Commercial Importation Requirements

Alexander Vucenovic

Cross-Border Transportation Centre

Abstract

The aim of this paper is to elucidate the policies, procedures, and processes by which
federal customs agencies in Canada and the United States control, monitor, and regulate
the importation of commercial goods. While binding export requirements in both
countries do exist, relative import requirements are far more stringent and will be the
focus of discussion. This paper is largely based on references to Canadian import
requirements and is thus intended for an audience consisting primarily of the Canadian
import community and the American export community. This paper also contains
comparative information on relevant U.S. equivalencies and, to an extent, may also be of
use to the Canadian export community and the American import community.
With the North American Free Trade Agreement (NAFTA) removing numerous
Canada-U.S. tariff barriers, the inherent cost-savings has resulted in an increase of cross-
border supply chain development. However, the time-sensitive nature of running a cross-
border supply chain – versus a domestic supply chain – has generated concern due to the
customs requirements involved in the physical movement of commercial goods across
national borders.
A lack of understanding of the necessary policies, procedures, and processes
required can hinder or prevent the formulation of international trade partnerships among
existing business entities looking for growth opportunities abroad. A failure to invest
time into understanding the requirements of engaging in such activities may also prove
overwhelmingly intimidating and prevent would-be entrepreneurs from starting a new
business. The task of understanding the step-by-step sequence of events is daunting and
each step must be unpacked individually in order to fully comprehend it.
This paper illustrates the commercial importation process using a high-level, step-
by-step process map from the point of view of a customs broker. This map will assist in
describing the specific documents or information required at each step as well as the
pertinent actors‟ relationships to the information and each other. Aside from
understanding the overall commercial importation process, the primary barrier to
importing or exporting commercial goods is exhibiting compliance with all relevant laws
and regulations governing trade. Additionally, commercial importation requirements vary
with the commodity being imported. Examples of such variations will be discussed as
appropriate.
Finally, this paper will conclude by exploring the financial costs of running a
cross-border supply chain versus a domestic supply chain. For commercial importers
contemplating such an endeavour, quantitative information identifying the additional
customs-based charges from customs brokers, commercial carriers, and federal agencies
responsible for administering and regulating customs policies is of paramount
importance.

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Introduction
Customs Brokerage: An Overview
In customs brokerage, a business where
time very much equals money, supply
chain members – including carriers,
customs brokers, as well as importers,
their vendors, and their intermediaries –
have made significant investments in
ensuring their technological
compatibility is on par with that of
relevant government agencies and each
other in order to reduce lead times in
material movement and ultimately
control costs. Communicating
information between business entities is
driven by heavy use of electronic data
interchange (EDI) technology1.
Figure 1 displays a high-level
customs brokerage process map.
Customs brokerage, as an information
technology-driven service industry, has
made significant improvements in
efficiency and effectiveness by using
emerging technologies and
corresponding best practices. The flow
of relevant information (in the form of
data files or hard-copy documents) is
often a cumbersome process due to the
number of supply chain members
involved at each step of the
information‟s pathway.
At steps 01 and 02 (the pre-
reporting stage), initial information must
be supplied to the customs broker. This
initial information, specific to the
shipment of commercial goods in
question, is then manipulated between
the customs broker and the relevant
federal customs agency in the following
sequence.
The customs broker must first
report the goods to the relevant federal
customs agency (1). Canada‟s federal
1
EDI standardizes data in a format that enables
exchange between entities (Robert Bosch, 2005).
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customs agency is the Canada Border
Services Agency whereas the United
States‟ federal customs agency is the
Bureau of Customs and Border
Protection. The federal agency will then
review the reported information and
make one of two determinations (2),
either rejecting the commercial goods
(3b1) or recommending the goods for
release (3a). If the shipment of
commercial goods is rejected, then the
broker must review and correct any
errors present (3b2). If the shipment is
recommended for release, then once the
conveyance (carrier) reaches the Primary
Inspection Line (PIL) and presents their
pre-arrival barcode for scanning to the
federal agent, the shipment will be
released into the importing country. The
final two points (4 & 5) of the process
involve accounting for the imported
goods and the subsequent remittance of
duties and taxes to the appropriate
federal body.
As a result of the scope and
intricacy of customs legislation,
procedures, and regulations, many
importers use customs brokers in order
to ensure the accurate and timely
reporting, releasing, accounting for, and
payment of duties and taxes on their
commercially imported goods.
Customs brokers can also serve
as a useful source of customs
information which can prove invaluable
considering the complexity and time-
sensitive nature of today‟s cross-border
supply chains. Each individual shipment
of commercial goods cleared by a
customs broker is wholly called a
transaction.
The remainder of this paper will
further describe each of these points and
the corresponding obligations incurred
by all parties in the process of customs
transaction processing.
Commercial Importation Requirements
 Importing into Canada

