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The impact of COVID-19 has cut across many aspects of
international trade, including supply chain management,
manufacturing, importing, exporting, customs, and logistics.
Importance of Trade Compliance During Changing Supply
Chains
COVID-19 is forcing companies to question the ability of their
supply chains to effectively and reliably respond to rapidly
evolving risk factors. Changing suppliers, logistics, and revising
sourcing will become more prevalent as companies seek to secure
their chains.
It is important that these changes do not cause inadvertent
compliance issues, violations, or penalties going forward. No
organization wants to redesign their business activities and incur
related costs and disruption only to find out later that the
changes are in violation of customs, sanctions, export control, or
other trade laws. It is critical to ensure trade compliance in
making these changes.
The issuance of compliance communications are not only helpful
in reminding personnel of the importance of maintaining effective
compliance safeguards during COVID-19, but also generate a record
that reflects well on a company and can be shared, if necessary,
with regulators, or investors to document continuity in a
company’s compliance program commitments during COVID19.
Internal company communications should remind employees to
identify and raise issues that could have adverse trade compliance
impacts during the COVID-19 period. For example, the following
questions should be addressed:
- Are you considering changing a
supplier? - Are you considering selling to a new
customer or country? - Are you thinking of using different
components or materials in manufacturing? - Will your new plans require you to
alter importing or exporting activities? - Are you considering a new customs
broker, agent, freight forwarder, carrier or other third-party
service provider? - Will travel restrictions require
non-Canadian personnel to access new IT databases or
locations? - Will a new third-party or country be
involved in any other way? - Will the end-use of your items be
changing, including will they be directed toward fighting
COVID-19? - Will the company provide ongoing
services or support to new parties or countries? - Will imported finished goods or raw
materials/components be substituted with others? - Will imported goods be contaminated
by the virus? - Is there a possibility that the
downstream supply chain for the existing supplier or any new
supplier will be disrupted? - Will the manner of shipment of
imports be changed from rail or sea to air and will this cause late
deliveries? - Am I able to request price reductions
of imported goods from my supplier?
These types of questions could help surface a range of issues in
international trade compliance:
- Restricted party screening of new
suppliers for economic sanctions - Export control and sanctions
licensing/authorization requirements - New country of origin issues under
customs laws, free trade agreements, and the issuance of new
certificates of origin to qualify new imports for preferential duty
rates - Access to export-controlled
information - Customs tariff impacts resulting from
new supply chain routes and product mixes - Customs valuation issues including
those surrounding decreases in the price of imported goods and the
requirement for the importer to have a written agreement with the
exporter on the price reduction prior to importation in order for
the price reduction to be reflected in the Customs value of the
goods at the time of importation - Whether substituted or new imports
have been quality tested and are in accordance with Canadian
specifications - Assurances from the supplier that
imported goods have not been contaminated with the virus - Contingency plan commitments from the
supplier if its supply chain of raw materials is disrupted - Assurances against freight escalation
charges
Canadian Customs & Related Government Actions
To date, the Canada Border Services Agency (CBSA) has introduced
the following import duty relief. It is likely that CBSA will be
issuing new relief measures as the situation evolves.
Notwithstanding the issuance of relief, importations continue to
be subject to examination at the time of importation and to
post-release verification for compliance with the Tariff
Classification, Valuation, Origin and Marking programs, and any
other applicable provisions administered by the CBSA.
Extension of Timelines for the Payment of Duties (Customs Notice
20-11)
Effective March 27, 2020, pursuant to section 33.7(1) of the Customs
Act, the Minister of Public Safety and Emergency
Preparedness has extended the timeframe for duty (customs duties
and GST on regular imports, re-assessments, penalties, etc.). The
timeframe for all payments due on March 31, 2020 has been extended
to June 30, 2020. This also includes charges on a statement of
account of March due on April 1, 2020. Importers should note
however that there no other changes to the accounting of goods
timeframes prescribed by the Accounting for
Imported Goods and Payment of Duties Regulations.
Importers are required to submit accounting declarations for
imported goods within the required timeframes.
Waiver of Late Accounting Penalties (Customs Notice
20-10)
Importers are required to submit accounting declarations for
imported goods released within the required timeframes. Late
accounting penalties are applied when these timelines are not met.
Pursuant to section 3.3 of the Customs
Act, the CBSA has introduced measures to provide for a 45
business days grace period for late accounting penalties. No
application for relief is required. The waiver applies to import
transactions released from CBSA between March 11, 2020, to May 14,
2020, inclusively. The grace period will be reviewed as the COVID
situation evolves, and further extensions maybe be issued.
Extension to the 90-day Period to Submit Corrections (Customs Notice
20-09)
Pursuant to Section 3.3 of the Customs
Act, effective immediately, the 90 day period for
submitting corrections following a CBSA trade compliance
verification where errors were found has been automatically
extended by 30 days, for a total of 120 days.
Duty Relief on Imported Goods for Emergency Use in Response to
COVID-19 (Customs Notice
20-08)
The Goods for Emergency Use Remission Order (C.R.C., c.
768), allows for the relief of duty and tax for goods required for
an emergency and are imported by or on behalf of federal,
provincial, or municipal entities involved such as centres for
health care as well as by or on behalf of members of first response
organizations such as police, fire, and local civil defence groups,
including medical response teams. Individual applications for
relief are required.
Duty Relief for Canadian Non-Resident Importers into the
US
Canadian businesses that operate as non-resident importers into
the US may apply for a deferral of US duties on exports into the
United States from US Customs and Border Protection (CBP). The CBP
will approve, on a case-by-case basis, additional days for payment
of estimated duties, taxes, and fees. Further details are expected
to be provided.
Canada–US Border
Goods
There are no restrictions on the cross-border supply of goods
between Canada and the US or cargo shipments using air, freight
rail, or sea. The CBSA advises that the border remains open and
commercial operations are “business as usual.”
Travel
Over 80 countries have issued travel restrictions related to
COVID-19. Most of the restrictions apply to inbound travelers from,
or transiting through, China, South Korea, Iran, and Italy. The
restrictions vary from quarantine periods to outright denial of
entry.
The Government of Canada has put in place an Emergency Order
under the Quarantine Act that applies to all travellers
arriving in Canada. This is to slow the introduction and spread of
COVID-19 in Canada. Effective March 25, 2020, all international
visitors to Canada who are not Canadian citizens or permanent
residents have been denied entry, with the exception of Americans,
diplomats, and flight crews.
Canada and the United States have imposed temporary restrictions
on all non-essential travel across the Canada-US border which will
remain in place April 20, 2020, though they could be extended by
both parties. All essential work and business travel will continue
unimpeded. Individuals crossing the border to go to work or for
other essential services, such as medical care, will not be
impacted.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
