Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada-US Border Headaches, Long Line Ups and Delays

Posted in Border Security, Customs Law, NEXUS

Canada CustomsHave you waited in a long line-up at the Canada-US border?  Did you forget an item when you arrived at the primary booth to make your declaration to the Canada Border Services Agency (“CBSA”) and responded to the CBSA officer’s questions? Was this your unlucky day? Were you selected by the primary CBSA officer or the computer for a secondary inspection?  Did the secondary inspection last a long time because the secondary CBSA officers took the position that you failed to declare a good (because the item was not on the primary officer’s referral slip)?

This happens to many returning Canadian citizens and residents every long week-end.  They were not perfect (and were tired and frustrated by the wait time) and their clean compliance history in the CBSA’s computers is gone – in an instant.  Future cross-border travel (even for business) can look frustrating because once a failure to declare is registered in the CBSA’s computerized records, the traveler (and family) is sent to secondary inspection frequently (for years).  Travel to the United States also seems longer as the U.S. Customs and Border Protection officers may refer the traveler to secondary inspection (the information in the CBSA’s electronic records is shared with the U.S.).

There is no opportunity to get “pardoned”.  People who shoplift and commit minor criminal activities can negotiate with a prosecutor or police officer for diversion.  A person who has had a momentary memory lapse (or brain fart as I like to call it) has a CBSA record for 6 years. A person can have their NEXUS pass cancelled or suspended for 6 years or more. The CBSA has a zero-tolerance policy.

So, what is an honest person supposed to do? At the present time, there is little that good people can do to clear their record at the CBSA.  There is an appeal mechanism.  However, if the underlying infraction is not appeals so that the violation remains on the person’s record, the CBSA NEXUS Redress Committee often does not reinstate the NEXUS privileges.

It is possible to successfully appeal the underlying infraction – many people done it.  The facts will be key.

Dogs at the Border – What the Canada Border Services Agency Dogs Are Trained to Sniff

Posted in Border Security, Customs Law

CNcZXqgWsAAxEMFThe television programs about border security and border patrol have four legged stars – the sniffer/detector dogs. To be honest, I like the commercials with the sniffer/detector dogs sniffing the envelops in the mail center – junk mail, junk mail, junk mail, LSD? These short commercials are helpful in communicating to the public at large for what items the sniffer/detector dogs are searching.

The Canada Border Service Agency (“CBSA”) uses sniffer/detector dogs (also called K9s) for a number of purposes. Sniffer/detector dogs are used at airports, land border crossings, ports and at mail centers. You many encounter the sniffer/detector dogs when you step off the aircraft, when you are at the luggage carousel, during secondary inspection or when you are waiting to board a plane to leave Canada.

The sniffer dogs are trained to detect certain types of goods, such as:

  • prohibited drugs;
  • prohibited weapons (e.g, guns);
  • currency over $10,000 (yes, they can smell money);
  • agricultural products (e.g., prohibited meat, fruits, dairy, etc.); and
  • data storage devices that might contain prohibited images.

The detector dogs find things that humans might not be able to find.  The alert their human handlers when they find the scent that they have been specially trained to detect. The CBSA handlers inform other CBSA officers who are tasked with conducting the secondary inspection.

For example, the dogs that are trained to detect large amounts of currency are used for passengers leaving Canada (who must report exports of currency over $CDN 10,000) and in the Customs Controlled Area (arriving passengers must report imports of currency over $CDN 10,000).  These detector dogs will be brought by their CBSA handlers to the passengers and the dog will signal (often by sitting down) when they detect the scent of paper money).  If the detector dog sits down next to a passenger, that passenger is asked by the CBSA handler to go to an inspection area where he/she is asked to provide to the CBSA officers all their currency.  Usually two CBSA officers are present so that they will not be accused of taking any of the money.  If the passenger has less than $CDN 10,000, he/she may be allowed to board their flight (or another flight if the inspection caused the person to miss their scheduled flight).  If the passenger has more than $CDN 10,000 the CBSA will seize all the currency in the passenger’s possession and apply the applicable penalty.

