Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canadian Exporters of Goods to the U.S. Need to Know 10+2 Requirements

On November 24, 2008, U.S. Customs and Border Protection (CBP) released its long-awaited interim final rule on the Importer Security Filing, also known as the 10+2 rule.  Starting Jan. 26, 2009 (but with an importers compliance grace period of one year), U.S. importers will be required to provide CBP with 10 + 2 data elements 24 hours prior to lading for all shipments inbound to the United States.  Where are they to get the information? - From the exporters.  Given the fact that Canada is the number one trading partner of the United States, Canadian exporters are going to have to move forward to incorporate the required 10+2 data elements into the information communicated to their U.S. importer.  This means that Canadian exporters are going to have to purchase computer programs and tools to update their systems to be able to maintain and communicate the required information.  If they are not able to provide the information, they will lose customers in the United States - which begs the question - Is this a protectionist measure?

The 10 + 2 rule requires importers or their agents to submit an ISF with the data elements, no later than 24 hours before the cargo is loaded aboard a vessel destined for the United States. The data elements are:

    • Seller;
    • Buyer;
    • Importer of record number / foreign trade zone applicant identification number;
    • Consignee number(s);
    • Manufacturer (or supplier);
    • Ship to party;
    • Country of origin; 
    • Commodity Harmonized Tariff Schedule of the United States (HTSUS) number
    • Container stuffing location and buy whom; and
    • Consolidator / person responsible for compliance.

Much of this information is known only to the seller/exporter and, therefore, the information must come from the exporter to the importer.  For example, the seller /exporter would know the origin of the goods, the buyer w / importer will only know what they have been told.  In respect of the country of origin data element, it will become necessary to track goods within a warehouse if a good is sourced from more than one country.  For example, if a Canadian importer of screws sources wood screws from more than one location and resells some of those screws to a person in the United States, they would have to be in a position to state the origin of the wood screw sent to the United States.

Canada plans to implement similar, but possibly different advance data element requirements.  It would be helpful for businesses if the Canadian Government passes regulations that mirror the U.S advance data element requirements, otherwise Canadian manufacturers will have to implement different computer programs to track different data - at a significant cost during difficult times for manufacturing.

On the up-side, the Statistics Canada trade data may improve regarding imports and exports - but what is that data used for and is it worth the cost to business.  On the downside, there is the compliance costs - both in terms of implementing systems and paying for mistakes that will undoubtedly occur.

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