Faster import clearance, duty savings, predictable

 Faster import clearance, duty savings, predictable costs, reduced regulatory oversight and a competitive advantage are all reasons to ensure that your business is compliant with international trade regulations. Canadian and U.S. trade laws are far reaching and pervasive. In addition, there are foreign laws that may apply to international transactions.

If you are an importer or exporter, you need a clear understanding of the rules that govern trade in your area. Here are a few of the legislative requirements and regulations you need to understand:

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1. The Harmonized System of Tariff Classification

What it is:

Developed and maintained by the World Customs Organization, this multipurpose classification system is comprised of names or terms for goods used as the basis for customs tariffs and for the compilation of trade statistics. It is reviewed and updated periodically to clarify, add, or delete any confusing wording, as well as to incorporate new products entering the market place. The next amendment is scheduled for January, 2017

Why it’s important:

Not knowing the proper classification of imported goods may result in an error, leading to a chain reaction of errors on the rate of duty, import and export controls, restricted goods, etc, resulting in hefty fines or delays at the border.

2. Transfer Pricing 

What it is:

Transfer pricing refers to the pricing of contributions (assets, tangible and intangible, services and funds) transferred within an organization. For example, goods from a parent company may be sold to a foreign subsidiary, typical market mechanisms that would normally establish prices between third parties don’t exist. Therefore, the transfer price will affect the allocation of profit among the parts of the company. The value of your product impacts the duty and taxes calculated. Value is defined as all costs that go into getting your goods to its final destination, including price paid, associated costs and transportation. If a transfer price agreement is in place it could also impact the calculation of duties or refunds.

Why it’s important:

Customs valuation and transfer pricing have a lot in common but have competing interests. Customs and Tax authorities worry that multinational entities set transfer prices on cross border transactions to reduce taxation, making customs value a major tax compliance issue.  Lack of attention to customs valuation methodologies exposes companies to audits, investigations and /or penalties. If duty calculated is less than it should be, penalties can result. In other cases, you may be paying more duty than you need to.

There are different rules developed for transfer pricing depending on the authority both attempting to reach arm’s length values.  However, due to differing methodologies and standards, the transfer pricing value may not be suitable for customs value and vice versa. The one thing that is certain is that multinational companies need to comply with both Tax and Customs valuation rules.

3. Trade Agreements and the Specific Rules of Origin

What it is:

A free trade agreement is a treaty between two or more countries where commerce in goods and services can be conducted across common borders, without tariffs or hindrances. However, capital or labour may not move freely.  Member countries usually impose a uniform tariff on trade with non-member countries.  Free trade agreements offer duty relief for many imported goods and eligibility often relies on the specific rules of origin to determine whether goods meet the required transformation to benefit from duty free status. The most widely used free trade agreement is the North American Free Trade Agreement (NAFTA).

Why it’s important:

Trade agreements can offer significant cost savings in the form of reduced duty or even duty-free.  It is important to note that importers must understand the legislative requirements and ensure the appropriate audit trails are in place when qualify goods for the benefits of the any agreement.  Each agreement has a set of “Specific Rules of Origin: that must be adhered to while maintaining the proof of origin for those eligible goods.

To take advantage of the benefits of these agreements and avoid costly penalties, importers and exporters must ensure compliance with the applicable rules and regulations of the agreement.

4. The U.S. Food Safety Modernization Act

What it is:

The U.S. Food Safety Modernization Act (FSMA) was signed into effect in 2011 by President Obama and was created to improve America’s food supply while increasing safety.

Why it’s important:

FSMA requires importers to verify the safety of their food from suppliers with the Food & Drug Administration (FDA) by submitting documented preventive control programs with clear visibility into their supply chain. This verification from the FDA enables them to focus on preventing food safety problems rather than reacting to problems after they occur.

However, this means importers must be compliant with the FDA’s import regulations to ensure that their food products are able to cross the border.

5. Amends, Refunds, Duty Relief and Remission Orders

What they are:

The B2 Canada Customs Adjustment Request form is used to request a refund, reduce the amount of duty and/or tax payable, make a non-revenue correction, to pay additional duty and/or tax, or to file an appeal/dispute against a decision made by the Canada border Services Agency.

