Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada Day: Survival Guide For Canada-US Cross Border Travel

Posted in Border Security, Canada's Federal Government, Cross-border trade, Customs Law, Imports Restrictions, NEXUS, Proceeds of Crime/Money Laundering

Canadian parliamentThe Canada Day long week-end will be here soon.  Canadians travel outside Canada to visit friends and family and to shop.  The Canada Border Services Agency (“CBSA”) is on the lookout for contraventions of the Customs Act and other border laws.

Here is our survival guide to make sure the CBSA is happy with your declaration and does not seize your goods, vehicle and/or NEXUS card:

  1. Know about personal exemptions that are permitted by the CBSA.  You still must declare all goods (even if you are entitled to a personal exemption).  Let the CBSA apply the exemption.  Entitlement to an exemption does not mean you do not have to say anything.
  2. Organize your receipts before you arrive at the border. If you have gone shopping, organize all your receipts (that is, all the receipts of all people in the vehicle) together. The most common mistake is forgetting a receipt and under-declaring to the Primary CBSA Officer the value of the goods purchased outside Canada. Another mistake is that Dad does not know all the purchases and understates the value purchased by everybody in the vehicle.  Make sure to add up all of your receipts before you drive to the border – preferably using a written list and a calculator app.  Yes, you may be sent to the cashier — but you will not be delayed by seizure paperwork.
  3. Declare any gifts or things received for free and allocate an amount to those items.  If you took the soaps and coffee from the hotel room, add a small value for these items.
  4. Declare any purchases of alcohol or tobacco products to the Primary CBSA Officer. Canada restricts the number of alcohol and tobacco items that may enter duty-free.  If you are clearing out the cupboards in a cottage or house in the United States, please be careful to count the litres of alcohol before you reach the border and make a proper declaration of volume and value.  We have written an article just on alcohol and tobacco declarations – Alcohol and Tobacco: Two Things That Cause The CBSA To Not Apply Common Sense
  5. Declare goods purchased at the duty free store.  Buying at a duty-free store does not mean the goods are exempt from duties.  Also, the CBSA gets the records of the purchases at the duty-free store because you provide the store your license plate number or name.  The Primary CBSA Officer knows that you purchased duty free when they input your information into their computer.
  6. Remember to convert your added receipts into Canadian dollars.  This is the second most common mistake.  Canadians inform the CBSA officer of the United States (or Euro or other currency) amount and do not adjust the amount upward to reflect foreign exchange.  The CBSA will hold you to the number provided and, if it has not been converted, will take the position that you under-declared the value.
  7. If you shopped at a store in the United States that accepted Canadian dollars at par, be in a position to provide evidence.  The CBSA will default to converting your receipt into Canadian dollars.  The CBSA does not know all the stores that accept Canadian dollars at par.  A photograph of a sign or a note from the store will be necessary to prove to the CBSA that you were allowed to pay using Canadian dollars.
  8. If you have more than $CDN 10,000 in your possession (adding up all the Canadian dollars and all the other currencies converted into Canadian dollars), declare to (that is tell) the Primary CBSA Officer that you have currency over $10,000.  The CBSA takes the position that you have the obligation to inform them even if they do not ask you the question.  If you fail to inform them, the CBSA could seize all of the money and take the position that it is proceeds of crime.  If the CBSA accepts that it is not proceeds of crime, they will impose a penalty for failure to declare the currency in the amount of either $250, $2500 or $5,000.  If you have made this mistake before, the CBSA can seize all of the money and not give it back to you. Do not use the NEXUS lane is you have currency over $CDN 10,000.
  9. Don’t forget to tell the Primary CBSA Officer about any food that you have.  It is best to not bring any food that is not permitted (e.g., fruits, vegetables, dairy, eggs, poultry, etc.). Check to see what food is not allowed – because if you bring it, your travel time will be extended due to the time spent in lines at the border.  The fines are significant for not declaring food.  For example, failure to declare food in Canada is $800.  Before you travel it is best to clean the vehicle in case you have a bag of Cheerios in the back seat.
  10. Don’t forget your children.  The CBSA will want to see the identification for your children travelling with you.  If both parents are not crossing the border with the children (only one parent is with the children), the CBSA may want to see custody documentation or a letter from the other parent that permission has been granted for the children to come to Canada.
  11. Don’t forget to declare your pets in the vehicle.
  12. Make sure that your medications are in prescription bottles or are not restricted in Canada.  Certain medications and health products are prohibited or imports are restricted.  Canadians who shop outside Canada may not be entitled to bring certain medications and/or health products back to Canada or may be limited in the number of pills that may be imported.
  13. If you have a NEXUS Card, but there is at least one person in your vehicle that does not have a NEXUS card, do not use the dedicated NEXUS lane.  The CBSA will take away your NEXUS Card for a breach of the program rules.  We have written an article on when you should not use the NEXUS lane – When Are You Not Permitted To Use The NEXUS Lane
  14. Make sure that if you plan to travel with your NEXUS Card, you also have your passport.  It is a rule of the NEXUS Program.
  15. Make sure that if you travel with your NEXUS Card and plan to use the NEXUS lane, that every NEXUS Card holder has up-to-date information in the CBSA’s computerized records.  If you have received a new driver’s license or passport, you must update the information with the NEXUS program.  You will get pulled over to update the information if this has not been done.  To avoid delays, update the information online before traveling.
  16. If you have commercial goods in the vehicle, do not use the NEXUS lane.  It is a breach of the NEXUS Program rules to use a NEXUS lane when you have commercial goods (that is, goods for your business).
  17. If you have teenagers, have the talk with them about drugs.  It is really embarrassing and is a negative event if your child is arrested at the border.  The rule must be that they not bring any drugs and that they look in their pockets (clothing and bags) to make sure that drugs are not being transported across the border.
  18. If you are visiting Canada, declare to the Primary CBSA Officer all goods you plan to leave/use in Canada.  If you are bringing gifts for your host or a friend, you must declare them.  If you are bringing food or alcohol you plan to consume in Canada, declare it.
  19. Be truthful.  The CBSA Primary and Secondary CBSA Officer may ask unexpected questions.  Rather than be offended by the question, just answer the questions truthfully.  The examination may take longer if you argue with the CBSA officer about the questions they are asking.
  20. Know that the CBSA can examine laptops, smart phones, iPhones, etc. The CBSA can ask for your passwords.  See Can the CBSA Ask For Passwords? Don’t bring your electronic devices if you do not want the CBSA to look at the contents of your harddrive or emails or social media history.
  21. The CBSA are not very sympathetic.  Their view is that everyone must get in the long line up.  Cutting if you use the NEXUS lane and do not have NEXUS membership, you will be sent to Secondary Inspection and your visit with the CBSA will be lengthened.  It would have been a lot shorter to use the long line up.