While I cannot say for certain that the CBSA has detector dogs who are able to find computers, hard drives and USB keys, we have learned from the Jared Fogel case in the United States that a detector dog (e.g., Bear) has been trained to detect electronic devices.  It has been reported that Bear’s trainers worked with scientists to isolate scents associated with electronics.  It is reasonable to expect detector dogs with this skill will be utilized by the CBSA at ports (to sniff out such contraband on large ships) and in mail centers.

While the detector dogs cannot testify in court, their human handlers can testify in court.  These CBSA officers are trained to be able to speak up for their K9 partners.

The CBSA Has Revised D-Memo 14-1-2 Relating to Disclosure of SIMA Duties

Posted in Antidumping, Cross-border trade, Legal Developments, Trade Remedies

iStock_000019169483XSmallOn August 27, 2015, the Canada Border Services Agency (“CBSA”) re-issued D-Memorandum D-14-1-2 “Disclosure of Normal Values, Export Prices, and Amounts of Subsidy Established Under the Special Import Measures Act”. The new D-Memo, which supercedes the previous version, is different.

The D-Memo primarily applies to importers who must pay applicable antidumping and/or countervailing duties on goods subject to an antidumping and/or subsidy Order.  Often importers are not aware of the normal value calculated for the exporter from whom they purchased the subject goods.  I like to call normal values calculated by the CBSA a “secret price list”.

While the subsidy rate (usually a monetary value per unit of measure) is publicly available on the CBSA web-site in the final determination or the conclusion if a reinvestigation, the normal values and export prices are not publicly available.  The CBSA takes the position that normal values and export prices are confidential because they are established based on confidential information provided by exporters and importers. This means that importers can buy goods and face an unexpected assessment of antidumping duties by the CBSA if the amount paid to the seller is less than the normal value.

Canada is different from the United States and other countries.  Canada collects antidumping and/or countervailing duties prior to the release of the goods and on a shipment-by-shipment basis.  The United States tallies up the antidumping and countervailing duties payable after the importation has occurred and in respect of number of shipments.

New D-Memo 14-1-2 states, in part, as follows:

Guidelines and General Information
1. Specific normal values and export prices are generally considered to be confidential and are not publicized or available to the general public. The amount of subsidy calculated for specific exporters who have cooperated in a dumping and/or subsidy investigation will normally be provided in the CBSA’s public decision documents, which are available on the CBSA Web site.

2. Importers should contact their respective exporters to obtain specific normal values, export prices and, if applicable, the amount of subsidy. However, this information may be released by the CBSA for purposes of:

(a) Releasing goods or accounting for goods released
CBSA officers may release normal values, export prices and amounts of subsidy to importers on a need-to-know basis, i.e. to obtain release of a shipment of goods or account for goods previously released.
(b) Determining potential liability for provisional duty, anti-dumping duty and countervailing duty on goods in-transit
CBSA officers may provide normal values, export prices and amounts of subsidy to an importer relative to goods, which the importer has purchased and which are in transit.
(c) Determining potential liability for provisional duty, anti-dumping duty and countervailing duty on a possible importation
CBSA officers may inform a potential importer whether or not quoted prices will incur provisional duty, anti-dumping duty or countervailing duty. Under no circumstances will a potential importer be given confidential normal values, export prices or the amounts of subsidy if no proof of price offer by the exporter is provided. The importer will only be informed whether or not the prices quoted will incur provisional, anti-dumping or countervailing duty.
3. Requests for normal values, export prices or amounts of subsidy and potential duty liabilities are to be made in writing and accompanied by a proof of purchase, proof that the goods are in-transit, or proof of the price offered by the exporter.

4. For certain goods, such as capital goods, the amount of anti-dumping duty or countervailing duty payable cannot be conclusively established prior to the entry of the goods. In such instances, the CBSA may require access to information relating to actual production costs, as well as other information relevant to determine the normal value, the export price, or the amount of subsidy not normally available or verifiable in advance of importation. Under certain circumstances, the CBSA may provide the exporter and importer with an estimate of the assessment, based on information provided in advance of actual production and shipment. The provision of such an estimate is not to be construed as limiting the CBSA in determining the actual assessment on the goods as provided for in the Special Import Measures Act. Please contact the Enforcement officer assigned to the case, as listed on the Measures in force Web page, for more information.

