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Customs Report - 3
Risk Management and Your Customs Policy
How integral is the customs policy to your supply chain? Have you considered what the impact may be on your clients, global or cross-border? Perhaps youre the importer of record as well as the exporter, and in these dual roles do you know what risks you maybe liable for?
There is no doubt that innocent until proved guilty is not an escape route as is evidenced by customs policies around the world. In the realm of import procedures, despite the fact that many categories of duty are diminishing, there is still a huge amount of data that Customs collect for statistical reasons as well as for protection of trade purposes.
How specifically do such customs processes cause problems to your supply chain if you do not follow the rules?
Well, with the supply chain getting tighter and tighter with regard to time limitations and the need to ensure delivery on time, it is becoming increasingly more important to expedite shipments, as well as control those vendor-managed inventories and shipments in third party distribution centres.
If the shipment is delayed at customs, this can be a real problem both for the shipper and the end user. In other words, whats the point in paying for rush deliveries if the shipment gets held up at Customs due to incorrect documents or markings?
So when you are shipping across the border to the United States, importing from that country into Canada or, likewise globally, you had better be knowledgeable about whats going on. If you are not up to speed this may result in grief, delays, frustrated clients and buyers as well as some hefty financial penalties. Its vital to get your house in order and ensure you are fully aware of the automatic liabilities you accept as an importer, exporter, or both.
You will need to understand your own companys trading terms with your vendor/ shipper and possibly your clients. In addition, you will need to know how these terms impact on you. For instance, though you maybe trading under an ex works (International Commercial trading term) or Free on board or FOB warehouse (North American trading terms), the vendor/shipper may not provide you with all the information you need in order to clear the shipment through Customs. In this case you are the importer and you need to ensure that the information you have is accurate with respect to the description of the product as well as the information regarding country of origin (there is enough here to already get you into trouble if the information you provide is not accurate.)
According to Customs, more than 70 percent of imported goods improperly classified; they are focusing on the country of origin and the classification to ensure compliance. Such errors will cause delays at the port of entry and possibly result in severe fines of possibly 110 percent of the shipments value, if it is bound for the United States. Canada Customs is not imposing such heavy fines just yet under its Administrative Monetary Penalty System (AMPS), which is still undergoing planning and implementation. AMPs will be initiated on April 1, 2001, and completed by spring of 2002.
Compliance is the buzz word around the world. It is not enough to assume you are compliant. Have your processes checked and mapped out correctly, make sure the companies you are buying from are compliant, that they give you the correct description of the goods and that they have been classified correctly. Also be certain the country of origin and manufacturer is clearly understood and stated on the invoice. If you are importing or exporting from/to the United States or Mexico make sure you have a current NAFTA certificate, providing, of course, that the goods are manufactured in either of the countries. I also recommend that you make sure the goods are marked correctly in accordance with the country of import requirements.
So, how do you avoid such claims and penalties? First of all, you should consult with an expert prior to exporting or importing. Next, classify all your products with the minimum six digit harmonized code and have this number appear against the product description on your commercial invoice when introducing or buying a new product, or when you are not sure!
A few other criteria to be mindful of in order to avoid claims and penalties are: prepare correct and full description of all documents; ensure the individuals handling your exports and imports are aware of their responsibilities, these people should include your buyers and finance people; exercise reasonable care, and consult with a reputable customs broker like Fritz Starber Inc.