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GHY University - Free Trade Agreements: Understanding the Risks & Opportunities_Sept 25 2013


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Importers are subject to higher degrees of customs enforcement and penalties by claiming Free Trade Agreements. Using a ‘Case Study’ approach, this GHY University session will provide deeper understandings of benefits and pitfalls in claiming a FTA for goods entering into Canada or the United States.

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GHY University - Free Trade Agreements: Understanding the Risks & Opportunities_Sept 25 2013

  1. 1. Welcome to our Webinar Housekeeping Notes •All attendees are in “listen only” mode. •We are recording this event and will share the link for the recording with you in our follow up email. •We will pause for questions at the halfway point and at the end of the presentation. – If you have a questions please use the “Ask a Question” function throughout the presentation. •If you are experiencing technical difficulties please notify Nigel immediately using the chat function. Tweet, Post, Share this content, please tag #GHYU
  2. 2. Introduction to Class • Most of us are familiar with NAFTA with it’s North American focus, in this session we explore the global trade agreements available to importers and exporters. • Understand the risks and opportunities associated with many Free Trade Agreements. • Understand why you must KNOW; Your Product, Your Markets, Your Inputs, and Your Suppliers • This session should be a starting point for a detailed discussion about your specific situation. Tweet, Post, Share this content, please tag #GHYU
  3. 3. Introduction of Presenters Alan Dewar – Vice President Canadian Operations Over 31 Years Industry Experience Leads Geo. H. Young & Co. Ltd. – Canadian Division Member of the National Board of CSCB Bob Cowie – Vice President Consulting Over 42 Years of Industry Experience Consultative Leader Canada & USA Consulted on Global as well as North American Trade Issues Tweet, Post, Share this content, please tag #GHYU
  4. 4. GHY U Webinar – September 2013 4 Free Trade Agreements Understanding the Risks & Opportunities Bob Cowie VP – International Consulting GHY International Alan Dewar VP - Canadian Operations GHY International
  5. 5. Agenda & Presentation Examples Awareness of opportunities and risks via… – Know Your Product (& Tariff Classification) – Know Your Market (& Supply Chain Opportunities) – Know Your Inputs (of particular importance to manufacturers) – Know Your Supplier (Buyer Beware) 5
  6. 6. Canada’s FTA in Constant Change 6
  7. 7. FTA Indemnification Example Purchase Order is conditional upon receipt of valid FTA Certificate of Origin prior to Delivery. Vendor to indemnify against all costs and duty arising from misrepresentation or false declaration in the Certificate of Origin. 7
  8. 8. FTA Requirements LINKED to HS Tariff
  9. 9. JIT - Regulatory Declaration Challenges • Commercial descriptions often INSUFFICIENT for determining Customs Tariff Classification • 50 – 80% of documents used to process Customs release and accounting are incomplete • Most ‘new’ products arrive unannounced as a result of documents sent to broker by carrier
  10. 10. 10 Tariff Classification Foundation for Compliance Mgmt 100% perfection necessary if: 1. goods specifically mentioned in tariff 2. Previous opinion or ‘RTB’ 3. Goods subject to OGD requirement (CFIA, SIMA, etc.) Know Your PRODUCT…..
  11. 11. Tariff Classification… • products can have different tariff classification based on…….. – Function – ie wrist watches – Fashion – ie eyeglass frames – End use – ie tires – Country Interpretation – ie Ratchet straps Understanding associated competitive opportunities and risks 11 Know Your PRODUCT…..
  12. 12. 12 Tariff Class – Function …. Watch Importer – tariff choice(s) –Mechanical display, –opto-electronic display, –other Know Your PRODUCT…..
  13. 13. 13 Tariff Class – Fashion…. Eyeglass frame importer – tariff choice(s) – Plastic – Not Plastic Know Your PRODUCT…..
  14. 14. 14 Tariff Class – End Use…. Tires – Pneumatic Rubber NEW Where Used Tariff Classification Cars 4011.10 Trucks / Buses 4011.20 Aircraft 4011.30 Motorcycles 4011.40 Bicycles 4011.50 The tariff is ENTIRELY DIFFERENT if the Tires are Used, Retreaded, etc. Know Your PRODUCT…..
  15. 15. 15 Tariff Class – Country Interpretation…. Ratchet Straps (non-NAFTA) United States Canada Tariff 8479 - Machine Tariff 8205 – Hand Tool Know Your PRODUCT…..
  16. 16. 16 FTA’s vary by Origin/Destination Soda importation (non-FTA) • 11% into Canada • 2 ¢ / liter into United States Know Your MARKET…..
  17. 17. 17 Manufacturing? FTA input considerations Duty Drawback Opportunities • import duty/ anti-dump duty Know Your INPUTS….. Canadian Mattress Manufacturer importing ‘inner springs from China’ subject to approx. 150% anti-dump duty
  18. 18. 18 Importer Responsibility Buyer Beware….. • Importer is ultimately responsible for post audit assessments (regardless of audit trail/ supplier documentation/ etc.) Know Your SUPPLIERS….. GHY Recommend Supplier Safeguards & Purchasing Indemnifications Clauses
  19. 19. 19 NAFTA – Internal Compliance Procedure(s) How many importers have: – Internal documented processes regarding FTA’s? – Share/validate these processes w/service provider? Indemnification statements with suppliers for inaccurate NAFTA certificates/statements
  20. 20. 20 Strategic FTA Recommendations… 1. Review Import Volumetric Review • Historical opinions by Customs (specific/ generic) • Core items to your business • Items named in ‘tariff’ • OGD item focus (CFIA, SIMA, etc.) 1. Understand FTA rates (where Global Sourcing potential exists) **Review Regularly – Annually at Minimum**
  21. 21. GHY U Webinar – September 2013 21 Free Trade Agreements Understanding the Risks & Opportunities Bob Cowie VP – International Consulting (204-947-6700 x237) Alan Dewar VP - Canadian Operations (204-947-6700 x215) Thank you for your time listening to Today’s Webinar on...