Duty Relief enables companies to import goods without having to pay customs duties at the time of import.  Qualifying companies can import goods for subsequent export without having to pay the Canadian Customs duties as long as the goods are exported within four years from import.

All goods imported into Canada are subject to the provision of various legislative acts and regulations by which customs duties and taxes including the Goods and Services Tax/Harmonized Sales Tax (GST/HST) are assessed.  However, there are situations where the Governor in council may remi all or a part of the customs duties.  In order to qualify for this provision, an importer must complete a detailed application outlining the reasons for the request.

Why they’re important:

As outlined in the Customs Act, the importer is ultimately responsible for the goods they import into Canada. They are obligated to make corrections whether or not the corrections results in money owing to the CBSA,  is revenue neutral or results in a refund to the claimant.

Taking advantage of your options for potential refunds, duty relief programs and remission orders can significantly lower your duty spend thereby reducing the cost to import products.  Not doing so may place you at a competitive disadvantage.

6. Customs Compliance, Verification and Audit

What they are:

Compliance refers to conformity in satisfying official requirements of various customs services (in our case usually the U.S. or Canada). Verification is providing evidence that confirms the accuracy of your submissions to customs, and Audit refers to a formal examination of records and documents.

Why they’re important:

Compliance, Verification and Audit help to establish your importer profile, thereby facilitating the movement of your goods across borders.

All three processes provide for security, along with the proper collection of duties, taxes, and correct application of preferential duty tariffs so governments can protect selected industries.  For the importer, these processes prevent supply chain bottlenecks, costly production downtime, or errors which may result in expensive penalties.

7. Export Controls and Documentation

What it is:

There are many controls in place for exporting. Specific commodities such as softwood lumber, firearms and peanut butter are controlled and require a special permit. There could be the situation where the destination country may require an export permit.

Why it’s important:

You must understand whether the product and the destination of that product are controlled, regulated or prohibited and whether a permit is required to proceed with the export.

In Canada, exporters are subject to the same rules and regulations as importers in regard to penalties. If you are operating as a Non-Resident Importer, you would also be subject to US CBP penalties for any situation involving fraud, negligence and gross negligence.

Your company should take the appropriate steps to ensure compliance with Canada’s export laws and implement an internal export compliance program, have documented record keeping policies, have an internal audit procedure, and work closely with both your Customs Broker and Freight Forwarder.

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Finally, never assume the steps you took six months ago for an export are the same steps you should take today – regularly review regulations!

8. Non-Resident Importing into the U.S. or Canada

What it is:

A Non-Resident Importer (NRI) is an individual or company who, depending on where they are importing, does not have residence in the U.S. or Canada and elects to act as their own Importer of Record for imported shipments.

Why it’s important:

Becoming an NRI allows you to have complete control over your shipment throughout the importing process. It also allows you to compete directly with larger businesses using pricing advantages like ‘landed costs’ while removing stress from your clients, since they no longer have to deal with paperwork or customs issues.

However, this means that you are now responsible for all custom compliance with each government agency and are also subject to audits.

9. The Regulations of U.S. Participating Government Agencies (PGA’s) or Canadian Other Government Departments (OGDs) that oversee your specific commodities

What it is:

Participating Government Agencies (PGA’s) or Other Government Departments (OGD’s) are branches of government whose sole area of responsibility, unlike that of CBP (U.S.) or CBSA (Canada), is not the movement of goods and people across borders. Nevertheless, 

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Ukraine has drawn a line in the dirt

Ukraine has drawn a line in the dirt, and that line is Bakhmut. It is a city that few say matters strategically, but that tens of thousands have died fighting over. It began more than seven months ago, and is the longest battle of the war so far.

Two Ukrainian army brigades defending the city's southern flank gave the BBC access to their positions last week as fierce fighting continued in and around Bakhmut. The men have spent months facing both regular Russian army forces, and prisoners recruited by the Wagner private military group who have swarmed their trenches in droves. Troops say Russian casualties far outweigh theirs, but the enemy is deploying new techniques to try to seize the city and surrounding countryside.