There are many other mistakes that could be listed – these are the most common.  Hope you have happy travels and let the other people spend time in the CBSA’s Secondary Inspection Area.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at Alternatively, visit

Importers Must Pay Customs Assessments In Canada To Perfect Appeal

Posted in Canada's Federal Government, Cross-border trade, Customs Law, origin, tariff classification, valuation

Customs Building (XL)We were asked recently whether a non-resident importer could ignore paying a Canadian customs detailed adjustment statement (“DAS”) and continue to import goods into Canada (just thumb their noses up at the Canadian government). The answer provided is that a non-resident importer (and a Canadian resident importer) should not consider something so foolish.  Under Canadian law, the Canada Border Services Agency (“CBSA”) may detain imported goods if the importer has an unpaid debt for previous imports, may seize the goods, and sell the goods if the debt remains unpaid.  Simply put, the importer could lose import privileges if they do not pay a DAS.  Consequently, the answer to the question is that importers should pay the amount of any DAS or enter into a payment arrangement with the CBSA (and the Canada Revenue Agency (“CRA”) which is the Canadian governmental authority that collects such amounts).  Based on our experience, the CBSA/CRA usually ask for payments to be made in full within 6 months, but we have negotiated payment arrangements over longer periods of time.

We were then asked if an importer could file a customs appeal (called a request for re-determination) for a tariff classification, origin or valuation issue without paying the amount of the DAS.  The answer to that question is also “No”.  Subsection 60(1) of the Customs Act provides as follows:

“A person to whom notice is given under subsection 59(2) in respect of goods may, within ninety days after the notice is given, request a re-determination or further re-determination of origin, tariff classification, value for duty or marking. The request may be made only after all amounts owing as duties and interest in respect of the goods are paid or security satisfactory to the Minister is given in respect of the total amount owing.”

What this means is that an importer (or other person entitled to file a request for re-determination) must pay the amount of any DAS in full or enter into a payment arrangement with the CBSA/CRA in order to perfect the appeal. If the amount is not paid within 90 days of the date of the DAS, the request for re-determination will be rejected.  We have seen the CBSA return the DAS in the mail when payment had not been made (in this case, the importer strategically paid one DAS in full to perfect an appeal and could not afford to pay all the DASs).

We were then asked if the importer could decide later (after the 90 day request for re-determination deadline) whether to pay the amount of the DAS.  This happens all the time.  The CBSA takes collections actions and detains new imports by the importer.  At this time, the importer realizes the importance of paying the DAS. The payment of the DAS gets paid so that the CBSA will allow future imports (and Canadian customers who have ordered and paid for goods can receive those goods).

However, this wait-and-see approach has a risk.  When the importer is past the 90 day deadline for the request for re-determination, the importer may not be able to challenge the merits of the assessment (and recover the amount paid) without seeking an extension of time to file the request for re-determination.  Pursuant to section 60.1 of the Customs Act, the importer may seek an extension of time from the President of the CBSA.  The President has discretion to grant an extension of time (but it is not granted as of right). Subsection 60.1(4) of the Customs Act sets out the conditions that the requester must satisfy:

“No application may be granted unless:

(a) the application is made within one year after the expiry of the time set out in section 60; and

(b) the person making the application demonstrates that:

(i) within the time set out in section 60, the person was unable to act or to give a mandate to act in the person’s name or the person had a bona fide intention to make a request,

(ii) it would be just and equitable to grant the application, and

(iii) the application was made as soon as circumstances permitted.”

The President will not accept as a valid reason for the delay in filing the request for re-determination that the importer did not want to pay the DAS. Such a reason would not demonstrate a bona fide intention to make the request.  The President may accept that the person needed time to raise the money to pay the DAS, but would have to provide evidence of attempts to raise the money before the 90 day deadline expired.

It is important to note that any amount of customs duties imposed under the Customs Act or assessed by way of a DAS as owning is a debt due to Her Majesty.  The CBSA may take collection action under the Customs Act and/or the Customs Tariff for such customs duties (and other Canadian import taxes, duties, levies, charges, etc.) debts.

For more information about Canada’s customs laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or at  More information may be found on the LexSage website, such as:

What is a Detailed Adjustment Statement?

How to file a Customs Origin Appeal in Canada

How to file a Customs Valuation Appeal In Canada


Global Affairs Canada Tables 2016 Annual Report on Exports In House of Commons

Posted in Aerospace & Defence, Border Security, Canada's Federal Government, Corporate Counsel, Export Controls & Economic Sanctions, Imports Restrictions

chessOn June 20, 2017, Hon. Diane Lebouthiller (Minister of National Revenue) tabled (see page 13032 of Hansard) the 2016 Annual Report to Parliament on the Administration of the Export and Import Permits Act (the “2016 Annual Export Controls Report”)  The Report is required under Standing Order 32(2) and section 27 of the Export and Import Permits Act, which provides that:

“As soon as practicable after December 31 of each year, the Minister shall prepare and lay before Parliament a report of the operations under this Act for that year.”

The 2016 Annual Export Controls Report is full of interesting information for export controls compliance managers and in-house counsel.  Some of the more interesting facts and figures and statistics are:

  • In 2016, Global Affairs Canada issued 48,100 import permits relating to controlled goods;
  • In 2016, Global Affairs Canada rejected 5,051 import permits;
  • In 2016, Global Affairs Canada cancelled 3,025 import permits (however, most of the cancellations related to amendments to permit details rather than non-compliance with the terms of the permits);
  • In 2016, Global Affairs Canada issued 1,910 international import certificate letters and 399 delivery verification letters;
  • In 2016, Global Affairs Canada issued 275,568 export permits relating to non-strategic exports (softwood lumber, logs, clothing and textiles, and agricultural products);
  • In 2016, Global Affairs Canada rejected 4,226 export permits relating to non-strategic exports;
  • In 2016, Global Affairs Canada cancelled 11,192 export permits relating to non-strategic exports;
  • In 2016, Global Affairs Canada issued 5,978 export permits relating to military, dual-use and strategic goods (with 348 returned without action, 522 withdrawn and 7 denied);
  • In 2016, the majority of strategic export permits were issued for munitions (3,203) and dual-use goods (1,824), goods and technology (222) and other (277);
  • The top 12 destinations for strategic goods are the United Kingdom (11.4%), Germany (7.3%), France (5.9%), China (4.6%), South Africa (4.5%), Israel (4.5%), Australia (4.0%), the United States (3.5%), Japan (3.3%), South Korea (3.1%), India (2.4%) and Netherlands (2.2%);
  • In 2016, 127 permits were issued for shipments of goods to Belarus and 5 permits were issued for shipments of goods to North Korea;
  • In 2016, the Export Controls Division responded to 20 formal requests for investigation support relating to export control enforcement actions;
  • In 2016, the Canada Border Services Agency (“CBSA”) referred 232 detentions to Global Affairs Canada;
  • In 2016, the Export Controls Division received 32 voluntary disclosures of possible export controls violations from Canadian exporters; and
  • In 2016, approximately 100-140 verification exercises were undertaken.

This information is important because it informs of the activities of Global Affairs.  The Export Controls Division is very secretive as is the CBSA.  The fact that there were 32 voluntary disclosures means that voluntary reporting of violations does occur in Canada (many think that there is no process – when there is).  The number of referrals means that the CBSA is active in monitoring exports and will detain goods when there is no export permit and the CBSA thinks the goods might be controlled or subject to Canadian sanctions.  Compliance managers should report the annual statistics to management in support of a robust export controls compliance program and annual internal compliance checks.

