Posts Tagged ‘Tariff’


 

Canadian Steel And Aluminum Importers Can Receive U.S. Surtax Relief At Time Of Import

Steel Railroad

You learned in Are You Eligible To Request Remission Of Canada’s New U.S. Surtaxes? how an importer can receive a refund on surtax paid in special circumstances of steel and aluminum imports. But as an importer of steel or aluminum, what if you could avoid paying the surtax at the time of import?

On October 11th, 2018, Canada Border Services Agency published the United States Surtax Remission Order. The Order notes that certain commodities can be relieved of paying the surtax at the time of import. To be relieved of surtaxes the items must be classified under the tariffs and be of the same description listed in Schedule 1 and Schedule 2 of the remission order. A description of the conditions these products must meet are listed below:

What Steel and Aluminum Commodities are Relieved of U.S. Surtax?

In this Notice, CBSA states “Remission is granted for those goods described in Schedule 1 and Schedule 2 attached to the remission order under the following conditions:

  • (a) the good listed in the schedule was imported into Canada on or after July 1, 2018 and subject to surtaxes;
  • (b) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the good;
  • (c) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation.
  • (d) the importer files, on request, the evidence or information that the Canada Border Services Agency requires to determine eligibility for remission;
  • (e) the importer agrees that it is subject, at any time, including after the remission, to review by the Canada Border Services Agency for the purpose of determining whether the information supplied by the importer under paragraph (c) or (d) is accurate and complete and whether the facts on which the Canada Border Services Agency relied or intends to rely to determine the eligibility for remission remain unchanged in all material respects; and
  • (f) at the time when the Canada Border Services Agency conducts the review referred to in paragraph (e), the Canada Border Services Agency must be able to conclude that the information supplied remains accurate and complete and that the facts remain unchanged in all material respects.
  • (g) goods described in Schedule 2 must be imported into Canada no later than December 31, 2018.” Canada border Services Customs Notice 18-16, october 11, 2018.

Proof in meeting these criteria must be provided.

What Other Commodities are Relieved of the U.S. Surtax?

Remission is granted for goods classified under tariff item No. 8903.10.00, 8903.91.00, 8903.92.00 or 8903.99.90 in the List of Tariff Provisions set out in the schedule to the Customs Tariff, excluding those that have been exported from Canada and then subsequently re-imported into Canada. Remission for these goods is granted under the following conditions as stated in the Notice:

  • (a) the good was imported into Canada on or after July 1, 2018 and subject to surtaxes;
  • (b) the good was both purchased under contract and sold under contract prior to May 31, 2018;
  • (c) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the good;
  • (d) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation;
  • (e) the importer files, on request, the evidence or information that the Canada Border Services Agency requires to determine eligibility for remission;
  • (f) the importer agrees that it is subject, at any time, including after the remission, to review by the Canada Border Services Agency for the purpose of determining whether the information supplied by the importer under paragraph (d) or (e) is accurate and complete and whether the facts on which the Canada Border Services Agency relied or intends to rely to determine the eligibility for remission remain unchanged in all material respects; and
  • (g) at the time when the Canada Border Services Agency conducts the review referred to in paragraph (f), the Canada Border Services Agency must be able to conclude that the information supplied remains accurate and complete and that the facts remain unchanged in all material respects.” Canada border Services Customs Notice 18-16, october 11, 2018.

CBSA further states that the remittance will only be granted if they were correctly classified under tariff item No. 8903.10.00, 8903.91.00, 8903.92.00 or 8903.99.90. The item could not have been exported from Canada and then re-imported, unless temporarily imported for repair, alteration or storage. Proof of meeting all criteria must be provided.

Are Goods Temporarily Imported Into Canada Relieved of U.S. Surtax?

Yes, if they were imported for repair, alteration, or storage and the following criteria are met as outlined by the Notice.