The CBSA & ACROSS

Section 9 of the Customs Act empowers
the Canada Border Services Agency
(CBSA) with the ability to grant licenses
to customs brokers. Customs brokers are
business entities that enter into
contractual agreements with importers of
commercial goods. A customs broker
provides the importer with the service of
clearing the importer‟s goods through
the border frontier and into Canada.
The service of clearing goods
does not have a formal definition, but
involves four basic obligations. Per
Figure 1, customs brokers are obligated
to complete steps 1, 3, 4, and 5 on behalf
of their clients (commercial importers).
Step steps 01 and 02 are the responsibility
of a supply chain member external to the
broker, often the importer, vendor, or
carrier. The importer is often heavily
involved in this process so as to ensure
the accuracy of information provided to
their customs broker.
Importers may also own or
subsidize their foreign vendor or even be
classified as a non-resident importer who
essentially acts as an exporter. Non-
resident, U.S.-based importers are often
large multi-national firms which own or
subsidize their consignees.
Step 2, the release decision by
federal customs agency, is merely an
intermediate step in which the broker
waits to receive confirmation of a
decision, in Canada from the CBSA, as
to whether or not the reported shipment
of commercial goods will be allowed to
enter Canada.
As of 2006, Canadian customs
brokers handled more than 80% of all
import transactions and more than 95%
________________________________________________
of those were performed electronically
Figure 1: High-level customs brokerage process map
using the Accelerated Commercial