Ukraine's forces are outgunned and outnumbered, but on a chalk hillside to the south, there is the anti-tank group from the 3rd Separate Assault Brigade. 3Storm - as they are known - are unyielding. They've dug trenches deep into the earth. Timber props supporting the roof shudder as Russian artillery lands in the near distance, and field mice scurry along duck boards. An antiquated field telephone sits in a wooden nook; these are conditions their grandfathers would recognise.

"They cannot get to us, we can see for a kilometre in all directions," says a bearded 26-year-old soldier who goes by the call sign "Dwarf", pointing out Russian positions. "We can hit the enemy with everything we have," he says.

Neither the Russian nor Ukrainian armies release official casualty figures for Bakhmut, or elsewhere, but the mostly abandoned city has become a slaughter house.

In a week fighting for the city, Dwarf's company faced conscripted prisoners from Russia's Wagner group. "We had battles every two hours," he says. "I guess a single company eliminated 50 people per day." In case of any doubt, he points out these numbers were confirmed by aerial reconnaissance. "The [Russian vehicle] arrives, 50 bodies come out, a day passes, 50 bodies come out again," he says. His company lost a fraction of that number, he says.

Officially, Ukraine estimates that for every one of its soldiers killed, Russia loses seven. Earlier this week, Russia said it had killed more than 220 Ukrainian service members in a 24-hour period in the battle for Bakhmut. None of these numbers can be independently verified.

In a newspaper interview, two captured Wagner conscripts told the Wall Street Journal that before they are sent forward, they receive little training beyond learning to crawl through forests in the dark. After six months serving at the front they are freed - assuming they survive.

Conditions all along the 600-mile-long eastern front have begun to change. 3Storm's chalky hilltop hideout feels like dry land compared with the surrounding territory. An early spring has turned the hard ground of winter to mud porridge - which may favour the defenders. To get there, we had to follow the Ukrainian soldiers on foot - within a few paces my boots become lumpen and heavy with thick dirt. A battlefield ambulance speeds by unsteadily, its caterpillar tracks ploughing up the ground, and spraying pools of sludge as it struggles for grip.

The villages around here - the location can't be revealed - are in ruin. Handwritten signs on gates, mostly in Russian, announce "People Live Here", a plea as much as it is a statement. But the streets are entirely empty, apart from abandoned dogs who roam the ruins of destroyed farms and homes.

Soldiers move through the tall grass

IMAGE SOURCE,DARREN CONWAY / BBC

Image caption,

Soldiers move through the tall grass

For the past two months, Russian forces have steadily advanced, trying to encircle Bakhmut. The commander of Ukrainian ground forces, General Oleksandr Syrsky, says his forces will continue to resist. "Every day of steadfast resistance wins us valuable time to reduce the enemy's offensive capabilities," he says, sending more reinforcements to the area. But it isn't only Russians who have fallen into the Bakhmut trap. Ukrainians are dying there, too, in ever increasing numbers.

On the hillside, a group of soldiers have gathered around a gun position, and I ask Dwarf - given that Ukraine is losing soldiers to untrained Russian convicts - if the defence of dead city, surrounded by the enemy, makes sense.

He says, "I was wondering, myself, if we should keep defending Bakhmut. On the one hand what's happening here now is awful. There are no words to describe it. But the alternative is we give up Bakhmut and move to another settlement. What's the difference between defending Bakhmut or any other village?"

Holm and Dwarf

IMAGE SOURCE,DARREN CONWAY / BBC

Image caption,

"Dwarf" with his comrade "Holm"

His comrade, a strongly built man with a full dark beard who goes by the call sign Holm, agrees. "It's not a strategic question for us here. We are ordinary soldiers. But this is our land. We may then retreat to Chasiv Yar, from Chasiv Yar to Slovyansk, and so we retreat up to Kyiv. Let it take a year or two, four, five - but we have to fight for every piece of our land."

The men have been fighting for more than a year now, and they say the Russians are evolving.

"They are learning, they are getting cleverer, and it really freaks me out," says Dwarf. "They send out a group - five morons taken from prison. They are shot, but the enemy sees where you are, walks around, and you are surrounded from behind."

Holm chimes in that Russia is now using drones armed with grenades more effectively. "We used to drop them and freak them out," he says. "Now they're dropping drone grenades on our positions."

