Our 4th video has now been released. Reynold Martens, author of our white paper series, An Integrated Trade Compliance Strategy, presents a summary of a few key concepts introduced in the original white paper. Related: Seven Best Practices of Leading Traders
Reducing the impact of import duties and taxes on budgets is an important consideration for most companies, especially given today’s demanding financial situation. As such, transfer pricing is a major corporate tax issue – by taking advantage of differences in taxation rates between jurisdictions, multinational enterprises (MNEs) can distribute their tax liabilities to reduce their [...]
Reducing the impact of import duties and taxes on budgets is an important consideration for most companies, especially given today’s demanding financial situation. As such, transfer pricing is a major corporate tax issue – by taking advantage of differences in taxation rates between jurisdictions, multinational enterprises (MNEs) can distribute their tax liabilities to reduce their overall tax burden and increase profitability. However, because transfer pricing impacts customs valuation (and vice versa), discrepancies between the two can also create significant trade compliance challenges for companies.
In recent years, the issues associated with using inter-company transfer prices for customs purposes have begun to receive greater attention from national tax and customs administrations around the world. As a consequence, importers are now more frequently being asked to demonstrate how their inter-company transfer prices are also acceptable customs values. This is because while the rules for transfer pricing and customs valuation share similar goals, the differences between methodologies utilized (e.g. profit allocation as opposed to product valuation) may result in a non-compliant determination of dutiable value. Simply relying on tax-related documentation is increasingly being regarded as unsatisfactory for purposes of customs valuation and MNEs that focus attention solely on transfer pricing are regularly encountering problematic customs issues as a result.
With the foregoing in mind, we will be exploring this issue in a series of articles over the next several weeks to help you better understand the various conflicts involved and more effectively manage the differences to the benefit of your overall trade compliance strategy.
(The Economist) Confusing environmental rules harm more than guitarmakers Maybelle Carter strummed one with a smile. Slash, the lead guitarist of Guns N’ Roses, thrashed one with a snarl. One would be hard-pressed to find two carbon-based life forms more different than Carter and Slash… but they both loved Gibson guitars, as do [...]
Confusing environmental rules harm more than guitarmakers
Maybelle Carter strummed one with a smile. Slash, the lead guitarist of Guns N’ Roses, thrashed one with a snarl. One would be hard-pressed to find two carbon-based life forms more different than Carter and Slash… but they both loved Gibson guitars, as do thousands of amateur bards. So it struck a jarring chord when federal agents raided Gibson’s factories in Nashville on August 24th.
Agents barged in and shut down production. They were hunting for ebony and rosewood which the Fish and Wildlife Service (FWS) alleges was imported from India in violation of the Lacey Act, a 1900 law originally designed to protect fauna from poachers. This law has metastasised: it now requires Americans, in essence, to abide by every plant and wildlife regulation set by any country on Earth. Not having heard of an obscure foreign rule is no defence. Violators face fines or even jail. FWS claims the ebony sent from India was mislabelled, and that Indian law forbids the export of unfinished ebony and rosewood. Gibson denies wrongdoing. Read more here.
This week I am fortunate to be reviewing the 2nd white paper by Reynold Martens, Executive VP, GHY International and President, GHY USA Inc.. Reynold was the author of the paper titled, A Case for An Integrated Trade Compliance Strategy that was released in 2010. This new paper is titled Seven Best Trade Compliance Practices [...]
This week I am fortunate to be reviewing the 2nd white paper by Reynold Martens, Executive VP, GHY International and President, GHY USA Inc.. Reynold was the author of the paper titled, A Case for An Integrated Trade Compliance Strategy that was released in 2010.
This new paper is titled Seven Best Trade Compliance Practices of Trusted Traders.
In this paper 7 specific concepts are introduced that are derived from interviews with traders of all sizes, as well as reviewing the many surveys released by large multi national firms.
The concept fo what is a “Trusted Trader” is defined early in the document as part of the back ground to this white paper.
While the document and it’s content are ready for public disclosure I will leave you with a hint of the top two topics we found that are Best Trade Practices:
- Corporate Leadership
- Trade Champion
We would love to let you know when this new white paper is released, just sign up for our news letter on the right hand side and we will make sure you will be one of the first to know.
Canada’s new Conservative government has trade on their mind as demonstrated by this visualization
The map graphic was created just 4 weeks ago indicating the status of Canada’s trade agreements with the world. It is already sadly out of date as additional future agreements have been announced. Some of the potentially future trade agreements include: Korea, Japan, Ukraine, and the rest of the EU not already covered by an exiting trade agreement.
Now that Prime Minister Stephen Harper has a majority government, he is working to expand Canada’s opportunity in a global marketplace with the creation of these trade agreements.
Risky Business: The Problem with Silo’s Back in October 2010 we introduced the foundational elements of why an Integrated Trade Compliance Strategy makes sense in todays global supply chain world. You can find the original piece titled; The Problems with Silo’s. In that original article we shared some insights as to why a silo based business may consider the [...]
