Customs Viewpoint
Good Thought, Bad Plan
Industry Canada has announced the signing and endorsement of Mutual Recognition Agreements with several foreign governments. The majority of these countries are members of the European Economic Community (EC) and the Asia-Pacific Economic Cooperation (APEC). These MRA’s will allow the foreign government to appoint conformance assessment bodies that will be able to certify goods were produced and manufactured in accordance with Canadian standards.
While this process sounds really good politically, and can be seen internationally as the elimination of another Canadian non-tariff barrier, the concept is drastically flawed.
It appears Industry Canada has little faith that these foreign certifications will be legitimate. Industry Canada is especially concerned with products of the telecommunications and radio communications sectors, as well as other products which contain these goods. Industry Canada has stated that non-compliance in these types of equipment may result in health and safety risk to Canadians.
Accordingly, in concert with Customs, Industry Canada has orchestrated an elaborate monitoring procedure that is set to take effect in May 2000. At the same time, Industry Canada has seized the opportunity to offload much of the data-input function. Industry Canada has negotiated with Customs to supply electronic data which will be collected from severely intensified data required to facilitate the release of these specified goods when imported.
Industry Canada attended the Canadian Importers Association Annual General Meeting, June 3, 1999, to discuss their intended monitoring program. As details were introduced, it became readily apparent that Industry Canada had no idea as to how drastically the proposed monitoring program would negatively impact the importation of these goods. Information required to facilitate release would be: brand name; model designation; purpose of importation — sale/lease, export, modification, testing; certification number (becomes part of the marking affixed to the product); products of effected tariff items, which do not contain a radio communication or telecommunication device will be required to declare “not regulated”; when using electronic submissions such as ACROSS, you will also have to provide the complete Harmonized System Tariff number.
There was no appreciation or consideration for the potential affect on the normal cross-border process; neither Industry Canada or Customs had any consideration for the tremendous volume of affected goods that enter Canada via the low-value shipment (LVS goods under $1,600) courier stream. Historically, because LVS goods were considered low risk, they have been afforded tremendously simplified reporting and release procedures. In essence, the courier company identifies all LVS goods in a plane/truck and lists them on a document called a Consist Sheet. The Consist Sheet is submitted to Customs, where, after a cursory review, virtually all goods on the Consist Sheet are released and sent out on delivery. Later, the various importers/brokers are notified of what was released on the Consist Sheet and much later the goods are formally accounted. As there is currently no way for the courier companies to accurately identify these telecommunication and radio-communication goods, there is no feasible way to administer the program in an equitable or fair manner without severely jeopardizing the entire courier release program.
Similarly, I can envision the situation where a U.S. firm purchases affected foreign goods in large quantities, primarily for distribution in the United States, and subsequently a number of these goods are earmarked for movement to Canada. Will this additional data and labeling be available? And who is responsible for its integrity?
Based on declining revenue collection requirements at the border, Customs is having to re-invent themselves. As seen through the advent of the Periodic Verification process, Self-Assessment program and Reason to Believe, a key focus is compliance. Yet, because they are the conduit of so much trade data and statistics, I clearly expect to see other government departments negotiate with Customs for similar administrative assistance.
A working group has been established to develop and review potential alternatives, which would be less intrusive and more practical. Currently, the Canadian Importers Association (CIA), Information Technology Association of Canada (ITAC), Canadian Advanced Technology Alliance (CATA), and the Alliance of Manufacturers and Exporters (AMEC) are in the process of making a joint submission to Industry Canada.
While I hope and expect this working group can and will find a more reasonable solution, this proposed initiative only serves to reinforce my standard message. Importers can not be sedentary, you must be proactive participants in your importing environment. Clearly, the government is a bureaucracy with many different agencies and departments and various portfolios and agendas. Left unchecked, they can and will cost your business time and money.