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Release Operations Support System
(ACROSS) (The Canadian Society of
Customs Brokers [CSCB], 2006, 4-9-
20). Whereas customs brokers use
ACROSS to report goods, the CBSA
uses ACROSS to review reported goods
and process release recommendations or
rejections for those goods. The use of
hard copy paper reporting packages was
commonplace prior to the national
implementation of ACROSS in April,
1996.
The overwhelming benefit of
ACROSS is that it eliminates the need to
report goods via hard copy paper
reporting packages; a laborious and time
consuming process for both the customs
broker and the CBSA. In addition to
reduced transaction processing times,
ACROSS provides the benefits of being
able to exchange information 24 hours a
day, the ability to exchange information
without having to constantly re-key
information manually, as well as the
cost-savings associated with not having
to handle and produce hard copy paper
reporting packages (CSCB, 15-3-11).
Steps 01 & 02
Pre-reporting of Goods
In the process of reporting commercial
goods entering Canada, customs brokers
operate with an understanding that the
CBSA requires certain shipment
information about each transaction to be
reported.
The CBSA uses this information
in order to determine the risk2 involved
in allowing the goods to enter Canada.
This shipment information is also
essential to the remaining customs
2
The term „risk‟ encompasses risks in the areas
of health, safety, and security and includes all
commodities ranging from agriculture to
children‟s toys to industrial machinery.
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brokers‟ obligations of release,
accounting, and payment of duties and
taxes. If the shipment information
reported to the CBSA meets the
necessary requirements, then the CBSA
will recommend that transaction for
release. If the shipment information
reported to the CBSA is erroneous,
inadequate, or questionable then the
transaction will be rejected and must be
resubmitted for review after the
necessary changes have been made by
the broker.
The CBSA may also choose to
randomly inspect shipments of
commercial goods at their discretion.
Examples include instances where the
country of origin of a shipment is known
to be a producer of illegal drugs or
instances where the importer of a
shipment has been identified as being of
high risk (CSCB, 14-3-2).
Before customs brokers can
report transactions to the CBSA, the
customs broker must first be provided
with shipment information. The
responsibility of providing shipment
information to the customs broker is
determined by the importer and may
often be delegated to the vendor or
carrier in the form of a contractual
obligation. An importer or an exporting
vendor will typically generate shipment
information based on its database
management capabilities3.
Many Materials Requirement
Planning (MRP) software applications
allow pertinent customs information,
such as tariff classification and country
3
While shipment information to be used by the
customs broker can be generated by the exporter
(exporting vendor) or importer for reporting
purposes, the accuracy of shipment information
for release and accounting purposes is always the
ultimate responsibility of the importer.
Commercial Importation Requirements
of origin, to be appended to existing
materials management data.
Step 1
Reporting of Transaction
Initial shipment information is typically
provided to the customs broker in a
variety of formats which can be
classified as either automatic or manual.
The current customs brokerage
industry trend is the automatic format of
shipment information provision.
Automatic shipment information is
typically provided to the broker in the
form of an EDI file, a process in which
MRP applications can prove extremely
useful. EDI file transfers require
compatibility between the customs
broker‟s ACROSS program and, most
commonly, the importer or vendor‟s own
MRP or other internal database
management application(s).
EDI files contain virtually all
relevant shipment information needed to
be reported to the CBSA. The integrity
of an EDI file – generated directly from
the importer‟s own internal database –
also helps to ensure accuracy in
reporting. EDI files also expedite the
reporting process overall because the
shipment information does not need to
be manually keyed by the customs
broker before being reported to the
CBSA in ACROSS. At most, the
customs broker will typically only need
to review, update, verify – and correct, if
necessary – an EDI file before reporting
the transaction. Also, because of their
integrity, EDI files also greatly reduce
broker keying errors which can result in
the subsequent need to correct erroneous
transactions.
In contrast to the automatic
format of shipment information
provision, manual shipment information
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provision significantly increases
transaction processing time. Manual
shipment information increases lead time
and begins by the importer or vendor
providing information to the carrier in
the form of hard copy reporting
documents. The carrier then provides the
hard copy reporting documents to the
customs broker, most often via fax or e-
mail.
In the manual method, a customs
broker must first manually key all the
shipment information from the hard copy
reporting documents into ACROSS in
order to report the transaction to the
CBSA. The two most common hard
copy reporting documents typically
provided to the customs broker include
the Canada Customs Invoice and Bill of
Lading.
Hard Copy Reporting Documents
The Canada Customs Invoice (CCI or
Form CI1) is the standardized hard copy
reporting document that, if fully and
accurately completed, fulfills the
CBSA‟s invoice information
requirements for commercial shipments
entering Canada. The CCI, therefore,
