Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada Quietly Repeals Schedule Of Politically Exposed Persons From Egypt

Posted in Canada's Federal Government, Export Controls & Economic Sanctions, Exports

chessOn March 10, 2016, Canada quietly amended the Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Tunisia and Egypt) Regulations and repealed provisions concerning Egypt.  Schedule 2 designating “politically exposed persons” in Egypt has been repealed. This means that the provisions of the Freezing of Assets of Corrupt Foreign Officials Act no longer apply to any Egyptian official.

This means that Canada does not have any restrictions on doing business with Egypt or Egyptian officials other than the usual export controls and trade restrictions applicable to most other countries/officials. Canadian businesses may engage in business with and deal with property of persons who were formerly designated as “politically exposed persons” on the Egyptian list.  Further, reporting obligations end and Canadian businesses not longer must report property in one’s possession of Egyptian “politically exposed persons.”  This means that the ongoing reporting obligation on financial institutions also ends.

The Freezing Assets of Corrupt Foreign Officials Act authorizes the Governor-in-Council (that is, Canadian Cabinet) to make orders directing that the property (whether real or personal), situated in Canada, of a “politically exposed foreign person” be seized, frozen or sequestered. The Freezing Assets of Corrupt Foreign Officials Act also authorizes the Governor-in-Council to make orders restricting the dealings that any person in Canada or any Canadian anywhere in the world may have with such a “politically exposed foreign person.”

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

Canada Introduces More Preclearance Legislation For People and Goods

Posted in Border Security, Canada's Federal Government, Cross-border trade, Customs Law, Exports, U.S. Federal Government

Canada-US GlobeOn June 17, 2016, the Minister of Public Safety and Emergency Preparedness introduced Bill C-23 “an Act respecting the preclearance of persons and goods in Canada and the United States” (to be known as the Preclearance Act 2016“) in the House of Commons.  This proposed legislation does not impose obligations in the United States and is not contrary to the sovereignty of the United States despite the name of the bill. The Government of Canada issued a limited information News Release and a Backgrounder.

Bill C-23 is intended to implement the Agreement on Land, Rail, Marine, and Air Transport Preclearance between the Government of Canada and the Government of the United States of America signed on March 16, 2015 (the “Agreement”). A treaty, such as the Agreement, is not enforceable in Canadian law until implementing legislation is passed. Bill C-23 is the implementing legislation for the Agreement.

This Agreement is a component of the Beyond the Border Action Plan that was announced in February 2011. The Agreement was previously tabled in the House of Commons on April 22, 2015 by the Harper Government. So, this is not a new initiative and it should pass Canada’s legislative process.

The main purpose of the Agreement and Bill C-23 is to facilitate and expedite travel between Canada and the United States for goods and services.  Canada and the United States have one of the most important trading relationships in the World.  As a result, mechanisms such as preclearance, make a lot of common sense.

Part 1 of Bill C-23 addresses the performance of U.S. preclearance officers in Canada. Part 1 of Bill C-23 authorizes United States customs officers to conduct preclearance in Canada of travellers and goods bound for the United States. Bill C-23 also authorizes a federal Minister to designate preclearance areas and preclearance perimeters in Canada, in which preclearance may take place. Bill C-23 gives United States preclearance officers with powers to facilitate preclearance.

The exercise of any power and performance of any duty or function by a United States preclearance officer is subject to Canadian law, including the Canadian Charter of Rights and Freedoms, the Canadian Bill of Rights and the Canadian Human Rights Act. Canadian police officers and the officers of the Canada Border Services Agency are authorized to assist United States preclearance officers in the exercise of their powers and performance of their duties and functions.  Bill C-23 allows a traveller bound for the United States to withdraw from the preclearance process, unless the traveller is detained under Part 1.  Bill C-23 limits the ability to request the extradition or provisional arrest of a current or former United States preclearance officer.

Part 2 of Bill C-23 addresses the performance of Canadian preclearance officers in the United States. Bill C-23 specifies how the Immigration and Refugee Protection Act will apply to travellers bound for Canada who are in preclearance areas and preclearance perimeters in the United States, and extends the application of other Canadian legislation that relates to the entry of persons and importation of goods into Canada to those preclearance areas and preclearance perimeters. Bill C-23 allows a traveller bound for Canada to withdraw from the preclearance process, unless the traveller is detained.

Part 3 of Bill C-23 contains amendments to the Criminal Code.

Part 4 of Bill C-23 amends the Customs Act.

Preclearance allows the inspection of goods and people before they leave the country of exit. A preclearance inspection at a point of embarkment is essentially the same inspection an individual would undergo at a U.S. port of entry (or at a point of disembarkment) and preclearance travellers do not have to undergo a second U.S. Customs and Border Protection inspection upon arrival in the United States.  Preclearance of goods occurs away from the border prior to the export from Canada and is the also the same inspection goods would undergo at a U.S. port of entry and precleared goods do not have to undergo a second U.S. Customs and Border Protection inspection upon arrival in the United States. 