Before the war, Dwarf was an outdoor youth worker and would take youngsters hiking in the Carpathian Mountains on the country's western edge. Here on Ukraine's eastern front, that is a far-off memory. He's been in many battles since then, but the horror of Bakhmut is what lives with him now.

When I ask about Wagner's convict army, he pauses to think and says, "I'll be honest. It's genius. Cruel, immoral, but effective tactics. It worked out. And it's still working in Bakhmut."

Jeep

IMAGE SOURCE,QUENTIN SOMMERVILLE / BBC

Image caption,

Soviet-era UAZ jeep makes it way through the mud

Days later, I'm back in the same area, crammed with four others into a Soviet-era UAZ jeep. Its steering wheel has the BMW logo - a joke says the driver, Oleg. He says little else as he grips the wheel and concentrates hard as the car whines and struggles over hills and through the shoals of muck. The automatic gunfire ahead signals we are nearing the 28th Mechanised Brigade, who are directly facing the Russians.

The landscape of war shifts in an instant - the men are holed up in a small wood, its trees shattered and split by Russian fire. In a month, the wood will offer them cover. For now, its bare branches expose them to surveillance drones. Nearby there's an exchange of gunfire, and Russian shells strike around 500m away. But Borys, a 48-year-old former architect who is serving now as a captain, seems untroubled.

"Today's war is a drone war," he says, "but we can walk around freely, because there's wind and rain today and drones are blown away. If it was quiet today, both our drones and our enemy's would be hovering over us."

On the way back, Oleg brings the jeep to a sudden halt. Lying in the dirt in front of us is a drone that has been blown off course. Its battery is quickly removed and it is brought inside - it turns out to be Ukrainian.

But today's war isn't so very different from the past.

Machine gun

IMAGE SOURCE,QUENTIN SOMMERVILLE / BBC

Image caption,

Maxim machine gun

Two nights before, the 28th Brigade was attacked by Russian infantry and tanks. In a timbered gun position below ground, the cold, rain drips through the roof onto the dirt floor, and there, peering out into the bare landscape, is a Maxim belt-fed machine gun with stout iron wheels.

"It only works when there is a massive attack going on…then it really works," says Borys. "So we use it every week".

And this is how the battle for Bakhmut is being fought, as winter turns to spring in 21st Century Europe. A 19th Century weapon still mows down men by the score in the black Ukrainian earth.

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By Anna Holligan & Paul Kirby In The Hague and London BBC News

 

A farmers' party has stunned Dutch politics, and is set to be the biggest party in the upper house of parliament after provincial elections.

The Farmer-citizen movement (BBB) was only set up in 2019 in the wake of widespread farmers' protests.

But with most votes counted they are due to win 15 seats of the Senate's seats with almost 20% of the vote.

"This isn't normal, but actually it is! It's all normal citizens who voted," said leader Caroline van der Plas.

The BBB aims to fight government plans to slash nitrogen emissions by dramatically reducing livestock numbers and buying out thousands of farms.

But its appeal has spread rapidly beyond farmers, on a populist platform that represents traditional, conservative Dutch social and moral values.

Shocked by the scale of their success, she told supporters that voters normally stayed at home if they lost faith in politics: "But today people have shown they can't stay at home any longer. We won't be ignored any more."

A left-wing Green-Labour alliance is also on course to win 15 Senate seats, while Prime Minister Mark Rutte's four-party coalition is poised to fall back to 24 - down eight seats.

The run-up to the vote was dominated by the sight of farmers' tractors on the streets of The Hague and outside the studio that hosted a pre-vote leaders' debate.

Why Dutch farmers are protesting over emissions cuts

Standing before supporters on Wednesday night, Caroline van der Plas wore her trademark green nail polish and a ring featuring an upside-down Dutch flag, a symbol of the anti-government protests.

The daughter of an Irish mother and a Dutch father, she lost her husband Jan to pancreatic cancer as the protests took off in 2019.

Commentator Ben Coates described the result as "something of an earthquake in Dutch politics".

Although their policies are very much focused on opposing the government's environmental policies, he told the BBC most people would characterise them as a right-wing, populist party that was quite anti-EU, anti-immigration and in favour of banning burkas for Muslims.

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