payable by the buyer (middleman) for imports into the USA. For example: a buyer (middleman) secures a sale of merchandise bought for $20,000. and then in turn sells the goods to the retailer for $30,000. The goods in the meantime are being exported from China into the USA with the final buyer being the importer. The value used meets the condition for using the valuation under the first sale rule. (lesser value of $20,000.).

Some countries in the World Trade Organization (WTO) have legislated and refined the interpretation of these valuations rules successfully while some have not.

Take the USA, Japan and the European Union, while they have had much discussion and even congressional reviews and debates, these countries still allow (with certain conditions met ) the “first sale rule”. Canada and Australia have already abolished the “first sale rule” through legislation 10 years ago.

Canada deems under the transaction value method that the value for customs be: the price paid or payable (with adjustments) by the first purchaser IN   Canada. In other words the value should be the last sales value before import and not the first sale. How does this change the example given above ?

In order to declare the lesser value ($20,000.) the importer must be the middleman and must reside in Canada.   If the middleman happens to be a USA company acting as a NRI for their sales to Canada and has their goods shipped directly from the offshore country they buy from, the value used for customs must be the price paid or payable by the first Canadian purchaser, not the price paid by the middleman under the “first sale rule”

This is critical to the NRI and compliance under valuations rules for doing business in Canada. Many USA companies do not realize this difference and declare the sales price they paid, leaving them at risk in the event of an audit by CBSA.

If you are a NRI selling to Canada, review your procedures and ensure you are using the correct valuation for Canada. When in doubt contact Pacific Customs Brokers for a complete review of the valuation methods and regulations for your imports into Canada.

 

 

 

 

 

 

NRI Program | Shipping to Canada Directly

Hockey PlayerPreviously, we introduced you (U.S. company) to the Non-Resident Importer (NRI) Program for exports to the Canadian market. In this segment, we’ll provide excellent reasons as to why shipping your overseas goods directly to Canada is the way to go.

One of Canada’s passions is hockey, therefore, this is great market to sell hockey sticks. If you are a U.S. company wanting to sell hockey sticks into Canada, this is not a problem. But it is a problem if the hockey sticks are initially imported into the USA from China first and then exported to Canada. The reason being, the hockey sticks will then attract duty. Considering your duty and freight cost to re-export to Canada, the price is no longer competitive as a Canadian firm can import the same hockey stick duty free direct from China. This is where the option of being an NRI is a cost benefit to your company. You can utilize the NRI option for a direct to market cost savings to import the hockey sticks duty free into Canada direct from China.

Many U.S. companies do not export from their locations in the USA. They have enough sales volume to bring the goods into Canada directly from the offshore country without ever landing in the USA and can then take advantage of Canada”s trade agreements with other countries. Just one of the benefits of being a Non-Resident Importer!

Let”s look at another example of how you can use the NRI option to your benefit — perhaps you export (not as an NRI) high end walking sticks made in Italy to Canada. These walking sticks are so desirable, you have no trouble selling them to the Canadian market, despite the Canadian consumer has to pay tax and 7% duty to import them.

With the product, you offer a lifetime warranty of a free replacement, should any of the walking sticks break or crack but the customer will still be responsible for the duty & taxes on the free replacement. The customer is not so happy. If you shipped as the a Non-Resident Importer, the customer would not endure anymore costs. Your customer in Canada is extremely pleased with your hassle free replacement warranty and spreads the word.

You decide to use the NRI option for all your sales to Canada and find you can actually reduce the cost by acting as the NRI due to your weekly volume of shipments to Canada.  Your phone starts ringing, and your website traffic increases with even more orders for the beautiful lifetime guaranteed Italian walking stick!  A true success story!

For more information on NRI option and how it can benefit your sales in Canada, contact us at shipmentstocanada@pcb.ca and get a jump on other exporters to Canada who are not taking advantage of the Non-Resident Importer option.