Ecommerce, Customs and You

Answers to your questions on imports

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CUSMA: short answers

The most important thing most small business importers in Canada need to know about CUSMA is nothing. The majority of the rules will not impact you, unless your supply chain involves agriculture, dairy, the manufacture of auto parts or one of the other select industries being impacted by stricter Rules of Origin. Please find below our short answers to your questions on CUSMA:

 

Will we still be able to use our existing NAFTA certificates?

No, this is the key change. The NAFTA certificates provided by your current supplies will be redundant as of July 1st, replaced by a certification included on an invoice. We’ve created an autoCUSMA Certification wizard to help our clients transition.*

What should I do to prepare?

When ordering from your suppliers, remind them that a new certification is required to obtain duty-free status (NAFTA certificates will all be invalid as of July 1st, 2020).

How will I know if CUSMA is being claimed on my entries?

The tariff treatment (10 for USA origin goods, 11 for Mexico) has not changed.

I’m concerned my products will no longer be valid under the new Rules of Origin. How can I verify this?

Most of the Rules of Origin have not changed under the new Agreement, but you can check the new Rules of Origin here (Chapter 5 of the Agreement). Make sure you have the HS codes for your products handy, as this is the key element in determining a product’s eligibility.

Do we still require a Exporter’s Certificate of Origin for Textiles?

Yes, the procedures to import garments duty-free remains largely unchanged and a permit from Global Affairs will still be needed.

 

*Certifications under CUSMA may take any format, as long as all the required details are included (the details are found here in Annex 5-A)



Importing masks, respirators and other goods in response to COVID-19

We’re receiving a lot of requests for more information on how to import masks and other medical equipment in response to the COVID-19 emergency. Canada Customs has issued an order relieving duty and tax on these products where they are being imported on behalf of emergency workers and government agencies.*

Please find below our best answers:

What items are considered as being for ’emergency use’ and qualify for duty relief?

Anything being imported by or the behalf of emergency health workers and government agencies in response to the COVID-19 crisis. There is no specific list, although additional documentation proving the goods qualify may be requested.

As of May 6th, most goods providing protection from contagion can now be imported duty-free, regardless of who the end user will be. A complete list is available on the CBSA website.

Do I need a special permit to import emergency goods?

For non-regulated articles only a valid business number will be required in order to import. For most medical devices (including N95 masks), an MDEL (Medical Device Establishment License) is required. Note that while Health Canada is expediting MDEL applications, you may need to pay a substantial fee to apply.

For other articles, please find a list below:

  • Denatured alcohol: only importers with a federal spirits license are able to import this product (this may change, but we’ve yet to see a notification).
  • medical devices/machines: an MDEL will likely be required. Check here to see if your business is licensed.
  • hand sanitizer: considered a Natural Health Product.
    • if for re-distribution: Usually importers will require a Drug Establishment Licence or Site Licence in order to redistribute (if the sanitizer will be re-sold to consumers, contact Health Canada first to ensure the product is eligible and you may act as the importer of record).
    • personal use or exclusively for use within your organization: If the sanitizer is meant only for use within an organization or for personal use, it can typically be imported without needing consent from Health Canada.
  • face masks (not surgical or N95): not all face masks are regulated as surgical or N95 masks and therefore not subject to additional regulation, although we have no guidance on what determines this — we recommend contacting Health Canada when in doubt (see below).
  • surgical masks: see below
  • N95 masks and respirators for redistribution
    • Rule of thumb: If you are importing Class I medical equipment (i.e. masks and gowns) for your own use or for use exclusively by your business and its employees during work  activities (i.e. not to be re-sold and redistributed), you may be considered to be the ‘ultimate consumer’ and likely exempt from requirements to obtain an MDEL. (see GUI-0016 Explanatory Notes).