Previous D-Memo D-14-1-2 stated as follows: Continue Reading

The Canada Border Services Agency Initiates Line Pipe AD/CVD Case

Posted in Antidumping, Trade Remedies

Shipping Container Above Stacked OthersOn August 28, 2015 the Canada Border Services Agency initiated an antidumping/countervailing case against certain carbon and alloy steel line pipe from China.   The CBSA did not issue an email notification until 11:33AM on August 31st (I know because this is when I received my email).

This case partially relates to existing AD/CVD duties on piling pipe from China. Atlas Tube Canada has stated in their letter of support that “Atlas supports the complain because of information that large volumes of so-called Chinese line pipe, stenciled as API-5L, are entering Canada, but are actually being imported entirely for sale as piling pipe.”

The goods covered by the CBSA investigation are usually classified under the following Harmonized System classification numbers:

  • 7304.19.00.11
  • 7304.19.00.12
  • 7304.19.00.21
  • 7304.19.00.22
  • 7305.11.00.11
  • 7305.11.00.19
  • 7305.12.00.11
  • 7305.12.00.19
  • 7305.19.00.11
  • 7305.19.00.19
  • 7306.19.00.10
  • 7306.19.00.90

The Subject Goods are described as follows:

Carbon and alloy steel line pipe originating in or exported from the People’s Republic of China, welded or seamless, having an outside diameter from 2.375 inches (60.3 mm) up to and including 24 inches (609.6 mm), including line pipe meeting or supplied to meet any one or several of API 5L, CSA Z245.1, ISO 3183, ASTM A333, ASTM A106, ASTM A53-B or their equivalents, in all grades, whether or not meeting specifications for other end uses (e.g. single-, dual-, or multiple-certified, for use in oil and gas, piling pipe, or other applications), and regardless of end finish (plain ends, beveled ends, threaded ends, or threaded and coupled ends), surface finish (coated or uncoated), wall thickness, or length, excluding galvanized line pipe and excluding stainless steel line pipe (containing 10.5 percent or more by weight of chromium), excluding goods covered by the Tribunal’s finding in Inquiry No. NQ-2012-002.

For greater certainty, the product definition includes:

  1. unfinished line pipe (including pipe that may or may not already be tested, inspected, and/or certified to line pipe specifications) originating in China and imported for use in the production or finishing of line pipe meeting final specifications, including outside diameter, grade, wall-thickness, length, end finish, or surface finish; and

  2. non-prime and secondary pipes (“limited service products”).

The key dates are as follows:

September 14, 2015 = All parties notify the Canadian International Trade Tribunal (CITT) if participating in preliminary injury inquiry

September 21, 2015 = Importer responses to CBSA’s Request for Information due to the CBSA

September 23, 2015 (by noon) = Submissions by parties opposed to the complaint due to the CITT

September 30, 2015 (by noon) = Submissions by parties in support of a complaint due to the CITT

October 5, 2015 = Exporter and Government responses to CBSA’s Request for Information due to the CBSA

October 27, 2015 = Preliminary Determination of Injury by the CITT

November 26, 2015 = Preliminary Determination of Dumping/Subsidy by the CBSA

January 11, 2016 = Closing of the CBSA Record date

January 18, 2016 = Submissions to the CBSA (all parties)

January 25, 2016 = Reply Submissions to the CBSA

February 22, 2016 = Likely start date of CITT hearing

February 24, 2016 = Final Determination of Dumping/Subsidy

Removing Confusion Over Tariff Classification of “Religious Articles”

Posted in Customs Law, tariff classification, Uncategorized

Many QuestionsOn August 27, 2015, the Canada Border Services Agency (“CBSA”) reissued D-Memorandum D-14-15-12 “Interpretation of Tariff Item 9986.00.00″, which supercedes the previous version.  The new and improved version is much longer than the previous May 29, 1998 version.

Goods that are properly classified pursuant to H.S. item number 9986.00.00.00 enter Canada duty free regardless of the country of origin of the item.  Due to the duty free treatment of religious articles, importers have used this tariff classification for a number of items that the CBSA has considered to be questionable.

