Streamline the U.S./Canada Clearance Process

A new white paper from Purolator International, “5 Tips for Improving U.S./Canadian Border Clearance Efficiency,” sheds light
on important processes and best practices that can help ensure seamless, hassle-free border crossings.

Following is a brief overview of some of the information included in the white paper.

Tip #1. Don’t Underestimate the Border Clearance Process

Most common mistakes occur in three categories:

• Shipment Valuation – how much is the shipment worth?
• Country of Origin – where did the shipment come from?
• Tariff Classification – what is the shipment’s unique 10-digit identification code?

Shipment Valuation

In general, the value listed on a commercial invoice should be the price a buyer has paid for a product (and not the amount the goods will be sold for). This is called the product’s transaction value.

In some situations, it is not possible to assign a transaction value. In those situations, alternate processes for determining value will be applied that include:

• Transaction Value of Identical Merchandise
• Transaction Value of Similar Merchandise
• Deductive Value – This is essentially the resale price in the United States, with deductions for certain items.

Country of Origin Determination

Importers also have an obligation to provide specific information about a product’s country of origin. This information is necessary for several reasons, including:

• Determining eligibility for free trade agreement benefits
• Determining rate of duty
• Assessing applicability of antidumping or countervailing duties
• Determining eligibility for import

Since many imported goods consist of materials from more than one country or goods that are manufactured in processes performed in multiple countries, complex rules have been established to determine the country of origin.

Tariff Classification

Every product entering Canada must be assigned a 10-digit Customs Tariff code that is used to assess tariff and duty obligations, and to assist in determining eligibility for free trade agreement benefits. But determining the exact code can be a time-consuming and exacting process, and unless the individual making the classification assignment truly understands the process, it is easy for errors to occur.

#2. Duty Paid or Unpaid? Select the Correct Shipping Terms

International shipping operates under a uniform set of standards – known as Incoterms – that establish clear expectations and responsibilities between buyers and sellers.

For purposes of ground shipments traveling between the United States and Canada, Incoterms choices are generally limited to the three terms commonly referred to as “Arrival Group D.” Within this category are the Delivered at Terminal (DAT), Delivered at Place (DAP), and the Delivered Duty Paid (DDP) options.

The primary difference between these three terms of service is that a DDP transaction places responsibility for payment of customs, taxes, and brokerage fees on the seller. DAT and DAP shipments place these responsibilities on the buyer.

#3. Become a Non-Resident Importer

The Canadian government allows a U.S. business to register as a Non-Resident Importer (NRI), which offers many benefits that include:

• Ability to factor in all duties, taxes, and brokerage fees at time of purchase
• Ability to act as “importer of record” during clearance process
• Greater control over delivery times
• Ability to compete on a level playing field with Canadian businesses
• Potential for reduced supply chain expenses
• Enhanced customer satisfaction

#4. Take Advantage of State and Federal Resources

Multiple government resources are available to assist businesses interested in becoming an exporter.

State Resources

State resources vary, but in general, a business can look to its state government for services ranging from official trade mission visits to market research to funding opportunities.

Federal Resources

A Basic Guide to Exporting: This publication provides comprehensive information about the export process and is considered a “must read” for any business interested in pursuing export opportunities.

Centers of Excellence and Expertise

Network of industry-specific “Centers of Excellence and Expertise” that oversees trade policy and serve as a resource for the trade community

Export.gov: Go-to source for information on key topics, including:

• Export education
• Access to webinars
• Country Commercial Guides
• Information about export finance programs
• Access to local trade specialists
• Small Business Administration: Assists potential exporters in several ways, including with loan procurement
• U.S. Commercial Service (USCS): Network of 106 domestic offices staffed by trade professionals
• Enhanced customer satisfaction

#5. Experience Matters – Choose the Right Logistics Provider

Among the benefits of using a logistics partner that truly understands the clearance process:

• Trusted trader program membership. Both the U.S. and Canadian governments offer “trusted trader” programs that provide expedited clearance benefits to qualified members of the trade community.
• Awareness of documentation requirements. An experienced logistics provider will have no learning curve when it comes to understanding documentation and paperwork requirements.
• Awareness of “trade facilitation” programs.
  • Non-Resident Importer (NRI) program allows U.S. businesses to serve as importer of record and to collect Canadian sales taxes.
  • Courier Low-Value Shipment Program. This program offers expedited clearance to shipments valued at less than $2,500 entering Canada via courier.
  • NAFTA benefits. NAFTA eliminates tariffs on all qualified products traveling between the United States, Canada, and Mexico. Determining eligibility can be quite difficult, since a product may contain percentages of components from non-NAFTA countries and still qualify.
  • Duty drawback. This program allows a qualified shipper to recoup up to 99 percent of duties, taxes, and fees paid on imported products that are subsequently exported or destroyed.
• Seamless release of shipments. A shipment will not be officially “released” from CBSA’s control until all paperwork has been reviewed and customs agents are satisfied that the shipment presents no risk. An experienced logistics provider will have intricate knowledge of this process, including experience with the Pre-Arrival Review System (PARS).

Related White Paper

5 Tips for Improving U.S./Canada Border Clearance Efficiency
When Canada's Office of the Auditor General released its 2017 audit focused on “customs duties,” a key finding included the fact “that importers misclassified about 20 percent of goods coming into Canada and may have ended up paying a lesser amount of duty as a result.” Download Now!