CBSA Updates Trade Compliance Verification Priorities

lamp

The Canada Border Services Agency recently published an amended list of its current compliance verification priorities as of July 2020, to update the status of various goods under ongoing review and include several new additions.

Additions to the list of the CBSA’s compliance verification priorities include:

  • Spent Fowl, Headings 02.07, 16.01 and 16.02
  • LED Lamps, Heading 85.39
  • Batteries, Heading 85.06
  • Parts of Lamps, Heading 94.05
  • Other Mountings & Fittings, Suitable for Furniture, Heading 83.02

To view a complete list of all CBSA’s current and ongoing compliance verification priorities, click here.

If you have any questions about CBSA’s current and ongoing compliant verification priorities, please reach out:

Matt Earish — matt@carson.ca
Tyler Carson — tyler@carson.ca

Canada Changes Export Policy Toward Hong Kong After Passage of Security Law

cyber

Canada has taken steps in response to the passage of Hong Kong’s Security Law. Exports and transfers of sensitive goods and technology to Hong Kong will now be treated in the same manner as those destined for mainland China. Exports of sensitive military items to Hong Kong will be prohibited.

Under the new policy, all export permit applications for items listed on the Export Control List destined for Hong Kong will be “closely scrutinized”, and permits for exports or technology transfers inconsistent with Canada’s domestic and international legal obligations, foreign policy, or security interests will be denied. Canada currently maintains export controls over a broad range of dual-use goods and technology, including those relating to cybersecurity, information security (encryption), telecommunications, integrated circuits, computers, navigation, avionics, sensors, aerospace and nuclear items, as well as defence and weapons-related items.

The Notice indicates that permits for exports of “sensitive” military items will be denied, but provides no definition for the term “sensitive.” This oversight will likely be addressed by observing the implementation and administration of this policy by Global Affairs.

Hong Kong’s Security Law, which came into effect July 1, 2020, has sparked global controversy. It is widely perceived as a mechanism to suppress Hong Kong’s independence, and human rights activism, by breaking the constitutional arrangement, commonly known as the “one country, two systems” agreement, that made Hong Kong a semi-independent Special Administrative Region of China in July of 1997.

Click here to read the full notice issued by Global Affairs Canada.

For questions about exports to Hong Kong, please reach out:

Matt Earish — matt@carson.ca
Tyler Carson — tyler@carson.ca

Canada Agrees to Tax Homegrown Wine in Trade Settlement

wine

B.C.’s wine industry is hoping the Trudeau government can find a solution after Canada agreed to reimpose a federal excise duty on domestic bottles as part of a trade dispute settlement.

The British Columbia Wine Institute (BCWI) estimates that the cost of a case of Canadian wine would rise by about $6, if a new provision in Canada’s trade truce with Australia announced Monday comes to pass, following a two-year grace period.

“That’s pretty material to Canadian wine growers and farmers, and so we’re unhappy about that,” said president and CEO Miles Prodan. “We’re in discussions with the feds as well, how can they help us with that.”

International Trade Minister Mary Ng announced on Monday that Canada had reached a “partial agreement” with Australia over its World Trade Organization challenge against Canada’s treatment of imported wines.

As part of the agreement, Canada agreed to repeal a 15-year-old exemption to the federal excise duty that it had been giving to wine produced in Canada and made from entirely Canadian products.

The change is expected to occur by June 30, 2022, according to Ng’s announcement.

Australia’s dispute was launched in January 2018, and includes other concerns, some of which were addressed on Monday that pertain to policies and regulations in Ontario and Nova Scotia.

But the removal of the excise exemption for Canadian wine affects the industry nationwide, Prodan said, not just the $2.8-billion industry in British Columbia.

While he said he was satisfied that the situation was being resolved through a negotiated settlement, as opposed to a WTO ruling, he said it will be a shock to many younger wineries.

In 2006, the former Harper government, newly elected to power, brought in the exemption for wine made from 100 per cent Canadian-grown products in Budget 2006, meant to give domestic winemakers a competitive edge.

In a statement issued Monday, Wine Growers Canada, the national industry association, said the excise exemption had “supported investment in more than 400 new wineries and 300 winery modernizations” over the 2006-18 period.