Many travellers from Canada are familiar with preclearance at airports, such as Toronto Pearson International Airport, Calgary Airport, Montreal Trudeau Airport, Vancouver Airport, etc. At previously approved preclearance airports, all travelers go through U.S. Customs Preclearance before boarding flights destined for a location in the U.S.  Inadmissible travelers are not permitted to board their planes and do not enter the United States.  High risk passengers are screened before being allowed to proceed.  Goods are also x-rayed to identify risks.

This preclearance will be expanded to other airports and land/rail/marine locations.  For example, preclearance will be available at a number of new Canadian locations, including Quebec’s Jean Lesage International Airport, Toronto’s Billy Bishop City Airport, Montreal Central Station and the Rocky Mountaineer.

Preclearance is good for Canada and Canadian businesses.  Previously, Canada and the United States have worked at establishing a security perimeter around North America (or, at least, Canada and the United States).  The next step is to somewhat erase the border between Canada and the United States for the movement of goods and people – it can never be fully erased. The next step in the process will be to further harmonize laws and regulations and policies to eliminate (or reduce) bottlenecks at the border in order to expedite the movement of low risk goods and people.  But, I digress beyond Bill C-23 to paint the picture on where we need to go from here.

For more information about Bill C-23, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

Canada To Add Export Smuggling Offence into Customs Act

Posted in Border Security, Canada's Federal Government, Controlled Goods Program, Customs Law, Export Controls & Economic Sanctions, Exports, Legal Developments

Gavel and Scales of JusticeOn June 15, 2016, the Government of Canada introduced Bill C-21 “An Act to amend the Customs Act” in the House of Commons. The amendments to the Customs Act focus on exports of people and goods.  Many of the amendments deal with the gathering of information about the export of goods and people.  However, one of the hidden changes relating to export smuggling may be more important for businesses.

New subsection 159(2) of the Customs Act creates a new offence of smuggling out of Canada.  Subsection 159(2) provides:

“Every person commits an offence who smuggles or attempts to smuggle out of Canada, whether clandestinely or not, any goods that are subject to duties, or any goods the exportation of which is prohibited, controlled or regulated under this or any other Act of Parliament.”

This provision must be read in conjunction with many other statutes, such as the Export and Import Permits Act, the Special Economic Measures Act, the United Nations Act, etc.

Section 160 of the Customs Act is amended to extend the punishment to export smugglers.  If a person commits an offence under new Subsection 159 (2) of the Customs Act, the person may, upon summary conviction, be fined up to $50,000 and/or face up to six (6) months in prison. Upon indictment, the person may be be fined up to $50o,000 and/or face up to five (5) years in prison.

The Canada Border Services Agency and the Royal Canadian Mounted Police will enforce the new export smuggling provision in the Customs Act.

The new smuggling offence will not be in effect until Bill C-21 completes the legislative process.  The date that the amendments to the Customs Act will come into effect will be established by Cabinet.

Canadian businesses should be mindful of this new export smuggling offence because it layers the punishment for exporting controlled or prohibited goods without proper paperwork.  Canadian business persons are the most likely to run into difficulty by traveling with the controlled or prohibited goods in their luggage.  This would include traveling with samples that are on the Export Control List.

Based on our experience, the CBSA x-rays luggage leaving Canada.  In addition, the Canadian Air Transportation Security Authority (CATSA) x-rays luggage that travelers take with them.  If CATSA sees large sums of cash in a person’s carry on luggage, they report the cash to the CBSA and the person is removed from the flight.  The same can hold true for goods within a person’s luggage.  This means that if a traveler does not have the proper paperwork relating to the permissibility of an export of goods (e.g., an export permit or Ministerial Authorization), it could delay travel of the person or the goods.  As a result, it will be more important to ask questions about Canada’s export controls laws.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

What Businesses Should Know About Bill C-21 Amendments to Customs Act (Canada)

Posted in Border Security, Canada's Federal Government, Cross-border trade, Customs Law, Export Controls & Economic Sanctions, Exports, Harmonization, Immigration law, Legal Developments, U.S. Federal Government

Canada CustomsOn June 15, 2016, Canada’s Minister of Public Safety and Emergency Preparedness introduced Bill C-21 “an Act to amend the Customs Act” in the Canadian House of Commons. It is a relatively short bill containing important and far-reaching amendments to the Customs Act.  Many people think that the Customs Act only affects them if they import goods into Canada – this is not the case and the amendments in Bill C-21 have nothing to do with the collection of customs duties on imported goods.

As a result, Bill C-21 could affect any Canadian business that operates internationally, even if it does not import goods.  If businesspersons travel outside Canada on business, the amendments could affect them.  If the business exports goods, the amendments could have an impact.

This post sets out ten things that Canadian businesses should know about Bill C-21. We are not going to address the privacy law issues that will be covered extensively by other.

