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The CSCB contacted CBSA for clarification regarding the requirement for a NAFTA Certificate of Origin for vehicles imported from the United States when the vehicles are not part of a commercial importation. Following is CBSA’s response; the bolding has been added by the CSCB.

For the purpose of determining origin, an automobile that has been assembled in Canada or the United States of America (USA) is considered to be a product of that country and is therefore entitled to the benefits of the NAFTA preferential tariff treatment at the time of importation, in accordance with the related policies and procedures set out by the CBSA under the authorities of the Customs Act and NAFTA.

In an effort to provide better guidance to the CBSA's Border Services Officers when they must determine which casually imported automobiles are assembled in Canada or the USA, and therefore qualify for the benefits of NAFTA, the OVD has recently developed a new resource tool that is based on the Vehicle Identification Number (VIN). This document is currently being finalized for national distribution in both official languages and is expected to be released by the end of this calendar year. Please note that it applies only to casual importations of vehicles into Canada.

After consulting with each of the North American automobile manufacturers, it has been determined that, at present, a first-digit VIN character of 1, 2, 4, or 5 indicates a country of origin of either Canada (Code 2) or the USA (codes 1, 4, and 5). That said, it has also been determined that there is one specific instance where an automobile that is assembled in the USA, and therefore qualifies for the benefits of NAFTA, does not use a traditional first-digit country code for Canada or the USA. In this case, the CBSA’s officers are referred to the 11th digit of the VIN, which serves as an indicator of the geographic location of the assembly plant within the NAFTA-qualifying countries.

Please note that in addition to publishing this new resource tool, some revised text will be included in the next printing of the guide entitled Importing a Vehicle into Canada that will specifically highlight the fact that the first-digit character of the VIN generally indicates the country of origin for automobiles.

Regarding the need for a supporting Certificate of Origin, while casual (personal) importations of vehicles benefit from the NAFTA Rules of Origin for Casual Goods Regulations, and therefore do not require a Certificate of Origin, the commercial importation of vehicles by a dealer for re-sale in Canada remains subject to the requirement for the importer to possess a valid Certificate of Origin for the goods when claiming the NAFTA preferential tariff treatment. As you know, the specifications of the Certificate of Origin are set out in Memorandum D11-4-14, Certification of Origin.

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Canadian e-Freight Update

November 9, 2010

The IATA e-freight project aims to take the paper out of air cargo. Facilitated by IATA, the project is an industry-wide initiative involving carriers, freight forwarders, ground handlers, shippers and customs authorities. Each air cargo shipment carries with it as many as 30 paper documents – enough to fill 80 Boeing 747 freighters every year. IATA e-freight replaces a minimum of 12 of these documents with electronic messages.

Some of the key benefits include:

• Lower costs: industry savings of up to US$4.9 billion annually
• Faster service: a reduced cycle time of an average of 24 hours
• Greater reliability and accuracy: one-time electronic data entry at point of origin
• Better visibility: electronic documentations allows for online track and trace functionality

What are the basic requirements to do e-freight in Canada for a freight forwarder?

• Be able to send an electronic version of the AWB (FWB message) and the House AWB (FHL message) to a carrier.
• Be able to receive an electronic acknowledgement (RCS) back from the carrier.
• Be able to send your commercial documents directly to your partner at destination (destination forwarder branch or customer broker) electronically (pdf or xml)

Several airports, forwarders and carriers currently participate in e-freight in Canada. Carriers include: Air Canada, British Airways, Emirates, Korean, Lufthansa, Cathay, KLM/Air France.

Airports in Canada open for e-freight are: Toronto, Montreal, Vancouver and Calgary.

e-freight is live in 30 countries and 335 airports.

