Ecommerce, Customs and You

Answers to your questions on imports

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NAFTA, TPL and You

NAFTA, TPL and You

Here is our guide to NAFTA’s quirkiest catch: the Tariff Preference Level for imported apparel

What is the TPL?

Tariff Preference Level: A specific exception under NAFTA relating to garments (and some other commodities) that use fabric from foreign sources. This covers most clothing for any vendors that are only involved in the cutting and sewing of their clothing production.

Why does this concern me?

If you are involved in the importation of clothing made within the USA or Mexico, an extra document will be needed in order to avoid paying duty.

Are all American-made clothes subject to TPL?

No, only goods that are made from fabric sourced outside the NAFTA zone. Certain fabrics, such as linen and silk, are also exempt regardless of where the fabric originates.

How do I know if the goods I am buying qualify for TPL?

You don’t– but your seller does. Make sure before placing any orders that your seller understands their TPL eligibility as a producer and can supply an Exporter’s Certificate of Non-Originating Textile Goods.

What is required to apply for a TPL permit?

Your customs broker will need a copy of your commercial invoice and the Exporter’s Certificate of Non-Originating Textile Goods to obtain your TPL permit.

Are the permits free?

No, they range in price based on the value of the order. Please find a schedule below:
image (1)

Can I apply for TPL permits anytime?

Yes, although the permits are subject to a first-come, first-serve quota that typically fills up halfway through the year.

I imported goods that qualify for TPL, but my broker did not obtain the permit at time of import and I am stuck paying the duty. Is there any way out?

Yes, if you have the Exporter’s certificate of Non-originating textile goods is required, Border Bee can obtain the permit and file a claim for you to obtain the duty back. However, if the quota for the year is full then the permit will not be issued even if the shipment was imported at a time when permits were available.

Need a TPL permit?

info@borderbee.com



The Canadian Importer Number and You

The Canadian Importer Number and You

An importer number–aka your business number, GST number, or ‘RM’ number–is required to import into Canada.

45 million parcels and pallets enter Canada each year, and to keep track of all that cargo, Customs uses your business number (or ‘importer number’) for identification and compliance. Simple enough! but who is the importer? When is a business number required, and who is eligible to obtain one? Please find our answers to the most common questions below:

Do you need a business number to import?

Yes, all commercial cargo imported into Canada requires a business number. Please note the CBSA’s definition of ‘commercial’ is extremely broad: anything for “commercial, institutional, or occupational use” is considered commercial. Personal orders of a high volume (e.g. 100x of the same item) or peculiar nature (industrial machinery) may also require a business number regardless of their end use.

What is the difference between a business number and an importer number?

None. The business number is the master number used by Ottawa to track Canadian business activity, and the importer number is a sub-account (business number + RM0001) that is activated when your business imports commercial goods.

Your business number -> 888888888

Your business number for importing -> 888888888RM0001

The numbers currently only start with 1, 7 or 8 and stretch to nine digits. Other sub-accounts of the business number include payroll, GST/HST, and Corporate reporting.

Why is the business number important?

As the CBSA now conducts most of its compliance checks following importation, the business number allows Customs to release cargo and audit later. As well, since verification is required to obtain an importer number, it eliminates confusion or debate about who is responsible when a Customs problem does arise.

What is a business number?

A business number is a nine-digit identification number issued by the Canada Revenue Agency to all active businesses in Canada. The number itself consists of four distinct accounts (RM0001, RT0001, RS0001 and RC0001). The business number is largely used by Ottawa and other government agencies to track business activity and is akin to a social insurance number for a company.

Who should apply for an importer number?

It is typically the buyer of the goods who is responsible for each import, unless the seller has stated that they will take responsibility for duties and taxes. In the latter case, the seller will need to register as a non-resident importer before they can complete Customs clearance for their client.

Am I eligible to obtain an importer number?

Any Canadian resident or non-resident business is eligible for an importer number.

We are not registered for GST, do we have a business number?

