Over the last few months, we’ve had many subscribers ask questions about customs and importing product from overseas. It can be a confusing topic and since so many people had similar questions, we decided to write a blog post on it. Instead of us answering your questions, however, we went straight to the source and interviewed Pacific Customs Brokers.
Table of Contents
- What exactly does a customs broker do?
- Do you need a customs broker?
- What are the benefits of a customs broker?
- Couriers also offer customs brokerage service, is there a difference?
- At what point should someone who is importing products from Asia contact a customs broker?
- What is required to set up an account with a customs broker?
- How long does it take to get an account set up?
- How much does it cost to use a customs broker?
- What documents do you need to get your product through Canada/US Customs?
- How do you get taxed/what customs charges are there?
- Restricted/regulated products
- Other helpful advice
Freight Forwarder FAQ Interview
Licensed by the Canada Border Services Agency (CBSA), a customs broker may act as an agent for commercial businesses importing goods into Canada in order for a shipment to be released by CBSA and other government bodies, such as Agriculture Canada or the Ministry of Transportation, all of which may require forms and documents to be supplied to them.
At a basic level, customs brokers obtain the documentation that has been prepared for the shipment/contract, review for completeness and compliance with customs regulations, prepare and submit a declaration to customs on their client’s behalf at the port of arrival.
Customs brokers will work with you to ensure your shipment moves effortlessly across the border and arrives at its destination on time while adhering to customs laws and regulations.
If someone has decided to open an ecommerce store and is going to import their product from Asia for resale in the North American market, do they need a customs broker?
It’s up to the importer. Most companies who import goods into Canada find that it is far too expensive and time-consuming to travel to the facility or port of arrival where their goods are held awaiting the clearance process, prepare a formal declaration for Canada customs, pay the charges due and then await delivery of their product. Smart businesses these days do what they do best and leave the clearance process up to the professionals.
Customs brokers will work with you to ensure your shipment moves effortlessly across the border and arrives at its destination on time while adhering to customs laws and regulations. Customs brokers will work in the best interest of you, their client, to assist you in assuring that customs and other government department regulations are met.
Customs brokers stay up-to-date with policy and regulation changes and come equipped with all of the software, hardware and technology needed to manage and declare your company’s shipments, so there’s no need to shop around for the necessary resources.
Aside from submitting a declaration on your behalf, customs brokers can also help your company reduce costs, improve efficiency, and mitigate risk issues related to engaging in cross-border business. We have the experience to help implement the processes and approaches that may boost your competitive advantage in the marketplace. We work closely with international trade and customs professionals to provide advantageous and forward-thinking advice.
This allows you to remain focused on what you do best, instead of spending your time overseeing complex customs procedures. Let the professionals leverage their experience to complete the job with accuracy.
To help you further, we’ve included a couple of links to blog articles that you might find useful.
Courier transport can be fast and efficient, but caution is advised when using their “all-inclusive” customs brokerage services. The extremely large volume of shipments carried by couriers, the speed with which their multiple-shipment loads must move through customs, and unfamiliarity with the multitude of goods handled, makes incorrect tariff, tariff treatment or valuation by courier customs brokers a fairly common occurrence.
Any advantages in freight rates or speed of service can be very quickly wiped out by costly tariff errors that are usually not identified until there is a customs post-release verification audit.
Another factor with courier brokers (or using more than one broker in general) is that you are one importer with customs, so it is imperative that you review your B3 Canada Customs Coding Forms to ensure that your information to customs is consistent amongst all of your agents/declarations. If customs sees one importer, with the same vendor, same item, etc. being declared differently, you leave yourself open for further review and possible penalties.
The best time to contact a customs broker would be in the planning stages, prior to entering into international contracts. The long-term success of any international business model depends on an organization’s ability to understand, execute and enforce cross-border contracts with their suppliers and customers. By getting involved in the early stages, customs brokers may not only be able to provide advantageous advice on terms, but also countries of origin to source from, tariff classification and entry types to assist in the decision-making and compliance process so that at the end of the day you are more competitive in the marketplace and gain a more positive relationship with both U.S. Customs & Border Protection and The Canada Border Services Agency.
What is required to set up an account with a customs broker? Do you need to have a legal business registered? Is there an upfront cost to set up an account?
To set up an account with a customs broker you will need to sign a Power of Attorney (General Agency Agreement) and provide a method of payment for services. If you have a registered business, we can import on your behalf through the commercial stream. If you do not have a registered business, we can import on your behalf as a personal shipment. There are no fees to set up a customs brokerage account with Pacific Customs Brokers.
Setting up an account is a quick process, and is dependent on the importer’s ability to sign and return the account set up documentation in a timely manner.
Customs brokerage fees for basic services typically include receiving documents from a carrier or exporter, reviewing the documents for trade compliance and presenting the documents either in hard copy or electronic format.