For more detailed information on e-freight please see the IATA website at

http://www.iata.org/whatwedo/cargo/efreight/Pages/index.aspx

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Airlines Fined $1.1 Billion for Cargo Cartel in EU

November 10, 2010

Eleven global airlines have been fined nearly $1.1-billion by the European Commission for running a cargo price-fixing cartel, reports the Globe and Mail. Air France-KLM, Europe's biggest cargo airline, was hit with the largest fine of $476 million while British Airways has to pay $145.6 million and Singapore Airlines $104.7 million. The commission slapped Air Canada with the 10th-largest fine at $29.1 million. The other airlines facing EU fines include Cargolux $112 million, SAS Scandinavian Airline System $98.3 million, Cathay Pacific $80 million, Japan Air Lines $50 million and Martinair $41.3 million. Australian airline Qantas and LAN Chile were both fined around $12 million. Lufthansa was found guilty price fixing but escaped fines because it notified the Commission of the cartel and co-operated in its investigations.

Air Canada has previously disclosed that “a provision related to investigations and proceedings related to alleged anti-competitive cargo pricing activities of $125-million was recorded in the first quarter of 2008.” The Montreal-based carrier made the provision in May, 2008, in anticipation of a settlement over cargo price-fixing investigations by authorities in Europe, the United States and Canada.

The European Commission and other authorities, including Canada’s Competition Bureau, have been assessing alleged anti-competitive cargo-pricing activities, notably fuel surcharges levied by global carriers and freight companies. The commission ruled that “the carriers contacted each other so as to ensure that worldwide airfreight carriers imposed a flat rate surcharge per kilo for all shipments. The cartel members extended their co-operation by introducing a security surcharge and refusing to pay a commission on surcharges” to freight forwarders. “By refusing to pay a commission, the airlines ensured that surcharges did not become subject to competition through the granting of discounts to customers. Such practices are in breach of the EU competition rules,” the commission added. The EU antitrust press release can be viewed here

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U.S seeks better manifest data for screening air cargo

November 10, 2010

The following is excerpted from the 9 November 2010 edition of the "American Shipper".

Obtaining shipment data from airlines sooner than required under current regulations is one of several steps U.S. government officials are considering to increase air cargo security in the wake of the recent plot to place parcel bombs on U.S.-bound freighters, according to Department of Homeland Security and industry officials.

Under the Trade Act of 2002, air carriers must transmit cargo manifest data four hours prior to arrival in the United States, or at takeoff for flights originating from nearby Central America and parts of South America. U.S. Customs and Border Protection runs the data through its automated targeting systems, matching shipments against a matrix of potential risks and intelligence reports, to identify suspicious cargo for inspection.

By contrast, ocean carriers must submit advance manifest data 24 hours prior to vessel loading at an overseas port.

DHS Secretary Janet Napolitano on Monday announced the administration is working with foreign governments and industry to expedite the receipt of cargo manifests for international flights to the United States prior to departure.

“Our focus is going to be receiving pre-advance, pre-departure information, which currently doesn’t do us a lot of good” because the aircraft is already airborne by the time a potential threat can be ascertained, a CBP official close to the situation told AmericanShipper.com.

The agency is interested in getting the data before takeoff – but not as early as the ocean deadline -- so inspections can take place at origin and prevent hazardous shipments from making their way onboard an airliner, the official said on condition of anonymity because he is not authorized to publicly speak about the internal policy discussions.

CBP officials met last week with representatives of the express consignment and passenger airline industries to explain the direction they are heading and received support for more data sharing, the source said. He stressed that no concrete decisions have been made yet about how to improve the existing risk-management approach.

The talks are focused on pushing back the manifest data deadline or getting some additional information carriers already collect from customers because the manifest may be incomplete earlier in the shipping process. CBP needs to better understand the express carriers’ sophisticated track-and-trace systems, what data they have that could prove helpful for data mining and how Customs officers would go about alerting the airline to hold a shipment for inspection, the CBP official said.

Customs last year implemented a rule requiring importers to electronically transmit data about their ocean shipments because of concerns that manifest data is not very reliable or detailed enough.

All-cargo carriers, especially overnight delivery companies such as FedEx and UPS, are extremely worried about a reflex response on Capitol Hill that could make air transport prohibitively expensive and cumbersome for shippers...

Rep. Edward Markey, D-Mass., who authored the legislation that requires 100 percent of cargo on passenger planes to be screened as of Aug. 1, 2010, has already said he plans to introduce a bill in the next session of Congress to expand the requirement to all-cargo planes...