Yes, all registered companies in Canada are issued a business number, regardless of their GST status.

We’ve been shipping to Canada for years, why do we need a business number now?

Parcels, which are four times more common than pallets, undergo an expedited release process and due diligence is often not exercised. Many non-resident companies are active in Canada for years before their first formal release is required. If your company has never needed a Canadian business number before, this is likely why.

Need a business number?

Still confused?

Ask us: info@borderbee.com



How to Import Cannabis Seeds into Canada

How to Import Cannabis Seeds into Canada

The importation of Cannabis seeds is heavily restricted in Canada

**Please note this is an article about the legal importation of cannabis seeds by licensed businesses in Canada.**

Despite the presence of numerous seed banks throughout the country, cannabis seeds do not originate in Canada and therefore must be imported. Licensed growers may find it difficult to navigate the compliance process, so we recommend a customs broker be involved from the start of the purchasing process.

Importing difficulty Hard
Classification Header 1209
Duty rate 0%
Tax rate 5%
Additional Requirements Health Canada and CFIA permits
Shipping method Special courier
Sources  Medical cannabis producers

Please find the requirements below:

  1. Be a licensed grower: There are currently only 29 in Canada, so unless you are one of them, you will not be able to import!
  2. Obtain a permit from Health Canada: the process will take some time. You can reach Health Canada by e-mail only: MMPR-RMFM@hc-sc.gc.ca
  3. Obtain an import permit from the CFIA (Canada Food Inspection Agency). This is a general permit for the importation of seeds into Canada. You can reach the CFIA at: 800-835-4486
  4. Order from a vendor that understands the export requirements: a Phytosanitary certificate will be required and must be included with the shipment.
  5. Hire a customs broker: Border Bee strongly recommends a customs broker be involved in any transaction regarding the importation of cannabis seeds as the consent of three distinct government parties must be coordinated in a timely manner.

Need shipping or customs clearance? ask us: info@borderbee.com



Importing clothes into Canada

Importing clothes into Canada

Part two in our series of import guides on specific commodities: the rag trade or schmatta business.

Garments are one of the most popular items imported into Canada–and one of the most protected–with duty rates averaging 17.5% and legislation (particularly for NAFTA-sourced goods) reaching epic levels. That said, no specific permits or Customs approval is required so long as you are not importing under your own brand. Assuming you have already found a vendor overseas, please follow the below check list to assure a smooth importing process.

Importing difficulty Easy
Classification Header Chapters 61 or 62
Duty rate 17-18%
Tax rate 5%
Additional Requirements Textile Labelling and Advertising Regulations
Shipping method Ocean or air freight
Sources  Anywhere
  1. Vendor communication: ensure that labels are added ahead of shipping. You may make certain modifications once the goods arrive and before they have cleared Customs, but special permission must be requested to do this.
  2. Labelling: the clothes must be labelled overseas with the correct country of origin, dealer information (you), and fabric content. See full requirements here.
  3. Obtain a CA number (if needed) to put on your labels. You can apply online via the Competition Bureau website.
    1. Note: if you are retailing another brands clothing, the CA number is not required as the garments will typically arrive pre-labelled with the correct information.
  4. Shipping and customs: air or ocean freight? This will depend on your budget as well as urgency. we recommend working with a freight forwarder and customs broker to expedite your importing and shipping. They will handle the A to B of the logistics and be able to advise you on most regulatory issues.
  5. Pay the duty: as mentioned, duty on garments is steep and there is little you can do about it. A few government initiatives exist to shelter manufacturers and designers, many of which are being phased out. Even garments made in the USA face a slew of additional requirements for duty-free entry. Your best bet, if you are going to be exporting the bulk of the garments you are importing by selling to foreign buyers (at least 70%), you can qualify for an exemption from paying the duty up front.

More questions? Need help shipping or importing your orders? info@borderbee.com



A Brief History of Customs

In an increasingly globalized world, it can be difficult to understand the behaviour or even the purpose of Customs agencies. What gave rise to such an institution, and why are its laws so complex? Perhaps the best way to understand the motivations of today’s federal agencies is to examine the history of Customs itself.