  • (a) the goods are exported immediately after having been repaired, altered or removed from storage, whichever occurs last, but no later than twelve months after the date on which the imported goods were released; and
  • (b) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the goods.
  • (c) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation;
  • (d) the importer files, on request, the evidence or information that the Canada Border Services Agency requires to determine eligibility for remission;
  • (e) the importer agrees that it is subject, at any time, including after the remission, to review by the Canada Border Services Agency for the purpose of determining whether the information supplied by the importer under paragraph (c) or (d) is true, accurate and complete and whether the facts on which the Canada Border Services Agency relied or intends to rely to determine the eligibility for remission remain unchanged in all material respects; and
  • (f) at the time when the Canada Border Services Agency conducts the review referred to in paragraph (e), the Canada Border Services Agency must be able to conclude that the information supplied remains true, accurate and complete and that the facts remain unchanged in all material respects.” Canada border Services Customs Notice 18-16, october 11, 2018.

In order to be eligible for any of these above noted exemptions, the products must both be of a tariff item and description listed in the Department of Finance notice found here: List of Goods Subject to Remission of Countermeasures on Certain Steel and Aluminum Goods from the U.S.

You must also provide proof of meeting these criteria to CBSA. If working with a Customs Broker, you will need to provide supporting documentation to them in order to receive these exemptions.

What If You Already Paid the U.S. Surtax?

If you have already paid surtax on items listed in this post, and would like for us to submit a claim for remission of the surtaxes paid, please provide documentation and/or product literature which proves your product is one of those listed in the linked document above for each import transaction. The CBSA will require this proof in order to review and process the claim for refund of the surtaxes paid. Note: Additional charges will apply for preparing and submitting the request for the refund.

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4 Reasons For Determining the Correct Harmonized Tariff Classification

Harmonized System Tariff and ClassificationThe dilemma: You are always getting calls from your customs broker asking for further information about your products. When asked “why”, they respond that they need to determine the correct harmonized tariff classification.

To the uninformed observer, why care? I mean let us be honest… all you want to know is… “Do I have to pay customs duty on these goods?” Right?

Like everything, you need to peel back the layers to see what lies beneath. First of all, let us briefly examine the complexity of the tariff schedule as defined by the harmonized system.

The Harmonized System (H.S.) Tariff Schedule:

The H.S. Tariff Schedule is comprised of 21 sections with 96 chapters; in Canada there are over 12,000 individual tariff classifications at the ten digit level. There is a specific hierarchy (the General Rules of Interpretation) which defines the methods used to determine a product classification. Additionally, there are sections, chapters and explanatory notes to consider, plus further rules defining how to navigate the punctuation and use of dashes or hyphens. Granted, some items can be classified easily but many require an expert with years of tariff classification experience.

Key Reasons Why “Getting It Right” Is So Important:

Let us start with the area that everyone is aware:

1. Duty rates: The tariff classification has a direct correlation to the duty rate that you will be expected to pay (and no, it is not a matter of “finding the one that says FREE”).

2. NAFTA: This is very important as one of the first steps in determining if goods qualify under NAFTA is to find the tariff classification for the product and to then check under the NAFTA Specific Rules of Origin to determine how the goods might qualify. A common misconception is that products will “automatically” qualify if they are made in Canada, the U.S. or Mexico.

3. Anti-Dumping Duty (ADD): If a government decides that they need to protect a domestic industry, they can impose an anti-dumping duty on specific imports. This is also driven by the harmonized tariff classification. Pay close attention to this area as anti-dumping duty rates are always very high – usually double or sometimes triple digit percentages.For a full list of Canadian imports subject to dumping duties visit this link » Goods subject to anti-dumping or countervailing duties

4. Exporting to countries other than the U.S. where the shipment value exceeds $2,000.00? You or your freight forwarder will be required to complete a B13A export document (or electronic equivalent), and you will need the eight digit harmonized system export code or the Canadian 10 digit import code for each product. Once again, export restrictions and permits governed by Foreign Affairs are driven by the tariff classification.The above topics are the primary reasons for determining the correct tariff classification. In addition, we should also include the controls through other governmental agencies, such as the Canadian Food Inspection Agency, Free Trade Agreements with other countries, and also the effects on Canada’s trade statistics.

 

Remember – If your company’s name is indicated as the importer on any customs documents, you (not your customs broker) are looked upon as the responsible party to ensure all declarations are correct. You may be able to avoid any future problems by getting it right the first time!

