Why is it important to assure that my goods are classified correctly according to the Harmonized Tariff Schedule?

Correct tariff classification is important not only for determining the duty rate, but also for determining whether goods are subject to quotas, antidumping or countervailing duties; review by other governmental agencies (e.g., FDA, EPA); restraints, embargoes, or other restrictions. As of October 1, 2004 US Customs is requiring the 10-digit tariff number of each item shipped to be reported at time of importation into the US.  If the tariff numbers for your items are not shown on your paperwork, as required by the US Customs regulations, your shipments may be delayed.  The act of correctly classifying goods is complex. It requires familiarity with the Harmonized Tariff Schedule of the United States, its 99 chapters, rules of interpretation, and notes. The Customs Modernization Act (Mod Act) requires the importer of record to use "reasonable care" to ensure correct classification of goods. PBB's Trade & Regulatory Services Department can assist importers with questions or concerns on tariff classification and requirements.

Do I need to show the cost of "free issue" material on my invoice?

Yes. Customs refers to such material as "Assists" and requires these costs to be included in the entered value. Examples of assists include tools, dies, and molds; engineering, artwork, and design work; and materials, components and parts incorporated in the import merchandise. PBB's Trade & Regulatory Services can consult with you about this topic.

I had my product returned to Canada because it was not marked with the country of origin. Does everything going into the US have to be marked?

While there are some exceptions, the general rule is that each article of commerce must be marked legibly, conspicuously and permanently with its country of origin (i.e. country of manufacture.)  US Customs takes marking issues seriously, and, as you found out, they can stop and even seize goods right at the border if they believe marking is insufficient. PBB's Trade & Regulatory Services can work with you in advance of shipping to help avoid expensive hold ups due to marking issues.

Is my product duty free into the U.S.,because it was previously imported and duty paid once?

The U.S. Customs Regulations state that "Dutiable merchandise imported and afterwards exported, even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States." However, there are some exceptions. PBB's Trade & Regulatory Services can assist in determining if your good would meet a particular exemption.

I'm told I need to complete a NAFTA certificate and so I'm calling to get an HS#.

This requires a two-part answer. First, there can never be a "need" for a NAFTA certificate as using the benefits of the North American Free Trade Agreement (mainly to be exempt from the normal duties and/or merchandise processing fee) are completely voluntary. Secondly, in regards to the HS#, in all cases, you must already know your HS# before determining whether your product is eligible for NAFTA benefits. This is because each HS# (at the 6 or 8 digit level) has its own rule for determining NAFTA eligibility. PBB's Trade & Regulatory Services can offer tariff opinions and assist with NAFTA determination.

What is the process for determining if a product qualifies for the NAFTA preferential tariff and for completing the Certificate?

Completion of a NAFTA Certificate is the declaration that the party signing the document has researched the NAFTA agreement terms and has determined that the subject goods are "originating goods" as defined in the agreement. The preparation of the NAFTA Certificate imposes obligations and liabilities on the party signing the certificate. Signing authorities should be aware of the terms of the NAFTA agreement. Just because the product was manufactured in a NAFTA country (U.S., Mexico, or Canada) does not automatically qualify it for NAFTA preferential duty rate. The product must meet the specific NAFTA rule of origin and the Exporter must complete the NAFTA Certificate of Origin before the importer can claim the NAFTA tariff rate. PBB's Trade & Regulatory Services can assist you in this process.

Isn't my product NAFTA eligible as it has over 50% Canadian, Mexican, or American content?

Not necessarily. NAFTA eligibility is determined according to the NAFTA Rules of Origin which are based on the tariff number of the finished product as imported into the United States. The Rules are very specific, usually requiring a tariff shift of the non-originating materials and/or regional value content. U.S. Customs has been verifying many NAFTA claims and assessing monetary penalties for false NAFTA claims. PBB's Trade & Regulatory Services can assist you in determining NAFTA eligibility of your merchandise.

How long should copies of NAFTA Certificates of Origin be retained?

The U.S. importer is required to retain the certificate and importing records for 5 years. The exporter is required to retain the certificate and supporting documentation for 6 years if Canadian) or 10 years (if Mexican).

What are U.S. Customs record keeping requirements?

U.S. Customs requires importers to maintain copies of certain documents relating to their U.S. Customs transactions for a period of five years. Customs has the legal right to audit your company to determine whether or not your organization is compliant. Importers that fail to comply expose themselves to severe civil and monetary penalties. PBB's Trade & Regulatory Services can consult with you to ensure that your company has standardized procedures in place to maintain records.

Are there any requirements necessary when importing clothing or other textiles into the United States?

