Tariffs are border â€œtaxesâ€ that a country imposes on imports prior to allowing the goods to enter the country. Tariffs are used by governments for a variety of reasons (1) to protect domestic industry (2) to raise revenue and (3) to punish a country for perceived bad acts. The use of tariffs has declined as free trade regimes and the World Trade Organization spread across the world. Canada is a party to several free trade agreements, including the North American Free Trade Agreement (â€œNAFTAâ€).
Issues arise when a country tries to impose a tariff but is restricted by a free trade agreement. How does a country identify which goods â€œoriginateâ€ from a free trade partner (like the United States) and those that do not? The Canada Border Services Agency (â€œCBSAâ€) uses â€œrules of originâ€ to determine which goods fall under which tariff. This is where customs broker services and customs calculator can come in handy.
Rules of Origin (â€œROOâ€)
The rules of origin are complicated and can depend based on the goods. In general, the ROO will measure the production in Canada or a partner country to ascertain if the goods can be considered â€œoriginatingâ€ from Canada or that partner country. Once the origin of the goods is ascertained, the CBSA will apply the appropriate tariff.
ARGO Customs Brokers provide services in Vancouver to help businesses identify which treaties their goods may fall under and how to structure their supply chain to maximize the chance of their goods being considered originating from a partner country.
Harmonized Commodity Description and Coding System
The second issue is how do you tell which goods fall under which category? The HCDCS is a uniform system that classifies every possible good. Identifying the goods is critical because the character of the goods determines (1) the tariff and (2) the ROO.
If a business wants to claim preferential tariff treatment, it must provide proof of origin. ARGO Customs Brokers can assist importers in preparing their proof of origin certificates or forms. The exporter confirms the goods meet the ROO but the importer must keep valid proof of origin and, upon request, produce it to the CBSA. It is generally advised to retain records for at least six years.
Customs broker services in Vancouver and Toronto
ARGO Customs Brokers provide customs calculating and broker services in Toronto, Vancouver and other cities across Canada to importers. Identifying the tariff is half the fight, the other half is paying it. For more information on our services, contact us today.