1. Bill C-21 will pass the legislative process in Canada. There is a majority Federal Government and it is unlikely that the draft presented at first reading will be amended further.  There are few statements made by the Minister of Public Safety and Emergency Preparedness on June 15, 2016 at the time of the introduction of Bill C-21.  It should be expected that Bill C-21 will become law.  As a result, knowing new obligations and the potential effects of the legislation is important.

2. Bill C-21 is required as part of the Beyond the Border initiative announced by Prime Minister Harper and President Obama in February 2011. On March 10, 2016, Prime Minister Trudeau and President Barack Obama announced that Canada and the United States will fully implement a system to exchange basic biographic entry/exit information at the land border and build off the process already in place. Bill C-21 fulfills Canada’s side of that agreement.

3. The main purpose of Bill C-21 is to introduce the legislative requirements to collect biometric data on all persons as they exit Canada.  This enables a process of matching entry and exit information. New Section 92 is added to the Customs Act to replace old section 92, which was repealed in 1995. New subsection 92(1) of the Customs Act provides:

“In relation to any person who is leaving Canada or who has left Canada, the [CBSA] may collect, from a prescribed source, in the prescribed circumstances, within the prescribed time and in the prescribed manner, the following information:
(a) the surname, first name and middle names, the date of birth, the citizenship or nationality and the sex of the person;
(b) the type of travel document that identifies the person, the name of the country or organization that issued the travel document and the travel document number; and
(c) the date, time and place of the person’s departure from Canada and, if the person arrives in the United States, the date, time and place of their arrival.”

The Government of Canada will be permitted by new subsection 92(2) of the Customs Act to pass regulations that would (a) prescribing the sources from which the information may be collected; (b) respecting the circumstances in which the information may be collected; and (c) respecting the time within which and the manner in which the information may be collected.  Since regulations do not need to be debated in the House of Commons and may be passed by the Governor-in-Council, most of the details will be in regulations.  it will be important to continue to monitor in the Canada Gazette regulations made pursuant to the Customs Act in order to be fully informed of the new requirements.  Further, many laws and regulations are supported by policy.  CBSA policy statements may also evolve the new exit data requirements.

4. Business persons who travel regularly for business and spend a lot of time outside Canada may be caught in other legal regimes that limit benefits to residents of Canada.  A person’s access to the Canadian health care system and other benefits could be collaterally affected. Minster of Public Safety and Emergency Preparedness stated to reporters that “Bill C-21 … will help [Canada’s Immigration Minister]  deal with immigration proceedings and visa applications and it will help us ensure the integrity of Canadian social programs.”  The “number of days in Canada” limitation in many laws, regulations and guidelines at the federal and provincial levels may become important.  Businesses will need to become familiar with such limitations and business persons will need to track their travel days to ensure compliance with other Canadian laws.

5. Businesspersons who travel to Canada on a regular basis also will need to carefully monitor their number of days in Canada. Individuals may be required to pay Canadian income tax if they are in Canada for more than the legislated period of time.  Since the CBSA will have both entry and exit data, the Government of Canada will be able to calculate number of days in Canada on an annual basis.  Tax assessment notices (including CPP and EI) may be in the mail if care is not taken.

6. More Obligations of Conveyances: If your business involves conveyances, new reporting obligations may be imposed by the amendments to the Customs Act.  New subsection 93(1) of the Customs Act imposes obligations on a “prescribed conveyance” that departs from a place in Canada and has a final destination outside Canada to provide information about passengers and the place of departure (it is not clear whether that will be a place of embarking or the port of exit).  New subsection 93(2) of the Customs Act authorizes the Minister of Public Safety and Emergency Preparedness to issue a notification to any person who is required to give information under subsection (1) to require the person to take any specified measure with respect to the information.  New subsection 93(1) of the Customs Act imposes an obligation to comply with ministerial requests to give information.

7. New section 94 of Customs Act creates an obligation on persons leaving Canada to answer questions of a CBSA officer.  Section 94 of the Customs Act provides that:

“Every person who is leaving Canada shall, if requested to do so by an officer, present themselves to an officer and answer truthfully any questions asked by an officer in the performance of their duties under this or any other Act of Parliament.”

While providing truthful answers is something we can all accept, the fact of the matter is that the CBSA will be able take the position that a person has provided false answers and pursue the individual for committing an offence under the Customs Act.  CBSA officers routinely take the position that persons have provided false answers when mistakes are made (e.g. when a person says they have less than $10,000 and the converted amount exceeds $10,000).  This provision could become important in connection with the new export smuggling provision discussed briefly below.  If a person says that are not exporting restricted goods and it turns out they are incorrect, the individual may be pursued for providing false information – remember, ignorance of the law is not excuse.

8. Section 95 of the Customs Act currently imposes obligations to report certain exports of goods. Subsection 95(1) will be amended to clarify the obligations.  Subject to exceptions, all goods that are exported shall be reported at any time and place and in any manner that may be prescribed.  We have previously written about export reporting obligations.

