As 2022 begins, please review the notable initiatives and improvements that have impacted the Customs Brokerage industry in Canada and the United States in 2021 and what changes you can expect in 2022.
Canadian Officials Seize Goods Made with Forced Labour
As of July 1st, 2020, goods that are mined, manufactured, or produced wholly or in part by forced labour, are prohibited from entering Canada pursuant to tariff item No. 9897.00.00 of the Customs Tariff.
On November 12th, 2021, the Canada Border Services Agency (CBSA) acknowledged seizing goods from China that were identified as being made with forced labour despite having told the Globe and Mail in March 2021 that they have not seized any imports from China since the new rules came into force. This was the first Chinese shipment that was intercepted since federal law was toughened in 2020 to prohibit imports of items made under coercion.
CBSA spokesperson, Rebecca Purdy, told the Globe and Mail that customs officials had seized a shipment of women’s and children’s clothing that arrived in Quebec from China, on the belief that it was “manufactured or produced wholly or in part by forced labour.” The CBSA did not disclose the date of the seizure and said confidentiality rules prevented them from identifying the importer. They also said information was only available on interceptions up to November 3rd, 2021.
Source: Excerpted from the Globe and Mail.
CBSA Assessment and Revenue Management (CARM)
CARM will affect all businesses importing into Canada. CARM is supported through a CBSA web portal, the CARM Client Portal (CCP), which all Canadian and non-resident importers are expected to have set up to continue to import into Canada. The program will be deployed through a phased approach.
On May 25th, 2021, Release 1 launched the CCP, facilitating accounting and revenue management processes with CBSA.
All functionalities of the CCP will be available as of Release 2 in May 2022.
Release 2 Preparation
- Importers will need to have financial securities in place to obtain Release Prior to Payment (RPP) privileges.
- Importers will be required to be on direct securities with CBSA. There are a few options to make payments on BN15 registered accounts within the CCP.
- Importers will need to be registered on the CPP to see their transactions and Statements of Account (SOA).
- On the CCP, importers will need to delegate authority to their broker, Delmar, and give them Business Account Manager (BAM) access to be able to manage their transactions, as we do today.
Please visit Delmar’s dedicated CARM webpage for additional resources that will facilitate the CPP onboarding process in preparation for Release 2.
Canada Organic Regime (COR)
The Canada Organic Regime (COR) team at the Canadian Food Inspection Agency (CFIA) has advised Delmar International that the implementation of new requirements for organic products is expected to be completed by the end of 2022.
COR Current Requirements
The current requirements demand importers/brokers to confirm possession of the organic product certificate at the time of import in the Integrated Import Declaration (IID). Anyone who imports organic products must be able to present a valid organic certificate when requested at any time, including at the time of import.
COR 2022 Requirements
Sometime in 2022, importers of organic commodities for which the import requirements are included in the Automated Import Reference System (AIRS), will be required to submit a digital copy of the organic product certificate when declaring organic products online using the IID system.
We encourage all importers to be prepared with valid organic product certificates on file for all of their imported or domestic organic products.
Note: The CFIA is currently auditing the organic products imported between January 2021 and June 2021. They are currently targeting fresh fruits and vegetables, honey and processed products. We have been told that the CFIA plans to take an educational approach and are unlikely to take enforcement action.
- The CFIA Flowchart helps determine if an organic product certificate is valid for marketing an organic product in Canada.
- Click on “Description of Figure 1: Organic Certificate validation flowchart” to access the flowchart’s embedded hyperlinks.
- The CFIA strongly encourages everyone to sign up for AIRS email notifications and organic email notifications.
- Visit the CFIA website regularly for updates.
World Customs Organization (WCO) Amendments to the HS Nomenclature -Concordance Tables T2022 and T2022-1
About the Harmonized Commodity Description and Coding System
The Harmonized Commodity Description and Coding System, generally referred to as “Harmonized System” or “HS”, is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). The system is used by more than 200 countries and economies as a basis for their customs tariffs and for the collection of international trade statistics. Over 98% of the merchandise in international trade is classified in terms of the HS.
The maintenance of the HS is a WCO priority. The HS Committee prepares amendments updating the HS every 5-6 years. These amendments are based upon the general reviews of the HS. These reviews ensure that the nomenclature stays up to date in light of new technology and new product streams.
As mentioned in Customs Notice 21-19, the WCO amendments to the HS nomenclature will enter into force on January 1st, 2022 (HS 2022). Canada, like other contracting parties to the International Convention on the Harmonized System Commodity Description and Coding System (the Convention), has made consequential adjustments to the Customs Tariff schedule that will come into force concurrently with HS 2022, effective January 1st, 2022.
A total of 852 HS Classification Numbers are affected due to the HS 2022. There are one-to-one changes as well as one-to-many changes.
There is a total of 282 one-to-one changes in HS 2022. A one-to-one change means that the HS code has changed to a single new code.
- In 2021, 7007.21.00.10 represented windshields. In 2022, the HS code for windshields is being changed to 8708.22.00.00.
- In 2021, 8708.22.00.00 did not exist, therefore this is a new HS code being created for windshields. 7007.21.00.10 will be discontinued.
There is a total of 570 one-to-many changes in HS 2022. A one-to-many change means that the HS code has changed into multiple codes.
- 7304.59.00.90 has 36 changes in HS 2022. It is being separated into multiple codes due to the external diameter and American Society for Testing and Materials (ASTM) grades.
A complete list of the 2022 HS codes can be found on the CBSA website under “Concordance”. Please note that a combination of the T2022 Concordance and T2022-1 Concordance files need to be used as they all have different updates. However, the Customs Tariff files under T2022-1 are fully updated.
Luxury Tax – Effective January 1st, 2022
In their 2021 Budget, the Canadian Government has proposed to introduce a tax on the sales of luxury cars and aircraft for personal use with a retail sales price over $100,000, and boats for personal use over $250,000. The tax would be calculated at the lesser of 20% of the value above these thresholds ($100,000 for cars and aircraft and $250,000 for boats) or 10% of the full value of the luxury car, boat, or aircraft.
The luxury tax will come into force on January 1st, 2022. It is estimated that this measure will increase federal revenues by $604 million over the next five years.
For additional information on the Luxury Tax, including illustrated price examples, please visit the following Government of Canada webpage: https://www.canada.ca/en/department-finance/programs/consultations/2021/consultation-proposed-luxury-tax/select-luxury-goods-tax.html.
For more information or questions regarding our 2021 Review and 2022 Updates, please contact Delmar’s Customs Brokerage Team at firstname.lastname@example.org or reply to this email and one of our specialists will assist you.