GHY Tradelines
In This Issue
Canada Signs Anti-Piracy Agreement
No Border Fence Says Top US Border Official
FDA Offers More Detail on Imposition of New Fees
CPSC Report on Risk Assessment for Imports
U.S. Border Czar Pitches 'Thinner' Border for Low-Risk Traffic
TSA Nixes Deadline for 100% Screening of Inbound Air Cargo
Truckload Carriers Eyeing Fees for Special Services
'Buy American' Less Helpful Than Free Trade, Fast Says
Why Canada Needs a Trade Deal with the EU
Proposed Changes to Country of Origin Marking Rules
CME and Its Members Push for Border Processes to Support Competitive
HS 2012 Coming Soon
U.S. Ratifies Free Trade Deals with Korea, Colombia and Panama
Congress Approves GSP/TAA Package
Task Force Calls for a Revitalized U.S. Trade & Investment Policy
Time to Transition to CBP's Modernized Import System
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Canada Signs Anti-Piracy Agreement 
Pirate Bay

Canada has signed on to an international agreement that aims to prevent the trade and spread of counterfeit and pirated goods. 


International Trade Minister Ed Fast announced on September 30, he signed the Anti-Counterfeiting Trade Agreement, an accord that has been in development since 2006 for which negotiations including 38 countries concluded in October last year.


A statement from Fast's office said the agreement improves international co-operation in fighting the spread of pirated and counterfeit products, establishes an effective legal framework for dealing with such issues, and better protects the rights of artists, innovators and entrepreneurs whose creations are targeted by counterfeiters.


The United States, Australia, Japan, Morocco, New Zealand, South Korea and Singapore are among the countries that have also signed the ACTA.

 

Fast's office said the government still needs to create and pass legislation to implement the anti-counterfeiting agreement in Canada.

 

No Border Fence Says Top US Border Official
Border Fence

The mention of fencing in a recent environmental impact statement from the US Customs and Border Protection agency sparked concerns in Canada that the US government is planning a fence along the Canadian border.

 

However, David V. Aguilar, deputy commissioner of US Customs and Border Protection, subsequently stated, "There are no plans at all for a fence along the northern border."

 

He added that any fencing under consideration would be for protecting infrastructure or buildings at individual "ports of entry" (border crossings)

 

"Any fence that is being considered at the northern border is specific to a port of entry footprint or complex. There is no intent at the current time to build a fence between the ports of entry," said Aguilar.

 

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FDA Offers More Detail on Imposition of New Fees  
FDA

The U.S. Food and Drug Administration has made available a guidance document on the implementation of new fees related to food under the FDA Food Safety Modernization Act of 2011.


This law provides FDA with the authority to assess and collect fees from (1) the responsible party for each domestic facility and the U.S. agent for each foreign facility subject to a reinspection to cover reinspection-related costs, (2) the responsible party for a domestic facility and an importer who does not comply with a recall order to cover food recall activities associated with such order that are performed by FDA and (3) each importer subject to a reinspection to cover reinspection-related costs. 
  

The FDA has indicated that it will start tracking, assessing and collecting reinspection fees related to domestic and foreign facilities and fees charged companies that refuse to issue recall orders, but the agency doesn't intend to send out any of the invoices

before Jan. 1, 2011. 


FDA has extended from Oct. 17 to Nov. 30 the deadline for comments on the burden of new fees on small business. The agency is seeking input on what burdens these fees might impose on small business, whether a reduction of fees or other consideration for small business is appropriate, and, if so, what factors should be considered for each.

  

CPSC Report Outlines Way Forward for Risk Assessment Methodology for Imports
CPSC

The Consumer Product Safety Commission has made available a staff report submitted to Congress Sept. 9 on the risk assessment methodology the CPSC is required to formulate to identify imported products that are most likely to violate consumer product safety statutes and regulations enforced by the Commission.
 
The objective of the RAM is to integrate newly available import risk data into a coordinated risk-based decision making process.