Australia’s B.C.-specific concerns had already been addressed, said Prodan, through other trade talks related to the United States-Mexico-Canada Agreement (USMCA).

USMCA, which is the replacement for NAFTA, included a “side letter” where B.C. had agreed to stop restricting the wine sold on its grocery store shelves to provincial wine only, as of last November.

That policy, which had been brought in by the B.C. Liberals in 2015, forced international wines into “stores-within-a-store.” Monday’s agreement addresses similar issues.

Ontario, for example, agreed to eliminate the tax difference between provincial and non-provincial wine sold at wine boutiques.

“The agreement reflects Canada’s strong commitment to the rules-based international trading system, which is incredibly important for our businesses during these challenging times,” said Global Affairs departmental spokesperson Ryan Nearing.

(Source: National Observer)

Webinar Recording — Personal Protective Equipment: What Importers Need To Know

PPE

On July 23, we hosted a webinar in partnership with Miller Thomson LLP about PPE and the most important things that importers should know in light of the COVID-19 pandemic. In case you weren’t able to join us — or just need a refresher — follow the link below to access the presentation and webinar recording.

There is an unprecedented demand and urgent need for access to health products during the COVID-19 pandemic. As part of Canada’s response to COVID-19, interim measures and interim orders (IO) are in place to help ensure quicker and more flexible access to health products.

Health Canada works with the Canada Border Services Agency (CBSA) to assess the compliance of health products at the border. To ensure that CBSA and Health Canada can determine if health products meet requirements, shipments should include the necessary information, such as:

  • product licence numbers
  • site or establishment licence numbers
  • copy of the IO authorization or
  • copies of other import documents

Health Canada is expediting approvals of product reviews and relevant site or establishment licences for COVID-19-related health products. Find out what authorizations or licences you need to import COVID-19-related health products by contacting us at hello@carson.ca.

Read the full Government of Canada memo and link to specific products are located here.

North America Container Imports From Europe Slow As Capacity Tightens

freight

Container freight rates from Europe to North America have fallen 15 percent in the past five weeks as carriers struggle to match capacity to the lower volume being booked by cautious shippers, according to forwarders on the trade.

The spot rate from Rotterdam to New York on July 23 was $2,213 per FEU, down $364 per FEU from mid-June and 7 percent year over year, after reaching a 2020 high of $2,592 per FEU on May 14, according to Drewry’s World Container Index (WCI). Last year, the WCI westbound trans-Atlantic rate never exceeded $2,400 per FEU.

The trans-Atlantic trade is dominated by automotive goods, parts, and machinery, especially on the westbound headhaul routes, with the “peak season” traditionally beginning at the end of July. However, lockdowns aimed at slowing the spread of COVID-19 in the second quarter and rising infection rates across the US have deeply impacted US demand for imports from Europe.

“The peak is definitely not coming, and we are hoping for a rush before Christmas, but our customers are being very cautious,” said Helge Neumann-Lezius, the Europe, Middle East, and Africa vice president of product and capacity management for DHL Global Forwarding.

“All production in Europe is at a low level at the moment, so volumes that are usually strong during the year are still down,” Neumann-Lezius explained. “We are seeing some shippers have orders to replenish existing products, but new orders and new production is still limited. We are expecting to run with a low-volume second half of the year.”

The trans-Atlantic operations manager for a Germany-based forwarder, who asked not to be identified, said shipment volume and shipment sizes were both shrinking, with a significant increase in demand for consolidation of cargo into less-than-container-loads (LCL).

“Customers are starting to come back after the coronavirus, but only with small orders. We are seeing 10 percent fewer orders but 50 percent less volume. For instance, before COVID-19 on one of our busiest routes from Europe to the US East Coast, we regularly had 200 consignments consolidated in 18 FEU per week. Last week, we had 180 consignments that only loaded nine containers.”

The forwarders also did not report an increase in front-loading to move cargo ahead of potential new US tariffs on a range of European-made goods. The US Trade Representative has just completed a call for public comment on new tariffs on $3.1 billion of goods from the UK, France, Germany, and Spain.

