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Canadian Importers Association

Importers' Update: The Key Issues

by Robert Armstrong

For those of you involved with the international movement of goods, you can appreciate the variety of issues facing our importers and exporters that go beyond the customs release and accounting issues.

In this June issue of Logistics Quarterly, our goal is to bring you an update on some of the key issues our association’s members have been faced with so far this year.

As I have written in the past about major customs issues such as Customs Self-Assessment and the like, I will merely comment on the release of the five-year Action Plan by the Minister of National Revenue, the Honourable Martin Cauchon, at our Conference on April 7, 2000.

An Eye at the border
The Blueprint Action Plan reflects the initiatives and the priorities identified by Customs and the trade community. The Minister claimed that the launch marked an “historic moment in customs history” and will enhance the Agency’s ability to balance its dual mandate of border protection and trade facilitation.

For the importer, the most significant option in the Action Plan is Customs Self-Assessment (CSA) wherein pre-approved importers will see their shipments from the United States cleared immediately at the border, using as few as three data elements: the driver, the carrier and the importer. However, the driver may be asked to stop for a random check. These elements will be compared to the importer’s profile, already established with the Canada Customs & Revenue Agency (CCRA), to ensure the shipment is CSA approved.

Under the CSA system, qualified importers will send their accounting data to customs electronically, directly from their business systems. In addition, each CSA client will be assigned an account manager to guide them through the application and approval process and maintain a relationship with the CCRA.

The Minister suggested that the Agency could speed almost half of U.S. imports through customs if the top 100 Canadian importers participated in the CSA option.

The government’s new approach to border management will be underpinned by risk management – links with enforcement agencies, data from carrier reservation systems, client profiles and customs audits; and driver registration will allow the government to focus more of its resources to identify areas of higher or unknown risks. An Administrative Monetary Penalty System (AMPS) will impose penalties according to the kind and severity of the infraction.

Implementation of Mandatory Harmonized System (HS) Options
For those importers who do not use the CSA option (or import from other than the United States), Customs will require HS codes for all shipments regardless of OGD requirements. Significantly, the CCRA is willing to talk about options for the implementation of mandatory HS code with the trade community and our most recent submission is available on our website: www.importers.ca.

Inspect costs
Our members continue to complain about the high costs associated with the customs contraband inspection and Canadian Food Inspection Agency (CFIA) inspections related to untreated wood. Both programs involve imports of ocean containers. We need customs to use the most modern container x-ray equipment to reduce the need for unloading and reloading the container. Exporters in foreign countries must use untreated wood for bracing, pallets, etc., and indicate this on the bill of lading to reduce the need for inspections and eliminate these costs.

Tariff Retaliation on Imports
Importers were faced with the possibility of 100 percent tariff on all goods imported from Australia as a result of a World Trade Organization (WTO) ruling on Canadian salmon exports to Australia. The association was heavily involved both in Australia and Canada and we are pleased that Australia will implement the terms of their settlement with Canada under the WTO rules on June 1, 2000. In turn, Canada will withdraw its request to retaliate against Australia and terminate the domestic consultation process, which began in May of 1999.

However, Canadian importers of goods from Brazil must now contend with the possibility of all imports from Brazil being blocked because of Brazil’s failure to comply with repeated WTO rulings condemning Brazil’s Proex subsidy program on exports of regional aircraft.

Canada is looking to impose trade barriers on Brazilian meat, fruit, vegetables, coffee, leather goods, wood, textiles, shows, steel, iron, glassware and hundreds of other items. The Canadian Importers Association is urging its members as well as all other importers, to encourage their Brazilian suppliers to solicit their Brazilian government’s support in complying with the WTO decision to preclude drastic action by the Canadian government.

Nonetheless, in light of the magnitude of the threatened sections, Canadian importers are urged to consider alternative sources of supply from other countries to replace Brazilian goods.

We sincerely hope Brazil will negotiate a settlement with Canada so that hundreds of businesses in both countries are not ruined by a drastic trade barrier.

To top off concerns about inspection costs, tariff retaliation and the like, importers must also contend with a declining dollar.

The costs of importing appear to be going up. However, the Customs Action Plan appears to indicate that there is a “light at the end of the tunnel” as importers could see their import costs decrease over the next five years.