There has been a lot of discussion in the media about the Trans Pacific Trade Partnership and the potential that Canada might enter the agreement.
The Trans Pacific Partnership became effective on May 28th 2006. It is a multilateral free trade agreement that currently consists of four participating countries (Brunei, Chile, New Zealand, and Singapore).However, in 2007, there began talks of expanding the agreement to a number of different countries, including Canada. Canada is currently negotiating its way into the agreement.
Canada already has a Free Trade Agreement with Chile and most of the other countries also negotiating their place in the TPP. Here’s a brief summary of Canada’s FTA history.
• Canada – Colombia – Brought into force: 15-August-2011
• Canada – Peru – Brought into force: 1-August-2009
• Canada – European Free Trade Association – Brought into force: 01-July-2009
• Canada – Costa Rica – Brought into force: 01-November-2002
• Canada – Chile – Brought into force: 05-July-1997
• Canada – Israel – Brought into force:01-January-1997
• North American Free Trade Agreement (NAFTA) – Brought into force:
• Canada – U.S. Free Trade Agreement (CUSFTA) – Brought into force:
01-January-1989 (superseded by NAFTA, which includes Mexico)
Additionally, Canada is in the process of negotiating free trade agreements with the following countries:
• Canada – Andean Community Countries
• Canada – Caribbean Community (CARICOM)
• Canada – Central America Four (CA4)
• Canada – Dominican Republic
• Canada – European Union: Comprehensive Economic and Trade Agreement
• Canada – India
• Canada – Japan
• Canada – Korea
• Canada – Morocco
• Canada – Singapore
• Canada – Ukraine
• Free Trade Area of the Americas (FTAA)
• Negotiations to Modernize the Canada-Costa Rica Free Trade Agreement
When you look at the list, Canada seems to have or is in the process of negotiating Free Trade Agreements with most of the economic world, with the obvious exception of China. This will certainly help Canadian exports in the future. The fact that Canada is negotiating its TPP agreement will defiantly help strengthen Canadian exports and the Canadian economy. This is one of the many benefits of Canada entering the TPP.
What do you about Canada’s involvement with the TPP?
Did you know that you don’t have to be in Canada to be in Canada?
For as long as we’ve been in business we have acted as the Canadian presence for U.S companies with distribution requirements in Canada. Sounds simple enough and it is (once you get through the initial education process with the U.S client).
The top 5 advantages are as follows:
As it happens the big integrators offer this service too. The key difference in using a smaller company to do the consolidation, bulk clearance, deconsolidation and final distribution is the personalized service that the big guys just can’t deliver. That includes the extra hand holding off the top to get the system rolling including streamlining the document preparation.
Due to steadily increasing security safeguards crossing our borders, having accessible professionals to guide you is becoming increasingly important. In the spirit of adding clarity to customs clearance, we trust this has been helpful and we look forward to any comments or further questions you might have.
Our Definition of the Day!
Input tax credit “Input Tax Credits are the vehicle for recovering the GST HST paid out on purchases and expenses related to your commercial activities and are often referred to as ITCs in Revenue Canada documents (related to your customs clearance documents) on shipments coming into Canada.”
It’s the kind of call we get 15-20 times a day, at each of our 3 Ontario locations. The nature of our business is confusing to most and in addition to our regular customers, businesses new to the process of exporting and importing product to Canada often call us for guidance.
We do our best to offer assistance and in that light, we thought it might be helpful to post some of the more common questions we field each day… along with our responses.
1. Do I need a customs broker?
This is probably the most common question we get and to keep it short; no you don’t. Just like you don’t have to be an experienced climber to scale Mount Everest but years of experience and knowledge sure comes in handy. As a consumer, if you are crossing the border with goods that are subject to duties and taxes, the customs officer will walk you through it. As a business, that type of guidance isn’t readily available. It all depends on what value you place on your time and how complicated an entry you have to complete. Most businesses defer to our expertise in this regard.
2. What’s the rate of duty?
Does the product imported originate from India or Indiana? As you know, an increasing amount of products are manufactured offshore. The majority of well know American brands are distributed from U.S. centers, but not manufactured there. If the origin of raw materials and assembly was primarily outside of Canada, USA or Mexico, then it may not fall under the NAFTA agreement and duties may apply. We have exact tables to allow us to answer your duty inquiry on the spot. If the rate of duty isn’t published on a new product, we can find out on your behalf.
3. How much do you charge?
That depends. The key factors are how much money we pay out on your behalf, the terms of payment arranged and whether it is a one line entry that takes 5 minutes or a complex transaction that can take hours. We’ve seen just about every situation, so we can give you a very close estimate at the time of your inquiry.