(Source: JOC.com)

Government of Canada Announces Creation of Essential Services Contingency Reserve Through Safe Restart Agreement

PPE

To ensure that essential service organizations have access to key supplies needed to keep members safe throughout the COVID-19 pandemic, last week the Honourable Anita Anand, Minister of Public Services and Procurement, announced that, as part of the Safe Restart Agreement, the Government of Canada is establishing the Essential Services Contingency Reserve, to which essential service organizations can apply for temporary, urgent access to personal protective equipment (PPE) and other critical supplies.

The Contingency Reserve complements existing PPE support being provided to frontline health care workers by the Public Health Agency of Canada. It helps other essential service organizations bridge urgent, short-term gaps in their supplies to avoid any significant disruptions in services to Canadians. This includes all critical infrastructure sectors, including the food sector.

Starting August 3rd, the ESCR will be accepting applications for PPE and will assist essential services providers, outside the health sector, that urgently require PPE to obtain supplies and continue operations. PPE including N95 and KN95 respirators, surgical masks, and gloves will be available.

Industry associations are encouraged to apply on behalf of their respective sectors.

Eligible associations and organizations will be able to apply online for a range of equipment, available for purchase at cost. Support provided to provincial or territorial governments will not be cost recovered. Full details on the Contingency Reserve, including the application process and eligibility criteria, are available on the Essential Services Contingency Reserve web page.

Consumer Goods, Textile, and Apparel Items Added to New Round of Section 301 Tariff Exclusions

cotton sheets

The Office of the U.S. Trade Representative has announced a new round of product exclusions from the administration’s Section 301 tariffs on goods from China (List 4, $300 billion trade action.)

The 11 newly excluded HTS subheadings are:

  • 0505.10.0055 (Down of a kind used for stuffing)
  • 5504.10.0000 (Artificial Staple Fibers of viscose Rayon)
  • 8215.99.3500 (Other Spoons and Ladles w/ Stainless Steel Handles)
  • 9506.70.4000 (Ice Skates w/ footwear permanently attached)
  • 9701.10.0000 (Paintings, Drawings, and Pastels)
  • 9702.00.0000 (Original Engravings, Prints, & Lithographs)
  • 9703.00.0000 (Original Sculptures & Statuary)
  • 9705.00.0085 (Other Collector’s Coins)
  • 9706.00.0020 (Antique Silverware)
  • 9706.00.0040 (Antique Furniture)
  • 9706.00.0060 (Other Antiques)