9. The CBSA has expanded detention powers.  Subsection 97.25(1) of the Customs Act is amended to permit the CBSA to detain any goods that are to be exported, that have been reported under section 95.  A detention power allows the CBSA to stop goods that are being exported and keep the goods from being exported.  There are legal mechanisms to provide evidence to the CBSA so that goods are not detained indefinitely.

10. A new export smuggling offence is added to section 159 of the Customs Act.  A blog post about the new export smuggling offence will be posted on this blog on June 21, 2016.

For more information about Bill C-21, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.

How To File A Customs Origin Appeal In Canada

Posted in Customs Law, origin, Trade Remedies

chessIf the Canada Border Services Agency (“CBSA”) has made an error during an origin verification, the importer may file a request for re-determination to appeal the assessment of duties. In most cases, the CBSA changes the origin from country with which Canada has a free trade agreement (e.g., the United States) to a country with which Canada does not have a free trade agreement (e.g., China) and issues a detailed adjustment statement charging the additional duties and interest resulting from the change in duty rate.

What is an customs origin verification? A customs origin verification is when the CBSA conducts an audit of an importer to verify that the importer reported the correct origin of the goods on the B3 Customs Coding Form.  When the importer imports goods into Canada, it communicates to the CBSA the origin of the goods and pays the applicable duties and taxes (e.g., goods and services tax, provincial sales tax, excise tax, etc.) based on the applicable duty rate for that country.  For example, most goods from the United States are duty free under NAFTA and the UST rate of duty is applied.  If the goods are actually from China, the Most-Favoured-Nation (“MFN”) rate of duty would apply.

In rare circumstances, the goods at issue are subject to anti-dumping and/or countervailing duties.  If the origin of the goods changes to a Subject Country, antidumping/countervailing duties may be applied in addition to the customs duties.  For example, if aluminum extrusions exported from the United States are determined by the CBSA to have originated in China, the CBSA may apply antidumping and countervailing duties.

If you believe the assessment is incorrect and/or the CBSA misunderstood the facts or ignored relevant facts, you may file a request for re-determination (an appeal).  You must file the request for re-determination within 90 days of the date on the detailed adjustment statement.  Do not miss this deadline.

You file the request for re-determination by completing a B2 “Adjustment Request”.  If there is more than one detailed adjustment statement, you will have to complete more than one form. The B2 form must match with the original B3 “Customs Coding Form”. The CBSA has one year to review the request for determination and make a decision.

Make sure that you provide reasons for the request for re-determination.  If there isn’t enough room in the B2 “Adjustment Request” form, file an attached schedule.  If you would like to resolve the issues more quickly, put your best arguments forward in a clear and concise manner.  Let the appeals officer understand your point of view and evidence in support of your position.  A common mistake that we see is that the importer has a customs broker file the B2 “Adjustment Request” form without providing clear information for the CBSA to consider.  A mere “you are wrong” is not sufficient to prove your case.

You must pay the amount of duties and interest owing as stated on the detailed adjustment statement or the CBSA may detain future imports of goods – they have ways to make you pay. in the case of anti-dumping and countervailing duties, payment of the duties and taxes owning perfects the appeal.  If the money is not paid, the appeal will be rejected by the CBSA.

If the CBSA does not change their minds about the origin, you may file an appeal with the Canadian International Trade Tribunal (“CITT”) within 90 days of the adverse decision of the CBSA. Do not miss this deadline. The initial appeal to the CITT is relatively simple. You should provide the CITT with sufficient information to identify (1) the appellant, (2) the applicable statutory provisions (e.g., is this aCustoms Act or Special Import Measures Act appeal), (3) the date of the CBSA decision being appealed, (4) the detailed adjustment statements at issue and (5) a brief indication of the issues to be decided. This can be done in a letter to the Registrar of the CITT. The notice of appeal or appeal letter must state the appellant’s intentions and be accompanied by a copy of the assessment, reassessment, rejection, decision, determination or re-determination, as the case may be, from which the appeal is launched.

Within 60 days of the filing and acceptance of the appeal, you must file an Appellant’s Brief.  This document must set out all the relevant facts, the law, and arguments.  You must file your supporting evidence that the CITT is to consider.  The Appellant’s Brief takes planning (as you may need expert evidence or test reports).  This document takes time to prepare – good arguments are drafted and redrafted.  Based on our experience, if the Appellant’s Brief can show the Department of Justice lawyer the weaknesses in their case, they may settle prior to having to file the Respondent’s Brief.

You should know the case you wish to present as early as the request for re-determination.  You should have your evidence plan in the works at this stage.  If you wait until the CITT hearing, you may find that the CITT does not accept your evidence.  If you do not make certain arguments in the Appellant’s Brief, you may be precluded from arguing certain points later (e.g. in argument at the hearing).

So, plan your litigation strategy as early as possible and stay organized from the point of the initial verification by the CBSA.  Seek help in preparing written representations and the available arguments.

If you have any questions, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

How Much Dairy Does General Import Permit #1 Allow?

