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Canada Changes Customs Processes: Impacts on U.S. Direct Sellers Moving Product to Canada

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Canada Border Services Agency (“CBSA”) has announced that the final iteration of its recent revamping of Canada’s import systems will arrive May 13, 2024.

Direct Sellers importing their products into Canada for further distribution or sale to their salesforce or customers (including with the assistance of a customs broker) – will be particularly concerned with these changes!

CARM Project

CBSA refers to this wholescale modernization of Canada’s import system as their Assessment and Revenue Management project, or “CARM” for short.

CARM is effectively a new electronic portal designed to provide a new user interface for importers, supply chain partners and CBSA itself, allowing for the better reporting and recording of duties and taxes on commercial goods imported into Canada – and for CBSA alone, allowing for better analysis and auditing of the same (think “data mining”).

At a basic level, CARM allows trade chain partners (“TCPs” – CBSA’s term for parties involved in customs transactions) to communicate with CBSA electronically, including submitting documents, viewing transaction history, and responding to CBSA inquiries. It will also allow for payments and security to be provided through the online self-service CARM Client Portal.

CARM 2 Changes

The changes being implemented for May 2024 are referred to as “CARM 2”), and CARM 2 will expand CARM to all TCPs, as well as make broader changes as follows:

  • Broker’s Security Not Enough Importers will no longer be able to use their customs broker’s security to clear shipments before paying duties or taxes. Instead, importers will have to post their own security.
  • Billing and Payment Changes Billing periods will now run from the 18th of a month until the 17th of the next month. However, courier low value shipments (“CLVS”) will remain on the current billing period – which runs from the first day to the last day of the month. Customs self-assessment program participants will be able to choose between the two billing periods. Despite the change to billing cycles, all TCPs have the same payment due date.
  • On-the-Fly Corrections - CARM 2 will also impact how corrections are made. TCPs will now be able to make penalty-free corrections to Commercial Accounting Declarations from the time of submission up to the payment due date without having to submit adjustment requests.
  • Other Regulatory ChangesThrough CARM 2, several existing regulations are also being updated to allow information and documentation to be submitted to the CBSA more generally – rather than e.g., at the customs office physically closest to the port of entry.

Direct Selling Implications

Direct Sellers importing their goods into Canada (including with the help of a customs broker) should evaluate whether they are required to register under CARM and determine the (potentially substantial) size of any required security deposits (since they will not be allowed to rely on their brokers any longer).

Takeaways

Direct Sellers importing goods into Canada should now start taking steps to ensure that their Customs House is in order. Direct Sellers looking for pre-emptive advice can take advantage of our Import / Export Comprehensive Program & Systems Review here.

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