The 53 specially prepared product descriptions are

  • Sodium Alginate Resins (described in HTSUS 3913.10.0000)
  • Boot Hangers of Plastics & Steel (3924.90.5650)
  • Exterior Doors having outer faces of plastics w/ foamed plastics insulation (3925.20.0010)
  • Clamps & Clips of Molded Plastics, each w/ a fastener or adhesive backing for affixing a cord or cable to a flat surface (3926.90.9985)
  • Molded Shells of Plastics of a kind used to form a housing for an earphone (3926.90.9985)
  • Sets of Three PVC-coated Foam Pads, of plastics, of a kind used to assemble flotation work vests (3926.90.9985)
  • Women’s Knit Robes in chief weight of cotton (6108.91.0030)
  • Babies’ Gowns of Cotton Knitted Interlock Fabric (6111.20.6070)
  • Babies’ Sleep Sacks, Knitted, of Cotton (6111.20.6070)
  • Babies’ Sleep Sacks of Cotton Interlock Knitted Fabric (6111.20.6070)
  • Babies’ Swaddle Sacks of Cotton Knitted Interlock Fabric (6111.20.6070)
  • Babies’ blanket sleepers of polyester knitted fleece (6111.30.5015)
  • Men’s & Boys’ Cotton Terry Bathrobes w/ Muslin Trim (6207.91.1000)
  • Women’s Cotton Terry Bathrobes w/ Muslin Trim (6208.91.1010)
  • Girls’ Cotton Terry Bathrobes w/ Muslin Trim (6208.91.1020)
  • Girls’ Fleece Bathrobes (6208.92.0020)
  • Blankets of Cotton, Woven (6301.30.0010)
  • Blankets of Cotton, o/t Woven (6301.30.0020)
  • Crib Sheets of Muslin Cotton (6302.31.9020)
  • Protective Covers of Cotton for Pillows (6302.31.9040)
  • Oven Mitts, Not Knitted or Crocheted, of Cotton (6304.92.0000)
  • Handrail Covers for Spas & Pools (6307.90.9891)
  • Outdoor Shelters, each comprising a canopy of textiles, a folding frame, and a carrying case with wheels (6307.90.9891)
  • Athletic, Recreational & Sporting Headgear designed for off-road use w/ bicycles (6506.10.6045)
  • Folding Helmets of Injected Plastic Parts (6506.10.6075)
  • Fittings of Galvanized Steel, including to support frames, wings, legs, connector & sign supports, all of which are Parts of Retail Display Fixtures (8302.42.3065)
  • Electric Snowblowers (8430.20.0060)
  • Cylindrical Steel Drives specially designed for adjusting color on machines that print on corrugated paper and paperboard (8443.91.3000)
  • Cylindrical Steel Drives specially designed to control color registration (alignment) & material tension on printing machinery (8443.91.3000)
  • Electrical Automated Embroidery Machines (8447.90.5000)
  • Cast Iron Covers for Hand-Operated Gate Valves (8481.90.3000)
  • Iron or Steel Bodies of Hand-Operated Disc Valves (8481.90.3000)
  • Steel Parts of Hand-Operated Gate Valves (8481.90.3000)
  • Lithium-Ion Batteries consisting of cases of base metal containing 18,650 individual lithium-ion battery cells (8507.60.0020)
  • Electric Coffee Makers of a kind used for Domestic Purposes (8516.71.0020)
  • Wireless Communication Apparatus that can receive audio data to be distributed to wireless speakers (8518.22.0000)
  • Fuse-Type Incandescent Tungsten-Filament Lamps (8539.29.3050)
  • Headlight Brackets of Aluminum for Motorcycles (8714.10.0050)
  • Electric Guitar Kits (9207.90.0040)
  • Parts of Music Synthesizers of Heading 9207 (9209.94.8000)
  • Pre-Charged Pneumatic Air Rifles (9304.00.2000)
  • Modular Diving Boards suitable for mounting on boats or docks (9506.29.0080)
  • Swim Masks, Snorkeling Masks, Snorkels, & Water Fins (9506.29.0080)
  • Balance Trainers of Plastics containing an air bladder (9506.91.0030)
  • Exercise Machines of Steel of a kind specifically designed to train the gluteal muscles (9506.91.0030)
  • Push-Up Exercise Machines (9506.91.0030)
  • Brushes of Natural Goat Hair Bristles enclosed in a plastic protective holder for cleaning optical lenses (9603.90.8050)
  • Porous-Tipped Markers for Applying Liquid Chalk (9608.20.0000)
  • Gold Coins of Collector’s Interest, 250 years or older, of Chinese Origin (9705.00.0010)
  • Collector’s Coins 250 years or older (9705.00.0040)
  • Gold Coins of Collector’s Interest, < 250 years old, of Chinese Origin (9705.00.0050)
  • Coins of Chinese Origin & of Collector’s Interest, of any metal other than of gold, < 250 years old (9705.00.0065)

These exclusions will apply from September 1, 2019, through September 1, 2020, and apply to any product that satisfies the description in the Federal Register annex, regardless of whether the company using the exclusion filed the request. The USTR has indicated that it is considering extending the newly granted exclusions beyond September 1, 2020.

Click here to read the full notice with list of exclusions.

G20 Finance Officials Vow to Reach Deal Over Digital Taxation

Apple Store

Finance officials from the Group of 20 major economies on Saturday vowed to resolve major differences over taxing big tech companies and reach a broad, consensus-based solution on international taxation this year.

The United States has been at loggerheads over the issue with Britain, France and other key allies, who have adopted or are considering digital service taxes as a way to raise revenue from the local operations of big tech companies.

Critics say those firms profit enormously from local markets while making only limited contributions to public coffers, but Washington contends the taxes discriminate against U.S. tech firms such as Google, Facebook, and Apple.

The Trump administration this month ratcheted up pressure on France over its 3% digital services tax, saying it would impose additional duties of 25% on French imports valued $1.3 billion but would hold off on implementing the move while talks continued in the Organisation for Economic Co-operation and Development.

G20 finance ministers and central bankers on Saturday acknowledged that the COVID-19 pandemic had slowed work toward an international plan, but said they expected concrete proposals to emerge before their next meeting in October.