The Customs Tariff identifies H.S. item number 9986.00.00 as including:

“religious statues, statuettes, medals, crosses, figures, plaques or ancestral shrines, and communion sets, oil stocks, crosiers, benitiers, sprinklers, incensers, incense boats, baptismal shells or fonts, scapulars, chapelets, rosaries, Scroll sets, Chanuka candlesticks, Kiddush sets, Mezuzah boxes, Havdalah sets or Seder plates and parts of all of the foregoing.”

D-Memo D-14-15-12 explains how the CBSA will interpret the above list. First, the CBSA states that “tariff item 9986.00.00 is a list of specific religious goods. If an item is not included in the list, it cannot be eligible for the” duty free benefits of the tariff item.

The CBSA goes on to explain the administrative test that they will be applying to determine when a good will be considered to fall within the list. The CBSA states that H.S. item 9986.00.00 covers goods that are:

(a) used in religious services, or

(b) used as explicit witness of a religious affiliation or devotion.

The CBSA then goes on clarify that H.S. item 9986.00.00 applies to all religious persuasions (without providing a positive list of religions) and that a religion need not be currently practiced for an object to qualify. Articles of mythology that are based on religious ideology or dogma are also eligible for the benefits of H.S. item 9986.00.00.

The CBSA provides numerous examples of what types of goods will be considered by the CBSA to fit within the tariff classification and what types of goods will be considered by the CBSA to not be entitled to the benefits of the H.S. item number.

The D-Memo is quite detailed and covers a variety of types of religious articles.  However, the administrative policy also contains pre-conditions and tests that the CBSA says it will be applying (more likely to exclude goods than to include goods).  This is where importers are likely to run into difficulties if they do not plan ahead.

While D-Memo 10-15-12 is helpful, it will undoubtedly be used by the CBSA to disqualify certain goods.  It is, therefore, very important to review the D-Memo carefully and make every effort to comply with the documentary and evidentiary requirements.  While the Canadian International Trade Tribunal is not bound by the CBSA’s administrative position and may not agree with the CBSA’s position, compliance with the D-Memo will limit the length of the battle with the CBSA.

The CBSA Issues Customs Notice 15-032 “Contingency Plan for System Outages”

Posted in Cross-border trade, Customs Law

Shipping Container Above Stacked OthersOn August 28, 2015, the Canada Border Services Agency (“CBSA”) posted Customs Notice 15-032 “Contingency Plan for System Outages”.  It is a short customs notice that primarily contains a link to the CBSA’s “System Outage Contingency Plan“. The System Outage Contingency Plan details requirements and procedures for Trade Chain Partners and all impacted parties during 15 types of CBSA system outages (defined as a temporary suspension of operation to the electronic system) that impede normal reporting procedures to the CBSA.  The System Outage Contingency Plan is an alternative to the general procedures for the reporting of goods, in bond movements, release of goods and final accounting.  This contingency plan is applicable only in circumstances where CBSA system outages have occurred.

Some examples of when the System Outage Contingency Plan applies are:

  • Full CBSA system outage (when all CBSA systems; EDI, eManifest portal and CBSA internal systems are not functioning);
  • Delays in processing;
  • Full EDI outage;
  • EDI inbound system outage (the CBSA is not able to receive any new inbound EDI messages from clients);
  • EDI outbound system outage (the CBSA is not able to receive any new outbound EDI messages from clients);
  • Full eManifest portal outage;
  • eManifest portal inbound system outage (the CBSA is not receiving information submitted through the eManifest portal);
  • eManifst portal outbound system outage (the CBSA is not able to post responses in the eManifest portal);
  • Direct Connect (DC) or VAN outage (affects those clients that utilize the impacted Direct Connect or VAN as their electronic communication method);
  • Customs Internet Gateway (CIG) outage ( affects those clients that utilizes the CIG as their electronic communication method);
  • When the CBSA is upgrading computer systems;
  • Blackouts (an infrastructure problem e.g. flood, earthquake, windstorm, terrorist attack that is affecting the entire country);
  • Brownouts (an infrastructure problem e.g. hydro, communication lines etc. that is affecting one or multiple locations within Canada);
  • Client planned outage (A client or service provider’s system outage that has been pre-scheduled for maintenance purposes that will prevent the transmission of customs information to and receipt of customs information from the CBSA); and
  • Client unplanned outage (A client or service provider’s system outage that is preventing the transmission of customs information to and/or receipt of customs information from the CBSA).