Fees are generally established on a sliding scale according to shipment value, shipment volume, time spent and complexity. However, in some cases, fees may be “capped,” flat rates, monthly retainers or otherwise mutually agreed upon.
It is best to shop around, provide as many details as possible, and request a quote.
All exports to Canada require specific information for clearance through Canada customs and the Canada Customs Invoice is the most common form utilized. Your commercial (sales) invoice can be used instead of a Canada Customs Invoice (CCI) provided the required data elements are included.
The information required:
- Vendor, Exporter and Consignee name and addresses
- Importer of Record (if other than the consignee)
- Full descriptions of all items in layman’s terms (what is it, what does it do, what is it made of?)
- Country of manufacture (If USA, CA or MX please accompany with a properly completed NAFTA Certificate to ensure duty-free status)
- Quantity (Packages and Weight)
- Value (Unit Price and Extension)
- Currency of Settlement (U.S. or Canadian Dollars)
- Conditions of Sale
- Purchasers Reference Number
We’ve had many people ask questions about being taxed when they import product: Some people say they get taxed (and therefore, have to pay customs) while some people say they never get charged taxes. Can you clear help clear this up? Are there rules on what gets taxed and what doesn’t? Are all products taxed differently? Is there a way to find out how much in duties and tax people will pay before they import?
Establishing the rate of duty or tax for imported goods depends, in part, on determining the proper classification. Tariff classification can be very complex and speaks to the essential character of the article being imported — what article is being imported, what is the article made of, what is the item used for.
In order to find out the rate of customs duties or tax, you must know the tariff classification. Once you have a tariff classification number, a proper value and the country of manufacture, you can determine the applicable tariff treatment, rate of duty and any applicable taxes. Once the duty rate has been determined, you can then determine if your goods are subject to Goods and Services Tax (GST), Excise Tax or Excise Duty.
Surely there is a laundry list of items with restrictions, regulations and red tape to get into Canada and the US… Can you give us a general idea of things ecommerce entrepreneurs should be cautious of considering for import?
Importers must be aware of today’s environment and the parties involved before you import. Depending on the item you import, they may be regulated by various departments.
- Canada Border Services Agency (CBSA)
- U.S. Customs and Border Protection (CBP)
Other Government Departments:
- Canadian Food Inspection Agency (CFIA)
- United States Department of Agriculture (USDA) and Environmental Protection Agency (EPA)
- Used equipment and used tools require soil inspections at the time of crossing.
- The goods must be clean. Some ports charge for this service and some do not, depending on where the goods are crossing. If they charge, the carrier will likely need to stop and pull over for customs soil inspection.
- Transport Canada (TC)
- New/used tires
- Vehicles (Transport Canada defines a vehicle as any vehicle that is capable of being driven or drawn on roads, by any means other than muscular power exclusively but does not run exclusively on rails. Trailers, such as recreational, camping, boat, horse and stock trailers, are considered vehicles, as are wood chippers, generators or any other equipment mounted on rims and tires)
- Natural Resources Canada (NRCAN)
- Electric appliances
- Gas operated products
- Wood, coal & oil burning products
- Health Canada (HC) / Consumer Product Safety
- Natural health products
- Medical devices
- Consumer products
- Pest control products
- Hazardous chemicals
- Baby products such as cribs, playpens, car seats & strollers
- Environment Canada (EC)
- Endangered species
- Exotic wood products
- Certain plants
- Wildlife animals
- Department of Foreign Affairs and International Trade Canada (DFAIT)
- (TPL) Clothing/Apparel – Tariff Preference Levels (TPL) are special NAFTA provisions set out that provide tariff preferences for imports and exports of non-originating textile and apparel goods up to a specified quantity and must obtain an import permit for the transaction.
- (TPL) Textile fabrics
- Steel/steel product
When provided with detailed descriptions, specifications and intended use of the products, Pacific Customs Brokers will review the information supplied and advise on the Harmonized Tariff Schedule Classification, current duty rates, Canada Border Services Agency, U.S. Customs and Border Control and other government department requirements of articles to be imported into Canada and the United States.
- Ensure that your commodity is admissible into Canada. It can be a very costly experience to discover that your goods are not admissible after shipping.
- Establish an internal set of controls and procedures to manage your import risk.
- Stay current and up to date with all customs regulations.
- Consider attending educational trade compliance seminars.
As additional resources to stay up-to-date on international trade, customs regulations & cross-border issues we also recommend:
- Visiting our import, customs and shipping blog: Your Broker Knows
- Signing up for our weekly international trade newsletter
- Learning more at one of our many trade compliance seminars
Pacific Customs Brokers provides Canadian and U.S. customs brokerage, international freight forwarding, trade compliance seminars and workshops, warehousing and distribution services. Our 24/7 live reception team (no voicemail), ALWAYS open operation and over 50 years of industry experience make us ideal trade partners.