Purolator International Helps You Benefit From Trade Incentive Programs

Canada-US Shipping is Incentivized Through International Programs

Trade Incentive Programs

Programs are also available to entice U.S. businesses to compete in the Canadian market:

• U.S. businesses shipping to Canada have found that country’s “Non-Resident Importer” (NRI) program to be a great equalizer. Through NRI, U.S. companies are able to act as “importers of record,” which means they pre-pay all taxes, duties and fees on goods entering Canada before they arrive at the border. This means that a U.S. company can pass along all fees to consumers up front. Canadian consumers will be aware of the fees at the time of purchase, and pay them at that time. No more instances of the deliveryman arriving at a consumer’s doorstep with a second invoice full of unexpected customs and Canadian customs brokers fees.
• U.S. businesses are also eligible to participate in the U.S. Customs Service’s Duty Drawback program. Intended as a way to prevent businesses from being over-taxed, the Duty Drawback Program gives special consideration to businesses that pay duties on goods imported into the United States, and then used in the manufacture of products that are subsequently exported. For example, a New York-based clothing manufacturer may import silk ribbon from Japan for use in a new line of dresses. The company is required as part of Canadian customs requirements to pay a duty on that ribbon when it is imported into the U.S. After the ribbon is sewn onto the dresses and packaged for export, it will again be subject to taxation. Under this scenario, the ribbon would be taxed twice. The Duty Drawback program is intended to address this inherent unfairness by returning the “second” duty payment paid on the same item.

For more information about US-Canada trade, contact Purolator at 1-888-511-4811.

Security Clearance Programs

Monitoring the flow of goods crossing the border has always been a primary mandate of the CBSA and its U.S. counterpart, Customs Border Patrol (CBP). From passenger cars to highway carriers shipping to Canada to cargo planes shipping from Canada – showing proper identification and paperwork, and enduring a border agent’s clearance review have always been an integral part of crossing the border. Both the U.S. and Canada have ramped up security procedures in recent years, with the goal of preventing any terrorist-related materials or contraband from passing into their countries. Following is a brief overview of some of the programs designed to ensure U.S. and Canadian border security:

Advanced Commercial Information (ACI) program: The Canadian Border Security Agency (CBSA) through its Advanced Commercial Information (ACI) program, require notification about all incoming shipments prior to arrival at the border. ACI was developed as a way to provide notification to border agents about potential high risk or contraband shipments headed to the Canadian border. ACI is a three-phased program that is expected to be fully implemented in late 2010, when e-Manifest provisions take effect, requiring electronic transmission of cargo information. ACI Phase One, which applied to marine carriers shipping from Canada and shipping to Canada was implemented in 2004, and Phase Two, which affects air carriers took effect in 2006. Implemented in 2010, Phase Three will apply to Canada/US shipping highway and rail carriers.

Automated Export System: The U.S. government imposes a similar electronic filing mandate on U.S. businesses that ship goods out of the country. While businesses have always had to submit paperwork, as of September 30, 2008, all filings are required to be done electronically, through the Automated Export System (AES). The new regulations, issued by the U.S. Census Bureau, are designed both to improve reporting accuracy, and to enhance security procedures. The regulations impose filing deadlines based on mode of transit, which will enable government officials time to review each shipment, to ensure that no restricted goods leave the country.

Customs-Trade Partnership Against Terrorism (C-TPAT): C-TPAT is a voluntary program administered by the U.S. Customs and Border Patrol (CBP) that takes a joint government-industry approach to securing the global supply chain. Through C-TPAT, businesses agree to implement specific security “best practices,” as defined by CBP. In return, C-TPAT participants receive a number of benefits from CBP that facilitate their shipments entry into the U.S.