Posted in Agriculture, Canada's Federal Government, Customs Law, Imports Restrictions, NEXUS

CheeseMany Canadians cross border shop but do not realize that not all groceries can be imported into Canada.  Most dairy products are subject to import restrictions.  Many businesses who import dairy products (and eggs and poultry) know about the import restrictions.  The average Canadian does not. Some individuals who cross border shop buy too much in terms of dairy products and their purchases are seized at the border. In addition, individuals have their NEXUS passes cancelled becasue they did not know the rules.

Canadians may import dairy products for personal consumption using General Export Permit No: 1  “Dairy Products For Personal Use” (GEP No. 1).  GEP No. 1 permits the importation of $CDN 20 worth of dairy products listed in the schedule to GEP No. 1.  If more than one person is in the car, the value can be multiplied by the number of people in the car.  Technically, you will run into a problem if anyone in the car is lactose intolerant as they cannot consume the dairy products – meaning someone else is over their limit.

The dairy products listed in Schedule 2 to GEP No. 1 are:

  • Milk and cream, neither concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 6 per cent;

  • Cream, neither concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 6 per cent;

  • Milk and cream, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, not exceeding 1.5 per cent;

  • Milk and cream, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 per cent, not containing added sugar or other sweetening matter;

  • Milk and cream, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 per cent, containing added sugar or other sweetening matter;

  • Preparations (other than preparations classified under tariff item No. 2106.90.31 or 2106.90.32 in the List of Tariff Provisions set out in the schedule to the Customs Tariff) containing more than 15 per cent by weight of milk fat, but less than 50 per cent by weight of dairy content, and suitable for use as butter substitutes, not elsewhere specified or included, that are classified under tariff item No. 2106.90.33 in the List of Tariff Provisions set out in the schedule to the Customs Tariff.

  • Milk and cream, not in powder, granules or other solid forms, concentrated (whether or not containing added sugar or other sweetening matter) or not concentrated (containing added sugar or other sweetening matter);

  • Powdered buttermilk, whether or not containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa;

  • Buttermilk (other than powdered buttermilk), curdled milk and cream, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa;

  • Products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included;

  • Powdered whey, whether or not containing added sugar or other sweetening matter;

  • Milk protein substances with a milk protein content of 85% or more by weight, calculated on a dry matter basis;

  • Mixes and doughs, for the preparation of bread, pastry, cakes, biscuits and other bakers’ wares containing more than 25 per cent by weight of butterfat and not put up for retail sale;

  • Milk, cream or butter substitutes containing 50 per cent or more by weight of dairy content;

  • Food preparations of goods of heading Nos. 04.01 to 04.04 in the List of Tariff Provisions set out in the schedule to the Customs Tariff (other than ice cream mixes or ice milk mixes), containing more than 10 per cent but less than 50 per cent on a dry weight basis of milk solids, not in retail packaging;

  • Food preparations of goods of heading Nos. 04.01 to 04.04 in the List of Tariff Provisions set out in the schedule to the Customs Tariff (other than ice cream mixes or ice milk mixes), containing 50 per cent or more on a dry weight basis of milk solids, not in retail packaging;

  • Food preparations, not elsewhere specified or included, containing 50 per cent or more by weight of dairy content;

  • Non-alcoholic beverages containing milk (other than chocolate milk) and containing 50 per cent or more by weight of dairy content and not put up for retail sale;

  • Complete feeds and feed supplements, including concentrates, containing 50 per cent or more by weight, in the dry state, of non-fat milk solids (other than preparations classified under tariff item No. 2309.10.00, 2309.90.10 or 2309.90.20 in the List of Tariff Provisions set out in the schedule to the Customs Tariff), not elsewhere specified or included;

  • Chocolate ice cream mix and ice milk mix;

  • Ice cream mixes and ice milk mixes containing more than 10 per cent but less than 50 per cent on a dry weight basis of milk solids;

  • Ice cream mixes and ice milk mixes containing 50 per cent or more on a dry weight basis of milk solids;

  • Ice cream and other edible ice, whether or not containing cocoa, other than flavoured ice and ice sherbets;

  • Fresh (unripened or uncured) cheese, including whey cheese and curd;

  • Cheddar cheese and Cheddar types of cheese, grated or powdered;

  • Grated or powdered cheese of all kinds, other than Cheddar and Cheddar types;

  • Processed cheese, not grated or powdered;

  • Blue-veined cheese;

  • Cheddar cheese and Cheddar types of cheese;

  • Camembert cheese and Camembert types of cheese;

  • Brie cheese and Brie types of cheese;

  • Gouda cheese and Gouda types of cheese;

  • Provolone cheese and Provolone types of cheese;

  • Mozzarella cheese and Mozzarella types of cheese;

  • Swiss/Emmental cheese and Swiss/Emmental types of cheese;

  • Gruyère cheese and Gruyère types of cheese;

  • Havarti cheese and Havarti types of cheese;

  • Parmesan cheese and Parmesan types of cheese;

  • Romano cheese and Romano types of cheese;

  • All other cheeses;

  • Yogurt, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa;

  • Butter;

  • Dairy spreads; and

  • Fats and oils derived from milk.