In a letter to President Obama on Nov. 2, Markey and Rep. Nita Lowey, D-N.Y., said the Transportation Security Administration should begin screening all cargo from countries identified as having terrorism problems.

Napolitano also announced a series of more immediate security measures that took effect on Monday. Last week’s ban on air cargo from Yemen will continue indefinitely and has been extended to all air cargo from Somali. The United States also will no longer allow high-risk cargo on passenger aircraft and has prohibited toner and ink cartridges over 16 ounces in both carry-on bags and checked bags on domestic and international-inbound passenger flights. The ban also applies to certain inbound all-cargo shipments. All cargo identified as high risk will go through additional and enhanced screening. The stricter rules also apply to international mail packages, which must be individually screened and certified to have come from an established postal shipper.

The lack of immediate steps to inspect all air cargo since the bomb plot suggests that authorities worldwide realize that scanning has limited benefit and cannot readily detect the PETN explosive powder that terrorists used in the packages or last December’s failed attempt to detonate a bomb concealed in a passenger’s underwear. The two parcels found in Dubai and East Midlands Airport in the United Kingdom in fact were X-rayed in Sana’a, Yemen and Dubai...

The air cargo industry is still hampered by the lack of a technology that can scan air containers or large shrink-wrapped pallets that predominate in international trade. The TSA has recently approved some large aperture X-ray units that can screen an entire standard wooden pallet with boxes that all contain the same product.

The technological challenge of imaging cargo places greater importance on analyzing shipment data for anomalies, something CBP is trying to figure out how to achieve sooner in the supply chain.

“We haven’t reached on any conclusions on what data to get, who has it, and what time it should be sent to us,” the CBP source said. “But there is general consensus that we need advance data, pre-departure.” Officials at this early stage haven’t addressed information technology, legal and other prerequisites for implanting a new regulation, or even whether the implementing mechanism would be a rulemaking or some kind of an industry directive.

Mullen confirmed the courier industry is actively cooperating with Customs...

Mullen said the ability of customers to track their packages every step of the way through the FedEx and UPS networks helped investigators pinpoint the location of the parcel bomb packages in England and Dubai, and intercept them before anyone was harmed...

All-cargo carriers already must follow Transportation Security Administration directives covering physical and information security, employee background checks and access controls to cargo areas and planes.

The Express Association of America, which also represents DHL and TNT, is emphasizing during the talks that government security efforts focus on a small handful of countries where the terrorist threat is the greatest, Mullen added.

“We’re trying to get them to take a whole supply chain look at this and not just react in one area. Look at everything that is being done from one end of this process to the other,” he explained.

The House Homeland Security Committee’s request for the Government Accountability Office to conduct an audit of the nation’s air cargo security regime and make any necessary recommendations is a better approach than rushing out with scan-all legislation, Mullen said.

Brandon Fried, executive director of the Airforwarders Association, also urged the government to stick to a multilayered, risk-based system rather than inspect all shipments...

He recommended TSA expand the Certified Cargo Screening Program to all-cargo carriers. CCSP was developed to help shippers and airlines meet the Aug. 1 deadline to screen 100 percent of parcels and freight on passenger planes without causing backlogs at the airports. The mandate requires screening down to the carton, or piece, level, which led to fears that airlines would be overwhelmed if some cargo wasn’t pre-screened before entering their systems. Under the voluntary program, shippers can get certified to pack shipments in a secure manner or have their certified freight forwarder deconsolidate palletized freight and check it by physical or non-intrusive means. Either party must then maintain a secure chain of custody during transport to the airport...

Shippers who participate in CCSP incur the lowest expense because they’re building in security as they pack the boxes without having to pay a third party to screen on their behalf further down the supply chain, he noted.

“We’re not calling for 100 percent screening of every package. We’re calling for increased risk-based screening so that high-risk cargo is singled out and looked at more carefully.”

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Increased Security Requirements for Air Cargo Shipments
November 12, 2010

In reaction to the bombs recently discovered on two aircraft, governments and airlines have placed increased restrictions on air cargo shipments. These new restrictions may include:

-  The origin and destination of goods
-  The types of goods
-  The types of shippers.

