Canada Border Services Agency, commonly referred to as CBSA, has released their 2011 International Trade Compliance targets. They regularly do this to ensure the trade community knows where there focus is. As an importer or exporter it tells you that if you deal with these products you are at higher risk of being included in one of the various international trade compliance audit programs that CBSA has. If you are included in these groups, then your need to ensure your trade compliance strategy is solid and encompassing all aspects we presented so far is critical.
There are 2 specific trade compliance programs that CBSA conduct, Random and those deemed a National Priority.
Random Compliance Verifications
The key to note is that Random is usually related to hot spots that pop up during the year, either you or your trade service provider should be plugged into information sources that broadcast that kind of information. There are many ways to get that sort of information, a few of them are;
The government states that random trade compliance verifications;
“Random verifications are designed to measure compliance rates and revenue seepage and the results may be used for many purposes”
Some of those purposes include,
• Risk assessment,
• Establishing client service activities,
• Revenue assessment, and
• Promoting voluntary compliance.
The biggest shift in the past 12 months is that the Canadian government has gone from almost a sole focus on security to one that is now focused on the Health, Safety, and Security of Canadians. This change in focus is of course driven by events in the news that suggest the Government isn’t protecting it’s citizens. A few examples include the news surrounding children’s toys from China made with paints that contained products deemed toxic in Canada, or the baby bottles made using plastic containing Bisphenol A (BPA).
While the Canadian government shares this list of National Priorities that focus on areas’ of Tariff Classification, Valuation, or Origin the fact remains that while examining one aspect related to products in their target zone, it is very easy to expand that to the others and in doing so catch multiple issues relating to trade compliance. That of course is a worst case scenario, but one we have seen before. The aspect to keep in mind is that the government does not constrain itself to this list as it states;
“National priorities (NPs) are determined through a risk-based, evergreen process; i.e., new NPs may be added throughout the fiscal year. NP verifications may also be carried over from previous years.”
According to Alan Dewar, Vice President, Canadian Operations of GHY International, “The most difficult part of this process for traders is that a single line item on the government’s list, may relate to ten’s of thousands of products, when in fact the government may be focused on a very specific item in those thousands of items”, he goes on to share, “as an example look at chapter 39, miscellaneous articles of plastic, what articles are they interested in, they government will never tell you.” This becomes a challenge when considering your trade compliance strategy as the specific focus in unknown, so the question must be asked how forensically do you need to go with your trade compliance efforts in order to ensure that you don’t leave a large compliance gap open. According to Alan, he suggests you consider looking at your products from a top down approach based upon import dollars spent. The largest risk financial is usually in correlation to the volume of dollars spent on that product.
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