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Introduction to Class

• Most of us are familiar with NAFTA with it’s North American focus, in this session we explore the global trade agreements available to importers and exporters.

• Understand the risks and opportunities associated with many Free Trade Agreements.

• Understand why you must KNOW; Your Product, Your Markets, Your Inputs, and Your Suppliers

• This session should be a starting point for a detailed discussion about your specific situation. 

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Introduction of Presenters

Alan Dewar – Vice President Canadian OperationsOver 31 Years Industry ExperienceLeads Geo. H. Young & Co. Ltd. – Canadian DivisionMember of the National Board of CSCB

Bob Cowie – Vice President ConsultingOver 42 Years of Industry ExperienceConsultative Leader Canada & USAConsulted on Global as well as North American Trade Issues

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GHY U Webinar – September 2013 4

Free Trade AgreementsUnderstanding the Risks &

Opportunities

Bob Cowie VP – International ConsultingGHY International

Alan Dewar VP - Canadian OperationsGHY International

Agenda & Presentation Examples

Awareness of opportunities and risks via…

– Know Your Product (& Tariff Classification)

– Know Your Market (& Supply Chain Opportunities)

– Know Your Inputs (of particular importance to manufacturers)

– Know Your Supplier (Buyer Beware)

5

Canada’s FTA in Constant Change

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FTA Indemnification Example

Purchase Order is conditional upon receipt of valid FTA Certificate of Origin prior to Delivery.

Vendor to indemnify against all costs and duty arising from misrepresentation or false declaration in the Certificate of Origin.

7

FTA Requirements LINKED to HS Tariff

JIT - Regulatory Declaration Challenges

• Commercial descriptions often INSUFFICIENT for determining Customs Tariff Classification

• 50 – 80% of documents used to process Customs release and accounting are incomplete

• Most ‘new’ products arrive unannounced as a result of documents sent to broker by carrier

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Tariff ClassificationFoundation for Compliance Mgmt

100% perfection necessary if:

1. goods specifically mentioned in tariff

2. Previous opinion or ‘RTB’

3. Goods subject to OGD requirement (CFIA, SIMA, etc.)

Know Your PRODUCT…..

Tariff Classification…

• products can have different tariff classification based on……..– Function – ie wrist watches– Fashion – ie eyeglass frames– End use – ie tires– Country Interpretation – ie Ratchet straps

Understanding associated competitive opportunities and risks

11Know Your PRODUCT…..

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Tariff Class – Function ….

Watch Importer – tariff choice(s)

– Mechanical display,

– opto-electronic display,

– other

Know Your PRODUCT…..

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Tariff Class – Fashion….

Eyeglass frame importer – tariff choice(s)

– Plastic

– Not Plastic

Know Your PRODUCT…..

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Tariff Class – End Use….

Tires – Pneumatic Rubber NEW

Where Used Tariff Classification

Cars 4011.10

Trucks / Buses 4011.20

Aircraft 4011.30

Motorcycles 4011.40

Bicycles 4011.50

The tariff is ENTIRELY DIFFERENT if the Tires are Used, Retreaded, etc.

Know Your PRODUCT…..

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Tariff Class – Country Interpretation….

Ratchet Straps (non-NAFTA)

United States Canada

Tariff 8479 - Machine Tariff 8205 – Hand Tool

Know Your PRODUCT…..

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FTA’s vary by Origin/Destination

Soda importation (non-FTA)

• 11% into Canada

• 2 ¢ / liter into United States

Know Your MARKET…..

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Manufacturing? FTA input considerations

Duty Drawback Opportunities

• import duty/ anti-dump duty

Know Your INPUTS…..

Canadian Mattress Manufacturer importing ‘inner springs from China’ subject to approx. 150% anti-dump duty

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Importer Responsibility

Buyer Beware…..

• Importer is ultimately responsible for post audit assessments (regardless of audit trail/ supplier documentation/ etc.)

Know Your SUPPLIERS…..

GHY Recommend Supplier Safeguards & Purchasing Indemnifications Clauses

19

NAFTA – Internal Compliance Procedure(s)

How many importers have:– Internal documented processes regarding FTA’s?– Share/validate these processes w/service provider?

Indemnification statements with suppliers for inaccurate NAFTA certificates/statements

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Strategic FTA Recommendations…

1. Review Import Volumetric Review• Historical opinions by Customs (specific/ generic)• Core items to your business• Items named in ‘tariff’• OGD item focus (CFIA, SIMA, etc.)

2. Understand FTA rates (where Global Sourcing potential exists)

**Review Regularly – Annually at Minimum**

GHY U Webinar – September 2013 21

Free Trade AgreementsUnderstanding the Risks &

Opportunities

Bob Cowie VP – International Consultingbob@ghy.com (204-947-6700 x237)

Alan Dewar VP - Canadian Operationsdewar@ghy.com (204-947-6700 x215)

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