also fulfills the customs broker‟s
requirements for accurately reporting
their client‟s transactions.
The most critical information
contained on a CCI is as follows: vendor
name and address, Date of Direct
Shipment to Canada (DDS), consignee
name and address, purchaser‟s name and
address (importer), currency of
settlement, net weight, gross weight,
invoice total, and originator. It is
necessary to indicate the following
information for each successive line item
(commodity) on the CCI: country of
origin of shipment, number of packages,
Commercial Importation Requirements
description of commodities, quantity
(unit), unit price, and line total4.
CCIs may only be completed by
– or originate from – the exporter
(vendor), importer, or a customs broker.
Carriers are not authorized under any
circumstance to complete a CCI.
When a CCI is provided to a
customs broker, the vendor or carrier
will include Pre-Arrival Review System
(PARS) information in a location on the
CCI where important shipment
information is not obstructed. The
concept of PARS centres around the
PARS barcode number, also known as a
Cargo Control Number (CCN). PARS
numbers are generated as barcodes so
that CBSA may scan the barcode rather
than manually key the PARS number,
contributing toward a reduction in
processing time. PARS barcode numbers
begin with a given carrier‟s four-
character carrier code. The carrier code
uniquely identifies each carrier and is
commonly in the form
„XXXXPARSXXX…‟ where the first
four characters can be alphabetical,
numeric, or include a hyphen. The
remaining characters uniquely identify
each transaction.
Additional PARS information,
aside from the PARS barcode number
itself, include: the truck driver‟s
telephone number or e-mail address, the
dispatcher‟s telephone number or e-mail
address, the truck driver‟s tractor and
trailer license numbers, the truck driver‟s
port of entry, and the truck driver‟s
estimated time of arrival. This additional
PARS information assists the customs
broker in prioritizing their workload and
ensuring that transactions are submitted
4
When shipments are reported electronically
using ACROSS, tariff classifications are
generally pre-loaded into the customs broker‟s
ACROSS application per the importer.
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to the CBSA in the order that they
anticipate them crossing to reduce the
amount of time that a given truck driver
may have to spend waiting to cross the
border. The CBSA indicates that PARS
transactions will be reported a minimum
of one hour prior to crossing and a
maximum of 30 calendar days before
crossing.
In addition to the PARS barcode
number, the customs broker‟s transaction
number is also a unique shipment
identifier which is critical for tracking
the transaction through the overall four-
step clearance process for which the
broker is responsible. Following the
receipt and verification of a CCI
containing PARS barcode number
information, the customs broker
generates a transaction number and
begins the process of manually keying in
the shipment information into ACROSS.
The 14-digit transaction number begins
with a given customs broker‟s five-digit
account security code. The account
security code uniquely identifies each
customs broker and the transaction
number is always in the form „12345-
123456789.‟ The remaining nine
characters uniquely identify each
transaction.
The Bill of Lading (BL) is a
contract between the vendor and carrier.
A BL is also important because it: acts
as a receipt for goods (and their
condition) being received by the carrier,
can contain shipping instructions, and
may be used to support a claim against
the carrier for loss or damage (CSCB,
14-16-65). The most critical information
contained on a BL is as follows: Date of
Direct Shipment to Canada (DDS),
vendor name and address, consignee
name and address, net weight, gross
weight, number and kind of total
packages, and description of
Commercial Importation Requirements
commodities. In this regard, the BL also
serves as a means by which the customs
broker can verify particular shipment
information provided on the CCI.
Steps 2, 3a, 3b1 & 3b2
Tariff classification
The Harmonized Commodity
Description and Coding System (HS) is
the system used to apply tariff
classifications to imported goods. This
system essentially uses a 10-digit
number to classify commodities based
on the level of human processing or
manufacturing received. For example, a
live, pure-bred breeding horse is
classified under the HS code
0101.10.00.10 whereas a plasma arc
welder is of the HS code 8515.31.00.10
(CBSA, 2010b).
HS codes also have certain tariff
classification information applied to
them which may result in an increased
rate of duty payable by the importer.
Certain commodities are also subject to
additional restrictions such as
commodities falling under certain
agricultural, industrial, or textile
classifications. These commodities may
require an additional import permit as
well as approval from the Canada Food
Inspection Agency (CFIA).
Such commodities may also have
a Tariff Rate Quota (TRQ)5 imposed
against them. These TRQ commodities
have a maximum yearly limit on the
amount that can be imported and is a
protectionist measure intended to benefit
Canadian producers of similar goods.
5
CBSA is responsible for the administration of
national TRQs. However, the Department of
Foreign Affairs and International Trade (DFAIT)
has the authority to impose TRQs to specific
commercial importers by issuing import
allocations or „quota-shares.‟
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The penalty imposed against importers
who enter an over access commitment
status for a particular TRQ commodity is
an increased rate of duty. For example,
certain veal products are normally duty-
free, or within access commitment, as
long as the annual imports do not reach a