The RAM provides a means to evaluate products entering the U.S. based on a predetermined rule set designed to identify imports with the highest risk to consumers. The CPSC staff report can be downloaded from our website.

 

U.S. Border Czar Pitches 'Thinner' Border for Low-Risk Traffic

Bersin

Speaking to business leaders in Ottawa this week, Alan Bersin, the commissioner of U.S. Customs and Border Protection, championed the idea of a "thinner" border for low-risk traffic as he seeks to reassure Canadians he understands what they want from the controversial North American Security Perimeter agreement.  


Mr. Bersin said Canada and the U.S. need to look at efforts such as joint inspection of foreign cargo where "cargo coming from Antwerp would be analyzed by both countries in tandem," along with an information management system that shares alerts.


"The notion that in order to obtain an incremental growth in your security you need to slow down the trade is actually a wrong way of viewing it in the world in which 97 per cent to 98 per cent of the traffic - or more - is perfectly legitimate and lawful," he said.


Bersin wants to get more serious about pre-clearing cargo and people before they hit the border. Canadian shippers currently complain they use pre-clearance inspections in an attempt to speed up their transit time, only to find their cargo being double-checked at the border.

 

TSA Nixes Deadline for 100% Screening of Inbound Air Cargo
TSA

The Transportation Security Administration announced Oct. 4 that it will not set a Dec. 31, 2011, deadline for 100% screening of cargo on international passenger aircraft bound for the U.S.


TSA said it reached this decision after careful consideration of industry comments and a thorough examination of the unique challenges facing international cargo screening. TSA will continue to work toward meeting the statutory requirement for 100% screening but has not set a new anticipated deadline.

 

Truckload Carriers Eyeing Fees for Special Services  
Blue Truck
More than two-thirds of truckload carriers plan more use of accessorial charges, adding income from shipping fees to higher rates, according to a new business expectations report by Transport Capital Partners.
 
The Tennessee-based consulting firm said 68% of the carriers it surveyed in the third quarter plan to renegotiate accessorial fees across more categories with shippers. Those accessorial fees include detention charges, mentioned by 42% of carriers, and fuel surcharges, which 39% of the carriers hoped to renegotiate.
 
And the percentage of carriers that expect to renegotiate their contracts to change the mileage standard they use to bill shippers tripled, rising to nearly 20%. Those carriers hope to move from shortest-route mileages favored by shippers to a practical mileage standard that more accurately reflects distances traveled.

Truckload carriers also hope to use their market leverage with shippers to negotiate shorter payment periods, which would help their cash flow, TCP said.

 

'Buy American' Less Helpful Than Free Trade, Fast Says 
Ed Fast

Free trade will help the economy more than a Buy American rule, International Trade Minister Ed Fast told the U.S. government in a statement released by his office this week.


Fast was responding to comments by U.S. Ambassador David Jacobson that argued Canada will benefit from a U.S. stimulus bill, even if it does have Buy American clauses that make it harder for Canadian exporters to get U.S. contracts.


Fast said Jacobson's comments reflect a  flawed view of economic history that concerns him.


"In these challenging times, there is simply no better American job creator than trade with Canada. And vice versa. And the best way to do that is through free and open trade," Fast said in the statement

 

GHY E-Newsletter        #20 Sept-Oct 2011

Canada-U.S. Border Agreement Faces Uphill Battle 

Uphill Struggle

In a paper released last month by The School of Public Policy at the University of Calgary, policy advisor and international lawyer Brian Flemming examines Canada-U.S. efforts to create a more porous border between the two countries. He finds that despite the best of intentions on both sides, real change will prove difficult to achieve. 


Flemming examines the many border issues that the Beyond the Border agreement - signed in February 2011 by Prime Minister Stephen Harper and President Barack Obama - is intended to address. These include an integrated Canada-U.S. entry-exit system, harmonization of regulations on Canadian or American products, the protection of citizens' privacy, and border installations.


While these issues are considered important by political leaders, there are other factors at play. "Overarching all issues and all packages in the Beyond the Border negotiation will be the twin hydras of trust and timing," Flemming writes.