For more information about Canada’s export controls laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or at More information about Canada’s export controls laws may be found on the LexSage website.


Canada’s Standing Committee On Foreign Affairs And International Development Amends Canada’s Magnitsky Act

Posted in Export Controls & Economic Sanctions

Gavel and Scales of JusticeCanada’s Magnitsky Act is not yet law.  Bill S-226 “Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law)” started as a Senate bill and has passed third reading in Canada’s Senate on April  11, 2017. On April 13, 2017, Bill S-226 passed first reading in Canada’s House of Commons and passed second reading on June 13, 2016.  Bill S-226 was sent for Committee review.

The review is complete.  On June 22, 2017, Canada’s Standing Committee on Foreign Affairs and International Development unanimously agreed to report the Bill S-226 “Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law)” back to the House of Commons with amendments.  The Standing Committee issued the following press release:

“Today, the House of Commons Standing Committee on Foreign Affairs and International Development examined Bill S-226, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), and unanimously agreed to report the bill back to the House of Commons with amendments.

The purpose of Bill S-226 is to provide the government with the authority to impose sanctions against foreign nationals who have committed gross violations of internationally recognized human rights or “acts of significant corruption.” The bill also proposes related amendments to the Special Economic Measures Act and the Immigration and Refugee Protection Act, including making those targeted by the new sanctions inadmissible to Canada.

As part of its clause-by-clause consideration of Bill S-226, the Committee agreed to several technical amendments aimed at strengthening, among other things, the sections of the bill related to criminal offences for sanctions violations and due process for persons subject to sanctions measures.

The Committee’s consideration of Bill S-226 follows on the release of its recent report, A Coherent and Effective Approach to Canada’s Sanctions Regimes: Sergei Magnitsky and Beyond. That report was the culmination of the Committee’s statutory review of the Freezing Assets of Corrupt Foreign Officials Act and the Special Economic Measures Act.

The full text of the Committee’s report relating to its clause-by-clause consideration of Bill S-226 is available on its website.”

The Committee Report contains a number of amendments, which will be incorporated into the next draft of Bill S-226.  The good news is that the Committee does not gut the effectiveness of Bill S-226.  One change is the addition of “foreign public official” into the definitions section and the definition is tied to section 2 of the Corruption of Foreign Public Officials Act.  The definition of “property” is removed from the definition section and section 2(2) is deleted.  Section 4(1) is amended such that the Governor in Council must form an “opinion that any of the circumstances described in subsection (2) has occurred” rather than being satisfied based on evidence. Clause 4(2)(ii)(c) is amended such that foreign nationals and “associates of such an official” are covered rather than “senior associates”.  Other amendments are made to strengthen the language clause 4(2)(ii)(c).  Paragraph 4(4)(c) is amended to remove “related services in respect of property of the foreign national” and add “other services to, for the benefit of or on the direction of order of the foreign national”.  New paragraphs 4(4)(d) and (e) are added:

(d) the acquisition by any person in Canada or Canadian outside Canada of financial services or any other services for the benefit of or on the direction or order of the foreign national; and

(e) the making available by any person in Canada or Canadian outside Canada of any property, wherever situated, to the foreign national or to a person acting on behalf of the foreign national.”

New subsections (5), (6) and (7) are added (but misidentified as (4), (5) and (6)):

(4) The Governor in Council may, by order, authorize the Minister to

(a) issue to any person in Canada or Canadian outside Canada a permit to carry out a specified activity or transaction, or class of activity or transaction, that is restricted or prohibited under this Act or any order or regulations made under this Act; or

(b) issue a general permit allowing any person in Canada or Canadian outside Canada to carry out a class of activity or transaction that is restricted or prohibited under this Act or any order or regulations made under this Act.

(5) The Minister may issue a permit or general permit, subject to any terms and conditions that are, in the opinion of the Minister, consistent with this Act and any order or regulations made under this Act.

(6) The Minister may amend, suspend, revoke or reinstate any permit or general permit issued by the Minister. ”

Section 5 is deleted with respect to duration.

A new disclosure provision is added as section 7.1:


7.1  (1)  Every entity referred to in section 7 must disclose, every month, to the principal agency or body that supervises or regulates it under federal or provincial law, whether it is in possession or control of any property referred to in that section and, if so, the number of persons or dealings involved and the total value of the property.

(2)  Every person in Canada and every Canadian outside Canada must disclose without delay to the Commissioner of the Royal Canadian Mounted Police or the Director of the Canadian Security Intelligence Service

(a)  that they have reason to believe that property in their possession or control is owned, held or controlled by or on behalf of a foreign national who is the subject of an order or regulation made under section 4; and

(b)  any information about a transaction or proposed transaction in respect of property referred to in paragraph (a).

(3)  No proceedings under this Act and no civil proceedings lie against a person for a disclosure made in good faith under subsection (1) or (2).”

Section 8 is amended:

“Rights of Foreign Nationals Who are the Subject of an Order or Regulation

8 (1) A foreign national who is the subject of an order or regulation made under section 4 may apply in writing to the Minister to cease being the subject of the order or regulation.

(2) On receipt of the application, the Minister must decide whether there are reasonable grounds to recommend to the Governor in Council that the order or regulation be amended or repealed, as the case may be, so that the applicant ceases to be the subject of it.

(3) The Minister must make a decision on the application within 90 days after the day on which the application is received.

(4) The Minister must give notice without delay to the applicant of any decision to reject the application.

(5) If there has been a material change in the applicant’s circumstances since their last application under subsection (1) was submitted, he or she may submit another application.”

Section 9 is amended:

“9 (1) Any person in Canada or any Canadian outside Canada whose name is the same as or similar to the name of a foreign national who is the subject of an order or regulation made under section 4 may, if they claim not to be that foreign national, apply to the Minister in writing for a certificate stating that they are not that foreign national.

(2) Within 45 days after the day on which the application was received, the Minister must,

(a) if he or she is satisfied that the applicant is not the foreign national, issue the certificate to the applicant; or

(b) if he or she is not so satisfied, provide a notice to the applicant of his or her determination.”

New Section 10.1 is an offence provision that adds more teeth to the bill:


10.1  Every person who knowingly contravenes or fails to comply with an order or regulation made under section 4

(a)  is guilty of an indictable offence and is liable to imprisonment for a term of not more than five years; or

(b)  is guilty of an offence punishable on summary conviction and is liable to a fine of not more than $25,000 or to imprisonment for a term of not more than one year, or to both.”

Paragraphs 16(2)(c) and (d) are amended and replaced with the following:

“(c) gross and systematic human rights violations have been committed in a foreign state; or

(d) a national of a foreign state who is either a foreign public official, within the meaning of section 2 of the Corruption of Foreign Public Officials Act, or an associate of such an official, is responsible for or complicit in ordering, controlling or otherwise directing acts of corruption — including bribery, the misappropriation of private or public assets for personal gain, the transfer of the proceeds of corruption to foreign states or any act of corruption related to expropriation, government contracts or the extraction of natural resources — which amount to acts of significant corruption when taking into consideration, among other things, their impact, the amounts involved, the foreign national’s influence or position of authority or the complicity of the government of the foreign state in question in the acts.”

