With businesses just starting to pick up momentum after the holiday season, January is a fantastic time to take stock of processes and review operations. Sometimes maintaining the status quo can cost businesses a significant amount in market share to competitors that are adapting to changing conditions.
When it comes to Canadian Customs related matters, here are some suggested areas you could review to improve your value chain:
a. Trade Agreements:
Exploring current and upcoming trade agreements can greatly benefit your company. The United States has always been our strongest trading partner. Similar culture and ease of doing business have made our southern neighbors a substantial market to sell into. However, during 2013, the Canadian Government was busy negotiating new trade deals to benefit Canada. The latest trade agreement that has been struck between Canada and the European Union (CETA) will provide better access for purchasers to source products without having to worry about the impact of duty upon import.
European goods have a reputation for their prestige and high quality. European craftsmanship has been refined and goes back for decades. They are on the cutting edge of fashion and technology with a healthy respect for the trademarks, patents, and copyrights that go along with intellectual property.
Many countries that are part of the European Union are the home to manufacturers that make products that are economically viable to purchase for Canadian companies. High rates of unemployment for certain countries in the European Union can mean significant opportunities for Canadian purchasers. The exact date for the roll out of CETA is not known yet, but importers should consider the European Union an option for future purchasing alternatives.
b. Canada’s General Preferential Tariff (GPT):
The General Preferential Tariff Agreement Canada had with China is slated to expire January 1, 2015, so unless China chooses to participate in the Trans-Pacific Partnership, the cost of many Chinese goods will increase in terms of Customs duties payable upon import into Canada.
The Customs D Memoranda 11 covers General Tariff information. Newer trade agreements may not be posted yet but will be as they get approved by Parliament.
c. Supply Chain Logistics:
Reviewing freight lanes and carriers hired to move your freight can also garner some economic returns to your organization. By making the effort to arrange your own transportation; buying power increases. Consolidating purchasing can help your transportation budget go further.
Canadian products are well known for their purity, quality, and innovation. The European Union has a desirable demographic market for Canadian products. It is both large and increasingly more accessible than ever before in the world of electronic commerce. Under CETA, it has the potential for breathing new life into the car manufacturing and resource industries with the elimination of tariffs to follow.
Increased service on some ocean lanes by several of the steamship lines makes for easier transportation of Canadian goods to international markets as well.
a. Trade Compliance Program
One of the most overlooked aspects of importing and exporting is trade compliance. Importing and exporting are privileges that allow Canadian companies to generate revenue. Having a program in place to systematically review the work being done for your organization in terms of Customs declarations on international transactions is very important.
b. Self Auditing Program
Establishing best practices for reviewing the work that your trade professionals do for you is key to keeping records that will withstand a Customs audit. Sometimes the savings on an entry fee is offset by the cost of retaining a senior customs broker’s expertise to get your organization in front of an audit or penalty under the Administrative Monetary Penalty System (AMPS).
c. Customs Brokers
Buyer behaviour is complex. Some companies use multiple customs brokers for various reasons. These reasons can include pricing, relationship between the parties, and carrier moving the freight. By using multiple customs brokers, the risk for inconsistencies on Customs declarations increases drastically, as there is room for interpretation in the Customs tariff.
Having a solid relationship with your customs broker who knows your business model and is familiar with provisions in the Customs Act and Customs Tariff can help your organization. An experienced customs broker can guide you in taking advantage of potential savings through trade agreements or end-use applications.
d. Customs Regulations
If declarations are being made "in house", it is extremely important to make sure internal staff understand the consequences of the declarations they are completing. Staff turnover can put your organization at risk of a Customs audit in a big way, and inexperienced staff can put your organization in jeopardy if they do not understand Customs. Current trade compliance training and education can fill the gaps to create a complete custom compliance program.
2014 looks bright and Pacific Customs Brokers wishes you a prosperous New Year! To learn how Pacific Customs Brokers' Customs trade compliance and Customs audit consulting can help your business; speak with one of our Trade Compliance Advisors today.