Citizens of both countries must trust that politicians are serving national interests with any international agreements. Flemming argues that "Trust in the abilities of politicians to solve problems of any kind is at an all-time low in both Canada and the United States." As an example, the author refers to the current debt problem in the U.S. and the public's perception that Congress has failed them.As for timing, President Obama is unlikely to make striking trade and security deals a priority given the run up to the 2012 election, with voters most concerned about his action on the U.S. economy.


Flemming also argues that the results of the U.S. election could make progress on border issues even tougher. "If too many members of Congress with erroneous opinions get elected, no agreements of any kind may be possible," he writes.


The paper can be downloaded from our website.

Why Canada Needs a Trade Deal with the European Union: C.D. Howe Institute 

  

Canada should set ambitious goals in trade talks with the European Union (EU), which resume next week, since it has much to gain from a comprehensive trade accord, according to a report released today by the C.D. Howe Institute.  In Go Big or Go Home: Priorities for the Canada-EU Economic and Trade Agreement, Daniel Schwanen, Associate Vice President, International and Trade Policy, says a comprehensive economic and trade agreement (CETA) between Canada and the EU is both desirable and possible. 

CETA
"For Canada," argues Schwanen, "an agreement with the EU is a strategic opportunity to significantly diversify the market for its high-value-added goods, services and skills, to increase the attractiveness of its economy for investors. It's also a chance to make a statement that it is ready to engage with other important trade partners on reducing barriers to mutually beneficial trade and investment"


Schwanen says a good agreement would, in addition to addressing more traditional trade barriers, open up bidding on public procurement contracts in Canada and the EU more equally to each party's firms, address the protection of intellectual property rights, facilitate the mobility of skilled personnel, and provide assurances that regulation will be applied even-handedly between Canadian and EU firms.

 

Many of these issues can be contentious, as they require scrutiny of a number of Canadian government practices, including at the provincial level. Indeed, for this reason, provinces are for the first time at the
negotiating table.

 

"Canada should seize the strategic opportunity presented by the CETA negotiations. Inability to do so would risk confining Canada's economic horizons increasingly to home," he concludes.

Proposed Changes to Country of Origin Marking Rules

 

The Department of Finance is in the process of finalizing changes to the NAFTA and non-NAFTA Marking Regulations that would update and liberalize the tariff shift rules for purposes of determining the country of origin under the NAFTA Marking Regulations, as well as harmonize certain elements of the two sets of regulations, and in particular apply the same exemptions for marking purposes to goodsMade in USA imported from a non-NAFTA country as those that apply to goods imported from a NAFTA country. 


The amendments to both sets of Marking Regulations proposed by Finance were published in the October 8, 2011 edition the Canada Gazette and can be referenced from the following links: Proposed amendments to the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations and Proposed amendments to the Determination of Country of Origin for the Purposes of Marking Goods (Non-NAFTA Countries) Regulations.


In the case of the NAFTA Marking Rules, it is the Government's intention to delete references to packaging and related operations from the general provisions of the Regulations and to replace Schedule III to the Regulations, which contains the Tariff Shift Rules. The proposed deletion of packaging and related operations from the general provisions of these Regulations would be consistent with recent liberalizing changes made to the NAFTA Annex 401 - Specific Rules of Origin. As well, the proposed replacement of Schedule III to the Regulations would result in the current list of "tariff shift" rules of origin being replaced by a list of updated and more liberal rules of origin. Although the draft rules of origin in the schedule are aligned with the current version of the Harmonized System, prior to the coming into force of such rules of origin, they would be adjusted to reflect the 2012 amendments to come to the Harmonized System (see related article below).


With respect to the non-NAFTA Marking Regulations, the Government intends to replace Schedule II, which contains the list of exemptions. This proposed change would replace the current list of goods exempt from marking with the list of marking exemptions that is currently found in the NAFTA Marking Regulations. Thus the same exemptions for marking purposes would apply to goods imported from a non-NAFTA country as those that apply to goods imported from a NAFTA country. The NAFTA exemptions are broader than those in the existing non-NAFTA list and are considered to be more effective at ensuring that manufacturing inputs are not subject to country-of-origin marking.