There are a few other amendments.

The amendments made by the Standing Committee on Foreign Affairs and International Development are important and significant and create a more powerful sanctions tool. Bill S-226, when passed, will have a significant impact on Canada’s economic sanctions laws.   Bill S-226 is not an anti-Russia law, it’s coverage includes Iran, Syria, Sudan and other countries.  Arguably, Canada could list members of China’s government for the purposes of imposing economic sanctions or freezing assets.

Canada’s House of Commons has risen for summer recess – that means the MPs (Members of Parliament) are home in their ridings.  The next step is third reading and Royal Assent.  The MPs must be recalled to pass Bill S-226 at third reading or we will have to wait until September.  It will be seen whether these changes will be accepted by the Hose of Commons at third reading and the Senate (where the Bill was initially tabled).  My guess is that the amendments will be accepted.

When the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) receives Royal Assent, Canadian corporate counsel will need to consider its implications. Corporations must add to their compliance programs the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) and to risk assessment criteria, human rights violations.  Canadian companies engage in business in many countries with human rights abuses. We can no longer turn a blind eye to these abuses while seeking rewards in foreign nations. 

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or Heather Innes at 416-350-1234 or at or



Can Canadian Importers Claim CETA Preferential Tariff Treatment If Goods Are Transshipped?

Posted in Canada-EU CETA

globe and calculatorOne question we have been asked is whether Canadian importers will be able to claim Canada-EU CETA duty-free tariff treatment if the EU-origin goods are imported into Canada from the United States or some other non-EU country after provisional implementation of the Canada-EU CETA.  It is common for Canadian importers to purchase from distributors in the United States (and other countries).  It is also very common for United States companies to arrange for contract manufacturers (OEMs) in the European Union to manufacture goods that will have the U.S. company logo and to maintain an inventory of those EU-origin goods in the United States.

The answer to the question “Will Canadian importers be able to claim Canada-EU CETA duty-free tariff treatment if the EU-origin goods are imported into Canada from the United States or some other non-EU country after provisional implementation of the Canada-EU CETA?” is maybe.

To which countries may Canadian exporters sell CETA goods?

Canadian importers may benefit from the Canada-EU CETA duty relief commitments made in respect of imports originating in the 28 European Union countries, which are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

What Are the Rules?

As a general rule, EU-origin goods must be shipped directly from an EU Member to receive Canada-EU CETA preferential tariff treatment. There are a number of fields on the B3 Canada Customs Coding Form that communicate information about the place of direct shipment and the country of origin.

An exception to the general rule is contained in Article 14 of the Protocol on rules of origin and origin procedures, which permits certain transshipment.  Article 14 provides that:

1. A product that has undergone production that satisfies the requirements of Article 2 shall be considered originating only if, subsequent to that production, the product;

(a) does not undergo further production or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the product to the territory of a Party; and

(b) remains under customs control while outside the territories of the Parties.

2. The storage of products and shipments or the splitting of shipments may take place where carried out under the responsibility of the exporter or of a subsequent holder of the products and the products remain under customs control in the country or countries of transit.

What this means is that if EU-origin goods are maintained by a U.S. distributor in a bonded warehouse, they may be able to enter Canada duty-free under the Canada-EU CETA.

What Are the Documentary Requirements?

Canadian importers of EU-origin goods must have an origin declaration.  There isn’t a certificate of origin like in NAFTA.  However, there is a certification requirement.  Annex 2 of the Protocol on rules of origin and origin procedures sets out the language to be used in the certification of origin.

It will be very important to verify that the U.S. or other non-EU warehouse was a customs bonded warehouse and that the EU-origin goods were imported into that warehouse and maintained in that warehouse while outside the EU.  It will be important to obtain a certification from the vendor of the goods.  If this evidence is not available to provide to the Canada Border Services Agency, CETA tariff treatment may be denied.

Provisional Implementation Date

We do not yet know the provisional implementation date – it is expected to be July 1, 2017 – but there are signs provisional implementation may be delayed.  Preferential Canada-EU CETA tariff rates cannot be claimed until provisional implementation.

For more information about the Canada-EU CETA, please contact 416-307-4168 or We have posted more information about the Canada-EU CETA on the LexSage website.

What Does The CBSA Review During A Customs Valuation Verification?

Posted in AMPs, Customs Law, valuation

3d human with a red question mark

Canadian importers (especially non-resident importers and those related to a foreign entity) may, someday, be contacted by the Canada Border Services Agency (“CBSA”) to conduct a customs valuation verification.  Current CBSA valuation verification priorities include apparel (Chapters 61 and 62) and food preparations and pastrycook’s products (Chapter 19).  In January 2017,  the CBSA announced that footwear, fresh-cut flowers and yachts for pleasure use were 2017 valuation verification priorities.

A CBSA valuation verification usually starts with a letter from the CBSA.  In this letter, the CBSA requests general information, specific information relating to identified transactions and for completion of a valuation questionnaire.

General Information Usually Requested

The general information often requested includes, but is not limited to:

  • Corporate income tax return of the importer (T2) and all related attachments;
  • Audited or unaudited financial statements;
  • Corporate organization chart that identifies the corporate structure, ownership, affiliates and divisions;
  • A list of all vendors;
  • A detailed trial balance, including opening and closing balances; and
  • Breakdown of the cost of goods sold reported on the financial statements into the individual accounts.

It is important to understand exactly what information the CBSA is looking for and where it is often located.  These documents contain valuable information about the transactions.  The CBSA will be looking at the general ledger accounts for inter-company payments, management fees, subsequent proceeds, royalties, assists, commissions, etc.  The CBSA will be looking for additional payments made in respect of the imported goods that have not been reported to the CBSA in the form of B2 Adjustment Requests.  The CBSA will be looking for information/facts as to whether a relationship affects the price paid or payable for goods such that the transaction value method becomes inapplicable.

Specific Information

The CBSA often provides a list of specific import transactions (identifying randomly selected transaction numbers) and requests that the importer provide the following with respect to those transactions:

  • Canada Customs Coding Form (B3);
  • B3 Recap Sheets;
  • Customs Commercial Invoice;
  • Invoice(s) from exporter(s);
  • Bills of Lading;
  • Packing Lists;
  • Freight invoices, waybills; air waybills, manifests, etc;
  • Purchase Order(s);
  • Import Permits (if applicable);
  • Proof of payment to vendor; and
  • Print screens from accounting records of the purchase and payment accounting entries.

This information is requested by the CBSA so that they can identify the parties involved and who paid for what.  These documents contain important information.