 

To learn more about the Harmonized System (HS) Code:

Proper classification is the starting point of compliance. A thorough knowledge of the Harmonized System is essential for anyone involved in global trade. If you would like to further your understanding of tariff classification and find the correct commodity codes for your goods, attend our upcoming H.S. Tariff Classification Workshop. In this hands-on session you will learn how to classifying goods and parts , understand the complexities of the various rules of interpretations of the H.S. Tariff System, gain a better understanding of how duties are determined and learn about preferential tariff treatments. Register today!

Have questions or comments on H.S. tariff classification? Post your thoughts in the comments section below or email us at Ask Your Broker.

Generalized System of Preferences Set to Expire July 31, 2013

Countries with Growing EconomiesAccording to The Office of the United States Trade Representative,

“The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 127 designated beneficiary countries and territories. The GSP program also supports U.S. jobs. U.S. businesses imported $19.9billion worth of products under the GSP program in 2012, including many inputs used in U.S. manufacturing. According to a 2005 U.S. Chamber of Commerce study, over 80,000 American jobs are associated with moving GSP imports from the docks to farmers, manufacturers, and retail shelves. GSP was instituted on January 1, 1976, by the Trade Act of 1974.”

“Products that are eligible for duty-free treatment under GSP include: most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products. Among the products that are not eligible for GSP duty-free treatment are: most textiles and apparel; watches; and most footwear, handbags, and luggage products.”

The GSP has been an active part of the Trade Act since 1976. This is a program that must be re-designated on a regular basis by the U.S. Congress. On occasion, Congress neglects to extend the program, and it appears that it may be allowed to lapse again this year.

Impact on Importers of Goods into the United States Under the GSP:

In the past, when the program has lapsed, importers have been required to pay the “general”, or normal trade relations (NTR) duty rates for the shipment imported during the lapse. Once the program has been reauthorized and been made retroactive, U.S. Customs and Border Protection (CBP) has refunded the duties paid on those entries that were entered under the appropriate special programs indicator. Each renewal in the past has been made retroactive, however this is not automatic.

Pacific Customs Brokers will continue to monitor the program, and will provide further information as it is known. As always, we welcome your questions and concerns, and encourage you to contact us. You may also post your thoughts or questions in our comments section below or email us at  Ask Your Broker.

 

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You Can Boost Your Global Trade With The Generalized System Of Preferences

Globe-Golden-Coins-600The U.S. Generalized System of Preferences (GSP) is a U.S. Customs and Border Protection (CBP) initiative that grants designated beneficiaries and territories preferential duty treatment. Similar to Canada’s General Preferential Tariff Regime (GPT), the GSP program is designed to increase economic growth both abroad and in the United States.

The Office of the United States Trade Representative states that “the GSP program supports U.S. jobs. U.S. business imported $19.9 billion worth of products under the GSP program in 2012, including many inputs used in US manufacturing.

GSP was part of the Trade Act of 1974 which sought to help industries in the United States become more competitive  and took effect on January 1, 1976. Since then over one hundred countries have been designated as beneficiaries and billions of dollars saved on import duties.

Benefits of GSP to Importers:

  • GSP can significantly reduce your landed costs by eliminating duties and taxes.

For example, if you source an eligible product from a designated beneficiary and pay no duties or taxes, you now own an advantage over your competition that sources from say, China.

  • You also benefit by having more than one market to choose from which gives you more flexibility when sourcing products.

 

Types of designations under GSP:

There are two types of designations under GSP containing 127 designated beneficiaries.

1. GSP Beneficiary Developing Countries (BDCs):

BDCs receive preferential duty treatment on 3511 tariff numbers.

2. Least Developed Beneficiary Developing Countries (LDBDCs):

Within that first level of designated beneficiaries are a group of 44 countries that have been designated as Least Developed Beneficiary Developing Countries (LDBDCs) which receive preferential duty treatment on an additional 1,464 tariff numbers.

In total GSP allows for duty free preferential treatment on 4,975 tariff numbers.