Interested parties wishing to comment on the proposed amendments should submit their views in writing to the Department of Finance by November 18, 2011.

CME and Its Members Push for Border Processes to Support Competitive, Integrated Manufacturing

 

This statement was issued by CME President & CEO Jayson Myers following a roundtable with US CBP Commissioner Alan Bersin to push for streamlined and harmonized processes for the movement of goods and people across the Canada-US border.


While Canada and the United States enjoy the most robust trading relationship in the world, we don't simply trade with each other; we build things together. Our manufacturers complete globally together. We are each other's most trusted and secure trading partners. At the same time, over the past decade, each of our countries have introduced a myriad of complex regulatory and security barriers at the border that have substantially increased the cost and uncertainty of shipping people and goods between our countries.

Gears
We constantly hear from our members right across the country about the challenges, uncertainties, and costs associated with crossing the Canada-US border. Companies have become frustrated with the lack of benefits available to those that have partnered with governments in low-risk trusted trader programs; the lack of coordination and the amount of duplication between government departments on reporting requirements; and, the overall difficulty and ever-changing requirements faced by business travellers.


Today, with the integration of our industry across North America, border delays and regulatory hurdles cost industry in Canada and the US an estimated three per cent of the total transaction value of trade between our countries, or more than $13 billion annually - costs which are not incurred by foreign manufacturers who import finished goods to market in either Canada or the United States. This puts domestic industry at a competitive disadvantage in its own market.


The border is no longer a physical location for companies. The border has now been pushed back to the factory and into the supply chain with the request for data and paperwork from dozens of government agencies well before a shipment ever sees the physical border crossing. This data must be sent to and approved by each individual agency before shipments can cross. While this might make sense on a shipload of goods from Asia, considering 60 per cent of shipments across the Canada-US border are intra-company, it simply creates a needless pile of data for both companies and the government. This is the thickening of the border that is so often discussed, and there can be great economic and security benefits for doing it smarter and more efficiently.


The meeting with Commissioner Bersin allowed CME and its members to continue to push for its three point plan to simplify border processing that has been supported by industry in both Canada and the US, including:


1. Harmonize and expand trusted trader programs, including the elimination of transactional reporting for qualified companies;

2. Implement harmonized government-wide single-window reporting; and,

3. Reduce barriers to the movement of business personnel.


For the CME's full recommendations to governments for the Beyond the Border Working Group, go here.

HS 2012 Coming Soon   

The Canadian Customs Tariff will undergo a major overall in 2012 as a result of international changes to the Harmonized System (HS) at the World Customs Organization (WCO), as well as simplification initiatives by both the Department of Finance and Statistics Canada. 
alert.

HS 2012 includes 220 sets of accepted amendments, divided as follows:
HS 2012
* 98 relate to the agricultural sector;
* 27 to the chemical sector;
* 9 to the paper sector;
* 14 to the textile sector;
* 5 to the base metal sector;
* 30 to the machinery sector; and
* an additional 37 that apply to a variety of other sectors.

Environmental and social issues of global concern are the major feature of these amendments, particularly the use of the HS as the standard for classifying and coding goods of specific importance to food security and the early warning data system of the Food and Agriculture Organization of the United Nations (FAO). HS 2012 amendments also feature new subheadings for specific chemicals controlled under the Rotterdam Convention and ozone-depleting substances controlled under the Montreal Protocol.

The Order Amending the Schedule to the Customs Tariff (Harmonized System Conversion, 2012), SOR/2011-191 is available in the October 12 edition of the Canada Gazette (refer to the Supplement at the end of the document).

Further changes to simplify the Customs Tariff, including the Schedule, were introduced into Parliament by the Minister of Finance on October 4th as Bill C-13. The proposed legislation upon approval will reduce the number of eight-digit tariff items by just over 1,100 and eliminate numerous end-use provisions. Details are available in Parts 3 and 4 as well as Schedules 1 to 3 of the Bill.

