Archive for November, 2010

Compliance at the Border: Changes to AMPS
Friday, November 12th, 2010

At the 2010 CSCB Conference in September, there was a joint CSCB-CBSA session on Compliance at the Border. The presentation for that session included changes to AMPS that had been discussed at a bilateral meeting between the CSCB and CBSA.

Since the conference, these changes were discussed by the BCCC AMPS Subcommittee and between CBSA and its regions. Clarification has been provided by CBSA and we are pleased to say that changes presented at our conference will be going forward. The updated AMPS documents are currently being translated into both official languages and are before the regional Trade Directors, in draft format, for their review.

Final versions of the AMPS documents should be ready for release by the end of this calendar year and will be made available when the proposed AMPS amendments are enacted. The related contravention documents will explain all of these provisions in much greater detail, and will include specific examples that should help the importing community to better understand the trade-related AMPs.

Last, we have also been advised that these changes will not be retroactive.

Clarification of the information provided at the conference follows. Please note the difference between “per error” and “per instance” or “per occurrence”. Per error refers to the same error, made more than once. Per instance, or per occurrence, means each time the same error is made.

1. For contraventions C080, 081, 082, and 083, the CBSA is currently working on the following changes:
At the first level, penalties will be assessed per error, except in instances where the importer has already received written instructions from the CBSA (currently they are issued each time the error occurs).
For example, if pens are misclassified 500 times and each of those 500 times the same incorrect HS is used, a single penalty will be assessed, at the first level of AMPS.

CSCB: Please confirm that if more than one HS error is made, on different items, the maximum penalty still remains $5,000.00.

CBSA: The proposed maximum for any first level penalty is $5,000. Where two different tariff classification errors are made, two $150 penalties will apply, for a total of $300.00. To that end, 33 different tariff classification errors would be required to reach the proposed $5,000 maximum.

2. CSCB: What is CBSA’s position for those who have not received written instructions from CBSA? That is, those who CBSA have determined have reason to believe based on other factors?

CBSA: AMPs only apply in cases where the CBSA has determined that the importer had “reason to believe”. The intention of this proposed amendment is to make a distinction between cases where the CBSA has specifically addressed the issue with the importer in writing previously versus other factors that constitute “reason to believe” (e.g. legislative provisions that are evident (obvious, apparent) and transparent (clear, self-explanatory).

In cases where written instructions have been provided by the CBSA, the $150 penalty would apply per occurrence, to the $5,000 maximum.

In cases where written instructions have not been provided by the CBSA, the $150 penalty per error would apply, to the $5,000 maximum.

3. CSCB: Can you confirm what is meant by the verification period?

CBSA: The verification period is as identified in the letter to the importer initiating the compliance verification activity. Generally speaking, this is typically the importer’s last closed full fiscal year.

4. For contraventions C350, 351, 352, and 353, the CBSA is currently working on the following changes:
Penalties under these contraventions will generally be identical to those under C080, 081, 082, and 083.
However, penalties will be issued for all transactions within the reassessment period (as compared to those within the verification period).

CSCB: Can you confirm what is meant by the reassessment period?

CBSA: The reassessment period is that contemplated in the Canada Border Services Agency (CBSA) Memorandum D11-6-10, Reassessment Policy. In accordance with the Customs Act, this period can extend back a full four years where the importer has had “reason to believe”.

5. There will be $1,000 cap on clerical errors.

CSCB: Can you explain how CBSA will determine what is and what is not a clerical error?

CBSA: A clerical error is an inadvertent mistake, generally of an obvious transcription or typographical nature. The CBSA will make this determination on a case-by-case basis when presented with specific information.

6. CSCB: With this structure in place, what is the process with a second audit if the same error is made? What if a different error is made, but in the same program?

CBSA: Where the same error is found, during a subsequent verification, to have been repeated, a second level penalty will apply. The second level penalties will not change and will therefore continue to have a maximum of $200,000. Where a new error is found, a first level penalty will apply, as second level penalties will only be applied to errors previously made that triggered the first level penalty.

Canada-U.S. trade as an election issue
Thursday, November 4th, 2010

The following is from today’s edition of the “Ottawa Citizen”.

The power shift in the U.S. Congress has killed the prospect of a North American carbon cap-and-trade system and will require Canada to be more vigilant than ever against American economic and political pressures — and myths — that threaten open cross-border trade, Canadian politicians and analysts said Wednesday.

