TradeLane

Top Three Excuses for Not Paying Attention to Your Company's International Trade

Posted by Rob Moore

5/19/16 2:38 PM

051916-bandaidonit.png

Put a band aid on it, it will be ok. Walk it off, you’re not really hurt and you’re holding up the game.

As a guy who has played hockey most of my life I have heard this many times. Then you wake up the next morning take a look and think “Hmm… That might need stitches”.  Sometimes trade programs do not look as good as you thought, too.

Over the years, I have talked to many importers and exporters about the state of their trade programs. Most listen with great interest and agree that their trade program does not get the attention it deserves. I usually ask one simple question: How much of your business relies on trade?

Then there are the excuses for not paying attention to the international movement of your goods. When I was in school, I had plenty of excuses and now in my career I have hear lots of them.

The Top Three Excuses for Not Paying Attention to Your International Trade

1. “We have been doing it this way for the last 25 years and have never had a problem.”

This one is my favorite. Let’s just say that 1991 was 25 years ago and parachute pants were in. Enough said.

The WCO will adjust the tariff globally at the start of 2017, Canada-Korea FTA came in last year, and the TPP may be coming. Things change and we have to change with them or we are left behind.

1.a. “We were never informed of this”

Sometimes an excuse can buy you some time, but it usually causes more trouble than it is worth. Hiding your head in the sand, The Ostrich Defense, rarely ever works.

 2. “My broker looks after all of this.”

I started my career working for a customs broker. There are tons of really talented people in the industry who do a great job with the information they are given. However, they can only be as good as the information they are given. If the source information is flawed then the issues can become systemic and not the fault of the broker. Secondly, the penalty regime in Canada puts the onus squarely on the importer. Your broker will do a great job but, the importer is ultimately responsible for H.S. classification, valuation, trade agreements and maintaining the records to substantiate the import declare to the government.

3. “We only look at the duty rates and duty paid.”

Ok, this is a start. If you only compare the duty rate this month to the one used last month you will pick up on any inconsistencies. How do you know it is right in the first place? Maybe you are paying too much to the government or perhaps you are not paying enough, which is much worse. The risk is probably higher on duty free classifications. An unfavorable reassessment of classification could mean that you will have to start paying duty on imports of the product(s) reassessed. Furthermore, the government will make you pay the duty on historical imports of the same product(s) as far back as four years. An increase in duty rate from 0 to 6% effects your landed cost and ultimately profit.

The CBSA publishes their audit targets twice a year. They actually tell you that they are looking for you. The Customs Tariff, Directive Memorandum and Customs Notices can all be found on their website. You could do yourself a favor and become familiar with these publications.

If not, my colleagues and I at Tradewin are very familiar with all of this. If it looks like it needs stitches, go to the doctor. 

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Topics: Best Practices

Written by Rob Moore

As Senior Manager of Consulting for Tradewin's Canadian practice, Rob brings expertise in H.S. Classification, Valuation, North American Free Trade Agreement (NAFTA), Least Developed Country Tariff (LDCT), and General Preferential Tariff (GPT), as well as extensive experience with the automotive and textile industries.