An Introduction to the Business of Importing Goods

into Canada

Trade Representatives Seminar Tuesday May 29, 20112

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Trade chain partners

• Importers• Customs brokers• Carriers• Freight forwarders• Warehouse operators

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Importer

• The party who causes the goods to be imported into Canada

• Responsible for:• The payment of all duties and taxes to the Canada Border

Services Agency (CBSA)• The accuracy of the information presented to the CBSA• The fines or penalties resulting from missing or inaccurate

information• The necessary import permits and special certificates

• Operates using a Business Number for identification• Importers may deal with the CBSA directly, or use the

services of a customs broker (most use a broker).

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Customs broker

• Company licensed by the CBSA under Section 9 of the Customs Act to carry out responsibilities on behalf of importers: • Obtains, prepares and submits release and accounting information or

documentation• Pays any applicable duties and taxes and collects from the importer• Maintains records for the importer• Responds to CBSA concerns/queries

• Undergoes CBSA examination process to become licensed• Licensed with annual renewal fees• Posts security with the CBSA (monitored by HQ and the regions).

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Carrier

• The party that transports the goods to Canada• Is responsible for reporting commercial goods at “the

nearest customs office designated for that purpose that is open for business”

• Where goods are not released and move beyond the first point of arrival (FPOA), the carrier must be bonded with the CBSA

• CBSA issues carriers a four digit “carrier code” for identification.

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Freight forwarder

• Secondary party in the transportation chain• An agent who arranges with carriers for the

transportation of goods and who may provide other services such as grouping and consolidating shipments, de-stuffing containers, and warehousing

• Freight forwarders do not transport goods into Canada• Freight forwarders are not referred to in the Customs

Act, and the transporting carrier remains legally liable for report to the CBSA

• Freight forwarders may also be in business as carriers, warehouse operators, and/or brokers.

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Warehouse operators• Sufferance and Bonded warehouses are licensed by the CBSA to

provide customs control of unreleased goods• Sufferance warehouses are private enterprises that provide for the

short term safekeeping of goods pending CBSA clearance• Allow up to 40 days of storage pending clearance• operator charges fees for handling, control and storage• operator is liable for duties/penalties on goods removed without the

authority of the CBSA• allows for CBSA examination procedures

• Bonded warehouses are for the long-term storage and release/ re-pack/export of goods.

• Warehouse operator posts security with the CBSA• Licensed with annual renewal fees• Physical and personnel security standards • Subject to CBSA audits.

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Trusted Trader Programs• Partners in Protection (PIP)

• Client applies and security measures are assessed by CBSA• Member companies are recognized as being trusted traders• Includes exporters, carriers, brokers, warehouses, freight forwarders

• Free and Secure Trade (FAST)• Joint initiative between with the US CBP• Client applies and security measures are assessed by CBSA• Member companies are recognized as being trusted traders• Includes highway carriers and drivers• Entitles carrier/driver to use dedicated FAST lanes• Membership card can be used as proof of identity and citizenship to

enter Canada and the US• Customs Self Assessment (CSA)

• Canadian program which pre-approves drivers, highway carriers, importers and low-risk goods.

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Report, examination, release, accounting & payment

The four distinct parts of the commercial importation process

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Report, examination, release, accounting & payment

A. Report: Section 12 of the Customs Act requires that all imported goods be reported to a customs office

B. Examination: Section 99 of the Customs Act authorizes the CBSA to examine goods at any time up to the time of release

C. Release: Section 31 of the Customs Act specifies that no goods shall be removed from customs control until released

D. Accounting & payment: Section 32 of the Customs Act sets forth the requirements for the accounting and payment of duties

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Advance Commercial Information (ACI) Air and Marine Modes

• ACI requires marine and air carriers to provide electronic conveyance and cargo data in advance of the arrival of goods (Marine: 24 hours prior to loading, Air: 4 hours prior to arrival)

• This data receives a (national security) risk assessment by officers at the National Risk Assessment Centre (NRAC). Officers have the ability to request more information from carriers and may place a hold on a shipment

• Moving to all modes.

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Part 5: Accounting for shipments and payment of duties and taxes

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Accounting & Payment of Duties/Taxes

• Where importers/brokers do not post security, the Customs Act requires a full accounting and payment of duties/taxes prior to the release of the goods

• Where security is posted:• Accounting may take place up to 5 business days after release for high

value shipments (over $1,600) and the following month for low value shipments

• Accounting is the provision of (B3) data not required at time of release • Duties and taxes owing may be paid by the end of the month in which

the shipment was released• Importers/brokers perform the accounting for each shipment by:

• submitting a paper Form B3, or• transmitting the information electronically.