There are many regulations covering the importation of textile articles into the U.S. For example, in most cases a textile declaration is required at time of importation. Textile items may also be subject to visa and/or quota restrictions depending on the commodity and country of manufacture. On January 1, 2005 the quota and visa restraints on textiles from WTO member countries will end for shipments exported on or after January 1, 2005 from the country of manufacture. Shipments imported into the US in 2005 that were exported from the country of production in 2004 will still be subject to the quota and visa restraints in place in 2004.  CITA (Committee for the Implementation of Textile Agreements) has the authority to deny the entry of goods shipped in excess of the 2004 quota limits, however they have stated they may allow for an orderly staging of entry in 2005. Once the quota/visa restraints for textiles from WTO countries disappears, it is expected that ADD and/or CVD duties may be assessed on many items.  PBB's Trade & Regulatory Services Department can consult with you regarding your textile questions.

I called a broker with a question and they said their answer was informal and not binding on them. They recommended we get a binding ruling from US Customs. What is a binding ruling and why should I bother with that?

A binding ruling is a written response from US Customs to a written request concerning Customs treatment in areas such as classification, valuation, marking, entry, NAFTA, and drawbacks. US Customs requires importers to take reasonable care in the conduct of their customs business. Obtaining a binding ruling is one way of demonstrating reasonable care. Once issued, rulings are binding on you and also on the Customs service, assuring uniform treatment of your product by all customs ports in accordance with the ruling. PBB's Trade & Regulatory Services can assist you in obtaining binding rulings.

US Customs is asking questions about our declared value to our related US buyer. Why?

The valuing of merchandise basically must be an arms-length transaction value. If the relationship of the parties influences the price paid or payable, then Customs will require the value to be adjusted to an equivalent of an arms-length transaction value. PBB's Trade & Regulatory Services can assist you in determining proper valuation of your goods.

I hear that it is now very difficult to export food to the US, is that true? 

The Bioterrorism Act of 2002 (BTA) went into effect on December 12, 2003.  The BTA requires, among other things, that all food (for human or animal consumption), or ingredients for food, for importation into the US be reported to the Food & Drug Administration (FDA) in the form of a Prior Notice (PN).  After the PN’s for a food shipment are transmitted to FDA, FDA sends back  confirmation that the PN’s were received.  That confirmation(s) needs to be received a minimum of four hours prior to the shipment arrival at the border. The BTA also requires manufacturers and processors of food to register with the FDA and to have a US agent if they are a foreign company.  PBB can assist you with your questions on exporting food to the US including building FDA product codes (which are required for the PN) for your items and operating as your US agent.  Our Agency Agreement and PN forms may be found on our website under “Trade Documentation – Food & Drug Administration (FDA)”.

I sent in a shipment of German-origin bearings and was told by my broker that there are additional duties to be paid.  The US tariff doesn’t say anything about additional duties.  What are they?

The US government will assess additional duties, known as antidumping duties (ADD)or countervailing duties (CVD) on certain imported goods from specific countries that are believed to be unfairly priced compared to domestic goods. The US International Trade Commission and Department of Commerce decide these cases and rates, and the US Customs & Border Protection Agency (Customs) collects the duties.  ADD/CVD cases are not tied to specific tariff numbers, but are instead specifically described in the scope of the order. Further, ADD/CVD cases often make reference to specific manufacturers, and quite often the rates of additional duties will vary among these manufacturers.  Many of these scopes can be found on the following website: http://ia.ita.doc.gov/.  Please note though that not all cases are on this Web site so it is best to confer with TRS to determine whether your goods are subject to any ADD/CVD duties.

I sent our computer to the US for some warranty repairs and was told by our carrier that additional forms are needed to clear Customs.  What are these forms and where can I get them?

Many types of communications equipment, including the individual components of computer systems  (e.g. CPU, monitor, mouse, keyboard, etc.) are regulated by the US Federal Communications Commission (“FCC”) and require form FCC 740 to be completed and accompany the shipment.

Radiation emitting, and laser-containing devices such as monitors, CD readers, etc. are regulated by the US Food and Drug Administration (“FDA”) and require FD 2877 form to be completed and accompany the shipment.

Both of these forms are available on PBB’s Web site (see Trade Documentation).  Please be sure to fill in the FCC 740 &/or FDA 2877 prior to packaging the equipment as certain information must be obtained from the equipment in order to complete these forms.


Do products imported from a parent/sister company have any affect on the valuation of the goods?

It may, should the relationship for any reason cause the goods to be valued lower than they would be sold to an unrelated company. Should this occur measures would have to be taken to determine the value of the goods in accordance to the Customs Act.


