About the Presenters

• Valerie Michaud - brings 22 years of trade facilitation experience across all modes of Transport. Valerie holds both a Certified Customs Specialist (CCS) and Certified Trade Compliance Specialist (CTCS) Designations.

• Brittany King - a fellow team member, currently enrolled in Introductory customs course through the CSCB will co-present

GHY University: Basics of Importing Into

Canada

June 17, 2015

Presented by Valerie Michaud and Brittany King

GHY International

• Our Vision

- Is to be a leader in providing innovative, tailor-made solutions to North American importers and exporters.

• Our Mission

- We are dedicated to providing the highest levels of personalized professional international trade services to our clients, whose needs shape all our endeavors.

GHY Values: C A R E

• Clients are the reason we exist

• Associates matter

• Relentless pursuit of improvement

• Excellence in all we do

Basics Steps to Importing

• Admissibility and the Entry Process

• Posting Security

• Tariff

• Valuation

• Rules of Origin

• Marking of Imported Goods

• Entry summary

• Self- Adjustments – Reason to Believe

• Recordkeeping

Canada The world’s second largest country in total area of 9,984,671 km2

Canada Border Services Agency

119 LAND BORDER CROSSINGS

(61 operate 24/7 basis)

13 INTERNATIONAL AIRPORTS

(10 operate 24/7 basis)

27 RAIL SITES

3 MAIL PROCESSING CENTERS

ICECAP Trade Presence at the Border

Primary Target Areas:

• TARIFF CLASSIFICATION

• ORIGIN

• VALUE

• OTHER GOVERNMENT DEPARTMENT CONCERNS

CBSC National Results for Commercial Releases

13580896

13993298 14013417

15402846

12500000

13000000

13500000

14000000

14500000

15000000

15500000

16000000

2011-12 2012-13 2013-14 2014-15

Custom’s Initiatives

• E- MANIFEST

- enables electronic transmittal of advance commercial information

• FAST: FREE AND SECURE TRADE

- expedites movement for prescreened commercial drivers through dedicated lanes

• SINGLE WINDOW INITIATIVE

- will assist information exchange and clearance across multiple other government departments

Basic Steps To Importing

STEP 1: IMPORTER

STEP 2: SUPPLIER

STEP 3: CARRIER

STEP 4: BROKER

STEP 5: OGD

STEP 6: CUSTOMS

STEP 1:

Importer

• Person

• Business/Company

Importer Of Record

• Is a person or business who imports goods into Canada

• Responsible for ensuring that the shipment of goods complies with all border clearance requirements

• Must file the required customs documents and pay the assessed import duties, taxes and other fees

• Before importing into Canada, you must obtain from Canada Revenue Agency a Business number (BN) for an import/export account

• To register for a BN

• Call the CRA’S business window at 1 800 959 5525

• Visit the CRA’S Business Registration Online (BRO)

Pre-Importation Requirements Gather as much information you can on the type of goods you want to import:

- descriptive literature, product composition information, product sample

Research what type of documents are required:

- are the goods controlled, regulated or prohibited by CBSA or any other government departments?

- any import permits, special licenses, quota required or if the product is allowed into Canada

Determine if the goods:

- are subject to any other duties and taxes, (excise tax or SIMA)

- verify whether the goods and service taxes (GST) is applicable

- identify the country of origin, manufacture and export

- qualify under a lower duty rate by using a NAFTA or any trade agreement with Canada

- the tariff classification number and applicable rate of duty

Additional Resources • Determine the country of origin for goods you are importing: Memorandum D11-4-2, Proof of Origin

• Ensure the goods you wish to import are permitted into Canada: Memoranda Series D9, Prohibited Importation

• Determine whether the goods you intend to import are subject to any permits, restrictions or regulations by CBSA or other government departments:

Memoranda Series D19, Acts and Regulations of Other Government Departments

• Ensure the marking of imported goods requirements are met: Memorandum D11-1-3

STEP 2:

Supplier/Vendor

Supplier/Vendor

• Supply a copy of all invoices, Bill of Lading, NAFTA or any other documents (Phytosanitary Certificate, Import Permits, etc.)

