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.

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 modern Customs declarations.

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)

“Undervaluation” is one of the most common Customs infractions and one that the CBSA invests a lot of time in discovering. The infraction is an attempt by the importer or shipper to conceal the real cost of a sale so that Customs duties and taxes will be assessed on a lower amount. While undervaluation can take many forms, the least complicated and most common is simply including a fake price on the invoice used for Customs clearance.

The CBSA uses a few methods to combat this scheme. They will frequently ask importers to present a “proof of payment” from a verified third-party (such as a bank or credit card provider) before releasing control of the goods. Should the price initially declared to Customs vary greatly from what was actually paid, Customs will often issue a penalty against the importer and may deny their right to import and seize the goods in question.

Invoice versus commercial invoice = different, sort of

What may sound like a novice question to an experienced shipper is really not a dumb one at all. How are you supposed to know that a “commercial invoice” is used specifically in international trade as it provides extra details (such as the country of origin and value for duty) required for customs export and clearance? The adjective “commercial” does not exactly suggest this.

How is it different than a normal invoice?

It’s not, really. An invoice is an invoice, but the amount of detail will change depending on who and what you are selling. If you are shipping abroad, you will need to prepare one, regardless of the situation of the sale. A commercial invoice should have, at least:

• names and addresses of the seller and buyer
  • as well as the consignee if a separate entity
• A description of the product sold
  • as well as its country of manufacture
  • the tariff code, if known
  • an end use statement for uncommon items
• the price of the product
  • date of the sale and any applicable terms (payment, INCO, or otherwise)

A “customs invoice” is similar, if not exactly the same. Apparently some old school merchants would use the term “consular invoice” interchangeably although I have never heard this.

Whats the easiest way to tell if its a “commercial invoice”?

“commercial invoice” is usually written at the top of the page : ) But seriously, any invoice will do as long as the necessary details are provided. You do not need to write “commercial invoice” on it although this does help distinguish it from a Pro Forma or other invoice type.

Can I make my own commercial invoice?

Of course, there is no standard form that must be filled out, although you can find many templates online.

Can I fill out the commercial invoice, even if I am the buyer and not the seller?

Yes, as long as you know the details of the transaction, the importer can fill out a commercial invoice. In this case, we recommend completing a Canada Customs Invoice. Be wary when declaring your value however, as you may still be asked for proof of payment by Customs (proof of wire transfer or credit card receipts) to back up your claim.

But the goods are shipped free of charge? Do I still need to make one?

Unfortunately yes. There are no exceptions and a commercial invoice will still be required at destination. Many couriers have solved this issue by automating invoice production into online pick up requests, but Customs are known to be skeptical of these so its best to attach a real commercial invoice anyway.

I don’t know the price yet, what do I declare?

You may use a Pro Forma invoice to clear customs which will declare the price and terms you agreed to pay the seller. However, if Customs doubts the value or if the actual cost of the goods augments you will need to provide proof (or file a claim if the entry was liquidated).

Coffee beans: coffee is the most commonly consumed beverage in Canada (other than water)

Coffee! The second most traded commodity on the stock market is also one of the most frequently imported.

But how do you get the beans into Canada? and what will it cost?

Coffee is a simple and affordable commodity to import. Most raw food and beverages are tax-free under Canada’s Excise Tax Act, meaning that coffee is not only free of duty but also GST. Unlike many other raw food items coffee beans require no permits or licenses, although the beans are subject to the approval of the CFIA.

A rising trend has seen smaller roasters work directly with vendors in countries who farm and produce the beans themselves, rather than buy from larger merchant conglomerates. Whether you are buying vendor-direct in Kenya or ordering from a merchant company, the process is the same:

Once you’ve found a vendor and made your order, you are ready to ship! Most beans will ship in an ocean container due to their weight, and chances are your vendor will arrange this for you. You should have a commercial invoice from your seller and the beans should be packaged in such a way that their country of origin is clearly indicated (most sellers will know to do this). While no duties or taxes will be collected on your cargo, a customs declaration must be prepared. Your customs broker will handle this for you, and can also assist you with the delivery of the goods from the port to your facility. From there, its roasting time!