Liberal leader Michael Ignatieff and others said the Republican victory in the House of Representatives — which U.S. President Barack Obama conceded spelled the end of his party’s cap-and-trade effort — puts the onus now on Canada to move alone and stop using the Americans as an “excuse for not doing anything on the environment.”

Prime Minister Stephen Harper dismissed Ignatieff’s remark, saying his government is moving on domestic, continental and global fronts on climate change. The Tories had been waiting for the outcome of the U.S. legislative process rather than proceeding with a Canada-only cap-and-trade plan for buying and selling industrial carbon emissions.

Harper defended that in the House of Commons, saying a North American approach was necessary because some industries are integrated across the continent.

Experts noted Obama’s signal that the administration’s battle against carbon now will shift from the legislative to the regulatory front where Democrats are waging battle with Republicans over the U.S. Environmental Protection Agency’s powers over industrial polluters.

“What they can’t do through legislation, the administration will try to do through regulation,” said Colin Robertson, a former Canadian diplomat who specializes in Canada-U.S. affairs.

While the record suggests Republicans are less protectionist than Democrats in terms of traditional trade barriers, Canada has faced a decade of border management issues with the United State that are in some cases, such as clogged border crossings, tantamount to trade barriers.

“For us, the border stuff won’t get any easier as the GOP (Republicans) puts big emphasis on ’security’ and enforcement — it’s a basic piece in the Pledge to America,” said Robertson, citing the frequently resurgent myth, resurrected during the midterm election campaign, that terrorists travel to the U.S. via a porous Canadian border.

Liberal foreign affairs critic Bob Rae says Canada has to guard against more of what was heard during the midterm election campaign, such as “completely ignorant” comments about Canada’s health care system and “completely false” statements about terrorist travel via Canada.

NDP leader Jack Layton said he suspects trade relations will continue to dog the Canada-U.S. relationship. “There is no question across the United States there is a real worry about job loss and about trade deals that produce job loss,” Layton said in an interview. “And NAFTA (North American Free Trade Agreement) has produced considerable challenges in terms of job loss in several key sectors here in Canada.”

He predicted Canada-U.S. trade will emerge as an issue in the run up to the presidential election in 2012, as it did during the campaign that ended with Obama’s election two years ago, and that it also will play a role in the next federal election in Canada.

Canada dollar makes fresh 2-week high, eye on parity
Tuesday, November 2nd, 2010

The following is excerpted from the 2 November 2010 edition of “ca.reuters.com”.

Canada’s dollar hit its highest in more than two weeks against the U.S. currency on Tuesday, putting its sights on parity again, helped by an unexpected interest rate rise in Australia.

But the gains paled in comparison to its commodity cousin, the Australian dollar, which shot above parity to its highest against the U.S. currency since 1983 after a surprise Australian interest rate hike.

At 8:30 a.m. (1230 GMT), the Canadian dollar was at its highest since October 15 at C$1.0081 to the U.S. dollar, or 99.20 U.S. cents, up from C$1.0161 to the U.S. dollar, or 98.42 U.S. cents, at Monday’s close.

Canada’s currency pushed above parity last month but had no staying power, partly because the Bank of Canada’s last policy statement was more dovish than some had expected.

“We’re just a penny shy of parity once again. What’s going to push us over? There’s no shortage of event risks and developments over the next few days that could,” said Eric Lascelles, chief Canada macro strategist, at TD Securities.

This week’s events pose strong potential for market swings as investors will absorb policy decisions from a host of central banks, particularly the U.S. Federal Reserve, which is expected to launch another round of quantitative easing through bond purchases. U.S. midterm elections on Tuesday and U.S. and Canadian monthly jobs data, due Friday, are also key.

In addition, investors will also be keeping an eye on developments in Anglo-Australian miner BHP Billiton’s $39 billion hostile bid to buy Potash Corp., a fertilizer giant and one of Canada’s biggest companies. A successful deal could nudge the Canadian dollar higher as many Canadian shareholders convert their U.S. dollar payouts back to the domestic currency.

Lascelles said parity was a “magical” figure but that TD was not expecting it right away and one key factor may be the details of the Fed’s quantitative easing program.

Markets are generally priced for the U.S. central bank to commit to buying at least $500 billion in Treasury debt over the coming months in a new round of stimulus aimed at shoring up the U.S. economy.