Although we tend to think of globalization as a modern phenomenon; the hallmarks of its activity, from free trade zones to duty rates, have been around for millennia. Evidence of Customs activity has been excavated all over the world, from the ports of Ancient Greece to the Great Wall of China.
The evidence suggests that complex systems of controls and taxes on traded commodities were in existence well before industrialization, as well as the reasoning behind them. It was easy to see among small populations that unmitigated dependence on foreign merchandise would in-debt and stress the community.

Scholars believe that the earliest Customs fees were actually voluntary, and offered by travelling merchants as a bribe to sovereigns for considerate treatment. Over time, this bribe became mandatory. It was called ‘duty,’ a fee charged for the privilege of trading in a particular kingdom. The collection itself was outsourced to tax farmers, who would use any means necessary–including violence–to obtain what had become an essential revenue source for monarchies.

The first written Customs tariff was developed in Palmyra (present day Syria) and was engraved in stone (its still there!). Despite its age, the ancient tariff bears a striking resemblance to the modern harmonized system, and included specific duty rates for commodities such as camels, slaves, fleece, and aromatic oils.

Customs Tariff of Palmyra (est. 167 AD)
  • per camel-load of aromatic oil in alabaster jars, seven denarii at importation and exportation
  • per camel-load of olive oil comprising four goatskin bags, ten denarii at importation and exportation
  • per camel-load of salted provisions, ten denarii at importation and exportation
  • for salted goods carried by donkey, the Customs agent shall collect three denarii per load, at importation and exportation
Canada Customs Tariff (2016)
3301.13.00 00 Essential oils (terpeneless or not), including concretes and absolutes; resinoids; extracted oleoresins; concentrates of essential oils in fats, in fixed oils, in waxes or the like, obtained by enfleurage or maceration; terpenic by-products of the deterpenation of essential oils; aqueous distillates and aqueous solutions of essential oils. – Essential oils of citrus fruit: – Of lemon KGM Free
1509.90.00 20 Olive oil and its fractions, whether or not refined, but not chemically modified. – Other – In container sizes of 18 kg or more KGM Free

Ancient Rome introduced professional customs offices and officers. Similarly to Palmyra’s tariff wall, trade information found on artifacts (imported jars of olive oil) contained inscriptions nearly identical to to modern Customs declarations.

Roman-era Customs data Canada Customs Invoice (current)
  • port of loading
  • date of shipment
  • name of city where duty was paid
  • weight
  • value
  • order #
  • producer
  • officer who weight the goods
  • amount of duty paid
  • Vendor (name and address)
  • Date of direct shipment
  • Other references
  • Consignee
  • Purchaser’s name and address
  • Country of transhipment
  • Country of origin of goods
  • Transportation mode
  • Conditions of sale and terms of payment
  • Currency of settlement
  • Number of packages
  • Specification of commodities
  • Quantity
  • Selling price
  • Total weight

A newer concept of Customs as a complex, evolving filter began at the dawn of the industrial age when nations promoted exporting as a powerful tool for national wealth. As trade increased, so did competition, and streams of legislation became a necessity to balance the needs of domestic labour with market forces. Countervailing duty was charged against subsidized products, and anti-dumping duty against unsold surplus. Unbridled attempts to push exports led to a series of trade wars that halted shipping and resulted in economic crashes, revealing the dangers of protectionism. Following the wars, international organizations were established, and an era of (somewhat) transparent cooperation continues to this day.

Despite major advances, the essence of Customs has neither disappeared nor changed. While today’s agencies screen for a variety of novel threats, from security to the environment, protecting the local market is the motivation behind every decision, even if it is not always clear to the importer.

Sources:

SJ de Leat: Portorium (1975)
Hironori Asakura, World History of the Customs and Tariffs (2003)
Douglas A. Irwin, Against the Tide (1996)