Statistics Canada has also been engaged in a simplification project that will remove approximately 7,000 ten-digit classification numbers from the Schedule to the Customs Tariff.

As changes are made at the eight-digit tariff item level by the Department of Finance, Statistics Canada must make the corresponding changes at the ten-digit classification number level. Statistics Canada has already undertaken this exercise with respect to the WCO-related changes to the HS.  However, it is still working on the changes resulting from the proposed amendments contained in Bill C-13. The Canada Border Services Agency anticipates publishing all of the changes to the Schedule to the Customs Tariff with concordance tables by December 1, 2011 at the latest.

Depending on the types of products you export and import, you may need to change their classifications. Re-classification could potentially affect any associated licenses, authorizations and inspections. It may also affect how those products are treated under any preferential trade agreements, since reclassification may involve rules of origin.
 
Note for U.S. Importers
HS 2012 changes to the HTSUS will also be taking place on January 1, 2012. A copy of the modifications as proposed by the U.S. International Trade Commission (including correlation tables) can be downloaded from our website.
U.S. Ratifies Free Trade Deals with Korea, Colombia and Panama  

Congress approved on Oct. 12 three separate bills to implement free trade agreements with Korea, Colombia and Panama.

Of the three agreements, the United States-Korea Free Trade Agreement (KORUS FTA) is by far the most commercially significant, with a projected boost for U.S. exports of as much as $11 billion in the first year in which it's in full effect, according to the U.S. International Trade Commission.Obama-Lee

South Korea has an economy at close to $1 trillion, and already is the United States' seventh largest goods trading partner. Administration officials estimate that America's economic output will grow more from the South Korea deal than from the United States' last nine trade agreements combined.

The U.S. International Trade Commission estimates that the reduction of Korean tariffs and tariff-rate quotas on goods alone would add $10 billion to $12 billion to annual U.S. GDP and around $10 billion to annual merchandise exports to Korea.

Under the FTA, nearly 95 percent of bilateral trade in consumer and industrial products would become duty free within three years of the date the FTA enters into force, and most remaining tariffs would be eliminated within 10 years.

For agricultural products, the FTA would immediately eliminate or phase out tariffs and quotas on a broad range of products, with almost two-thirds (by value) of Korea's agriculture imports from the United States becoming duty free upon entry into force.

If the Korean National Assembly ratifies it by the end of this month, the new trade deal will go into effect on Jan. 1, 2012.
Congress Approves GSP/TAA Package  

On October 12, 2011 the U.S. House of Representatives endorsed H.R. 2832 previously approved by the Senate to extend the CongressGeneralized System of Preferences and the Trade Adjustment Assistance programs through July 31, 2013.

The bill provides that the GSP program will be renewed retroactively for all GSP eligible entries made after December 31, 2010. Once the legislation has been signed into law CBP will issue instructions on how to obtain refunds for all GSP eligible imports entered during the past year.

When the GSP program expired in the past U.S. Customs and Border Protection (CBP) automatically liquidated or reliquidated items flagged in the ABI system with the GSP Special Program Indicator (SPI) "A" as duty-free and issued refunds to importers without the need to submit individual claims. In the case of unflagged GSP eligible entries, claims must be submitted to CBP within 180 days after the enactment of the bill.

U.S. importers should also aware that the GSP renewal bill contains an increase in the Merchandise Processing Fee (MPF) on ALL applicable U.S. imports. The MPF will increase from 0.21% ad valorem to 0.3464% ad valorem. However, the MPF paid on a single entry will still be capped at $485.
Task Force Calls for a Revitalized U.S. Trade & Investment Policy 

 

The growth of global trade and investment has brought significant benefits to the United States and to the rest of the world. Freer trade and investment, facilitated by rules the United States led in Shippingnegotiating and implementing, have alleviated poverty, raised average standards of living, and discouraged conflict.

But over the past two decades, American support for trade liberalization has waned. Today, the United States lacks an ambitious trade policy and has not kept pace with other countries in opening new markets abroad, especially in the fast-growing economies of Asia and Latin America that are now major engines of global growth.
 