4. What tax do I pay?
As a commercial enterprise importing product from the USA, you will be charged 5% GST. We are required to charge the applicable HST (by province), on the total amount of our fees for services rendered.
5. How do I get it here?
We offer 3PL (third party logistics) services in order to help you transport your goods across the border. Based on a combination of weight and size, it may make more sense to use a courier direct to your destination. Typically on larger shipments (skid(s) of freight), we contract with one of our affiliated LTL carriers to our warehouse in Port Huron. We then perform the clearance and bring into Canada on our daily shuttle. By having the bulk of your journey as a US domestic move, this decreases the cost of transport significantly on larger shipments. Again, we can work this out and advise you up front-no surprises
In the spirit of adding clarity to customs clearance, we trust this has been helpful and we look forward to any comments or further questions you might have.
Our Definition of the Day!
Anti-Dumping Duty “A penalty imposed on suspiciously low-priced imports, to increase their price in the importing country and so protect local industry from unfair competition.”
On Aug 15, 2011 the Canada – Columbia Free Trade Agreement came into force. I took a quick look at the agreement and the possible impact for our customers and Canadian business in general.
Currently, total Canadian imports and exports are about $400 billion of goods each way, each year. That number is about $650 million (each way) between Canada and Columbia. Free trade agreements like this one, allow companies to buy and sell goods to each other duty free. My initial impression- this will be a significant factor to encourage increased trade between our countries – not so.
What Do Canadian Businesses Buy from Columbia
|Petroleum and Coal||$300 million|
|Coffee, fruits, vegetables and cut flowers||$325 million|
|Other stuff||$75 million|
What Do Canadian Businesses Sell to Columbia
|Wheat, Oats and Cereals||$240 million|
|Machinery, vehicles, chemicals||$210 million|
|Other stuff||$150 million|
Looking at the above list, petroleum, coal, coffee, fruits and vegetables were already duty free entering Canada…even without a free trade agreement. The bottom line? It’s no big deal unless you import cut flowers, then you can save an additional 6%.
Something to add? We welcome your comments!
I think everyone would agree that keeping an existing customer is easier than finding a new one. It takes time to create a relationship and gain the trust of a customer. We all need to keep that fact in the forefront of our daily activities to ensure customer retention and growth for our business.
Many times, customers will never really know or fully understand what goes on behind the scenes to provide consistent and timely service. That’s okay. It’s a part of being in business we need to accept. Treat your customers like they’re important and keep these 10 tips close by to discuss with your team on a regular basis.
We would love to hear from you to see what you think makes for great customer service. The more contributors, the better!
At Link+, we accept our position as the go to guys to get your goods across the border without delay. Our job, on a daily basis, addresses the details related to customs clearance and compliance that few people understand and are quite happy to have us look after.
If you are claiming duty free status on your shipment crossing the border, we can help you make sure that the goods actually comply with the rules of NAFTA. It is important, as companies that import or export on a regular basis can expect to receive a random shipment audit every couple of years. This audit has a name. It’s called a CF28, Request for Information, from U.S. Customs.
We’re not offering advice today on how to respond to a CF28, but if you get one, we’re suggesting you don’t ignore it, as many do. Time and time again, we get this type of call at the 11th hour, “I have to submit this by Monday or I’ll need to pay thousands of dollars. HELP!”
We’re happy to come to the rescue for our clients and typically don’t charge extra for it. Our experience is that U.S. Customs is quite easy to deal with. The most recent example was an automotive parts supplier that ignored a CF28 Request for Information. Once we were notified we jumped into action and dealt directly with the customs officer responsible for the request. We talk their language and U.S. Customs appreciate dealing with people who fully understand their requirements. In just about every case, we have proved that the company is in compliance with NAFTA requirements and supplied the necessary documents in time to avoid any additional expense for our customers.
With the high rate of non-compliance, it is likely these random checks will increase. So remember, if you get a CF28 from U.S. Customs, deal with it. If not, it will cost you money. Need help with it? Call us, we’re happy to be of assistance!
I have spoken to a lot of companies over my 35 years in the Customs Brokerage business. I find each company fascinating, the products they make, how they make them, the products they import and the products that they export. Each company faces unique business challenges and I have been fortunate to have helped many of these companies overcome some interesting trade and customs related hurdles.
Over the coming weeks and months I want to use this forum to discuss International Trade, Customs and business issues which are of interest to me. Hopefully you will find them interesting too. Over time I hope to be able to “Add Clarity to Customs Clearance”. I invite you to check back regularly to our website custombroker.com and I look forward to your feedback and topic suggestions.