particular quantity. When the annual
imports exceed this quantity, then the
duty rate for each subsequent
importation is raised to a rate of 26.5%
(CBSA, 2010b).
Additionally, HS codes also
denote which commodities may be
exempt from duties if their country of
origin is a country with which Canada
has a preferential tariff agreement, for
instance the Canada-Chile Free Trade
Agreement (CCFTA). In such an
instance, a shipment of an otherwise
dutiable commodity of Chilean origin
that bears an appropriate Certificate of
Origin will be exempted from payment
of said duties. The process of
determining the rules of origin is dealt
with in more detail during the
accounting process.
What causes a transaction to be rejected?
When a customs broker reports a
transaction to the CBSA for review, the
transaction is queued to a CBSA
electronic commerce processing center
where a CBSA Border Services Officer
(BSO) reviews the transaction and
makes a release decision. If all
requirements have been met by the
customs broker in reporting the
transaction, the BSO will recommend
that transaction for release.
In the case of a truck driver
carrying a particular transaction on his or
her trailer, the driver would present their
PARS barcode to the BSO at the primary
inspection line (booth) at the Canadian
border frontier. Once the BSO scans the
Commercial Importation Requirements
PARS barcode, the BSO will be notified
that the transaction has been
recommended for release. At that point,
it is at the BSO‟s discretion as to
whether or not the truck will be
permitted immediate entry or will be
referred to secondary inspection for
further investigation.
If all requirements have not been
met by the customs broker in reporting
the transaction, then the BSO will refuse
the truck driver entry. If the transaction
has not been yet been reviewed by a
BSO working in the electronic
commerce area, then the driver will be
refused. Such an event always occurs at
the driver/carrier‟s expense and is a
reason that most carriers encourage their
drivers to contact their respective
customs brokers to confirm their
shipment‟s „recommended for release‟
status before crossing the border. The
CBSA published Customs Notice 08-009
for the purpose of mandating ACROSS
transaction reporting for transactions
with 100 or fewer invoice line items on
February 22, 2008 (CBSA, 2008).
Consequences of Incorrect Reporting
Once the customs broker is ready to
either key manual shipment information
or update automatic EDI shipment
information, the customs broker must
ensure that the transaction information is
correct and without error. If not, rather
than the BSO recommending a
transaction for release (3a), the agent
will reject the shipment (3b1).
While the shipment information
provided is ultimately the responsibility
of the importer, the importer, carrier, and
customs broker may all be subject to the
Administrative Monetary Penalty
System (AMPS) depending on the type
of violation committed. AMPS penalties
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are a penalty system imposed by CBSA
to ensure compliance.
AMPS penalties are based on
common errors in reporting commercial
goods such as incorrect value, incorrect
country of origin, incorrect tariff
classification, or failure to obtain an
appropriate import permit or required
approval from another government
department if required.
Many AMPS penalties are
administered progressively, escalating in
cost per violation. In other cases, certain
AMPS penalties have a „flat‟ penalty
rate that remains static per occurrence no
matter what the number of occurrences
is. Such is the case of contravention
C160, which results from a failure to
keep records on imported commercial
goods for a period of six years. C160 is
an extreme example where the flat
penalty rate is CAD$25000.00 for each
violation (The Canada Border Services
Agency [CBSA], 2010a, p. 80).
Step 4
Accounting
After the customs broker ensures that
their transaction has been released –
meaning that the shipment of
commercial goods has physically entered
the country and cleared the border
frontier – then the accounting process
begins. The accounting process must be
completed and „confirmed‟ within five
business days of the transaction having
been released.
Customs Automated Data
Exchange (CADEX) is an EDI system,
not unlike ACROSS, used by customs
brokers to transmit final accounting
information to CBSA.
When an exporter or vendor‟s
goods have been loaded onto a carrier‟s
conveyance, the carrier has temporarily
Commercial Importation Requirements
taken title to the goods and a legal
obligation now exists to the carrier in the
form of transporting the exporter‟s
materials to the consignee or place of
ultimate destination. The shipping
supervisor and truck driver are obligated
to sign and date the BL accordingly.
This date on the BL is referred to as the
Date of Direct Shipment (DDS). If the
currency of settlement of the transaction,
as it appears on the CCI is not in
Canadian dollars, then the DDS is used
to determine the appropriate exchange
rate for currency conversion, thus
resulting in the Value For Duty (VFD).
The BL, because of the DDS,
plays an important role in the accounting
process. The VFD is used to calculate
applicable duties or other taxes. These
amounts are then totaled to determine
the value for tax. Once the 5% GST
charge has been added, the customs
broker is then left with a total amount
owing per transaction.
The accounting period is the last
opportunity an importer has to supply a
relevant certificate of origin6 to the
customs broker so that the customs
broker can remove the requirement to
pay any applicable duties as per the
Canada Customs Coding (accounting)
Form (Form B3-3), or B3.
6
In the case of a NAFTA certificate of origin, if
the goods do not fall under the Rules of Origin
Criterion A (“wholly obtained or produced
