IMPORTING/EXPORTING
TO CANADA
Presented by: Steve Nicademo & Rahul Sharma
© 2011 Centre for Enterprise and Law
WORKSHOP OUTLINE
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GETTING STARTED
IMPORT/EXPORT PROCESS
TARIFF CLASSIFICATION
ORIGIN AND VALUATION
DUTIES AND TAXES
CORRECTIONS AND ADJUSTMENTS
ADVICE BEFORE EXPORTING
© 2011 Centre for Enterprise and Law
BUSINESS NUMBER REGISTRATION
• Obtain your Business Number (BN) from the Canada
Revenue Agency (CRA) for import-export account: BN
123456789 RM 0001
• Call 1-800-959-5525
• Register Online at www.businessregistration.gc.ca
© 2011 Centre for Enterprise and Law
BEFORE IMPORTING TO CANADA
Identify that your goods are not prohibited from entering into Canada
Examples of prohibited goods include:
• Used or second hand automobiles of all kinds (except from the U.S.)
• Debased or Counterfeit coins
• Certain Birds
Complete List in Chapter 98 and Customs Memo D-9 Series
© 2011 Centre for Enterprise and Law
TARIFF CLASSIFICATION OF GOODS
THE CUSTOMS TARIFF
• What is a Tariff?
• Organized according to the Harmonized System of
Classification
• Goods Imported to Canada are identified with a 10digit classification number
• Duty Rates determined by Tariff Number
Customs Memo D10-13-1
© 2011 Centre for Enterprise and Law
STRUCTURE OF TARIFF CLASSIFICATION
24
24.03
2403.20
2403.20.10
2403.20.10.00
CHAPTER
HEADING
SUBHEADING
TARIFF ITEM
STATISTICAL
SUFFIX
KETCHUP TO AU CLASSIFICATION NUMBER
KETCHUP TO CANADA
© 2011 Centre for Enterprise and Law
INTERNATIONAL
COMPONENT
2403.20.10.00
CANADIAN
COMPONENT
CHAPTER 99
CONDITIONAL TARIFF ITEMS
TARIFF ITEM
9923.00.00
9926.00.00
© 2011 Centre for Enterprise and Law
DESCRIPTION
Articles and materials for use in
the manufacture of golf bags
Articles and materials for use in
the manufacture of lawn mowers
powered by piston engines
TARIFF NUMBERS CAN BE DETERMINED BY:
• Accessing the Customs Tariff
• Telephone: 1-800-461-9999 (Border Information Services)
• Visit the Canadian Border Services Agency
• Request an advanced ruling for Memo D-11-11-3
© 2011 Centre for Enterprise and Law
TARIFF TREATMENT: ORIGIN OF GOODS
Codes
(1)
(2)
(3)
(4)
(5)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(21)
Tariff treatment
Commonwealth Developing Countries Remission Orders
Most-Favoured-Nation Tariff
General Tariff
Australia Tariff
New Zealand Tariff
Commonwealth Caribbean Countries Tariff
Least Developed Country Tariff
General Preferential Tariff
United States Tariff
NAFTA
Mexico Tariff
Mexico-United States Tariff
Canada-Israel Agreement Tariff
Chile Tariff
Costa Rica Tariff
© 2011 Centre for Enterprise and Law
ORIGIN OF GOODS
• Form A
Certificate of Origin
Required for:
(07) CCCT – Commonwealth Caribbean Country Tariff
(08) LDCT – Least Developed Country Tariff
(09) GPT – General Preferential Tariff
Customs Memo D11 – 3 -3
© 2011 Centre for Enterprise and Law
ORIGIN OF GOODS
• Form B255
Textile & Apparel Goods
Originating in a Least Developed Country
Certificate of Origin
Goods in CH. 50-63 in
Customs Tariff
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NAFTA CERTIFICATE
• NAFTA Certificate of Origin
• Exporters statement of origin of goods valued
at less than $1600 CAD
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ORIGIN OF GOODS: NAFTA
• Form B232
(10) UST – United States Tariff
(11) MT – Mexico Tariff
(12) MUST – Mexico-United States Tariff
Goods with value more than $1600.00 CAD
© 2011 Centre for Enterprise and Law
TARIFF TREATMENT WILL DEPEND ON:
• Trade Agreement available for the country of
origin
• Rules of Origin
• Certificate of Origin
• Direct Shipment Requirements