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The Canada Customs Coding Form (B3)

• The Canada Customs Coding Form, also known as form B3, is a detailed accounting report to the CBSA of over 50 data elements, specific to each shipment transaction, such as:• Importer’s name and Business Number• Detailed description of the goods• Value for duty• Direct shipment date• Tariff treatment• Country of origin• Tariff classification• Appropriate duty and tax rates• Calculation of duties owing

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Post-Release Compliance Verification

• Compliance verification (audit) reviews are conducted in the regions to ensure importers are complying with the law

• National verification plans and trade compliance priorities guide regional activities

• Other government departments contribute to verification priorities

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The Food, Plant and Animal Program

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The Food, Plant and Animal (FPA) ProgramThe FPA Program is responsible for the development and theadministration of National policies, procedures, programs, and initiatives related to the enforcement of Canadian Food InspectionAgency (CFIA), Fisheries and Oceans Canada, Health Canada and Environment Canada legislation as it applies to food, plants, animalsand related products to the extent that they apply at the border.

Key Activities• The MOU between the CBSA and the CFIA• Convention on International Trade in Endangered Species of Wild Fauna

and Flora (CITES)• Goods contaminated with soil• Illegal fishing and trade Illegal logging and trade• Invasive alien species Live animal inspections• International waste disposal Wood packaging material

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CBSA/CFIA and the Memorandum of Understanding

• In 2003, the CBSA assumed responsibility for the initial import inspection services in respect of the Acts and Regulations administered by the CFIA to the extent that they are applicable at Canadian border points.

• In 2005, The CFIA and the CBSA signed a Memorandum of Understanding (MOU) which formalized both the administrative and operational roles and responsibilities of each agency with respect to the import, export and in-transit movement of food, plants, animals and related products

• The CFIA is responsible for general policy and international arrangements, including the establishment of bilateral arrangements related to the import of CFIA-regulated products.

• The CFIA consults as appropriate with the CBSA on prospective changes that may affect the CBSA’s inspection responsibilities at first point of entry to Canada.

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The CBSA and Other Government Departments

The CBSA:• administers over 90 Acts and regulations, many on behalf of other

government departments (OGDs) and agencies;

• implement agreements and arrangements between the Agency and departments or agencies of the Government of Canada to carry out an activity, provide a service or administer a program at the border;

• assists OGDs in administering various import requirements at the border, through verification of permit, licence or other requirements, as well as targeting and information sharing.

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Travellers and Commercial Importers

Travellers• The examination and inspection of travellers and their imported goods are

the responsibility of the CBSA. This includes travellers at all Canadian border points.

Commercial Importers• Importers will continue to send their commercial import requests for CFIA-

regulated food, plants, animals and related products to the National Import Service Centre (NISC) for documentation review prior to arrival of the shipments at the border

• The CBSA continues to refer items which were not pre-approved by the (NISC) back to the NISC when recommended by the AIRS

• In certain cases the CBSA may release certain products without further direction from the CFIA.

• In other cases, the NISC will direct the CBSA as to whether the food, plants, animals and related products may be released or will require inspection at the border.

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Importing CFIA Regulated and Non-regulated Products

• The Canadian Food Inspection Agency (CFIA) has various key components and requirements for the import process.

• Many CFIA products are regulated and require import permits

• The CFIA’s Automated Import Reference System (AIRS) is the online tool available to the public in order to determination what documents are required for importing to Canada.

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Automated Import Reference Systems (AIRS)

Automated Import Reference System (AIRS)• CFIA-AIRS is the automated import reference system of the Canadian Food

Inspection Agency (CFIA).• The purpose of the AIRS is to provide accurate and timely information on

import requirements. The application uses a question and answer approach to guide the user through a series of questions about the Harmonized System (HS) Codes, origin, destination, end use and miscellaneous qualifiers of the product they wish to import.

• The AIRS has been prepared for the convenience of reference only and has no official sanction. For all purposes of interpreting and applying the law, users should consult the Acts as passed by Parliament.

Automated Import Reference System (AIRS)

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Contacts

• www.cbsa-asfc.gc.ca

• Border Information Service Inside Canada 1-800-461-9999 Outside Canada 1-204-983-3500

1-506-636-5064

• Canadian Food Inspection Agencywww.inspection.gc.ca