entirely”), then Criterion B mandates the
calculation of Regional Value Content (RVC).
RVC is “the percentage of the value of the goods
that represent its North American content” and
can be calculated at the importer‟s discretion
using either the net cost method or transaction
value method. RVC must equal not less than
60% where the transaction value is used or not
less than 50% where net cost is used in order for
the goods to qualify for duty-free status (CSCB,
8-10-25).
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Step 5
Payment of Duties & Taxes
The final basic service obligation
customs brokers have to their clients
requires the customs broker to pay duties
and taxes for the goods on behalf of the
importer to the Receiver General of
Canada. The account security code is
used by CBSA to determine which
transactions have been accounted for by
which customs broker and a
corresponding list is generated using the
CBSA‟s Customs Commercial System
(CCS) K84 form.
There are two different K84
documents generated by CBSA. The first
type is the Daily Notice which identifies
all transactions accounted for the
previous business day. The second type
is the Monthly Statement which is
generated on the second last business
day of each month.
The K84 Monthly Statement
records from the 25th day of the previous
month to the 24th day of the current
month. This statement totals all duties
and taxes owed, including AMPS
penalties applied to the customs broker,
as well as any other miscellaneous
payments that a given customs broker
may have outstanding with the CBSA
(CSCB, 18-4-20). The total amount
indicated is payable “in full on the last
business day of the current month”
(CSCB, 18-4-21).
Importing into the United States
United States CBP
The Bureau of Customs and Border
Protection (CBP), under directorate of
the Department of Homeland Security, is
one of the many numerous initiatives,
organizations, and programs borne as an
outcome of the Attack on America that
Commercial Importation Requirements
occurred September 11, 2001. CBP‟s
priority mission is to “keep terrorists and
their weapons out of the U.S.” (United
States Customs and Border Protection
[CBP], 2006, p. 5).
CBP is also the agency
responsible for facilitating international
trade as mandated by extensive federal
laws and regulations. CBP, in
partnership with the commercial trade
community and other government
agencies, is projected to oversee the
importation of approximately USD$1.8
trillion of commercial goods in 2010
alone, an increase of six percent from
2009 (CBP, 2010).
Process Overview
For U.S. customs brokers, a high-level
process map outlining generalized flows
of shipment information throughout the
supply chain would be virtually identical
to that of their Canadian counterparts.
For instance, the responsibility of
providing shipment information to the
customs broker is determined by the
importer and may often be delegated to
the vendor or carrier in the form of a
contractual obligation. Also, the current
industry trend in the U.S. is the
automatic format of shipment
information provision versus the manual
method, consequently allowing for
greater accuracy and a reduction of lead
time in the overall reporting of goods to
CBP. An additional similarity is the
four-step responsibility of U.S. customs
brokers to report, release, account for,
and pay duties and taxes on their clients‟
imported goods.
While there are many parallels –
evident in the flows of shipment
information, technological capabilities,
and customs clearance processes –
common to both CBP and the CBSA,
there are certain areas of variance.
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Noteworthy areas of variance in the
reporting of commercial goods to CBP
include the Pre-Arrival Processing
System entry summary, the Automated
Commercial Environment, and the
electronic truck manifest.
Pre-Arrival Processing System
The Pre-Arrival Processing System
(PAPS) is the U.S. equivalent to PARS
in Canada. Instead of the PAPS barcode
number beginning with a four-character
alphanumeric carrier code as PARS
numbers do, PAPS barcode numbers
begin with a given carrier‟s Standard
Carrier Alpha Code (SCAC). The SCAC
code, as the name implies, is composed
of alphabetical characters and does not
contain any numerical characters
whatsoever.
Another significant difference in
the processing of PAPS information is
the use of filer codes in the reporting of
commercial goods to CBP. The filer
code is a unique three-digit
alphanumeric code identifying a specific
customs broker at a specific port.
Not unlike the standardized CCI
in Canada, the Entry Summary (or Form
7501) fulfills the CBP‟s invoice
information requirements for
commercial shipments entering the
United States. In addition to the
aforementioned PARS information
supplied to a Canadian customs broker
for a PARS shipment, PAPS shipments
require the inclusion of (aside from the
PAPS barcode number itself) the broker
filer code. When a carrier approaches the
primary inspection line, a CBP agent
will scan the PAPS barcode in order to
view whether or not the transaction has
been recommended for release. If there
is a problem, then the filer code allows
the CBP agent to expedite the process of
getting the carrier in contact with the
Commercial Importation Requirements
correct customs broker in order to
resolve the issue.
Automated Commercial Environment
The Automated Commercial
Environment (ACE) is CBP`s electronic
transaction processing system used to
exchange information with customs
brokers. As in the case of ACROSS in
Canada, the reasons for the development
and implementation of ACE in the U.S.
are identical. Prior to the deployment of
ACE in 2003, hard copy paper reporting
packages were used to report imports of
commercial goods to CBP. However, in
contrast with the often third-party
software applications developed for
