The Canada Border Services Agency (“CBSA”) resets its “audit priority areas” twice per year. Essentially, the CBSA designates certain tariff classification codes as priority areas for customs verifications (i.e., “audits”), based on the program areas which the CBSA believes pose significant risk for important non-compliance in tariff classification, valuation, and origin of goods.
The CBSA has released its January 2025 Trade Compliance Verification priorities, setting the stage for the next six (6) months. As is often the case, most of the focus is on tariff classification.
Tariff Classification Priorities
The CBSA will be focusing on nine (9) types of goods for tariff classification verification. We encourage importers to review the list in full, but have picked out the following two (2) items as being of interest:
- Furniture for Non-Domestic Purposes – Headings 94.04 and 94.03 – This has been a verification priority for the CBSA since 2013. The results to-date of the ongoing fourth round of verifications indicate a continued high percentage of non-compliance, suggesting this verification priority will continue for some time.
- Spent Fowl – Headings 02.07. 16.01, and 16.02 – The results to date of the third round of verification indicate a decrease in non-compliance. The CBSA looks set to keep auditing this area, likely because of the huge duties that apply to Tariff Rate Quote (“TRQ”) controlled items like poultry (which we blogged on here).
Origin Priorities
The CBSA continues to scrutinize the origin of Bedding and Drapery (Headings 63.01, 63.02, and 63.03), identifying the risk that manufacturers in the United States were using fabrics not produced in former NAFTA territories while claiming the goods were “Made in the USA”. Third round results indicate ongoing compliance issues.
Importers should seek legal advice when they wish to claim their products originated in a CUMSA/USMCA (formerly NAFTA) country.
Valuation Priorities
The CBSA continues to focus on auditing Apparel (Chapters 61 and 62 of the Harmonized System). In the fourth round of verifications, 51% of the companies targeted were found to have had some form of non-compliance. Importers of apparel should be cognizant of increased scrutiny from the CBSA.
Other New Compliance Priorities
The CBSA has indicated several further new compliance priorities, including:
- Tariff Rate Quota and Tariff Classification verification of frozen desserts containing 5% of dairy products;
- Withdrawal of Most-Favoured-Nation (MFN) tariff treatment from Russia and Belarus;
- Enforcement of the China Surtax Orders (2024) concerning Electric Vehicles, and Steel and Aluminum.
What Does this Mean for Importers?
While importers should always try to get things like tariff class, valuation, and origin correct the first time, the CBSA’s audit priorities are special targets because of the high levels of non-compliance already identified. This can be a confusing area for importers, so legal advice is recommended!