CBSA Valuation Questionnaire

The CBSA sends a Valuation Questionnaire to be completed by the importer under verification.  The Valuation Questionnaire asks the following questions:

  1. Were the imported goods sold for export to Canada?
  2. Who was the purchaser in Canada?
  3. If you were the purchaser in Canada, [how do you satisfy the definition of purchaser in Canada]?
  4. Describe the procurement process (ordering, receiving and payment) Please explain how the purchase and payment of the goods was recorded in the accounting records?
  5. Was an advance payment made in respect of the imported goods?
  6. Was a rebate or any other decrease in price effected in respect of the imported goods?
  7. Was the purchaser in Canada related to its foreign vendor?
  8. Was the price of the imported goods subject to an adjustment?
  9. Did the related foreign vendor charge a management fee?
  10. Were commissions or brokerage fees incurred by the purchaser in Canada in respect of the imported goods?
  11. Were those fees paid or payable by the purchaser in Canada to his agent for the service of representing it abroad?
  12. Were packing costs incurred by the purchaser in respect of the imported goods?
  13. Were materials, components, parts and other goods incorporated in imported goods supplied free of charge or at a reduced cost by the purchaser in Canada for use in connection with the production and sale for export of the imported goods?
  14. Were tools, dies, moulds and other goods utilized in the production of imported goods supplied free of charge or at a reduced cost by the purchaser in Canada for use in connection with the production and sale for export of the imported goods?
  15. Were materials consumed in the production of the imported goods supplied free of charge or at a reduced cost by the purchaser in Canada for use in connection with the production and sale for export of the imported goods?
  16. Were engineering, development work, artwork, design work, plans and sketches undertaken elsewhere than in Canada and necessary for the production of imported goods, supplied free of charge or at a reduced cost by the purchaser in Canada for use in connection with the production and sale for export of the imported goods?
  17. Were royalties or licence fees incurred by the purchaser in Canada in respect of the imported goods?
  18. Have any proceeds from the subsequent resale, disposal, or use of the imported goods by the purchaser in Canada accrued to the vendor?
  19. Were transportation and associated costs, related to the transportation of the goods to the place within the country of export from which the goods are directly shipped to Canada incurred by the purchaser in Canada in respect of the imported goods?
  20. Was a deduction from the price paid or payable of the imported goods made for the transportation and associated costs, related to the transportation of the goods from the place within the country of export from which the goods were directly shipped to Canada?
  21. Was a deduction from the price paid or payable of the imported goods made for any reasonable cost, charge, or expense that was incurred for the corporation, erection, assembly or maintenance of the goods, after the goods were imported?
  22. Was a deduction from the price paid or payable of the imported goods made for any reasonable cost, charge, or expense that was incurred for technical assistance provided in respect of the goods, after the goods are imported?
  23. Was a deduction from price paid or payable of the imported goods made for any duties and taxes paid or payable by reason of the importation of the goods or sale of the goods in Canada?

These questions mirror Canada’s legislation and require an understanding of Canadian law and the CBSA D-Memorandum in order to answer them correctly. Care must be taken when answering the CBSA questions as an incorrect answer can lead the CBSA to conclude that goods are undervalued and wish to conduct a full on-site verification.  The verification may end in a requirement to self-adjust and file B2 Adjustments for one or more years.  This could lead to a significant detailed adjustment statement and administrative monetary penalties (“AMPs”).  It is better to help the CBSA get the right answer rather than having to file a valuation appeal.

Penalties For Failure To Provide Requested Information

It is important to know that the CBSA may issue AMPs penalties if the information is not provided within the time period specified by the CBSA in the request letter.  As a result, it is important to seek assistance as early as possible. The most commonly identified AMPS penalty by the CBSA is C157 “failed to make records and documents in respect of goods available to the CBSA”.

For more information about Canada’s customs laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or at  More information about Canada’s customs laws can be found on the LexSage website.

How Can I Get My NEXUS Card Back When It is Cancelled/Confiscated By The CBSA?

Posted in Agriculture, Border Security, Canada's Federal Government, Cross-border trade, Currency Reporting, Customs Law, NEXUS

Fountain pen on appeal

The Canada Border Services Agency (“CBSA”) may confiscate, revoke or cancel a NEXUS Membership for a number of reasons, such as (1) a breach of a customs law (e.g., undervaluation or not declaring goods purchased or acquired outside Canada), (2) a breach of an immigration law (e.g., working in Canada without a proper visa), (3) a breach of a NEXUS Program rule (e.g., using the NEXUS lane with a person in the vehicle without NEXUS approval, having commercial goods in a vehicle when you used the NEXUS lane, failure to update information of your NEXUS file after a new passport is issued or you have moved, etc.), (4) a determination of ineligibility (e.g., criminal charges are laid), or (5) a determination that the information of a NEXUS application or renewal is false (e.g., no mention of a past customs violation).

NEXUS Card holders may discover that a “disagreement” with the CBSA upon re-entering Canada results in the immediate (on the spot) confiscation of their NEXUS Membership Card or they may receive a letter in the mail after the fact informing that their NEXUS privileges have been cancelled and they can no longer use their NEXUS Card.

A NEXUS Card is a valuable asset to a business traveler and a desired benefit for a frequent traveler. When a NEXUS Card is cancelled unfairly, the aggrieved individual should appeal.  We have helped many people convince the CBSA to reinstate their NEXUS privileges when the CBSA was wrong to end their participation in the NEXUS Program.

An informal and administrative appeal process (called a “review”) has been established in Canada — but it is not a quick process. As a result, until the review is completed and the CBSA reinstates and returns a person’s NEXUS Card, the business person/individual/traveler must use the snail lines (instead of the fast  NEXUS automated kiosks).

If your NEXUS pass is confiscated or cancelled by the CBSA.  Americans (and U.S. residents) and Canadians (and Canadian residents) are entitled to utilize the regulatory review process contained in the Presentation of Persons (2003) Regulations. According to section 23 of the Regulations, a person must file the request for review within 30 days.  However, the CBSA has administratively permitted an extension of that time period to 90 days.  The NEXUS cancellation letters attach a notification of the administrative adjustment, which was made because the limitation period for a request for a decision of a seizure under section 129 of the Customs Act is 90 days. If the letter is silent, there was an administrative statement by the CBSA.  If you cannot locate it, make sure to file your request for review as quickly as possible.

To request a review, the person whose NEXUS Membership was cancelled writes (or asks knowledgeable counsel to write) a letter to the NEXUS Program via the Recourse Directorate. This letter must include a date of birth, NEXUS Membership Number, passport number or other information to permit the CBSA NEXUS Program to identify the traveler. Can you image how difficult it would be for the CBSA to find the information about John Smith if a NEXUS Membership Number of a specific unhappy John Smith is not provided?

What NEXUS pass holders are not told is that when the NEXUS Membership is cancelled due to a customs infraction or failure to declare currency, they MUST appeal the merits of the “disagreement” (for example, the under-declaration of goods acquired outside Canada) before the CBSA will restate the NEXUS privileges.  The CBSA  Recourse Directorate must decide that the contravention was not warranted before they will even consider the NEXUS request for a review.  There is a statutory scheme for appeals of enforcement actions taken by the CBSA at the border. This process takes time. The appeal on valuation, classification and/or origin issues (called a “request for re-determination”) is filed with the CBSA Recourse Directorate. Generally speaking, the CBSA Recourse Directorate appeal process is objective.