Canadian customs brokers to access
ACROSS, CBP developed ACE to be a
secure data portal accessible over the
internet to any party possessing the
appropriate access credentials.
Unlike ACROSS in Canada,
which can only be accessed by CBSA
and customs brokers through third-party
applications, ACE has developed into
tool that can be used by CBP, customs
brokers, importers, vendors, and carriers
alike to perform numerous functions
including generating financial reports,
investigating the status of transactions,
and reviewing delivery schedules.
ACE effectively consolidates
relevant information pertaining to the
functions of all members in a cross-
border supply chain, including the
functions of CBP. The Automated
Broker Interface (ABI) is a specialized
portal for customs brokers‟ use and
allows the broker to complete all
necessary functions of reporting,
releasing, accounting for, and paying
duties and taxes for their clients‟
shipments.
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Electronic Truck Manifest
The ACE Truck Manifest System (or „e-
Manifest‟) was first mandated in the
states of Arizona and Washington on
October 27, 2006. The e-Manifest
system allows for carriers to self-report
certain information regarding the
commercial goods on their trailer in
order to expedite the import process7.
To file an e-Manifest, carriers
have the option of self-filing either by
using the ACE secure data portal, using
an interface developed internally or by a
software vendor, or by using a third
party (most often a customs broker).
For carriers who have invested
enough resources in driver training and
system development, the time-saving
advantages of not having to use a
customs broker to file an e-Manifest can
be overwhelmingly obvious. Free and
Secure Trade- (FAST)8 approved
shipments gain an advantage of only
requiring a reporting time in advance of
30 minutes prior to crossing, as opposed
to the traditional one hour minimum
(Spero, 2007, p. 8110). These carriers
are authorized to use designated border
crossing lanes in order to expedite the
movement of low-risk shipments. For
U.S. importers, the use of FAST-
approved carriers who self-file their e-
Manifests is advantageous, especially if
the importer is employing Just-In-Time
(JIT) manufacturing schedules.
7
CBSA will begin an equivalent e-Manifest
program for truck carriers as of September, 2010
(CBSA, 2010c). e-Manifests require information
on the conveyance, cargo, crew/passenger(s),
secondary, and importer.
8
The Commercial Driver Registration Program
(CDRP) is free to join, however, only Canada
participates in the CDRP program. CBSA has
recommended that CDRP drivers apply for
FAST cards, which are recognized in both
Canada and the U.S., at a cost of USD$50.00.
Commercial Importation Requirements
 Although the information
submitted to CBP is sufficient for
reporting purposes it does not, however,
satisfy the complete invoice
requirements for accounting purposes.
These requirements must be completed
by the importer‟s customs broker and are
usually completed following the release
of the commercial goods. ACE
simplifies this process by automating the
e-Manifest notification to the broker via
ABI.
Conclusion
The Costs of Importing
The financial impacts of importing will
often be the bottom line and deciding
factor on whether or not to pursue such
an endeavour. Fees charged by customs
brokers are often assessed to importers
either per entry, at a monthly flat rate, or
sometimes as a percentage of total duties
and taxes paid.
Additional costs associated with
running a cross-border supply chain
include the use of carriers who employ
FAST-approved truck drivers. Customs-
Trade Partnership Against Terrorism-
approved (C-TPAT)9 carriers have made
significant upgrades to their fleet and
warehouse such as controlled access
points, security cameras, and
improvements to their existing
infrastructures. Investments in FAST and
C-TPAT by carriers are transferred
directly to their clients (Transport
Canada, 2005).
In order to capitalize on the
privileges of designated FAST lanes and
9
Partners In Protection (PIP) is the CBSA
equivalent to C-TPAT. Both C-TPAT and PIP
require participants to modernize security
infrastructures, procedures, and standards in
order to enhance supply chain safety and
security.
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„low-risk‟ status, these certified carriers
are now, generally speaking, the ones
who can move material across the border
the fastest; a must for most modern
production firms, especially those
employing JIT schedules.
As mentioned above, the duties
on imported goods originating from a
country that has no trade agreement in
place with Canada or the United States
can be significant. As well, certain
commodities that have import quotas or
TRQs can also prove expensive, as in the
case of over access commitment veal
imports. Also, the looming threat of
AMPS penalties is significant, even to
the importer who otherwise has
outstanding records but misplaces the
record for a single particular transaction.
Somewhat obscure outlier costs
also exist. One such cost is for imported
goods subject to excise tax. Excise tax is
a tax applied to certain items deemed to
be “luxury goods,” or goods of a non-
essential nature (Bescec, et al., 2008, p.
102). Goods subject to excise tax include
alcoholic spirits/beer/wine, gasoline/fuel,
tobacco, motor vehicles with air
conditioners, and jewelry/clocks. Outlier
costs also include charges for shipments
that have had CBSA inspections
performed on them and „border wait
time‟ fees charged by commercial
carriers.
Although costs may seem
imposing, potential benefits are
abundant. Business entities willing to
make the investment in technologies
hold a competitive advantage in growing
their cross-border supply chains.
Commercial Importation Requirements
 APPENDIX A