• Notify the importer of changes in product that can effect the duty rate or NAFTA qualifying status

• Provide the products in a timely manner and ensure that they get what they’ve ordered

Trade Declaration

• All commercial shipments entering Canada require the invoice(s) to be in English or French

• CBSA is willing to accept importer or owner prepared documentation to assist in obtaining release of commercial shipments, but supporting evidence may be necessary. Commercial invoice is the main document the CBSA relies on to provide this evidence

Canada Customs Invoice

Step 3:

Carrier

• Truck • Air • Vessel • Rail

Carrier: Any Modes Of Transportation The cargo and conveyance data must be received and validated by the CBSA before the shipment arrives at the border.

Highway:

1 hour before the shipment arrives at the border

Air:

4 hours prior to arrival in Canada or at time of departure if the flight is less than four hours in duration

Ocean:

Within prescribed time frames prior to arrival or prior to loading depending on the type and origin of goods

Rail:

Minimum of 2 hours before the conveyance arrives at the border

CBSA’S E-Manifest Initiative

Team Processing

Quality Assurance - Human & Technological

Shipment Notification Option

Manual = email, fax, etc. Automated = EDI, CCI Web, .xls Line Loader, etc.

QC (docs-mfst) Validate mfst to docs

QC (dbase/docs) Dbase Match @ P/N

Central Document Review & Sort Process

Importer

PARS/PAPS Acceptance Awaiting Arrival of Goods

ACROSSCADEX

AdvancedDataPARS

E-ReleaseRequest

Importer/Broker

e-Release

CurrentRequirement

ACI

CarrierObliga on

Manifest

Trip

Conveyance

Crew

Equipment

ShipmentData

WebPortal/EDI

e-Manifest

EndState

Commercial Impact of CBSA’s e-Manifest Initiative

Mode Time Description

Marine 24 hrs Prior to loading or arrival (depending on type & origin of goods)

Air 4 hrs 4 hours or at ‘wheels up’

Rail 2 hrs Prior to arrival

Hwy 1 hr Prior to arrival

Step 4:

Licensed Customs Broker

LICENSED CUSTOMS BROKERS

Compliance

Prompt Delivery

Accurate Payments

Policy Tracking

Record Keeping

Licensed Custom Broker

• Once the broker receives the paperwork from the carrier, they will review, prepare and send release requests electronically to CBSA

• Most goods can be transmitted electronically. Depending on the product, a paper entry might be required at the time of release

• The carrier can track his/her shipment on the brokers’ pars tracker

• Once the goods are released the broker must account for unpaid duties and taxes within 5 days of release

• Only a licensed custom broker may account for goods and pay duties under Section 32 of the Customs Act as an agent of an importer or owner

Broker’s Service Includes

• Obtaining the release of the imported goods

• Paying any duties that may apply

• Obtaining, preparing and presenting or transmitting the necessary documents or data

• Maintaining records

• Responding to any CBSA concerns after payment.

• Offer a growing range of specialized services to help importers develop new product lines, explore new markets, evaluate the impact of global change, and cut costs

Step 5:

O.G.D Other Government

Departments and Agencies

OGD Other Government Departments and Agencies

• Canadian Firearms Program

• Canadian Food Inspection Agency

• Canadian Heritage

• Canadian Nuclear Safely Commission

• Canada Post

• Competition Bureau

• Environment Canada

• Fisheries and Oceans Canada

• Foreign affairs, Trade and Development

• Health Canada

• Industry Canada

• National Energy Board

• Natural Resources Canada

• Public Health Agency of Canada

• Transport Canada

Some of the departments are:

> 90 Acts of Parliament

• Canadian Food Inspection Agency

- Food labelling and food recalls, wood packaging

- International waste and used machinery/equipment

• Foreign Affairs, Trade and Development Canada

- Agricultural products, firearms, goods under trade embargoes, steel, textiles and clothing

• Transport Canada

- Transportation of dangerous goods, vehicles and tires

• Health Canada

- Consumer goods, drugs, food, medical devices, natural health products, pesticides, pharmaceuticals, radiation-emitting devices, toxic substances, vitamins