Businesses that opt to participate in the program must apply to CBP and undergo extensive examinations of their business processes – both internal and external. Potential C-TPAT participants agree to work with CBP to identify potential security gaps within their supply chain and to address a broad range of security topics including personnel, document processing, access controls, physical security and manifest procedures. In addition, C-TPAT applicants agree to ensure the security practices of their business partners. Thus the reach of the program extends to businesses that are not active C-TPAT participants.

Free and Secure Trade (FAST): The U.S. and Canadian governments jointly administer the bilateral Free and Secure Trade (FAST) program as a way to ensure supply chain safety and border security, while at the same time, taking steps to promote the economic viability of private business. In developing this program, the U.S. and Canada have agreed to coordinate to the extent possible, their standards for US and Canadian customs regulations and border clearance, so that consistent security protocols are in place at all border entry points. Participation in FAST is voluntary, and businesses that choose to participate are eligible for several timesaving benefits including reduced number of inspections, “front of the line” priority processing, and direct access to CBP and CBSA personnel who can help ensure proper compliance.

In the United States, FAST expedited clearance is available to carriers and importers enrolled in the Customs-Trade Partnership Against Terrorism (C-TPAT) program. C-TPAT is an effort by the government to engage private businesses in “the war on terror” by asking businesses to ensure the integrity of their security practices, and to communicate their security practices to their Canada/US supply chain partners.

Nexus: Administered jointly by the CBSA and CBP, NEXUS is intended to expedite the border clearance process of low-risk, pre-approved individuals. Individuals enroll in NEXUS by completing an application/registration process. Once approved, an individual will be issued a NEXUS membership card which, upon arrival at a border crossing or port of entry, can be used to gain expedited Canadian customs regulations clearance.

Partners in Protection (PIP): Similar to the United States’ “C-TPAT” program, Partners in Protection is administered by CBSA and is a cooperative venture among the Canadian government, businesses and the transportation industry to enhance border security. PIP is a voluntary program, through which interested parties undergo an application and approval process. Once approved, PIP members agree to uphold specific CBSA-issued security standards. In return, CBSA grants “trusted shipper” status that allows preferential status at the border for certain companies shipping to Canada and from Canada. PIP is a coordinated effort among Canadian businesses and transportation providers to help protect the integrity and security of the global Canada freight supply chain.

Pre-Arrival Processing System (PAPS): PAPS is administered by the U.S. Customs and Border Patrol agency as a way to provide advance information about shipments shipping from Canada to the United States. To participate, a carrier is issued a PAPS barcode label, which must be attached to an original invoice – while the shipment is still in Canada. Information about the shipment is then transmitted electronically to a U.S. customs broker, who enters shipment details into the appropriate CBP databases. Upon arrival at the border, a CBP agent will scan the barcode, and if no further action is warranted, will clear the shipment for immediate entry.

PAPS is similar to the Canadian government’s Pre-Arrival Review System (PARS).

Pre-Arrival Review System (PARS): PARS is a CBSA-administered program that facilitates the flow of goods from the U.S. into Canada. Through PARS, qualified importers are allowed to submit shipment information to CBSA prior to a shipment’s arrival at the border. Once at the border, a PARS shipment shipping from US to Canada may be cleared for entry in a matter of minutes.

Every PARS-approved shipment is assigned a bar-coded cargo control number that is affixed to the original invoice. Together with all other required documentation, the PARS-coded invoice is submitted to CBSA. A CBSA officer reviews the documentation, and determines whether to “release or refer” the shipment. PARS is similar to the U.S. government’s Pre-Arrival Processing System (PAPS).

Penalties

Failure to comply with the applicable CBSA regulations comes at a cost – namely in the form of monetary fines and delays as CBSA personnel determine how to handle a non-compliant shipment. Shipments that arrive at the border without having fulfilled pre-arrival requirements, or that have incomplete or missing documentation, are forwarded to CBSA’s Administrative Monetary Penalty System for review. Penalties are generally assessed based on the type, frequency and severity of the failure to comply.

Questions about US-Canada trade? Ask Purolator at 1-888-511-4811.