Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada's Bill C-43 Incorporates Hidden Advance Data Element Requirements

On February 15, 2008, Bill C-43 "An Act to amend the Customs Act" was tabled for first reading in Canada's House of Commons.  In the middle of Bill C-43 is the following innocuous provision:

"6. The Act is amended by adding the following after section 12:

The Governor in Council [Note: means the Cabinet of the Governing Party] may make regulations:

(a) requiring persons to give, before a conveyance's arrival in Canada, information about the conveyance and the persons and goods on board;

(b) respecting the information that must be given;

(c) prescribing the persons or classes of persons who must give the information;

(d) prescribing the circumstances in which the information must be given; and

(e) respecting the time within which and the manner in which the information must be given." (Emphasis added)

This provision has not received any press in Canada because the provision is hidden in the middle of Bill C-43 and most people would not see the potential problems looming on the horizon.  However, the provision should cause any customs lawyer or business who is familiar with the advance data element debate in the United States to be concerned.

Section 6 of Bill C-43 would allow the Cabinet (with the advice and guidance of the CBSA) to pass regulations (which do not need the approval of the House of Commons) regarding what information or advance data elements would need to be provided by exporters prior to the arrival of goods to Canada.  The problem under the Customs Act and the development of the rules by regulation is that exporters to Canada and importers into Canada may be forced to accept advance data element requirements without a consultation process (as Canadians are rarely consulted on the contents of regulations) 

If Section 6 is ignored or not understood, it is likely Bill C-43 will pass the House of Commons without much debate because the much of the Bill relates to housekeeping matters to allow Canada Border Services Agency officers to stop and question a person who is in and has not left a customs controlled area (e.g. while the individual is waiting to pick up his/her bags at the airport)).  If Section 6 of Bill C-43 is carefully considered, concerns should be raised concerning the extent of the information that will be required and how the requirements to gather and provide the information will affect exporters' trade with Canada.

The problem is the same as the unilateral rule making that is taking place in the United States.  Except, U.S Customs and Border Patrol Customs published its Notice of Proposed Rule Making (NPRM) regarding 10 + 2 in the Federal Register on January 2, 2008 and has given interested persons until March 8, 2008 to comment.  Canadians are not guaranteed any comment period.

The proposed "10+2" rule in the United States requires carriers provide two data elements: (1) vessel stow plans and (2) container status messages.

The proposed 10 elements of the U.S. "10+2 rule" to be required from importers are:

1) Manufacturer (or supplier) name and address – the name and address to report are of the entity that last manufactures, assembles, produces, or grows the commodity; if that is not known and cannot be determined through due diligence, or may not apply, then report the name and address of the supplier of the finished goods in the country from which the goods are leaving.

2)  Seller name and address – of the last known entity by whom the goods are sold or agreed to be sold; if no sale, then the name and address of the owner is to be reported.

3) Buyer name and address – the last known entity to whom the goods are sold or agreed to be sold: again if there is no sale, report the owner of the goods.

4) Ship to name and address – report the first deliver-to party scheduled to physically receive the goods after release from Customs’ custody.

5) Container stuffing location – name and address of the physical location(s) where the goods were stuffed; for break bulk goods it is the physical location(s) where the goods were made shipment ready.

6) Consolidator (stuffer) name and address – of the party who stuffed the container or arranged for its stuffing; for break bulk goods, it is again the shipment ready party.

7) Importer IRS number  –  including the Foreign Trade Zone applicant ID number;

8) Consignee IRS number ; 

9) Country of origin  -  to include the country of manufacture, production, or growth, based upon the import laws, rules and regulations of the U.S.; and

10) Commodity HTS number – required to the 6 digit level, but allowed to be reported to the 10 digit level.

To learn more about the U.S. "10+2 rule" please refer to blog postings by Susan Kohn Ross.  Su asked in a blog article posted on January 6, 2008:

"The drastic change for importers is that all of these data elements must be filed no later than 24 hours prior to loading. Can it be done? What changes will be required to your day-to-day operations? While you are thinking about that, keep in mind the most controversial of the requirements. Customs has mandated importers link the country of origin, manufacturer and tariff number (HTS). The potential programming costs to the importing community are astronomical. Despite this fact, Customs continues to ignore the practical suggestion to write an algorithm that would cause its Automated Targeting System to make all the possible matches and determine whether any combination created a risk. If so, that shipment would be subject to inspection. Instead, Customs insists on putting the burden on the trade to link at the line item level when filing. What will it cost?"

Canadians must now ask the same questions!

If you require more information or would like to voice your concerns with elected officials who will be involved in the legislative process relating to Bill C-43, please contact any of the following Canadian customs lawyers with Canadian federal government relations/lobbying experience:

Cyndee Todgham Cherniak, Lang Michener LLP (416-307-4168)

Michael Flavell, Lang Michener LLP (General Line: 613-232-7171)

Geoffrey Kubrick, Lang Michener LLP (General Line: 613-232-7171)

Martin Masse, Lang Michener LLP (General Line: 613-232-7171)

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