We recently have had a number of successes appealing CBSA enforcement actions taken at the border, such as:

  • CBSA accusations that the traveler undervaluation of goods purchased or acquired outside Canada;
  • CBSA accusations that a traveler failed to declare goods acquired or received outside Canada;
  • CBSA accusations that a traveler failed to declare a luxury purse purchased on a previous trip outside Canada and that had been previously undeclared upon return to Canada;
  • CBSA accusations that a U.S traveler to Canada failed to declare goods to be left in Canada;
  • CBSA accusations that the traveler presented a false invoice;
  • CBSA accusations that a traveler should have declared alcohol purchased at a Canadian duty free store prior to travel to the United States that are returned to Canada;
  • CBSA accusations that a traveler was not within his/her exemption for cigarettes or alcohol and failed to check the appropriate box;
  • CBSA accusations that a traveler failed to check the right box to declare a pet;
  • CBSA accusations that a traveler failed to declare restricted food products;
  • CBSA accusations that a traveler failed to report currency over $CDN 10,000;
  • CBSA accusations that a person failed to provide truthful information to the CBSA.

Where the appeal has merit, the CBSA Recourse Directorate is generally fair.

If the CBSA confiscates a NEXUS Card on the basis of the above infractions or similar accusations, it is important to file 2 appeals. One appeal is filed with the NEXUS Program and is in respect of the cancellation of the NEXUS privileges. The second appeal is the appeal on the merits of the customs infraction. Consideration of the NEXUS review will be deferred until after the appeal on the merits of the customs enforcement action.

The appeal must set out the facts, details concerning the dispute and the reasons for the appeal. The appeal should include any and all relevant documents concerning the “disagreement”.  Evidence is important.  For example, if the CBSA has accused the traveler of not declaring goods on a previous occasion, evidence of the prior importation and declaration of the goods is important.  This is why individuals should keep receipts and all Casual Goods Accounting Documents (a CBSA document provided by the CBSA cashier after payment) showing payment to the CBSA.  What evidence is relevant depends upon the reasons for the NEXUS confiscation.

What you write in a NEXUS request for a review and the appeal of the underlying infraction is very important.  How you present your version of the events is important.  The seizing officer (that is the CBSA Officer who took the enforcement action against you) will get a copy of your appeal letter and will be allowed to provide comments and additional evidence.  So, what is written, how it is written, the words chosen, the tone of the letter, etc. are all very important.

After the appeals are filed, the CBSA, Recourse Directorate will send a copy of the CBSA Officer’s notes on the day in question relating to the “disagreement”. The CBSA, Recourse Directorate will give you 30 days to file additional information after receiving the notes. If your letter of appeal is very divergent from the CBSA Officer’s version of the events, you will have a problem in explaining those differences.

We have noticed that the CBSA Officer’s notes on the day of the “disagreement” may be brief and may be open to interpretation. In some cases, the notes are straight-forward. In some cases the CBSA Officer’s notes are brief and at other times the notes can be a number of pages.  In some cases the CBSA Officer’s notes support the travelers version of the events.  At other times, the CBSA Officer’s version is very different (and they are not always accurate).  In some cases the CBSA Officer makes errors in the notes, which can be used to overturn the enforcement action.  If the CBSA Recourse Directorate cannot tell from the CBSA Officer’s notes what happened, the benefit of the doubt will be given to the traveler. We have successfully presented the facts in the original letter that are accepted by the Recourse Directorate where the CBSA Officer’s notes are much less clear.  In many cases, the decision comes down to the CBSA Officer’s notes and the additional evidence presented in the appeal letter.

You will have the opportunity to provide comments concerning the contents of the CBSA Officer’s notes.  You may need to ask for additional documents from the CBSA.  Every case is different and there is not a form letter response.  It is important to respond to CBSA Officer’s notes if there is something important to point out to the Recourse Directorate..  Not responding can result in the CBSA Recourse Directorate making an unfavourable decision that the enforcement action was warranted. We have seen many situations where individuals appeal without assistance and not properly respond to correspondence from the CBSA Recourse Directorate in a timely manner.

If the CBSA Recourse Directorate decides that the enforment action is warranted, you will have to file two legal proceedings with the Federal Court:

  1. A notice of application for judicial review of the NEXUS Membership Cancellation within 30 days of the CBSA Recourse Directorate letter; and
  2. A notice of action appealing the merits of the enforcement action.

These are expensive and long processes that could result in the judge awarding costs against you.  Therefore, it is important to present your best case from the start in the request for re-determination/request for decision and the request for a review.


It is not a simple and quick process to appeal a confiscation of a NEXUS pass. If you require assistance from a lawyer because the NEXUS privileges are important to you, please contact Cyndee Todgham Cherniak at 416-307-4168. More information about NEXUS confiscations and appeals is posted on the LexSage website.  Also review our Guidance on “What Can I Do If My NEXUS Card Is Confiscated By The CBSA“.

Compliance Confusion !!!!

Posted in Corporate Counsel, Cross-border deals, Cross-border trade, Customs Law, Export Controls & Economic Sanctions, Exports, Legal Developments

Originally published by the Journal of Commerce in June 2017

Even in the current environment, there remains massive confusion about what is and is not permitted under U.S. law when it comes to trading with Cuba and Iran.  The President is expected in the next few days to reverse some of the openings created by President Obama regarding Cuba, but American exporters are still not clear. They think trade with Cuba is permitted. They think trade with Iran is permitted.  It is not, expect in very limited circumstances.  Nonetheless, at a time when so much of the focus by international compliance professionals is on the import side, export issues should not get lost in the shuffle.

Clearly, there is much well-deserved attention to what is hoped to be the soon to occur final roll-out of the originally planned Automated Commercial Environment or ACE features. Even so, questions abound regarding what features/upgrades will follow and how long they will take to reach implementation.

In the produce industry, compliance professionals are still yanking their hair out in clumps while continuing to sort out the newly effective Foreign Supplier Verification Program (“FSVP”) which took effect on May 30, 2017. Is their food subject to the Preventive Control regulations? The Produce Safety rule? How do they interact with their recalcitrant supply chain partners? How long will “UNK” be accepted before FDA and CBP cut off that option as evidence of non-compliance?

It remains a surprise that, with all the effort made by the customs brokers to get their importers ready, our firm is still receiving calls from food importers who do not understand the difference between importer of record for entry purposes and FSVP importer of record.  Perhaps even more concerning are calls from those food importers who have not taken the first step to implement the new requirements!

Even though much on the FDA website is confusing, one thing FDA has done well is its efforts surrounding FSVP implementation. Here is a link to a graphic depiction the agency has published about which products are subject to the FSVP rules and the relevant timelines – Further compounding the confusion is the Produce Safety rule which deals with the controls that apply to raw agricultural products. The Produce Safety rule itself seems relatively straight forward, but questions abound here, too, when it comes to how to define something that is not a raw agricultural product.  For example, if one freezes berries and then imports them, are those berries subject to the FSVP or the Produce Safety Rule?