If you have any questions, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

How To File A Customs Valuation Appeal In Canada

Posted in Customs Law, valuation

Gavel and Scales of JusticeIf the Canada Border Services Agency (“CBSA”) has made an error during a valuation verification, the importer may file a request for re-determination to appeal the assessment of duties. In most cases, the CBSA changes the value for duty from a lower number to a higher value and issues a detailed adjustment statement charging the additional duties and interest.

What is a valuation verification? A valuation verification is when the CBSA conducts an audit of an importer to verify that the importer reported the correct value for duty (that is, value of the goods) on the B3 Customs Coding Form. When the importer imports goods into Canada, it communicates to the CBSA the value of the goods and pays the applicable duties and taxes (e.g., goods and services tax, provincial sales tax, excise tax, etc.) based on the reported value for duty.

For customs law purposes, the methods of customs valuation, in descending order of precedence, are:

  1. Transaction Value of Goods
  2. Transaction Value of Identical Goods
  3. Transaction Value of Similar Goods
  4. Deductive Value
  5. Computed Value
  6. Residual Method

These valuation methods are applied in this hierarchical order – meaning that if the transaction value method does not apply, the next step is to determine if the transaction value of identical goods method applies. When none of methods 1-5 apply, the residual methods is used in a flexible manner.

Often related importers run into difficulties when the transaction value is not applicable and another method results in a higher value for duty. The assessment is raised with resident to the duty and taxes payable on the higher value.

If you believe the assessment is incorrect and/or the CBSA misunderstood the facts or ignored relevant facts, you may file a request for re-determination (an appeal).  You must file the request for re-determination within 90 days of the date on the detailed adjustment statement. Do not miss this deadline. While there are exceptional circumstances that would allow a late filed request for re-determination, it is best to not have to prove that you meet the limited criteria.

You file the request for re-determination by completing a B2 “Adjustment Request.” If there is more than one detailed adjustment statement, you will have to complete more than one form. The B2 form must match with the original B3 “Customs Coding Form.” The CBSA has one year to review the request for determination and make a decision.

Make sure that you provide reasons for the request for re-determination.  If there isn’t enough room in the B2 “Adjustment Request” form, file an attached schedule. If you would like to resolve the issues more quickly, put your best arguments forward in a clear and concise manner. Let the appeals officer understand your point of view and evidence in support of your position.  A common mistake that we see is that the importer has a customs broker file the B2 “Adjustment Request” form without providing clear information for the CBSA to consider. A mere “you are wrong” is not sufficient to prove your case.

You must pay the amount of duties and interest owing as stated on the detailed adjustment statement or the CBSA may detain future imports of goods – they have ways to make you pay.

If the CBSA does not change their minds about the valuation, you may file an appeal with the Canadian International Trade Tribunal (“CITT”) within 90 days of the adverse decision of the CBSA. Do not miss this deadline. The initial appeal is relatively simple. An appeal can be in the form of a letter to the CITT.  You should provide the CITT with sufficient information to identify (1) the appellant, (2) the applicable statutory provisions, (3) the date of the CBSA decision being appealed, (4) the detailed adjustment statements at issue and (5) a brief indication of the issues to be decided. This can be done in a letter to the Registrar of the CITT. The notice of appeal or appeal letter must state the appellant’s intentions and be accompanied by a copy of the assessment, reassessment, rejection, decision, determination or re-determination, as the case may be, from which the appeal is launched.

However, within 60 days, you must file an Appellant’s Brief. This document must set out all the relevant facts, the law, and arguments. You must file your supporting evidence that the CITT is to consider. The Appellant’s Brief takes planning (as you may need expert evidence). This document takes time to prepare – good arguments are drafted and redrafted. Based on our experience, if the Appellant’s Brief can show the Department of Justice lawyer the weaknesses in their case, they may settle prior to having to file the Respondent’s Brief.

You should know the case you wish to present as early as the request for re-determination. You should have your evidence plan in the works at this stage. If you wait until the CITT hearing, you may find that the CITT does not accept your evidence. If you do not make certain arguments in the Appellant’s Brief, you may be precluded from arguing certain points later (e.g. in argument at the hearing).

So, plan your litigation strategy as early as possible and stay organized from the point of the initial verification by the CBSA. Seek help in preparing written representations and the available arguments.

If you have any questions, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

Senate of Canada Releases “Tear Down These Walls: Dismantling Canada’s Internal Trade Barriers” Report

Posted in Canada's Federal Government, Harmonization, Legal Developments

top10Further to my May 11, 2016 testimony and the testimony of others (view post here), today the Senate of Canada, Standing Committee on Banking, Trade and Commerce released an extensive report on Canada’s internal (inter-provincial) barriers to trade called Tear Down These Walls: Dismantling Canada’s Internal Trade Barriers.