• Canadian Firearms Program

- Firearms

Step 6:

CBSA CANADIAN BORDER SERVICE AGENCY

(Customs)

CBSA OFFICER Responsibilities The Agency's legislative, regulatory and partnership responsibilities include the following:

• Administering legislation that governs the admissibility of people and goods, plants and animals into and out of Canada

• Detaining those people who may pose a threat to Canada

• Removing people who are inadmissible to Canada, including those involved in terrorism, organized crime, war crimes or crimes against humanity

• Interdicting illegal goods entering or leaving the country

• Protecting food safety, plant and animal health, and Canada's resource base

• Promoting Canadian business and economic benefits by administering trade legislation and trade agreements to meet Canada's international obligations

• Enforcing trade remedies that help protect Canadian industry from the injurious effects of dumped and subsidized imported goods

• Administering a fair and impartial redress mechanism

• Promoting Canadian interests in various international forums and with international organizations

• Collecting applicable duties and taxes on imported goods

Back to the Importer

• Once the goods arrive at their dock, it’s the importer’s responsibility to make sure the goods received matches what the purchase order is

• Importer must let the broker know if there is any shortages or overages

• If there is a change in product that can effect the duty rate or NAFTA qualifying status

• It’s important the importer checks to see if the correct tariff, origin, value and description is being used

Posting Security • Bond amounts are based on established risk guidelines set forth by

CBSA

• Annual continuous bonds cover all shipments within the given year and are common for high value or high volume importers

• Single entry bonds cover just the entry of merchandise connected to that one entry and is more common for infrequent importers

• Various types of Canada Customs Bonds include:

• Duty Free Shops, • Release of Goods Bond • Non-Resident GST Bond • Bonded Highway Carrier Bond • Temporary Importation of Articles Bond • Customs Bonded Warehouse Bond • Customs Brokers License Bond • Customs Sufferance Warehouse Bond

Tariff The Language of Trade and Cornerstone of Declarations

• Internationally recognized classification system for all goods

• Allows consistency of goods identification, regardless of country of origin

• Comprises of 22 sections and 99 chapters in Canada:

Chapters 1-97; covers all goods, from live animals to manufactured products to works of art.

Chapter 98; special relief provisions for non- commercial goods

Chapter 99; provisions which eliminate or reduce customs duty for qualifying goods.

• Over 5000 HS codes all goods, from live animals to manufactured products to works of art

Tariff Classification Number

(HS CODE) • Determines the duty, taxes and fees that are imposed

• All products must be fully classified prior to release

• Aids the government in compiling trade data

• Example of a complete tariff classification number: 9506.11.10.00

HS CODE for Downhill Skis:

HEADING - International 9506

SUB-HEADING - International 9506.11

TARIFF ITEM - Canada 9506.11.10

STATICALLY SUFFIX - Canada 9506.11.10.00

Memorandum D10-13-1, classification of goods

Valuation Transaction Value Memorandum D13-4-4

• is the most common and preferred method by CBSA

• is defined as price paid or payable & includes:

I. certain commissions and brokerage

II. all packing costs and charges

III. the value of certain goods and services provided free or at a reduced charge by the purchaser for use in the production of the imported goods (assists)

IV. certain royalties and license fees

V. the value of any proceeds from the subsequent resale, disposal, or use of the goods which accrue to the vendor

• freight and insurance are non-dutiable charges and can be deducted if included in the invoice value

Canada’s Free Trade Agreements

- Chile - Korea - Colombia - Mexico - Costa Rica - North American Free Trade - Panama

- Honduras - Peru - Israel - USA - Jordan - EFTA (European Free Trade

Association)

List of Countries that Canada has an agreements with:

NAFTA

NAFTA North American Free Trade Agreement

• The NAFTA certificate of origin must be completed and signed by the exporter of the goods

• Where the exporter in its territory is not the producer of the goods, the exporter may complete and sign the certificate on the basis of:

Its knowledge of whether the good qualifies as an originating good Its reasonable reliance on producer’s written representation A complete and signed certificate, voluntarily provide to the exporter

by the producer

• Certificates of origin may be applicable to a single importation or to multiple importations of identical goods that occur within a specified period not exceeding twelve months

• No certificate = $1000.00 amp plus duty and interest may be applicable

• This form is legally binding

$1,000 AMP • us Duty and Interest May Be Applicable

Rules of Origin • Used to determine if goods qualify for a particular tariff treatment

• Non-free trade agreement tariff treatments (FTA): Originate in a country where there has been a transformation of the good

during a production process and where required a minimum value added to the goods in the country where the goods were produced. D11-4-3

• FTA – a change in tariff classification as required by a rule specific to the finished good and where required a regional value content provision

• Benefits of a particular tariff treatment must meet certification and direct shipment conditions

Customs D Memoranda provide proof of origin and rules of origin.

These are provided in D11 General Tariff information.

Marking of Imported Goods

• Clearly indicate the country of origin

• Marking shall be in English, French or Spanish for NAFTA countries

• Marking shall be in English or French for Non-NAFTA countries

• Encouraged to use the full name of the origin, however abbreviations may be necessary where there are space limitations on a product.

• Legible, sufficiently permanent, and capable of being easily seen during normal handling of the goods or their container.

• Marking should appear on the individual article for Non-NAFTA countries

• If point of sale packaging conceals the marking on the product, then the packaging should also be marked.

• Goods that require Marking: goods for personal or household use, hardware, paper products, apparel hardware, novelties and sporting goods, horticultural products

Memorandum D11-4-16

Marking Exemptions

Three examples of the 21 exemptions: • Goods for charitable purposes and not for the purpose of sale: The importer

may be required to submit evidence that the goods are for charitable purposes and not for sale

• Goods that are gifts or bequests: The importer may be required to submit evidence that goods are either gifts or bequests. For gifts, a letter from the donor indicating that no sale has taken place is an example of what documentation may service as satisfactory proof.

• Goods that are antiques or goods that have been produced more than 20 years prior to importation: For goods imported from NAFTA countries, it may be evident to the border services officer at the time of importation that the goods are more than 20 years old. However, it may be necessary to present evidence of the age of the goods. A certificate of antiquity or a letter from an antique dealer may be satisfactory.

• D11-3-1 Appendix B

Form B3: Canada

Customs Coding Form

Self- Adjustment “Reason to Believe”

• Self-adjustment process is activated when the importer has reason to believe that a declaration of origin, tariff classification, or value for duty was incorrect

• Importer has 90 days to make a correction after the importer has reason to believe that the original declaration was incorrect. The obligation to make a correction ends four years after the goods are accounted

• Importers who do not file corrections within the 90-day period will be liable to penalties under the Administrative Monetary Penalty System (AMPS)

Memorandum D11-6-6

AMPS Administrative Monetary Penalty System

• Know and understand the requirements related to your import and export transactions

• Consult service providers to ensure that all aspects of your import and export transactions are compliant

• Verify that import and export transactions are fully compliant with requirements

• Develop and implement a compliance plan

Memorandum D22-1-1

Recordkeeping Requirements

• Applies to resident and non-resident importers, including exporters abroad who ship commercial goods to themselves into Canada

• Records maintained in electronic imaged or microfilmed format are recognized as records of account, provided the medium can be related back to the supporting source documents or hard copy documents and is supported by a system capable of producing an accessible and readable copy.

• All record of account (including source documents) available in paper format must be kept, except where an acceptable electronic imaging or microfilming program must adhere to the National Standards of Canada, CAN/CGSB-72.4-2005 & CAN/CGSB-72.11-93

• The CBSA e-Manifest Portal users are required to retain separate records in respect of imported goods in accordance with the information provided in this memorandum. The e-Manifest Portal is not to be used for recordkeeping.

• All records are to be maintained for 6 years plus current year

Memorandum D17-1-21

QUESTIONS?

If you require further information on any of these topics please email:

valerie@ghy.com or consulting@ghy.com