Just as with the FSVP rules, the Produce Safety Rule also includes exceptions:

1)         Produce that is not a raw agricultural commodity (A raw agricultural commodity is any food in its raw or natural state);

2)         Commodities that FDA has identified as rarely consumed raw: asparagus; black beans, great Northern beans, kidney beans, lima beans, navy beans, and pinto beans; garden beets (roots and tops) and sugar beets; cashews; sour cherries; chickpeas; cocoa beans; coffee beans; collards; sweet corn; cranberries; dates; dill (seeds and weed); eggplants; figs; horseradish; hazelnuts; lentils; okra; peanuts; pecans; peppermint; potatoes; pumpkins; winter squash; sweet potatoes; and water chestnuts;

3)         Food grains, including barley, dent- or flint-corn, sorghum, oats, rice, rye, wheat, amaranth, quinoa, buckwheat, and oilseeds (e.g., cotton seed, flax seed, rapeseed, soybean, and sunflower seed);

4)         Produce that is used for personal or on-farm consumption; and

5)         Farms that have an average annual value of produce sold during the previous three-year period of $25,000 or less.

In the midst of this somewhat understandable chaos, OFAC has announced imposition of an $87,255 fine on American Honda Finance Corp. (“AHFC”) for violations of the Cuba sanctions. Troublingly, OFAC’s published explanation only leads one to scratch one’s head.

There were 13 vehicle leases approved by Honda Canada Finance Inc. (“HCFI”), a majority-owned Canadian affiliate of AHFC. The problem transactions involved vehicles leased in Canada by unaffiliated Honda dealerships to the Cuban embassy, which were financed by HCFI!

There are two interesting facts stated in the press release which perhaps shed some light on why things came out as they did, but you decide. First, both HCFA and AHFC has policies and procedures in place to properly screen, despite being advised the Cuban embassy  in Ottawa was the lessee, those screening programs did not include “Cuba” or any other country name as a possible red flag.  Second, AHFC filed a voluntary disclosure.  Nowhere in its press release does OFAC explain what violation(s) it was AHFC disclosed, so exactly why the Canadian blocking statute – the Foreign Extraterritorial Measures Act – was not a total defense remains a mystery.  The total value of the leases was $276,999. The ultimate fine, as noted, was $87,255.

On a more positive note, OFAC did articulate both aggravating and mitigating factors which serve as a reminder to international traders of what is important when it comes to penalty calculations.

The aggravating factors were:

–           AHFC had reason to know about the conduct that led to the alleged violations, especially those leases which occurred after its voluntary self-disclosure was filed;

–           HCFI personnel “seemed to have actual knowledge” of the Cuban Embassy’s involvement with the leases;

–           AHFC is a “large and commercially sophisticated financial institution; and

–           Of course, the alleged violations resulted in “harm to U.S. sanctions program objectives”.

When it came to mitigating factors, OFAC noted:

–           AHFC had not receive a penalty notice or other finding of violation in the past five (5) years;

–           AHFC took remedial action, including implementing a new compliance policy;

–           AHFC cooperated with the investigation by voluntarily self-disclosing, providing “detailed and well-organized” information in a “timely and efficient manner”, and by signing a tolling agreement and thereby extending the statute of limitations; and

–           Most mysteriously – OFAC issued a specific license to AHFC in June 2015 regarding “the subject leases”!

Proving once again that OFAC lives in its own rarified world – it found AHFC had violated the law, imposed a fine and issued a license, all in one breath – and all regarding the same transactions!  How are international trader supposed to understand that sequence of events?   No wonder there is a confusion about trading with Cuba or Iran!

Damned If You Do/Damned If You Don’t: Foreign Extraterritorial Measures Act and Trump’s Cuba Policy

Posted in Canada's Federal Government, Corporate Counsel, Cross-border trade, Export Controls & Economic Sanctions, Exports, Imports Restrictions, Politics, U.S. Federal Government

smiley-vector-illustration-puzzled_X1AqT-_LOn June 16, 2017, President Trump gave a speech in Miami and announced he was reversing some of President Obama’s Policy on Cuba. Just as Canadian businesses were getting used to the Obama Policy on Cuba, there has been a partial snap-back.  Not only has there been a partial snap-back, there is a stronger enforcement mentality in the United States.  The Trump Policy on Cuba overlaps with the America First Doctrine and Art of the Deal negotiation style of President Trump.  The combination of the Trump Policy on Cuba, America First, and Art of the Deal means that U.S. sanctions against Cuba should be taken very seriously and Canadian companies should know that a contravention under U.S law could mean significant fines and failure to report to the Canadian government as required by Canadian law could result in a Canadian prosecution (and fines up to $1,500,00 and/or imprisonment up to 5 years in Canada).

What does this mean for Canadian businesses who have activities in Cuba?  Canadian businesses that have U.S. citizens as shareholders, management, directors, officers, employees or representatives/agents, etc. need to understand the do’s and don’t of the Trump Cuba Policy or they might find themselves in trouble in both the United States and Canada.  The United States imposes various economic sanctions against Cuba effectively prohibiting many transactions with Cuba.  Canada, on the other hand, blocks U.S. anti-Cuba legislation with the Foreign Extraterritorial Measures Act (Canada) (“FEMA”) and the Foreign Extraterritorial Measures (United States) Order, 1992, as amended.  In Canada, persons must report to the Attorney General of Canada when they prevented, impeded or trade or commerce between Canada and Cuba is reduced:

(a) the Cuban Assets Control Regulations, Code of Federal Regulations, Title 31, Part 515, as amended from time to time or replaced, and (b)any law, statute, regulation, by-law, ordinance, order, judgment, ruling, resolution, denial of authorization, directive, guideline or other enactment, instrument, decision or communication having a purpose similar to that of the Cuban Assets Control Regulations referred to in paragraph (a), whether enacted, passed, made, done, voted, established, issued, rendered, given, taken or executed by any legislative, executive, administrative, regulatory, judicial or quasi-judicial authority or body of the United States, the District of Columbia or any of the member states or territories or possessions of the United States, or any municipality or other local authority in the United States or its territories or possessions.

“Trade or commerce” is defined to include the following:

“… the free exchange of goods and services, between Canada, or Canadian nationals, corporations or other legal entities or federal, provincial or local government institutions, and

(a) Cuba, or Cuban nationals, corporations or other legal entities or national, provincial or local government institutions, or

(b) Canadian nationals or corporations that are designated as, deemed to be, or otherwise treated as, Cuban nationals or corporations by or pursuant to an extraterritorial measure of the United States, whether by the use of the expression designated national or specially designated national or in any other manner.

Section 5 of FEMA prohibits Canadian companies and its directors, officers, managers and employees from complying with U.S. anti-Cuba legislation that prohibits, infringes or otherwise influences trade between Canada and Cuba.  In other words, a Canadian company or representative cannot not undertake business activities that are legal under Canadian law on the basis of compliance with U.S. anti-Cuba laws. The prohibition applies to trade in goods, including technology and trade in services, including technology-related services.

