International Trade: Be Aware
Importing goods into Canada can be a very risky and costly undertaking if you do it without advance planning. For the past several years, the Canada Border Services Agency (CBSA) has been mandated to notify businesses about import requirements via the Web, and has shifted responsibility for customs compliance to the importer.
One pertinent example quickly comes to mind. A man with good intentions purchased a food trailer in China, which he planned to give to his daughter so that she could start her own business. He then enlisted our services to help facilitate the release of his shipment. After receiving the required data, the CBSA examined his purchase. Note that it is common practice for the CBSA to inspect a first importation and, since the trailer is subject to Transport Canada standards, the CBSA must request its authorization. That was the beginning of the nightmare! Transport Canada employees were already familiar with this type of product, and it was very clear to them that it did not comply with Canadian regulations. Following this, the client had two options: either return the trailer to the shipper or have it destroyed. His choice was to destroy it, but this had to be done by a firm recognized by the CBSA under the supervision of a customs officer. The trailer had to be transported from the sufferance warehouse to the specialized firm’s warehouse for destruction. Needless to say, all these steps resulted in additional expenses, ultimately costing the importer more than $20,000, leaving him with nothing but disappointment.
This is just one example of many, demonstrating that poor preparation can create delays, added costs and a lot of frustration. New importers can find the Step-by-step guide to importing on the CBSA website. This guide provides you with the steps to follow before importing:
- Obtain a Business Number
- Identify the goods you want to import
- Determine if you will use the services of a licensed customs broker
- Determine the country of origin
- Ensure the goods you wish to import are permitted into Canada
- Determine whether the goods you intend to import are subject to any permits
Meanwhile, this is not the only information to consider. You should also take into account the transportation of the goods. The majority of new importers leave this responsibility to the seller, who often has more experience in this area. This can obviously make the importer’s task easier, but will not reduce costs, since the seller will include the costs in the selling price and add a profit margin. Moreover, the choice of mode of transport is extremely important.For a shipment from China, maritime transport can often be less expensive but, depending on the weight and volume of the shipment, air transport can be a cost-effective alternative.
To calculate all costs, it is necessary to identify the appropriate customs classification code, the country of manufacture and the trade agreements in place to determine the applicable customs duties on your goods.
In brief, there are several things you should know before you even purchase the goods.
During a transaction, you need to consider the roles and responsibilities of all parties involved in the supply chain, which comprises a network of stakeholders who contribute to the development of a good. It includes a full logistics chain from the supply of raw materials to distribution and the production of goods. Combined with the fact that the CBSA can now apply penalties for non-compliance, importing goods is clearly not an exercise to be taken lightly.
Over the next few months, we will discuss the steps to follow to get ready for importing:
- Use of Incoterms
- Role and responsibilities of stakeholders
- Development of work procedures and instructions
- Determination of classification codes
- Development of a compliance plan
- Determination of the origin of goods
- Determination of the value for duty
- Usefulness of training
- Security programs
- Other relevant topics
For more information, don’t hesitate to contact one of our experts.