As we cannot communicate specific security details in an open forum, we can generalize that either the above scenarios will be met with increase security measures at the airline or not be acceptable for carriage at all. Freight Forwarders should be vigilant in identifying air cargo shipments that could be potential security risks.  For example, shipments that:

- Contain personal effects or household goods
- Are offered for payment by cash
- Are offered from a person, rather than from a company
- Are offered from a person or an organization that is not ‘known’ to your company.

CIFFA strongly suggests you first participate in the Air Cargo Security program implemented in Canada, and other applicable countries, if permitted (such as the U.S.), keep up-to-date with their security bulletins.  Secondly, discuss any specific security measures with your airline.

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Seaway Cargo Shipments Improve 17.5 Percent
November 12, 2010

A resurgence of iron ore and coal shipments combined with a healthy increase in grain exports to drive an upward trend on the St. Lawrence Seaway as the current shipping season comes to an end reports the Journal of Commerce. Demand for construction materials and general cargo shipments also boosted October’s numbers. The Seaway reported total year-to-date shipments reached 27.1 million metric tons through Oct. 31, an increase of 17.5 percent over the same period in 2009.

Year-to-date shipments of iron ore for 2010 were up 52.6 percent to 7.9 million metric tons compared to last year. Coal tonnage increased 22 percent to 2.8 million metric tons. Total grain shipments increased 4 percent to 5.9 million metric tons. Bulk materials, which include among other items construction materials such as stone, cement and gypsum, increased 11 percent to 1.5 million metric tons in October compared to the same month in 2009. General cargo, comprised of steel slabs, coils and project cargo like wind power components, rose 27 percent compared to the same month in 2009.

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CBSA Regulatory Change in Support of Mandatory Electronic Export Reporting for Marine Carriers

November 12, 2010

This notice is to inform the marine carriers that the Canada Border Services Agency (CBSA) is in the process of preparing changes to the Reporting of Exported Goods Regulations (Regulations). An internal evaluation of the export program released in 2008 recommended the development of an all inclusive electronic reporting system in order to ensure timely and accurate export reporting. Getting the right information to the right people at the right time helps the CBSA to detect, assess and mitigate risks with the least disruption to the flow of goods exported from Canada. The CBSA has received numerous requests from trade stakeholders and is therefore moving forward to mandate outbound electronic reporting for marine carriers. Providing export information electronically to the CBSA will minimize the burden on marine carriers compared with the submission of paper A6 and A6A documents. 

This notice provides the interim direction to require marine carriers to report the departure of their conveyances and their export cargo electronically. The CBSA strongly encourages all marine carriers to make the necessary system modifications for the anticipatory regulatory changes. This notice does not introduce a change in the timeframes for export carrier reporting as currently applied. No penalty under the Administrative Monetary Penalty System (AMPS) will be issued with regards to the regulatory changes announced in this notice until they come into effect. The CBSA is looking into expanding export electronic carrier reporting to other modes of transportation in the future. Details at: http://www.cbsa-asfc.gc.ca/publications/cn-ad/cn10-019-eng.html

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Canada posts near-record trade deficit in September

Statistics Canada reports that the country's exports declined 1.7% to $33.1 billion in September, while export volumes fell 2.2%. The level of exports has remained relatively unchanged since the beginning of 2010.

The main commodities behind the decline were automotive products, other consumer goods as well as industrial goods and materials. Conversely, exports of machinery and equipment increased during the month.

Imports increased 1.2% to $35.6 billion, the highest level since November 2008. Industrial goods and materials and machinery and equipment, the two largest import sectors, recorded gains in September.

The trade deficit rose from $1.5 billion in August to $2.5 billion in September, approaching the record deficit registered in July.

Exports to the United States fell 3.6% to $23.9 billion, their lowest level since November 2009. The decrease largely reflected lower exports of passenger autos. In contrast, imports increased 1.6%. As a result, Canada's trade surplus with the United States narrowed to $1.6 billion in September from $2.9 billion in August.