This results in tension between complying with Canadian law and complying with United States laws (e.g, Helms-Burton).  Multi-national companies sometimes get caught between the two sets of opposing laws.  For example, recently (on June 8, 2017) OFAC fined a US company (American Honda Finance Corporation) $87,255 in connection with leases of Honda vehicles by Honda Canada Finance, Inc. to the Cuban Embassy in Ottawa.  The leased vehicles were on Canadian soil.  The financing of the vehicles driven on Canadian roads went through the fined US entity. The transaction was perfectly legal in Canada and could not have been rejected in Canada even if the reason was to comply with U.S. laws.  If the Canadian entity was asked to not lease vehicles to the Cuban officials in Ottawa, they would have had to report that request under provisions of FEMA.  This recent OFAC file should act as a wake-up call to Canadian companies to understand the Trump Cuba Policy and re-visit compliance programs relating to business with Cuba/Cuban persons.  This recent U.S. fine should be a wake-up call to Canadian companies that the U.S. will enforce its Cuba sanctions even if the activities are legal in Canada.

It is therefore, very important to review the Trump Policy on Cuba. Courtesy of our friend, Jennifer Diaz of Diaz Trade Law in Miami, who wrote on her blog an article entitled “President Trump Outlines New U.S. Policy on Cuba”, the Trump Cuba Policy will enact the following changes to U.S. law:

  • No new direct transactions with entities related to the Cuban military, intelligence, or security services;
  • The State Department will be publishing a list of entities with which direct transactions generally will not be permitted;
  • President Trump advised “we will very strongly restrict American dollars flowing to the military,” “we will take concrete steps to ensure investments flow directly to the Cuban people”;
  • The 12 categories of authorized travel will remain, BUT, there will be an end to “people to people” travel on your own (group travel is not impacted). President Trump stated “easing restrictions on travel and trade does not help the Cuban people, they only enrich the Cuban regime”. “The profits from investment and tourism flow directly to the military, the regime takes the money and owns the industry;
  • President Trump stated: “we will not lift sanctions on the Cuban regime until “all political prisoners are free, freedoms of assembly and expression are respected, all political parties are legalized, and free and internationally supervised elections are scheduled.”
  • Remittances will NOT be impacted; and
  • We can expect the new provisions to be actively enforced. President Trump advised: “our new policy begins with STRICTLY ENFORCING U.S. law”. Review our previous travel tips to you, and ensure you meet them!
  • The Embargo will REMAIN in place.

The White House released a Fact Sheet on Cuba Policy and OFAC released a three page FAQ discussing the main questions and answers.

What this means for Canadian businesses is risk.  The number of “Do Not’s” have increased.  This means, the FEMA risk has increased.

What should Canadian companies do?

We cannot list all of the actions that should be taken – here are ten to demonstrate the types of relevant considerations for Canadian companies:

  1. Canadian companies with any activities with Cuba, Cubans or the Cuban Embassy in Canada should review FEMA to know if and when they have a Canadian reporting requirement;
  2. Canadian companies with any activities with Cuba, Cubans or the Cuban Embassy in Canada should review their compliance policy with respect to business in or with Cuba or Cubans (or implement a policy if they do not have one);
  3. Canadian companies must know who they are dealing with in Cuba.  Many Cuban businesses are government owned or owned by government officials.  Any transaction with a state-owned or government official owned enterprise should be reviewed;
  4. Canadian companies must consider who within their organization is traveling to Cuba on business matters.  The removal of “people-to-people travel” from the categories of authorized travel may mean that U.S. citizens working for U.S. companies ca no longer participate in business travel to Cuba;
  5. Canadian companies must review whether U.S. citizens in management positions could be prosecuted under U.S. anti-Cuba laws and whether reporting structures need to be adjusted;
  6. Canadian companies who borrow from U.S. financial institutions should review their loan documents to see if there is a requirement to comply with U.S. laws (which would include U.S. anti-Cuba laws and President Trump’s Cuba Policy) and then determine what are the U.S. and Canadian reporting requirements applicable to the company;
  7. Canadian companies who have insurance from a U.S.-based or affiliated insurance company should review their insurance policies to see if there is a requirement to comply with U.S. laws (which would include U.S. anti-Cuba laws and President Trump’s Cuba Policy) and then determine what are the U.S. and Canadian reporting requirements applicable to the company;
  8. Canadian companies who provide goods and services to the Cuban embassy in Canada should review the transactions to determine whether they have similar problems as Honda;
  9. Canadian companies must review how they get paid by Cuban businesses (for Canadian goods and services provided to Cuba) to ensure the funds do not flow through U.S. financial institutions in a manner that is contrary to U.S. anti-Cuba laws; and
  10. Canadian companies must review how they pay Cuban businesses (for Canadian goods and services provided by Cuba to Canada) to ensure the funds do not flow through U.S. financial institutions in a manner that is contrary to U.S. anti-Cuba laws.

For more information about FEMA, please contact Cyndee Todgham Cherniak at 416-307-4168 or at




Parliamentary Committee Makes 8 Recommendations Regarding Canada’s Steel Industry

Posted in Antidumping, Canada's Federal Government, Trade Remedies

globe and calculatorOn June 15, 2017, the Standing Committee on International Trade released Report No. 7 “The Canadian Steel Industry’s Ability to Compete Internationally”.  This Report is helpful to Canadian steel producers and not very helpful to steel importers.  China will not be pleased to read that the Committee recommends non-market economy status remain in place in Canada against China.

The Standing Committee on International Trade made 8 recommendations in Report No. 7:

Recommendation 1: That the Government of Canada proactively participate in discussions and initiatives of international organizations, the Organisation for Economic Co-operation and Development, for example that want to find solutions to global excess steel making capacity.
Recommendation 2: That the Government of Canada increase the visibility of trade remedy services and tools available to Canadian companies and that it proactively inform Canadian steel industry stakeholders when a decision is made regarding the imposition of anti-dumping duties or countervailing duties on steel products.
Recommendation 3: That the Government of Canada work with its closest trading partners, particularly the United States, to ensure that those countries and Canada have adequate and effective trade remedy systems in place and that Canada does not become a dumping ground for foreign steel.
Recommendation 4: That the Government of Canada reserve the right to use methods other than prices on the exporting country’s market to establish the dumping margin when foreign companies cannot prove that they are operating under market economy conditions.
Recommendation 5: That the Government of Canada consider the consequences of dumping and countervailable subsidies for all regions in Canada in steel import investigations and that it study the impact of the imposition of regional rather than national anti-dumping or countervailing duties, where appropriate.
Recommendation 6: That the Government of Canada assist Canadian steel producers in benefitting from the low carbon footprint of Canadian steel compared to foreign steel, including through government procurement processes that take carbon dioxide emissions into account when awarding contracts.
Recommendation 7:  That the Government of Canada preserve and advance fair trade by continuing to treat China as a non-market economy.
Recommendation 8: That the Government of Canada grant labour unions an expanded role in Canada’s trade remedy system, including the right to participate in trade remedy complaints.
Many of these recommendations have already been put into motion in the 2017 Budget.  Changes have been proposed to Canada’s Special Import Measures Act (Canada’s antidumping and countervailing duty legislation) (“SIMA”) and should become law when omnibus Bill C-44 receives Royal Assent and is implemented.  The relevant provisions are Sections 66-102.
For more information about Canada’s trade remedy laws, please call Cyndee Todgham Cherniak at 416-307-4168 or email  More information is on the LexSage website.  We will be posting a series of articles on the Bill C-44 additions to SIMA.