 

Importing or distributing masks and respirators that aren’t approved in Canada

Manufacturers and importers may wish to import masks and respirators that haven’t been approved. Non-compliance means the product:

-is past its expiry date
-is a non-medical grade
-may not have a bilingual label

To import non-compliant masks, manufacturers and importers should

-complete the HC Personal Protective Equipment (PPE) – Notification form
-include “COVID – Notification” in the subject line of the email to help Health Canada fast-track requests
-email the completed form along with a copy of the product label to hc.mdel.questions.leim.sc@canada.ca

Fast-tracking approval of masks in Canada
Health Canada is fast-tracking the MDEL application process for companies that want to manufacture, import or distribute Class I masks. Our goal is to complete the process within 24 hours from the time we receive a completed application.Companies that need an MDEL application fast-tracked should:

-contact hc.mdel.application.leim.sc@canada.ca to obtain the MDEL Application Form (FRM-0292)

-complete the form
-indicate in the subject line of the email: URGENT COVID-19 MDEL application for “-name of company”
-email the completed MDEL application form to hc.mdel.application.leim.sc@canada.ca

What if I am not importing on behalf of the gov’t or health workers?

You may still import these articles even if the consumers will not be government or health affiliated, but duty and tax may apply.

How do I Customs clear the goods and take advantage of CN20-08?

If you do not already have an account with a customs broker, you may use the autoclear wizard on our home page. Your customs broker will apply the special authorization for duty relief if you are eligible.

 

Sources:

https://www.canada.ca/en/health-canada/services/drugs-health-products/medical-devices/masks-respirators-covid19.html#a5

https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn20-08-eng.html

https://www.fda.gov/medical-devices/personal-protective-equipment-infection-control/n95-respirators-and-surgical-masks-face-masks

https://healthycanadians.gc.ca/recall-alert-rappel-avis/hc-sc/2020/72623a-eng.php#

https://www.canada.ca/content/dam/hc-sc/migration/hc-sc/dhp-mps/alt_formats/pdf/compli-conform/licences/directives/gui-0016-eng.pdf

https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn20-12-eng.html

https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn20-19-eng.html



Cargo Drones and Customs

Are cargo drones the future of international trade?

Google has their own division dedicated to improving the technology, and UPS recently received a license to operate an “unlimited number of drones.” Larger cargo drones — capable of carrying much heavier loads — are not yet operational but are projected to hit the market next year.

a Google drone in action. The technology has the power to push trade in a new direction.

What this new mode of transport entails for international trade remains unclear, but the impact of thousands of new air consignments could be massive. Countries with a close proximity to each other like Canada and the US could see their trade relation change in unpredictable ways. A drone fleet’s ability to fulfill orders endlessly resembles the pipeline mode more than any other, which is currently only used by the energy sector.

We sent a request to the CBSA media relations team but have yet to hear back from them on how they plan to regulate unmanned vehicles and their commercial consignments. Assuming that the regulations are similar to those of other commercial vehicles, drone operators should prepare for the following when extending their routes internationally:



  • Drone operators will require a carrier code (or 'SCAC' code)
  • Pre-manifest information must be sent before each voyage
  • For each consignment, a Customs release
  • Random inspections or check-ins at sites designated by Customs

Given the complexity and pace of Customs transactions it may be a while before autonomous vehicles accelerate international trade. Some fast-moving individuals are already shaking up the cross-border scene with drones: CBP in the US recently busted a meth trafficker who attempted to fly his contraband over the US – Mexican border. Could Amazon be next?



The HS classification of plant-based meat

 



What is a classification?

HS classification is the process of determining a products place in the universal index of international trade. Proper classification is essential to compliance, but finding the true classification of a certain product can be challenging and sometimes  absurd.

Plant-based meat vendors are working hard to brand their products as a meat alternative rather than as a traditional vegetarian product. While this marketing strategy is working, for Customs purposes these products remain under the same heading as all other imitation meats (2106.90). However, new products are arriving quickly (such as plant-based eggs and bacon) which could be classified differently depending on their ingredient list and level of manufacturing — if the product has one dominant ingredient (i.e. it is made of 100% beets) then the correct classification could reasonably shift to a different category.

 

Description HS Code Current Duty Rate PGA Requirements* Detail
Plant-based meat (incl. burger patties and sausages) 2106.90.99.99  10.5%  CFIA, Environment Canada  All plant-based meat products are classified as ‘food preparations not elsewhere specified’

*Note that the PGA requirements can vary depending on the country of origin, end use and state (dried, chilled, fresh) of the items you are importing. For more information, please contact us.

**Classifications are provided by Border Bee Customs Brokers as a reference guide for importers and should not be relied upon solely for commercial classification.