Risky Business: The Problem with Silo’s
Back in October 2010 we introduced the foundational elements of why an Integrated Trade Compliance Strategy makes sense in todays global supply chain world. You can find the original piece titled; The Problems with Silo’s.
In that original article we shared some insights as to why a silo based business may consider the adoption of an Integrated Trade Compliance Strategy. To refresh your memory here was that original list we shared.
Some of the issues that arise in evaluating a silo based organization include;
- Compliance outsourced or compartmentalized
- Import and export functions internally are often “silos”
- Trade related financials have limited corporate visibility
- Regulatory interventions force executive focus
- End result is clear audit trails and accountability
- Integrated cross-functional approach reduces exposure
- End game: reduce risks & maximize opportunities
- Are international traders adapting to new trade reality?
- Cost of reacting is more than a taking a proactive stance
When it comes to the threat of terrorism, the Canadian border is a bigger problem than the Mexican one, a U.S. security official says.
(Colin Freeze — Globe & Mail)
When it comes to the threat of terrorism, the Canadian border is a bigger problem than the Mexican one, a U.S. security official says.
Customs and Border Protection Commissioner Alan Bersin said he is concerned that potential terrorists are exploiting Canadian loopholes to gain entry to the United States.
“We have had more cases where people who are suspected of alliances with terrorist organizations, or have had a terrorist suspicion in their background – we see more people crossing over from Canada than we have from Mexico,” he said during in his testimony to the U.S. Senate this week.
The remarks will grate on Ottawa officials, who frequently try to persuade U.S. counterparts that the terrorist threat emanating from north of the border is not that bad. Read more here.
Related: U.S.-Canada Border Not Secure: U.S. Official (Toronto Sun)
Congress is currently drafting an updated customs reauthorization bill, which is expected to be taken up by lawmakers later this year…
(World Trade Interactive)
Both the Senate and the House of Representatives are currently drafting an updated customs reauthorization bill, which is expected to be taken up by lawmakers later this year following the anticipated approval of free trade agreements with Korea, Colombia and Panama. Businesses, organizations and individuals with an interest in resolving problematic customs issues should take this opportunity to make sure those issues are part of the forthcoming legislation….
Issues expected to be included in the customs reauthorization bill include the following.
Automated Commercial Environment
This section of the bill will include provisions on 100% electronic filing for all entry types, centralized entry filing, accelerated implementation of the International Trade Data System, implementation of ACE for exports and continued funding.
Centers of Excellence
Congress may direct U.S. Customs and Border Protection to test a “centers of excellence” model in which it designates a few select ports and import specialist teams to process all entries related to a specific industry sector and links the centers with national account managers to ensure coordinated CBP actions, uniformity, compliance reviews, etc.
The envisioned legislation would amend the HTSUS Chapter 98 provisions to facilitate the flow of goods that may cross borders for certain operations and return to the U.S. without being assessed duties a second time and allow goods that may be imported under such provisions to use generally accepted accounting principles for inventory management.
Lawmakers are interested in adding language, possibly the Duty Drawback Simplification Act of 2007, to streamline the drawback process and thus open the door to more drawback claims.
The pending bill could allow non-resident importers of record to participate in the Customs-Trade Partnership Against Terrorism, which would allow CBP to vet their supply chains for security purposes.
Possible changes could affect the positioning of the Office of Regulations and Rulings, whose current status within the Office of International Trade is seen by some as limiting its ability to issue critical policy and legal guidance, and could include moving the balance of the current OIT into the current Office of Field Operations (which would be renamed the Office of Commercial Operations) to ensure that CBP’s operational, strategic and enforcement functions are managed in a uniform and collaborative manner.
Private Sector Partnership
The draft legislation proposes that, without diminishing its central law enforcement and homeland security functions, CBP adopt a trade facilitation posture as a point of departure for executing new laws and regulations. For example, the First Sale Rule should not be reversed barring congressional action, and the HTSUS 9801 provision should not be reinterpreted to the detriment of commerce unless there is a clear conflict with law enforcement or security objectives.
De Minimis and Informal Entry Amounts
The personal de minimis exemption would be increased to $500 and the informal entry limit would be increased to $2,500.
‘A customs broker is not an importer,’ says industry association…
(Journal of Commerce Online – R.G.Edmonson)
‘A customs broker is not an importer,’ says industry association
The National Customs Brokers and Forwarders Association of America cautioned the Food and Drug Administration to use care in its definition of ‘importer’ under the Food Safety Modernization Act.
April 29 is the deadline for comments on rules to implement the 2010 law, which gives the FDA greater oversight of the import food chain, including registration of foreign producers, and the authority to recall products it considers hazardous.
In a letter Thursday from NCBFAA, President Jeff Coppersmith said the “importer” under the law “must be the party that is actually responsible for the food product,” should have a financial interest in the product, and “be the person who caused the goods to come to the U.S.” Read more here.