If the United States is to prosper in today's global economy, it must enhance its ability to attract the investment and jobs linked to producing goods and services for these large and prospering markets. In short, the United States must become a great trading nation.

That, at least, is the upshot of an impressively detailed new report from the Council on Foreign Relations. America, it concludes, risks being left a bystander as the rest of the world integrates further.
 
Accordingly, the CFR Task Force recommends a new trade and investment strategy based on seven pillars:

* An ambitious trade-negotiations agenda that opens markets for the most competitive U.S.-produced goods and services, especially the biggest and fastest-growing emerging markets (e.g., India and Brazil).

* A National Investment Initiative that would coordinate policies on inward and outbound investment to encourage the location in the United States of high-wage, high-productivity jobs.

* A robust and strategic trade enforcement effort, with the U.S. government playing a more proactive role in ensuring that U.S. companies and workers are not harmed by trade agreement violations.

* Greater efforts to promote exports through more competitive export financing and a more active government role in supporting U.S. overseas sales.

* Expanded use of trade to foster development in the world's poorest countries.

* A comprehensive worker adjustment and retraining policy.

* A new deal with Congress to give the president a mandate to negotiate trade-opening agreements with an assurance of timely congressional action.
Time to Transition to CBP's Modernized Import System  
U.S. Customs and Border Protection and the National Customs Brokers and Forwarders Association of America, Inc. are encouraging international traders to begin moving their import business process to CBP's Automated Commercial Environment. ACE is the commercial trade processing system being developed by CBP to facilitate legitimate trade and strengthen border security.

In early 2012, CBP plans to announce via Federal Register Notice the decommissioning of the Automated Manifest System for rail and sea shipments. AMS for rail and sea shipments will be the first piece of the CBP legacy trade processing system to be decommissioned. This move to ACE is currently anticipated for July 2012, or six months after the announcement.
ACE 
At a recent meeting of the Advisory Committee on Commercial Operations of CBP (COAC), the agency provided an update on the rollout of various ACE functionality.

Rail and Sea Manifest (M1)
M1 will provide a consolidated view of rail and sea shipment manifest and entry data at the bill of lading or container level to facilitate the identification of shipments that may pose a risk and will expedite the pre-arrival processing of legitimate cargo. The M1 pilot period began in September and full system deployment is scheduled for January 2012.

Simplified Entry
CBP plans to deploy before the end of 2011 a pilot program for the release/entry simplification initiative, which is intended to produce a number of streamlined processes and reduce the administrative burden on filers.The goal is to give trusted traders a more streamlined process to get goods released by linking security and admissibility data requirements. A simplified customs entry would resemble the Importer Security Filing (ISF) with a few extra data elements such as a 10-digit Harmonized Tariff System code, the estimated value and an entry number.

Drawback and Reconciliation
ACE's post-summary correction functionality is being evaluated to determine if it could be used for ACE initiation of drawback and reconciliation, which are also types of adjustments made after entry summary filing. CBP states that this approach could enable faster and more efficient delivery of additional capabilities in ACE rather than building drawback and reconciliation from scratch.
 
Export Processing
CBP and other affected agencies are examining the potential for enhancing the Automated Export System to achieve basic single-window functionality for export commodity and transportation reporting on an accelerated schedule. CBP's assessment includes an examination of International Trade Data System agencies' export requirements and the authority under which they would be granted access to confidential export commodity information, current AES functions and access controls, and the functionality that would need to be added.

The intent is to create a single export processing platform within ACE that will maintain the current export commodity reporting capability and store the data in ACE/ITDS for authorized agencies and industry to retrieve in a secure environment. CBP states that funding for this project has been secured, work is anticipated to commence by the end of the year and an aggressive timetable is being set for project completion.
And Furthermore...


Finding time to follow the latest international trade developments and programs of Customs agencies on both sides of the border relevant to your business can be challenging, so we hope you find this issue of our
Tradelines e-newsletter to be a helpful resource in this respect.

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