Lose Direct Shipment if product goes from
CHINA  U.S.  CANADA
© 2011 Centre for Enterprise and Law
CUSTOMS TARIFF SCHEDULE
• Tomatoes grown in California, Made into Ketchup in California
© 2011 Centre for Enterprise and Law
CUSTOMS TARIFF SCHEDULE
© 2011 Centre for Enterprise and Law
ORIGIN OF GOODS
• Certain goods when imported into Canada are
required to be marked to indicate clearly the
country in which the goods were made
(a) Goods for Personal or Household Use
(b) Hardware
(c) Novelties and Sporting Goods
(d) Paper Products
(e) Apparel
(f) Horticultural Products.
Customs Memo D11-3-1
© 2011 Centre for Enterprise and Law
COUNTRY OF ORIGIN MARKING
• Different than labeling
requirements of other
governments
• Customs Requirement
• Identifies country of origin for
ultimate purchaser or recipient
• Not all goods require markings
© 2011 Centre for Enterprise and Law
ADVANCED RULINGS OR NATIONAL CUSTOMS
RULINGS
• If unsure of the tariff classification, origin, or value of duty
• 120 days or less
• Ex. Sample of clothing consisting of small % cotton. Sent to the
lab, given the tariff classification number
Advance Ruling
National Customs Ruling
Tariff Classification, FTA origin
Customs Memo D11-11-3
& D11-4-16
Value for Duty, Origin outside FTA
Customs Memo D11-11-1
© 2011 Centre for Enterprise and Law
VALUATION METHODS
6 Methods for Computing Value for Duty
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•
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Transaction Value
Transaction Value of Identical Goods
Transaction Value of Similar Goods
Deductive Value
Border Services Valuation Guide
Computed Value
Residual Value
© 2011 Centre for Enterprise and Law
DUTIES AND TAXES CALCULATION
(36) Value for Currency conversion
Exchange rate for Direct Shipment date to Canada (box 16)
(37) Value for Duty
(38) Customs Duties (Ex. 10%) (rate in box 33)
(39) SIMA Assessment (code in box 32)
(40) Excise Tax (rate in box 34)
(41) Value for Tax
(42) GST (5%) (rate in box 35)
Total:
Duties
SIMA
Excise
GST
Total Payable
© 2011 Centre for Enterprise and Law
$
$
110.00
0.00
0.00
60.50
170.50
$1000.00 USD
(rate @ 1.10)
$1100.00 CAD
110.00
0.00
0.00
1210.00
60.50
OTHER DUTIES OR TAXES
• Excise Duty
 Liquor and Tobacco
• Excise Tax
 Automobile Air Conditioners, Certain new and used vehicles based on
fuel efficiency, wine, fuel, diesel
 Ex. SUV with high fuel consumption may be charged up to $4000
under new Green Act.
• Goods & Services Tax – GST

5%
• Special Importing Measures Act – SIMA Duties

Anti-dumping and Countervailing
© 2011 Centre for Enterprise and Law
ENSURE YOUR CARGO IS REPORTED
• Unless you transport a shipment yourself, the carrier must declare
all commercial goods on arrival.
Shipments valued at CAN$1,600 or more
• The carrier will notify you when the goods arrive
Shipments valued at less than CAN$1,600
• Will be delivered by Canada Post.
• Will include Form E14, CBSA Postal Import Form, indicating the
classification, value, and applicable rate of duty and taxes according
to the information (invoice) accompanying your shipment.
© 2011 Centre for Enterprise and Law
OPTIONS FOR GETTING GOODS RELEASED
1) Full accounting and payment of duties prior to release
•
Completed B3-3 Form
 Two copies of the form A8A-B, Cargo Control Document (CCD), which
will be provided by your carrier.
 Two copies of form CI1, Canada Customs Invoice (or the commercial
invoice that contains the data). For information on Canada Customs
Invoice requirements, refer to Memorandum D1-4-1, CBSA Invoice
Requirements.
 A paper copy of all import permits, certificates, licences, or required
documents from other government departments and agencies (OGD)
or an electronic copy for EDI participants (OGD Interface).
© 2011 Centre for Enterprise and Law
OPTIONS FOR GETTING GOODS RELEASED
2) Release of goods prior to the payment of duties
• Release on Minimum Documentation (RMD) allows the release of
goods prior to the payment of duties and taxes.
 For details on this option, refer to Memorandum D17-1-4,
Release of Commercial Goods.
© 2011 Centre for Enterprise and Law
CORRECTIONS AND ADJUSTMENTS
Refunds for Exporters
• 4 year time frame – for exporters to file refund request
• 1 year time frame – for exporters to file refund under NAFTA
and Chile CCFTA
Corrections
(Non-revenue or monies owing to CBSA)
• 4 year time frame – for exporters to file a correction.
• Needs to be reason to believe there is an error
© 2011 Centre for Enterprise and Law
Special Import Measures Act
SIMA
• Protects against:

Dumping - Goods imported at less than full cost of
manufacture than the price sold in home market

Subsidization – where foreign manufacturers have
received specific or at less financial incentives from their
government
© 2011 Centre for Enterprise and Law
RECORD KEEPING
What books and records should you keep?
• All books and records related to accounting of
imported goods.
• Must be kept for 6 years
• Paper, Electronic, or Microfilm format
Customs Memo D17-1-21
© 2011 Centre for Enterprise and Law
ADVICE BEFORE IMPORTING
Contact:
• Importing/Exporting Broker
• Canadian Border Services Agency
• Lawyer
© 2011 Centre for Enterprise and Law
Importing/Exporting
between Canada
and the U.S.
Presented by: Katie Wei, Caia Wojnarowicz
© 2011 Centre for Enterprise and Law
PRESENTATION OUTLINE
• Basic Contract Formation
• United Nations Convention on Contracts for
International Sale of Goods
• Ontario Sale of Goods Act
• Uniform Commercial Code in Michigan
• Important points to remember when creating your
importing/exporting contracts
• E-commerce
© 2011 Centre for Enterprise and Law
CONTRACT FORMATION
• Essential Parts of a Contract




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Offer/Acceptance
Consideration (Canada)
Intention to create legal relations
Capacity
Legality
• Most Contracts do not include everything to
provide business efficacy, so to some degree
your contract will be affected by your choice
of law
• Jurisdiction – US, Canada or International
Law
© 2011 Centre for Enterprise and Law
UN CONVENTION ON CONTRACTS
FOR INTERNATIONAL SALE OF GOODS
• Also known as CISG
• Goal to harmonize International sale of Goods and minimize
conflicts
• Implemented in Canada on May 1, 1992
 The CISG has not been litigated in court frequently in Canada, and
thus still has many uncertainties.
• Implemented in the United States on January 1, 1988
 There has been more litigated in the United States. The increased
number of cases decided in court interpreting the CISG lends to more
certainty.
© 2011 Centre for Enterprise and Law
ONTARIO SALE OF GOODS ACT
• Primary source on the law of sales in
Ontario
• You can alter or exclude most
provisions of the Act
 Expressly: i.e. written into the contract
 Usage: seen by how the parties conduct
business together
• Certain provisions CANNOT be
excluded
© 2011 Centre for Enterprise and Law
UNIFORM COMMERCIAL CODE (UCC)
IN MICHIGAN
• Contracts for the sale, lease, and/or distribution of
goods are primarily governed by state law
• The UCC is adopted as the governing law in Michigan
and 49 of 50 states (the exception being Louisiana).
• Article 2 of the UCC provides rules for all phases of a
sales contract, including formation, modification, and
remedies upon breach. A detailed discussion of these
topics is beyond the scope of this presentation.
© 2011 Centre for Enterprise and Law
IMPORTANT POINTS IN CONTRACTS
• When does risk of loss pass?

Responsibility for bearing the costs and expenses of such
damage, destruction, or misplacement.
• When does title of ownership pass?

Risk of loss does not necessarily pass with title
• Payment


Method
Currency
• Write jurisdiction into contract

This can depend on the location of business, the residence
of owner, etc.
© 2011 Centre for Enterprise and Law
E-COMMERCE
• Laws of contracting also apply to online
contracts
• An offer is extended online
• The contract is not enforceable if the terms and
conditions are not available without opening the
product
• Clicking “I Agree” or “I Accept” is acceptance of
the contract
• Tax- still in early stages of developing a protocol
to ensure each country involved in the
transaction extracts its fair share of income
taxes and sales tax on each transaction
© 2011 Centre for Enterprise and Law
CONCLUSION
• Be clear as to the jurisdiction that applies to the
contract



International Treaty- Contracts for International Sale of
Goods;
Ontario- Sale of Goods Act; or
Michigan- Uniform Commercial Code
• Explicitly outline important issues



Risk of loss
Title
Payment
© 2011 Centre for Enterprise and Law
WORKSHOP CONTACTS
Delon Chan – Trade Consulate Delon.Chan@international.gc.ca
Jane Smith – Farrow Exporting Group jane.smith@farrow.com
Steve Nicodemo – CEL (Business Student) nicodems@uwindsor.ca
Rahul Sharma – CEL (Busness Student) sharma19@uwindsor.ca
Caia Wojnarowicz – CEL (Law Student) wojnaro@uwindsor.ca
Katie Wei – CEL (Law Student) katielanwei@gmail.com
CEL administration – 519-253-3000 Ext. 4627
© 2011 Centre for Enterprise and Law