Customs planning during COVID-19: CBSA updates

COVID-19 has quickly and severely disrupted supply chains and international trading routes. Governments and their customs agencies are streamlining customs clearance procedures, reducing tariffs on essential goods and extending important regulatory deadlines. They are doing this to fast track importations of essential and emergency goods, as well as to ease administrative burdens on importers to support public health and give lifelines to critical industries that employ millions of workers at risk for layoffs.

In Canada, importers (resident and non-resident) should be aware that the Canada Border Services Agency (CBSA) issued three important customs notices on March 16, 18 and 19, which provide the following:

• Tariff-free access for otherwise dutiable goods imported for emergency use by government and first responders;
• A 30-day extension of the limitation period for submitting required corrections during a trade compliance audit; and
• A 45-day grace period for any administrative penalties that would have otherwise been payable for failure to properly account for goods crossing the border.

Imported goods for emergency use in response to COVID-19 (Customs Notice 20-08)

The Government of Canada has declared COVID-19 an emergency under the Goods for Emergency Use Remission Order, which provides immediate duty and tax relief for goods imported for emergency response purposes. This Order relieves duties and taxes for goods imported into Canada by or on behalf of federal, provincial or municipal entities, and first responders such as police, fire and local medical response teams. Although the CBSA has not defined the term “on behalf of,” BLG has contacted CBSA officials who confirmed that it should be given broad interpretation in light of the COVID-19 crisis.

Goods no longer required for the emergency must later be exported from Canada. Importers wishing to take advantage of this duty and tax relieved  access are required to enter a special authorization code on their commercial import document (the Canada Customs Form B3). The CBSA has not provided any guidance as to when goods not consumed or disposed of during the emergency must be exported from Canada. We expect that a 12 to 18 month period is a reasonable benchmark but this is an estimate subject to further clarification from the CBSA.

The CBSA stated that it will make every effort to expedite clearance of these goods through customs. It is unclear whether there will be any special expedited customs procedures or whether normal customs procedures, which are already fairly seamless absent physical border enforcement, will be applied.

Extension to the 90-day period to submit corrections (Customs Notice 20-09)

Many importers are in the midst of complex CBSA regulatory enforcement proceedings; for example, trade verification audits relating to valuation, tariff classification and origin, among others. Many CBSA offices are functioning at reduced capacity, making it difficult or impossible to proceed with strict legislated or administrative timelines, and there is recognition within government that importers are operating with reduced capacity, including capacity for real-time compliance monitoring. The CBSA has extended the period for submitting corrections by 30 days, from 90 to 120 days. This extension applies automatically to all ongoing audits.

Waiver of late accounting penalties (Customs Notice 20-10)

Many importers take advantage of CBSA programs that allow for the release of goods without complete accounting at the time of importation. Complete accounting data is instead required shortly following release of their goods. The CBSA applies Administrative Monetary Penalties (AMPS) to importers that fail to provide proper documentation and payment of duties within prescribed timelines.

Due to COVID-19, the CBSA is now providing a 45-day grace period from AMPS for importers who may have failed to account for goods. Currently this waiver only applies to goods released from customs between March 11 and March 14. The CBSA has indicated it will review the grace period and may extend its application, which is likely.

If your business has questions about its supply chain, alternative methods of transportation (due to air cargo restrictions), changes to Canadian customs clearance procedures, or if it is in the midst of a CBSA regulatory proceeding that may be facing internal delays due to COVID-19 response measures, our experienced team of international trade lawyers can guide your business in these unprecedented circumstances. We expect the CBSA and federal government will continue to adjust customs procedures and administrative processes over the coming weeks.