The CBSA assists Transport Canada with the administration of the Canadian Motor Vehicle Safety Act and Canadian Motor Vehicle Safety Regulations by enforcing the conditions under which new and used vehicles may be imported at Canadian points of entry. The Motor Vehicle Safety Act regulates the importation of vehicles to reduce the risk of death, injury, and damage to property and the environment. A majority of these transactions involve the exchange of goods between the U.S. and Canada. New legislation was being proposed to modernize the present importation laws for motor vehicle imports.
Based on Bay’s extensive experience importing vehicles to and from the U.S. and Canada, Bay was asked to review and identify weaknesses within the proposed legislation that historically allowed thousands of non-complying and salvage vehicles to enter the Canadian commerce overlooking quality assurance and safety and to make recommendations to the House of Commons prior to the final reading of the bill based on it’s knowledge of customs import practices and procedures pursuant to the U.S. Federal Motor Vehicle Safety and the Clean Air Acts.
Importers are responsible for determining whether the vehicles that they are about to ship comply with all the Transport Canada import requirements. These requirements are complex, dealing with a multiplicity of procedural issues covering categorization (new or salvage), admissibility, licensing, detention, storage, disposal, citizenship/ownership status. The Bay Consulting recommendation simplified requirements for importers by outlining a new mechanism between Canadian Customs and Transport Canada to properly and effectively enforce the provisions related to compliance with the CMVSS. Further recommendations included updated electronic forms, border inspection procedures, new documentary requirements, an independent registrar to police the imports and a national motor vehicle inspection service to provide final safety checks following vehicle importations.
Bay Consulting provided professional testimony during the ensuing Parliamentary proceedings with the House of Commons. Bay’s testimony proposed the implementation of a responsible entity or Registrar of Imported Vehicles now commonly know as the RIV. This testimony became public record and the bill was passed which included all of the proposed recommendations. Pursuant to Bill S-8 and Memorandum D19-12-1, these changes are now included in the Canadian Motor Vehicle Safety Act with joint enforcement between Canadian Customs and Transport Canada. All vehicles are now certified by the RIV with final inspections through a national service franchise.
A major Canadian manufacturer sells a variety of products direct to customers and resellers in the United States on a daily basis. With only certain products qualifying for free duty under the North American Free Trade Agreement (NAFTA), a percentage of the exported products were subject to duties thus resulting in considerable and on-going duty payments to U.S. Customs.
On-going shipment delays at U.S. Customs due to missing information or improper documentation were resulting in customers not receiving their orders on time. Because of the sheer volumes and variety of products, the first challenge was to develop a secure automated system that would accurately report each transaction to U.S. Customs in a timely manner. The new process had to be compliant with Trade Act of 2002 security criteria while meeting U.S. Customs airport entry requirements. To solve specific problems presented by product diversity and value assessment in real time, the system had to electronically categorize each commodity in U.S. Customs terms, while providing instant feedback for exceptions, restricted commodities or commodities with excessive values. All processes had to ensure timely and accurate data transmissions and visibility at the specific U.S. port of entry.
The next challenge was to develop an overview of the customers’ purchasing trends to determine which products qualified as duty-free and if alternative sourcing could qualify the completed products under a reduced duty rate or free of duties altogether. Finally, Bay had to prepare a recommendation for possible duty reductions based on analyses of their product types and the requirements (for duty) as set forth in the NAFTA agreements, GSP(General System of Preferences), and HTSUS Chapter 98(9801 and 9802).
After an in-depth review, Bay found that under HTSUS 9802, products assembled abroad in whole or as part of fabricated components that were (a) exported in condition ready for assembly without further fabrication, (b) had not lost their physical identity in such articles by change in form, shape or otherwise, and (c) had not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting, were eligible for duty savings. All three requirements of subheading 9802.00.80 HTSUS, must be satisfied before a component may receive a duty allowance. Any significant process, operation, or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precluded the application of the exemption under subheading 9802.00.80 HTSUS, to that component.
The new system created by Bay Consulting and the ensuing analysis resulted in considerable duty savings for the Canadian manufacturer. Bay now uses this unique process on behalf of other cross-border manufacturing clients.
A major Canadian distributor was purchasing small volumes of goods manufactured in the US and importing them to Canada for resale. These product shipments were brought in by international carriers and subject to LTL/Small Parcel freight rates that were 30-50% greater than equivalent rates in the US. With their existing methods, this importer was experiencing regular delays, misdirected freight and excessive freight charges based upon international tariffs. Bay Logistics was challenged to find a more cost-effective and time-efficient method for transporting these goods.
Bay Logistics implemented procedures routing all orders from US vendors to its US border warehouses. Orders were received and interlined with Bay’s fleet of trucks offering immediate delivery services to the Canadian destinations. Additionally, Bay negotiated a reduction in rates from the US carriers and got many of the distributors’ US vendors to offer free delivery when shipped to a US address. Using its proprietary software platform, this method allowed for better tracking of the goods, better preparation for Canadian Customs review, and more timely deliveries.
Bay’s new approach eliminated unwarranted duty fees and penalties paid on hundreds of shipments, resulting in a cost savings of 38% and an average reduction in transit time of 2 days to all Canadian locations.