Bibliography

Bescec, J., Leich, D., Neilson, C., O‟Herlihy, A., Osmond, C., Salas, N., & Weaver, M.
(2008). Importing into Canada: A step-by-step guide on how to start an import
business (6th revised ed.), A. MacDonald, (Ed.). Toronto, ON: I.E. Canada,
Canadian Association of Importers and Exporters Inc.
Robert Bosch. (2005). EDI in procurement. Supplier logistics manual. Stuttgart: Robert
Bosch GmbH.
Spero, Deborah J. (2007). Advance electronic presentation of cargo information for truck
carriers required to be transmitted through ACE truck manifest at ports in the
states of Michigan and New York. Federal Register: February 23, 2007, Volume
72 (Number 36). Washington, DC: United States Government Printing Office.
The Canada Border Services Agency (CBSA). (2008). Measures to increase the use of
electronic data interchange (EDI) for release purposes, Customs Notice 08-009.
Ottawa, ON: The Canada Border Services Agency.
The Canada Border Services Agency (CBSA), (2010a). Master penalty document.
Ottawa, ON: The Canada Border Services Agency.
The Canada Border Services Agency (CBSA). (2010b). Customs tariff: Departmental
consolidation 2010. Ottawa, ON: Public Works and Government Services Canada
(PWGSC) Publishing and Depository Services.
The Canada Border Services Agency (CBSA). (2010c). eManifest: Making the border
smarter and more secure. I.E. Canada (Canadian Association of Importers &
Exporters) Cross-Canada eManifest Workshops, March-April 2010. Ottawa, ON:
The Canada Border Services Agency.
The Canadian Society of Customs Brokers (CSCB). (2006). CCS (Certified Customs
Specialist) Course. Ottawa, ON: The Canadian Society of Customs Brokers.
Transport Canada. (2005). The cumulative impact of U.S. import compliance programs at
the Canada/U.S. land border on the Canadian trucking industry, May 24 (TP
14402E). Ottawa, ON: Transport Canada.
United States Customs and Border Protection (CBP). (2006). Importing into the United
States: A guide for commercial importers. Washington, DC: United States
Customs and Border Protection.
United States Customs and Border Protection (CBP). (2010). Import trade trends fiscal
year 2010 mid-year report. Washington, DC: United States Customs and Border
Protection.

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University of Windsor
 APPENDIX B

List of Acronyms

ABI Automated Broker Interface

ACE Automated Commercial Environment
ACROSS Accelerated Commercial Release Operations Support System
AMPS Administrative Monetary Penalty System
B3 Canada Customs Coding Form
BL Bill of Lading
BSO Border Services Officer
CADEX Customs Automated Data Exchange
C-TPAT Customs-Trade Partnership Against Terrorism
CBP United States Customs and Border Protection
CBSA The Canada Border Services Agency
CCFTA Canada-Chile Free Trade Agreement
CCI Canada Customs Invoice
CCN Cargo Control Number
CCS Customs Commercial System
CDRP Commercial Driver Registration Program
CFIA Canada Food Inspection Agency
CSCB The Canadian Society of Customs Brokers
DDS Date of Direct Shipment
DFAIT The Department of Foreign Affairs and International Trade
EDI Electronic Data Interchange
FAST Free and Secure Trade
HS Harmonized Commodity Description and Coding System
JIT Just-In-Time
K84 Broker/Importer Account Statement Reconciliation Control Sheet
MRP Materials Requirement Planning
NAFTA North American Free Trade Agreement
PAPS Pre-Arrival Processing System
PARS Pre-Arrival Review System
PIL Primary Inspection Line
PIP Partners in Protection
RVC Regional Value Content
SCAC Standard Carrier Alpha Code
TRQ Tariff Rate Quota
VFD Value For Duty

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