GSP by the Numbers:

  • Year GSP first instituted: 1976
  • Total U.S. imports under GSP (2012): $19.9 billion
  • Import duties saved on GSP products (2011): $700 million
  • Number of GSP beneficiary countries and territories: 127
  • Number of GSP beneficiaries that are least developed countries (LDCs): 44
  • Total number of 8?digit U.S. tariff lines eligible for duty-free entry under GSP: 4,975
    • of these, number eligible for all GSP beneficiaries: 3,511
    • number eligible for LDC beneficiaries only: 1,464

    GSP by the Numbers (a fact sheet on the program)

 

2012 Top GSP Beneficiary Developing Countries:

  1. India ($4.5 billion)
  2. Thailand ($3.7 billion)
  3. Brazil ($2.3 billion)
  4. Indonesia ($2.2 billion)
  5. South Africa ($1.3 billion)
  6. Philippines ($1.2 billion)
  7. Turkey ($1.1 billion)
  8. Angola ($632 million)
  9. Russia ($544 million)
  10. Argentina ($233 million) (suspended in March 2012)
  11. Pakistan ($195million)
  12. Sri Lanka ($158 million)
  13. Tunisia ($149 million)
  14. Bolivia ($128 million)
  15. Georgia ($124 million)
  16. Kazakhstan ($111 million)
  17. Ecuador ($107 million)
  18. Venezuela ($99 million)
  19. Cote d`Ivoire ($96 million)
  20. Congo (DROC) ($94 million)

Resources:

CBP offers a guide to GSP providing an overview of the program and how it works.

The guide offers a look into:

  • GSP eligible products
  • GSP eligible countries
  • Which import scenarios qualify

The Simple Facts – GSP Guidebook

 

While navigating the waters of GSP can be tricky, with the right customs broker it can be smooth sailing and a worthy endeavor. In the same fashion as Free Trade Agreements, GSP opens up further markets to global commerce and increases the potential sources of products.

Should you need more information or have questions about the U.S. Generalized System of Preferences, please contact us. You may also leave us your thoughts or questions in our comments section below or email Ask Your Broker.

 

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Proposed Changes to the General Preferential Tariff Regime

Canadian currencyThe 2013 Budget, tabled in the House of Commons, proposes changes to Canada’s General Preferential Tariff (GPT) regime under the Customs Act.  The reason for the proposed changes is to ensure that General Preferential Tariffs are applied appropriately and that they are aligned with current global economics.  Further, the proposed changes will target GPT benefits to those countries that will benefit the most.

Background

The General Preferential Tariff (GPT) was implemented in 1974 as Canada’s preferential tariff treatment for developing countries. The original policy intent of the GPT was to encourage imports from developing countries as a means to promote their economic growth and export earnings.  Under the current GPT, Canada offers duty-free or preferential duty rates to imports of most products from 175 designated beneficiaries.

 

Modernizing Canada’s GPT Regime:

Guided by the objectives of the Economic Action Plan 2012, a review of the current GPT measures was undertaken by the Department of Finance. The Department of Finance consulted extensively with industry stakeholders, seeking views on proposed changes to the various elements of the GPT.  As announced in the Canada Gazette the Government will be removing 72 countries from the list of countries eligible for GPT status, including all members of the G-20.  To ensure that elevating these countries from GPT status does not reduce benefits under the Least Developed Country Tariff (LDCT) regime, appropriate regulations will be amended to enable continuing duty free importation of textiles and apparel from LDCT countries that are produced using inputs from current GPT beneficiary countries.

Please see below links to the proposed changes. These changes will be given effect by amendments to the Customs Tariff and various regulations.  The changes will be made in respect to goods imported into Canada on or after January 1, 2015 and will remain in effect until December 31, 2024.

This list of countries, as well as the list of countries that may continue to use the General Preferential Tariff, can be found below. It is proposed that

 

At Pacific Customs Brokers, we understand how these changes affect your company and look forward to providing a customized solution to make your company more competitive in the world marketplace. Should you need more information or have questions about the General Preferential Tariff, please contact us.

You may also leave us your thoughts or questions in our comments section below or email Ask Your Broker.

 

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