What surprises me is that the CBSA does not include temporary closures of a single border crossing location due to wildfires (a current scenario is Western Canada).

The System Outage Contingency Plan provides general instructions of what interested parties should do in the case of an outage.

The CBSA Announces Seizure of Cocaine at Toronto Pearson Airport

Posted in Border Security, Customs Law

iStock_000014893754_SmallOn August 28, 2015, the Canada Border Services Agency (“CBSA”) posted on the CBSA website a news release that on August 27th, CBSA officers at Toronto Pearson International Airport seized a suspected shipment of 23 kilograms of cocaine.  The news release provides the following details about the seizure:

“On August 27, 2015, CBSA officers monitoring the offload of luggage from an aircraft originating from the Dominican Republic noticed an unclaimed suitcase in the baggage hall. An X-ray examination of the suitcase displayed dense, rectangular objects. After opening the luggage and examining the contents, officers found 20 brick-shaped bundles and two bags of pellets containing suspected cocaine.”

These types of new releases are interesting. U.S Customs and Border Protection posts similar news releases about significant seizures (and also used social media, e.g., Twitter).  The CBSA posts on Twitter under the name (@CanBorder), but did not publicize this particular seizure at the time I wrote this blog post.

Dear Duck Dynasty, The Canada Border Services Agency Issues D-Memo on Decoy Calls

Posted in Customs Law, Legal Developments

IMG_2562 (2)On August 27, 2015, the Canada Border Services Agency (“CBSA”) issued D-Memorandum D10-14-65 “Tariff Classification of Decoy Calls“.  I did not realize that there was an issue relating specifically to decoy calls.  The issue was serious enough that the CBSA issued a specific administrative policy statement.

The CBSA states that:

“As heading 92.08 covers, among other things, “ … decoy calls of all kinds”, it must be considered for the classification of decoy calls.”

The CBSA takes the position that all decoy calls fall in H.S. item number 92.08. So, when you import a duck call from Duck Dynasty, please use the number the CBSA wishes. It looks like the duck decoys are classified under H.S.item 92.07. Nova Scotia Duck Tolling Retrievers (my puppy is in the photo) are not classified as duck decoys, even though they are a breed of dog that are bred to play on the shoreline to attract ducks to within shooting range.


Who Would Have Thought Tariff Classification of Pizza Kits Would Be So Complicated

Posted in Cross-border trade, Customs Law

On August 20, 2015, the Canada Border Services Agency (“CBSA”) issued D-Memorandum D-10-14-32 “Tariff Classification of Pizza Kits”.  The good news is that the D-Memorandum is only 2 pages in length.  The bad news is that the instructions to importers of pizza kits is as clear as mud.

Paragraph 1 of D-Memorandum D-10-14-32 states as follows:

That a product is described commercially as a “pizza kit”does not mean it qualifies as such for the purposes of this memorandum.”

It does not get more clear after this opening statement.

It appears that the CBSA distinguishes between pizza kits for retail sale to an individual vs pizza kits for sale to a commercial establishment (e.g., restaurant) or institution.

If the pizza kits are imported for sale to an individual or consumer, then the classification depends on whether or not the crust (dough) is uncooked/raw crust (dough) vs cooked or pre-cooked.  If the crust is raw dough, the H.S. tariff classification is 19.01.  If the crust is cooked or pre-cooked, the H.S. tariff classification is 19.05.

However, if the pizza kit is for sale to a commercial establishment or institution, then each component part of the pizza must be classified separately according to the CBSA’s administrative policy.

One of the reasons behind the CBSA’s administrative position is to react to circumvention of Canada’s cheese quotas.  The CBSA wishes to stop importers of shredded mozzarella cheese from getting around the cheese quotas by importing the ingredients for a pizza.

When viewed in light of the goal to stop circumvention activities, the contorted D-Memo is explained.  However, the average person needs to understand the rules and the rules could be set out clearly and concisely so that real people can comply.