In this report, Senator David Tkachuk, Chair of the committee says:

“Canadians should be able to live, practice their profession or trade, purchase goods and services freely and without penalty anywhere in this great country as a right. To do otherwise makes us less of a country and makes citizens tied to their region rather than their nation.”

Here Are The Top Weirdest Barriers To Trade (In Canada)

 

  1. Traffic Jam – Part 1:

    Some truck configurations must be driven at night in British Columbia — and only during the day in neighbouring Alberta. Insomnia rejoice.

  2. Traffic Jam – Part 2:

    Some provinces impose limits on the use of high-tech fuel-efficient tires so truckers have to swap them out at the border. Pit crews not included.

  3. The Grapes of Wrath:

    Only British Columbia, Manitoba and Nova Scotia allow direct-to-consumer wine shipments. Meanwhile, provincial liquor outlets charge high markeups.

  4. The Cheese Police:

    Quebec’s delicious array of unpasteurized cheeses can’t be shipped outside of the province. Un-brie-lievable.

  5. An Ale-Ing System:

    Beer bottle size standards differ across jurisdictions, forcing some brewers to spend money on parallel production system if they want to sell to other parts of the country.

  6. Size Does Matter:

    The size of diary creamers and milk containers differs across jurisdictions, forcing some companies to duplicate production streams.

  7. Carbon Omissions:

    British Columbia and Alberta have a carbon tax while Quebec and Ontario — and soon Manitoba — have a cap-and-trade system, making it more costly to operate in more than one jurisdiction.

  8. Paper Please:

    Companies often have to register in every province or territory in which they do business.

  9. A Sticky Situation:

    Provincial, territorial and federal standards for maple syrup grades differ. That’s not so sweet.

  10. Organic Feud:

    Organic food standards are different across Canada, therefore limiting access to certain markets. Kale still tats the same.

Download the Top 10 Weirdest Barriers to Trade: English | French (pdfs).

Download the news release: English | French (pdfs).

This Report should provide needed push to tear down internal trade barriers in Canada.  The removal of internal trade barriers within Canada should have beneficial economic effects.

The Federal Government and provincial governments are currently re-negotiating/evolving Canada’s Agreement on Internal Trade. The Senate Report should give Canadian businesses something to consider and further the discussion between business and the negotiators.

If you have any questions, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

The Canadian AD Expiry Review (Sunset) Process for Pup Joints for China Begins

Posted in Antidumping, Trade Remedies

3d human with a red question mark

Since April 10, 2017, Canada has imposed definitive anti-dumping and countervailing duties on OCTG pup joints (referred to as “pup joints”) originating in or exported from China.  Pup joints are defined as “oil country tubular goods pup joints, made of carbon or alloy steel, welded or seamless, heat-treated or not heat-treated, regardless of end finish, having an outside diameter from 2 3/8 inches to 4 1/2 inches (60.3 mm to 114.3 mm), in all grades, in lengths from 2 feet to 12 feet (61 cm to 366 cm)”. So, we are not talking about dog treats.  We are talking about a steel product used in the oil and gas industry.

On June 13, 2016, the Canadian International Trade Tribunal (“CITT”) commenced the first step in the expiry review process.  The CITT has commenced LE-2016-001 and has asked for submissions on whether and expiry review is warranted.

The timeline for the LE proceedings is:

June 29, 2016 – Notices of Participation are due

June 30, 2016 – The CITT will distribute the record

July 8, 2016 – Parties requesting or opposing the initiation of an expiry review of the findings shall file their written public submissions containing relevant information, opinions and arguments

July 18, 2016 – Reply submissions are due

August 2, 2016 – The CITT will issue its decision

If the CITT decides that an expiry review is warranted, the Canada Border Services Agency (“CBSA”) will commence the expiry review proceedings likely sometime in August.  In an expiry review, the CBSA takes 90 days to determine whether dumping and subsidization of pup joints will likely resume or continue should the duties be rescinded.  The CBSA in most cases determines that dumping and subsidization of pup joints will likely resume or continue should the duties be rescinded.  The CITT then conducts an inquiry into whether the resumption or continuation of dumping/subsidization is likely to cause injury to the domestic industry.  Commencing on or about the 90th day to the CITT inquiry, the CITT usually holds a hearing. The CITT usually takes approximately 45 days to make its decision.  It is based on this timeline that we believe the expiry review would commence sometime in August.

The CITT asks for submissions and evidence from the Canadian pup joints industry and importers/exporters/foreign producers on the the following:

  • the likelihood of continued or resumed dumping and subsidizing of the goods;
  • the likely volume and price ranges of dumped and subsidized imports if dumping and subsidizing were to continue or resume;
  • the domestic industry’s recent performance (data for the past three years and for the most recent interim period), including supporting data and statistics showing trends in production, sales, market share, domestic prices, costs and profits;
  • the likelihood of injury to the domestic industry if the findings were allowed to expire, having regard to the anticipated effects of a continuation or resumption of dumped and subsidized imports on the industry’s future performance;
  • any other developments affecting, or likely to affect, the performance of the domestic industry;
    changes in circumstances, domestically or internationally, including changes in the supply of or demand for the goods, and changes in trends in, and sources of, imports into Canada; and
  • any other matter that is relevant.