If product is imported from a vendor that provided a NAFTA certificate, and it is later discovered that the goods do not qualify, is a correction required?

Yes, an amendment to the customs entry should be filed, however you must obtain a letter from the supplier that describes their incorrect use of NAFTA. You will also have to pay the correct rate of duty on the imported product. From date of discovery you should file amending entry within 90 days to avoid any AMPS penalties.


Isn't it my broker's responsibility to assign the correct tariff classification and retrieve NAFTA Certificates?

No. Although a broker can be commissioned to retrieve and verify the validity of NAFTA certificates, the responsibility ultimately lies with the importer. The importer must ensure that that the certificates are correct and must also keep a copy of their certificates on file.


What happens if I claim NAFTA duty rates without a certificate on file?

If the CCRA were to ask for the NAFTA or performed an audit and the certificate was unavailable, an AMPS penalty could apply.

What is the concept of "reason to believe" and how is it related to Compliance?

The interpretation of "reason to believe" occurs when an importer has specific information regarding the origin, tariff classification, value for duty, or diversion from a declared end use, of the imported goods, that gives them "reason to believe" that a declaration is incorrect. In terms of compliance, an importer would be deemed non-compliant if they were provided with "reason to believe" that a declaration was incorrect and did not rectify the error.

Pursuant to section 32.2 of the Customs Act, it is required that the importer, within ninety days of reason to believe that the declaration of Origin and/or Value for Duty and/or Tariff Classification made under the Customs Act for any imported is incorrect, shall make a correction to the declaration and pay any duties and interest that may become owing as a result of the correction to the declaration.


What is transfer pricing and whom does it affect?

Transfer pricing refers to the prices at which services, tangible property, and intangible property are traded across international borders between related parties.


Who is responsible for keeping the NAFTA Certificate on file?

The CCRA recommends that the Mexican or U.S. exporter maintain the original Certificate of Origin and send copies to each Canadian importer who will claim preferential tariff treatment. The exporter must maintain a record of which Canadian importers have received a Certificate so that the importers can be notified of any changes to that Certificate.

It is a requirement of the Customs Act for the Importer of Record to keep NAFTA Certificates of Origin on file for 5 years plus the current year.


Who should be completing and signing my NAFTA Certificate?

Exporters and Producers are the only groups that should complete and sign NAFTA certificates of origin, as they are the most knowledgeable about what component(s) comprise the good(s). Certificates must be based on a certificate of origin or other written representation filled out by that producer. Importers cannot claim benefit of NAFTA until they are in possession of a valid NAFTA Certificate of Origin.


Why do I have to list all my part #'s on a NAFTA?

The CCRA requires each individual item, usually by product line to be verified for NAFTA Certification. This means that each product line would be looked at on an individual basis to see if it qualifies for NAFTA. Putting the part #'s on the NAFTA certificate tells Customs that each item has been looked at and qualified for NAFTA.


How is GST calculated on imported goods, and what is "duty paid value"?

The GST paid on imported goods is equal to 7% of the duty paid value of the goods. The duty paid value is equal to the value of the imported goods, in Canadian funds, plus any duties and excise taxes that may be payable.


If we have "reason to believe", how far back should we go to amend entries?

Technically per Section 32(2) of the Customs Act, the amendment can be processed as far back as 4 years. For imports prior to Oct 7, 2002, Customs will not apply AMPS penalties. It is the discretion of the Importer to make the final decision.


What is C-TPAT?

Customs-Trade Partnership Against Terrorism is a joint U.S. government-business initiative to build cooperative relationships that strengthen overall supply chain and border security. C-TPAT recognizes that Customs can provide the highest level of security only through close cooperation with the ultimate owners of the supply chain, importers, carriers, brokers, warehouse operators and manufacturers. Through this initiative, Customs is asking businesses to ensure the integrity of their security practices and communicate their security guidelines to their business partners within the supply chain. This program is similar to the Partners in Protection program that Canada Customs and Revenue Agency has implemented.


What is FAST?

Free and Secure Trade is a joint Canada-U.S. initiative involving the Canada Customs and Revenue Agency, Citizenship and Immigration Canada , the United States Customs Service, and the United States Immigration and Naturalization Service. FAST supports moving pre-approved eligible goods across the border quickly and verifying trade compliance away from the border. The benefits of FAST include:
· Greater speed and certainty in the clearance of transborder shipments
· Reduced costs of compliance with customs requirements
· A strong and ongoing partnership with the Canadian and U.S. Customs Administrations