Trade Matters
Spring 2009 Edition
Canada
Customs Fact: Importers Using Customs Brokers — You’re Not Off the Hook
Importers can often have a misconception about their relationship with their customs broker. Importers commonly think that, by outsourcing their import and export business to a customs broker, they are exempt from penalties and scrutiny by the Canada Border Services Agency (CBSA). This, in fact, is not the case.
The importer is ultimately responsible under customs law for ensuring that its import transactions are accurately declared and corrections are submitted within 90 days of having “reason to believe” a declaration is incorrect. Any penalties for non-compliance will be issued to the importer of record, not the customs broker.
Importers remain liable for all duties and taxes owing until they pay them or the agent pays them. Among other responsibilities, importers must ensure the correct tariff classification, the correct value and the correct origin are declared, as well as ensuring any subsequent re-determinations are submitted within the prescribed time limits.
Failure to comply with these obligations may result in penalties under the Administrative Monetary Penalty System.
To help ensure that all obligations are met and to avoid penalties, importers may want to put controls in place so that all parties are aware of their roles and responsibilities. For example, importers may want to have:
- A designated customs contact at the importer and the customs broker
- Written procedures that clearly define the role of the customs broker and the importer
- Customs broker awareness of the importer’s business and types of imported goods
- A tariff classification database that meets the importer’s needs
- A periodic review by a third party of all import transactions and related documentation
- An emergency response plan in case of a seizure, forfeiture or unexpected visit by customs officials.
Importers and exporters who authorize an agent to transact business on their behalf are ultimately responsible for the accuracy and completeness of their import and export transactions. As such, they can benefit from working closely with their service providers to ensure compliance with all CBSA and other government requirements.
For more information, please contact your KPMG adviser or one of our Trade and Customs professionals.
Are Your Goods on Canada’s Revised Export Control List?
Foreign Affairs and International Trade Canada recently released amendments to the Export Control List, which identifies specific goods and technology that are controlled for export from Canada to other countries. These amendments include additions, deletions and clarifications to the controls relating to the exportation of various goods and technologies. Some of the key changes include:
Additions to controls:
- Certain numerically controlled optical finishing equipment
- Microwave power modules
- Solar cells
- Imprint lithography equipment
- Imprint lithography templates
- Specific valves for gas centrifuge enrichment plants
Removal of controls:
- Polyarylene ether ketones
- Radios having adaptive techniques providing 15dB suppression of an interfering signal
Clarifications and changes to controls:
- Ultrasonic and X-ray tomography equipment for three-dimensional defect inspection
- Superconductive conductors
- Cells and batteries
- Frequency synthesized signal generators
If your company exports any of these goods, you may need to adjust your export process to ensure you comply with these revised requirements.
For more information, please contact your KPMG adviser or one of our Trade and Customs professionals.
Canada-European Trade Update
Free Trade with Select European Countries Takes Effect July 1
A free trade agreement between Canada and members of the European Free Trade Association (Switzerland, Norway, Iceland and Liechtenstein) will go into effect on July 1, 2009. The Canada-European Free Trade Association Free Trade Agreement (CEFTA) deals with industrial products, selected processed agricultural products and three bilateral agreements on agriculture signed with Norway, Iceland and Switzerland, respectively. Switzerland and Liechtenstein have a customs union and the agreement with Switzerland covers both countries.
These four agreements are to operate together to eliminate duties on all non-agricultural goods and eliminate or reduce tariffs on selected agricultural products. This agreement introduces three new preferential tariff treatments, namely the Iceland Tariff, the Norway Tariff and the Switzerland-Liechtenstein Tariff.
For importers to benefit from these new preferential tariff treatments, the goods must meet the requirements of the CEFTA rules of origin. The exporter must provide written proof of origin, which may be stated on an invoice or other supporting document. Importers must have this statement in their possession at the time of declaration.
Canada and European Union Announce Negotiations
In the continuing effort to build a stronger economic partnership between Canada and the European Union (EU), the leaders of Canada and the EU recently announced that an agreement has been reached on the areas to be negotiated in a possible comprehensive economic agreement. These areas include trade in goods and services, investment, technical barriers to trade and regulatory co-operation.
The EU is Canada’s second-largest export market after the US As such, a bilateral agreement with the EU could deliver commercial benefits to many Canadian industries including aerospace, chemicals, aluminum, wood products, fish and seafood, automotive vehicles and parts, agricultural products and transportation and other business services.
To formally launch negotiations, the next step involves the preparation of a detailed negotiating mandate, which the government of Canada will prepare together with the provinces and territories in consultation with Canadian stakeholders.
For more information, please contact your KPMG adviser or one of our Trade and Customs professionals.
Don’t Ignore Warning from the Canada Border Services Agency
In most cases, a company’s first customs violation not involving dangerous or prohibited goods leads to a “warning” from the Canada Border Services Agency (CBSA) under the Administrative Monetary Penalty System (AMPS).
Although your company won’t be liable for a penalty if it receives such a warning, it is likely to face greater scrutiny by the CBSA and more serious action being taken in the event goods are improperly declared again in the future.
Important things to remember about a warning under AMPS:
- A warning may be disputed with the manager at the CBSA office that issued it, either verbally or in writing. Letters must be sent within 30 days of the incident and should clearly outline what happened.
- A warning is not a criminal record. An offender must be prosecuted and convicted of a crime to have a criminal record.
- The CBSA keeps records of warning for up to two years. After two years, your company’s record will automatically be deleted if you haven’t had any more violations.
- Under Customs legislation, a warning constitutes “reason to believe” for purposes of applying penalties for future non-compliance.
For more information, please contact your KPMG adviser or one of our Trade and Customs professionals.
In Brief
Customs Self Assessment Expands to Include Mexico
The definition of “eligible goods” under the Customs Self Assessment (CSA) program has been amended and now includes commercial goods shipped directly from the United States or Mexico going to all industry sectors. This amendment went into effect on April 15, 2009.
New Canadian Requirements for Wood Packaging Material from China
Due to high rates of non-compliance, the Canadian Food Inspection Agency (CFIA) will no longer accept phytosanitary certificates from China for wood packaging material, effective September 1, 2009.
A valid International Plant Protection Convention (IPPC) mark will be the only accepted treatment certification method. A three-month grace period will begin on June 1, 2009, during which wood packaging material accompanied by a Chinese phytosanitary certificate in lieu of an IPPC mark will be permitted to enter Canada, subject to a verification of the certificate’s authenticity.
The new policy will be fully enforced as of September 1, 2009 and the CBSA will refuse the entry of any wood packaging material that is not stamped with a valid IPPC mark.
We Can Help
Contact one of our KPMG professionals for help with these or any other customs-related matters that may affect your business. We can help you manage your customs compliance obligations as well as help you ensure you are not missing any refund opportunities.
In This Issue Customs Fact: Importers Using Customs Brokers — You’re Not Off the Hook Are Your Goods on Canada’s Revised Export Control List? Don’t Ignore Warning from the Canada Border Services Agency More Information? For more information on any of these Joseph Brick John Pajek Angelos Xilinas Visit our Web site: |
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