Any party that would like its voice to be heard should make submissions to the CITT.  Further, by participating in the proceedings, importers/exporters/foreign producers (if represented by counsel who have signed confidentiality undertakings) will have an opportunity to review the Canadian producers’ case.  It is useful to participate in the LE because the timelines in the expiry review are tight. If one is not well prepared, it could mean 5 more years of definitive anti-dumping and countervailing duties.

If you have any questions, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

What Exports From Canada Are Permitted Under General Export Permit No. 1?

Posted in Border Security, Canada's Federal Government, Cross-border trade, Export Controls & Economic Sanctions, Exports

flagsI am often asked by friends and family whether they can export clothing and money to Ukraine (because “Cherniak” is the Ukrainian part of my name).  I refer my friends and family to General Export Permit No. 1 (also known as the “Export of Goods for Special and Personal Use Permit”).

A General Export Permit is can be helpful to an exporter because Canada restricts exports of certain items and to certain countries. As a general rule, if an item is on Canada’s Export Control List, it can only be exported from Canada upon applying for and being granted an export permit from the Export Controls Division of the Global Affairs Canada. The process of applying for an export permit can take time.

However, if a General Export Permit, such as General Export Permit No. 1, applies, an exporter may ship or transfer the goods under certain conditions without having to apply for an export permit.  Also, where General Export Permit No. 1 applies, if an exporter’s goods have been detained by the CBSA, quoting GEP No. 1 and providing proof of its applicable may speed up the release.

Most people I speak with do not realize that General Export Permit No. 1 exist and do not know what exports it allows. General Export Permit No. 1 contains a number of rules facilitating exports. In other words, General Export Permit No. 1 may relieve a Canadian from the prohibitions in the Export and Import Permits Act and the Special Economic Measures Act if a specific relieving Rule applies.  You must read all of the Rules because if a specific rule does not provide relief, you must comply with the export controls restrictions where applicable and apply for an export permit.

The Rules in General Export Permit No. I are:

Rule No. 1: Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country any goods that have a value of $100 or less.  This includes countries subject to export controls.  This rule applies primarily to shipments by family and friends of low value items.  It is not necessary to determine whether Canada’s export restrictions apply unless Rule 3 below applies.

Caveat: One cannot circumvent Rule No. 1  by exporting goods that are separated into units the aggregate value of which exceeds $100.  In other words, you cannot send $1000 worth of goods in 10 different packages in order to get around the $100 value limitation.

Rule No. 2 (a): Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country casual gifts, including those sent by parcel mail, that have a value not exceeding $50 and that are sent to a consignee for the consignee’s personal use, but not exceeding one such casual gift per month to the same consignee.

Rule No. 2 (b): Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country goods consigned to embassies, legations, high commissioners, trade commissioners or consular offices of Canada or the United Kingdom.

Rule No. 2 (c): Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country personal or settler’s effects taken or shipped by an individual on leaving Canada and solely for his own use or that of his immediate family and not for resale and being (i) household articles, (ii) personal effects, (iii) articles of business equipment, instruments, tools of trade or machinery, if such articles have been used by him in his occupation or employment, are his personal property and will continue to be used by him in his occupation or employment, or (iv) a passenger automobile that is the personal property of the person who is leaving Canada.  It is important to review the Canada Border Services Agency’s position on what are settler’s effects before relying on Rule No. 2(c).  See D-Memorandum D2-2-1 and D2-2-2.

Rule No. 2 (d): Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country goods in Group 1 of the Export Control List that have been exported from Canada under a valid export permit and have subsequently been returned to Canada for repair, overhaul or testing, on condition that the exporter presents a copy of the original export permit at the time the goods are exported.

Rule No. 2 (e): Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country parts or components for the repair of goods in Group 1 of the Export Control List that were previously exported under a valid export permit, on condition that the exporter presents a copy of the original export permit at the time the goods are exported and on condition that the repair does not upgrade or otherwise transform the original function of the exported goods.

Rule No. 2 (f): Subject to Rule No. 3, under the authority of General Export Permit No. 1, any person may export from Canada to any country goods in Group 1 of the Export Control List that are being returned to their original manufacturer as unwanted goods or for repair, overhaul or testing, on condition that the goods have not been transformed, remanufactured or otherwise modified in Canada.

Override: Rule No. 3: Rules No. 1 & 2 do not apply to (a) the export of radioactive goods; (b) exports to a country listed on the Area Control List (currently North Korea and Belarus are listed; but the Government of Canada has indicated Belarus will be removed – see Canada Announced Plans to End Strict Export Controls Against Belarus); or (c) exports of helicopters and their parts as described in item 1460 of the Export Control List.

It is worth noting that two Rules no longer apply because the underling Remission Order or Regulation has been repealed.

If you have any questions, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com. Alternatively, visit www.lexsage.com.