Exports to countries other than the United States increased 3.6%, the third consecutive monthly gain, while imports rose 0.5%. Consequently, Canada's trade deficit with countries other than the United States declined to $4.1 billion in September from $4.3 billion in August.

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Changes to Amps

At the 2010 CSCB Conference in September, there was a joint CSCB-CBSA session on Compliance at the Border. The presentation for that session included changes to AMPS that had been discussed at a bilateral meeting between the CSCB and CBSA.

Since the conference, these changes were discussed by the BCCC AMPS Subcommittee and between CBSA and its regions. Clarification has been provided by CBSA and we are pleased to say that changes presented at our conference will be going forward. The updated AMPS documents are currently being translated into both official languages and are before the regional Trade Directors, in draft format, for their review.

Final versions of the AMPS documents should be ready for release by the end of this calendar year and will be made available when the proposed AMPS amendments are enacted. The related contravention documents will explain all of these provisions in much greater detail, and will include specific examples that should help the importing community to better understand the trade-related AMPs.

Last, we have also been advised that these changes will not be retroactive.

Clarification of the information provided at the conference follows. Please note the difference between “per error” and “per instance” or “per occurrence”. Per error refers to the same error, made more than once. Per instance, or per occurrence, means each time the same error is made.

1. For contraventions C080, 081, 082, and 083, the CBSA is currently working on the following changes:
At the first level, penalties will be assessed per error, except in instances where the importer has already received written instructions from the CBSA (currently they are issued each time the error occurs).
For example, if pens are misclassified 500 times and each of those 500 times the same incorrect HS is used, a single penalty will be assessed, at the first level of AMPS.

CSCB: Please confirm that if more than one HS error is made, on different items, the maximum penalty still remains $5,000.00.

CBSA: The proposed maximum for any first level penalty is $5,000. Where two different tariff classification errors are made, two $150 penalties will apply, for a total of $300.00. To that end, 33 different tariff classification errors would be required to reach the proposed $5,000 maximum.

2. CSCB: What is CBSA's position for those who have not received written instructions from CBSA? That is, those who CBSA have determined have reason to believe based on other factors?

CBSA: AMPs only apply in cases where the CBSA has determined that the importer had “reason to believe”. The intention of this proposed amendment is to make a distinction between cases where the CBSA has specifically addressed the issue with the importer in writing previously versus other factors that constitute “reason to believe” (e.g. legislative provisions that are evident (obvious, apparent) and transparent (clear, self-explanatory).

In cases where written instructions have been provided by the CBSA, the $150 penalty would apply per occurrence, to the $5,000 maximum.

In cases where written instructions have not been provided by the CBSA, the $150 penalty per error would apply, to the $5,000 maximum.

3. CSCB: Can you confirm what is meant by the verification period?

CBSA: The verification period is as identified in the letter to the importer initiating the compliance verification activity. Generally speaking, this is typically the importer's last closed full fiscal year.

4. For contraventions C350, 351, 352, and 353, the CBSA is currently working on the following changes:
Penalties under these contraventions will generally be identical to those under C080, 081, 082, and 083.
However, penalties will be issued for all transactions within the reassessment period (as compared to those within the verification period).

CSCB: Can you confirm what is meant by the reassessment period?

CBSA: The reassessment period is that contemplated in the Canada Border Services Agency (CBSA) Memorandum D11-6-10, Reassessment Policy. In accordance with the Customs Act, this period can extend back a full four years where the importer has had “reason to believe”.

5. There will be $1,000 cap on clerical errors.

CSCB: Can you explain how CBSA will determine what is and what is not a clerical error?

CBSA: A clerical error is an inadvertent mistake, generally of an obvious transcription or typographical nature. The CBSA will make this determination on a case-by-case basis when presented with specific information.

6. CSCB: With this structure in place, what is the process with a second audit if the same error is made? What if a different error is made, but in the same program?

CBSA: Where the same error is found, during a subsequent verification, to have been repeated, a second level penalty will apply. The second level penalties will not change and will therefore continue to have a maximum of $200,000. Where a new error is found, a first level penalty will apply, as second level penalties will only be applied to errors previously made that triggered the first level penalty.

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