After the meeting, German Finance Minister Olaf Scholz said, “Fair taxation of international companies and large digital groups is more urgent than ever.”

French Finance Minister Bruno Le Maire said reaching an agreement by year end was “indispensible.”

“The (pandemic) crisis proved that these digital giants were the big beneficiaries of the crisis. They must pay their fair portion of tax,” he said.

(Source: Reuters)

Canadian Wholesale Trade Rebounds 5.7% in May From Record April Low

manufacturing

Canadian wholesale sales rose 5.7 per cent to $52.6 billion in May, rebounding from a record-setting plunge in April as COVID-19 lockdowns ground factory activity to a halt.

Statistics Canada reported Friday that wholesale trade, which records sales of supplies to retailers, before they are resold to consumers, rose to an all-time high of $65.1 billion in January, before railway blockades walloped supplies in February, and COVID-19 lockdowns hit them again in March and beyond.

But activity seems to have bottomed out in April, with a plunge of 21 per cent to just under $50 billion. That was its lowest level since 2013. But in May the data agency says sales picked up in six of the seven subsectors it monitors. The lone exception was machinery equipment and supply, which fell again.

Most of May’s surge came from the motor vehicles and motor vehicle parts sector. “The sales pattern here largely reflects manufacturers being closed for all of April and parts of May — there was little inventory for most motor vehicle and motor vehicle parts wholesalers to sell,” Statscan said.

After losing two thirds of their sales in April, the motor vehicle and motor vehicle parts and accessories subsector rebounded by one third to $4.2 billion in May.

Another important sector was the food and beverage sector, which has come through COVID-19 comparatively better, since business at grocery stores has boomed throughout the pandemic as Canadians stay home and cook.

May’s restart means Canadian wholesalers have recovered about 18 per cent of what they lost to COVID-19 but they’re still 19 per cent below the high water mark they hit in January.

Sales were up in seven provinces, but Ontario and Quebec saw most of the gain.

While an encouraging sign, Scotiabank economist Derek Holt noted that the numbers show the economy has a long way to go to dig itself out of the COVID-19 hole.

“Almost all of that was through higher volumes with stable prices,” he said. “That’s a fairly mild rebound from the 21 per cent disaster during the prior month.”

(Source: CBC)

Asia-Europe Carriers Reinstate Sailings, Limit Capacity Cuts

shipping

Asia-Europe freight rates flattened in the past few weeks as carriers reinstated several blank sailings and introduced extra loaders in what analysts see as a response to cutting too much capacity amid stronger-than-expected volume on the trade.

The China-North Europe spot rate edged down 1.4 percent in the past week to $907 per TEU, while the China-Mediterranean (Med) rate of $940 per TEU is down 1.2 percent, according to the Shanghai Containerized Freight Index (SCFI). On Asia-North Europe routes, the spot rate is 32 percent above year-ago levels, and the Asia-Med rate is 33 percent higher.

Volume data on the Asia-Europe trade lags by two months, with the last available numbers for May showing a drop in volume of 14.6 percent, according to Container Trades Statistics (CTS). Carriers in the first five months carried almost 1 million TEU fewer than the same period in 2019, with the demand falling sharply from February.

However, the volume carried on Asia-Europe in May was an improvement over April, which recorded a 20 percent decline. While June numbers will only be available in August, the volume data is trending upwards, with European retail outlets open again and factories resuming production. 

Asia-Europe has seen 18 of 189 scheduled blanked sailings being reactivated in the past few weeks, according to Sea-Intelligence Maritime Analysis, with only two new blank sailings announced in week 29 (July 13–19). In its latest Sunday Spotlight, the analyst said fewer new blank sailings indicated a belief by carriers that current capacity cuts were adequate, considering the reinstated sailings.

“While we should caution that this could simply be a question of the carriers being too optimistic, or alternatively that they are planning to sail heavily underutilized for the peak season, this is likely not the case, as the carriers have throughout the pandemic shown an incredible affinity for balancing supply to demand, in order to keep freight rates up,” the analyst noted.

This has been particularly effective on the trans-Pacific, where a spike in imports from Asia consisting of seasonal merchandise, personal protective equipment (PPE), and goods that retailers required for inventory replenishment — coupled with cancelled sailings — kept spot rates at 10-year highs.

(Source: JOC.com)