The Office of the U.S. Trade Representative issued March 30 its annual National Trade Estimate report…
The Office of the U.S. Trade Representative issued March 30 its annual National Trade Estimate report, which describes significant foreign barriers to U.S. exports of goods and services, foreign direct investment and intellectual property rights protection as well as the actions being taken to address those barriers. The NTE report covers significant barriers, whether or not they are consistent with international trading rules, in 58 countries, the European Union, Taiwan, Hong Kong and one regional body.
USTR has also issued its second annual report focusing specifically on Technical Barriers to Trade, such as product standards and testing and certification requirements, and sanitary and phytosanitary barriers, which include measures used to ensure that foods and beverages are safe for consumers and to protect animals and plants from pests and diseases.
Note: The section of the report dealing with Canadian Trade barriers can be downloaded from our website here.
IBM Executive Study Cites Complexity as largest issuing facing business leaders. Zappos leaves Canadian Market because of logistic complexities.
Hey, everyone. While we often have fun things to talk about in this space, we sometimes have less pleasant topics to share. Far be it for me to tell you about why Zappos decided to exit the Canadian Market, but a recent IBM study of Executives cited complexity as the biggest obstacle to doing business or creating concerns of compliance and risk. You can read below in their own words why Zappos made this recent decision.
A new European Parliament resolution has taken aim at Canada’s decision to re-impose visa requirements on the Czech Republic two years ago…
(Embassy – Anca Gurzu)
European Parliament resolution applies fresh pressure
A new European Parliament resolution has taken aim at Canada’s decision to re-impose visa requirements on the Czech Republic two years ago, directly linking the issue with the ongoing Canada-EU trade talks.
While experts say that threat only amounts to political pressure at this point, even top officials acknowledge the visa issue remains a potential stumbling block and should not be dismissed.
In a March 8 declaration, members of the European Parliament expressed “solidarity with the unequal status of Czech citizens” and called on the European Commission and the European Council “to increase political pressure on Canada in order to set the earliest possible date for abolishing the visa regime for Czech citizens.” The Parliament’s document notes that any further “delay in the termination of the unequal status of Czech citizens could threaten the future ratification of the Comprehensive Economic and Trade Agreement between the EU and Canada.” Read more here.
Industry Canada has partnered with Canadian trade groups to review the valuable core business function of logistics.
Industry Canada has partnered with Canadian Manufacturers and Exporters (CME) and Supply Chain & Logistics Association Canada (SCL) to review the valuable core business function of logistics. By collecting insights from industry, academia and international research organizations, and using economic analysis conducted by Industry Canada, this industry-academia-government partnership has produced a complete profile of logistics innovation and global business strategies in Canada.
Highlights and Key Findings can be downloaded from our website here.
A new bilateral Industrial Security Arrangement with Spain opens new trade opportunities for Canadian industry to do business in Spain.
The Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, [Friday] announced the signing of a bilateral Industrial Security Arrangement with Spain, which opens new trade opportunities for Canadian industry to do business in Spain.
“It is a priority of the Government of Canada to provide small businesses with the tools and advantages they need to succeed in today’s international market,” said Minister Ambrose. “This arrangement aims to create new opportunities for Canadian businesses, especially those small- and medium-sized enterprises that are the backbone of our economy.”
In one of our last posts we discussed the idea of involving your outside partners in your trade compliance strategy. Especially important in the example we gave is the design of your channels of communication to stay abreast of good information. Here is a case in point specific to the Apparel Industry and provided by our partner the Canadian Apparel Foundation.
Courtesy of the Canadian Apparel Foundation
Apparel producers that participate in the apparel duty remission programs are attempting to understand and reverse recent administrative changes to the programs. Just before Christmas Canada Border Services Agency (CBSA) informed remission holders that all apparel and textile remission authorizations were being cancelled effective December 31, 2010. Remission holders have also been advised not to re-apply for their licenses until further notice and that any duties paid as a result of this initiative could eventually be recovered by way of drawback.
These abrupt and unexplained measures are likely to have extremely negative impacts not only on remission holders but also on stakeholders throughout their supply chains. Importers who have previously been able to forgo payment of duty at time of importation will now have to pay those duties and apply for drawback, causing a major unanticipated cash flow problem for many firms. The most surprising aspect of this policy change is the fact that CBSA would undertake what appear to be significant modifications to policy without prior consultation with any stakeholders and provide users less than two weeks notice before changes take effect.
CAF has asked CBSA to reinstate remission authorizations until such time that a reasonable and transparent consultation has been completed.
Interested firms may contact Bob Kirke, CAF Executive Director.
Who is the CAF?
The Canadian Apparel Federation (CAF) is the national association for Canada’s apparel industry. CAF stands up for the industry, and is your source for information and advice on national and international issues, and for industry-specific services.
Membership in CAF is open both to Canadian-based firms that design, manufacture or market apparel in Canada (corporate membership), and to industry suppliers and other interested parties (associate membership). Please click here for further instructions on applying for membership.