“We’re formally forecasting at least as an opening position more like $300 billion over the first few months. I’m inclined to think that the market could be a little bit disappointed tomorrow with the consequence that the U.S. dollar strengthens and the Canadian dollar doesn’t quite pull off parity. It should be a whippy market,” said Lascelles.

Canadian government bonds were slightly lower, taking a wait-and-see approach similar to U.S. Treasuries as the two-day Fed meeting was to start on Tuesday.

The two-year bond fell 4 Canadian cents to yield 1.431 percent, while the 10-year bond shed 10 Canadian cents to yield 2.851 percent.

Advances for Canada’s trade community at the land border
Monday, November 1st, 2010

The following press release was issued today by CBSA.

The Canada Border Services Agency (CBSA) today announced the implementation of the first stage of the eManifest initiative, a major Crown project that will change the way commercial goods coming into Canada are processed.

As of today, electronic data interchange (EDI) systems are now available for highway carriers who can now transmit their pre-arrival cargo and conveyance data to the CBSA before arriving at the border.

“eManifest is part of the overall measures the CBSA is putting in place to enhance the safety and security of Canadians and international trade while streamlining cross-border processes,” said Cathy Munroe, Vice-President, Programs Branch. “Moving goods quickly, reliably and securely across the border is critical to Canada’s prosperity and economic competitiveness.”

This advance information will allow border services officers to detect potential health, safety and security risks before goods reach Canada. It will also allow low-risk, legitimate goods to cross the border more efficiently.

This first milestone is one of several more to come. In 2011, the CBSA will offer a secure eManifest Portal transmission option that will allow for the electronic transmission of highway carrier data through the Internet. Then later in 2011, eManifest will be offered in the rail mode and then to freight forwarders. Importers in the marine mode may begin transmission of advance trade data in 2012.

When fully implemented, eManifest will be a virtually paperless process that starts before shipments even reach the border.

For more information on eManifest, visit the CBSA Web site at www.cbsa.gc.ca.

Growth resumes in Canada but U.S. woes threaten
Monday, November 1st, 2010

The following is excerpted from the 29 October 2010 edition of “ca.reuters.com”.

Canada’s economic recovery picked up speed again in August after stalling in July, but third-quarter growth is still on track to be the weakest since the rebound began, according to figures released on Friday.

Statistics Canada said gross domestic product climbed 0.3 percent in August, bolstered by wholesale trade, manufacturing and oil and gas extraction. GDP shrank 0.1 percent in July, the first contraction in a year.

The August figure matched the forecasts from a Reuters poll, and supported market expectations that the Bank of Canada will keep its key interest rate on hold through early 2011 after three successive hikes earlier this year.

Canadian Finance Minister Jim Flaherty welcomed the August comeback, but said U.S. housing woes remain a threat, and economists also blamed a weak U.S. economy for the slowdown…

Canada ships three-quarters of its exports to the United States and its autos and timber industries are particularly vulnerable to swings in demand from the next-door giant.

U.S. growth rose an annualized 2 percent in the third quarter, not enough to chip away at high unemployment or change perceptions of more monetary easing from the Federal Reserve next week, U.S. data showed.

The International Monetary Fund had warned on Thursday that risks to Canada’s economic outlook have increased and include housing market weakness in the United States.

It said the government and Bank of Canada should be ready to prime the economic pump if needed, but agreed that current plans to wind down the stimulus program were appropriate now.

The Bank of Canada focuses on inflation rather than growth to set its monetary policy, and there was mixed news on that front on Friday.

Statscan said high demand for precious metals offset the dampening effect of a strong Canadian dollar on motor vehicle exports to lift producer prices in September by 0.2 percent.

But raw materials prices unexpectedly fell 0.4 percent in the month, dragged down by lower crude oil prices.

The Canadian dollar firmed to a session high of C$1.0170 to the U.S. dollar, or 98.33 U.S. cents after the date. It later retreated somewhat, but stayed above Thursday’s close of C$1.0215 to the U.S. dollar, or 97.90 U.S. cents.

The Bank of Canada last week cut its third-quarter projection to an annualized 1.6 percent, from 2.8 percent and economists say that even that may be optimistic…

The central bank hiked rates to 1 percent from June-September before pausing in October. Canada’s primary securities dealers unanimously predict the bank will hold rates unchanged at its next decision on December 7.