I N D U S T R Y   R O U N D U P

 C O M P A N Y   C O R N E R

Why Otto Bock and Superior Medical switched to Universal Logistics

Improved communication. Enhanced compliance support. Better client service.

That’s what Otto Bock Health Care, a company in the healthcare sector, has noted since it began using the customs brokerage service offered by Universal Logistics. Here is a note from Luc Champagne, Operations Manager for Otto Bock, sent to his sales representative at Universal Logistics, Brenda Munroe.

Hi Brenda, just a quick note to update you on some of the positives we have seen since we switched brokers. Biggest area of improvement in my opinion has been communication, updated regularly via e-mail as to status of shipments as well as a good website for tracking. People at Universal have been a great help in updating our harmonizing code database and making sure we are paying applicable GST tax on the right materials. I believe we have people at Universal who not only care about us as your customer but also care about and have taken the time to understand the service we provide to our customers. Thank-you

Equally generous comments can be found in the following testimonial from David Medina of Superior Medical:

Superior Medical began doing business with Universal Logistics as their customs broker in January 2007. This relationship has proven to be a strong asset for our company, dramatically improving the import process. We now have access to an accurate vendor database which contains all necessary information for customs purposes, all clearances may be tracked online, and the correspondence with Customs is accurate and done in a timely manner so that shipments are not affected by delays. The customer service provided by Universal Logistics is excellent; not restricted only to the Client Care department, but all staff members of the company are willing to help with any issue. Superior Medical is happy to bring Universal Logistics on board and look forward to continuing this relationship.

Good medicine for the medical sector

	Are you paying GST on medical devices that are actually GST exempt?

Otto Bock and Superior Medical are the latest additions to the growing list of companies in the medical sector that have to come realize they need improved compliance support – and turned to Universal Logistics to fill the gap. For these companies – and any other firms that are not currently a client of Universal Logistics – there is no better way to ensure you are not at risk of paying unnecessary charges in one area – while being non-compliant in another area.

For example, some companies are paying GST when their goods are actually GST exempt, or vice versa. Other companies are paying duty on goods that should be duty free (most goods in the medical sector are duty free). These companies could also be subject to significant Administrative Monetary Penalty System (AMPS) penalties because their goods have not been properly classified. And the worst part is they won’t even know about the problem until they have been audited by the Canada Border Services Agency (CBSA).

If you are concerned or uncertain about your company’s level of customs compliance, ask us to do a free, no-obligation Snap-Shot review of your customs entries. We can assess your level of customs compliance, identify opportunities to obtain National Customs Rulings that would be in your favor, and assess whether an ‘end use code’ would apply to your products.

Another option is to take advantage of our unique Pre-Audit Customs Service (see below for more information), which employs the same process as an actual CBSA Verification, and leads to the development of the all-important Importer Profile.

For more information or to order your Snap-Shot review, please call 905-882-4880 and ask for Mark Glionna. For information on our Pre-Audit Customs Service, please call Brian Rowe at 905-882-4880.

Are you audit ready?

	It’s only a matter of time before your company is selected for a Verification Audit

Since The Administrative Monetary Penalty System (AMPS) was introduced five years ago, companies across Canada have paid penalties totaling just over $36 Million. That’s a staggering amount, especially when you consider most AMPS penalties can be avoided by having proper systems in place and/or self-correcting inaccurate customs declarations within the required time frames.

Don’t assume you are OK because you haven’t been audited in the past. Every company is going to be audited. You also need to know that once you receive notice of the audit, it is too late to take remedial measures.

What about your customs broker? Your broker only has access to limited third-party documentation. That documentation has to match what actually happens in your business systems. If it doesn’t, you are non-compliant and the resulting penalties will be applied to your company, not your customs broker.

What’s the worst that can happen? If Customs determines that your company is non-compliant, you may:

• Be required to implement Customs’ Requirements to your business system
• Be subject to monitoring audits to re-assess your compliance
• Receive physical shipment inspections at a higher than average rate
• Be assessed monetary penalties for non-compliance

The better alternative is to take advantage of our Pre-Audit Customs Service, which employs the same process as an actual CBSA Verification, and leads to the development of the all-important Importer Profile. We will work also with you to set up a schedule for voluntary adjustments to correct issues of non-compliance before they become grounds for an AMPS penalty.

The audit involves a complete review of your books and records to determine your compliance level, identify gaps and create systems/processes to become compliant. We know what to look for because we have already guided a number of companies through the formal CBSA audit process and provided one-on-one guidance on every step of the process.

Here are the key areas we examine during the audit:

Record Keeping
Are you keeping all records for the Customs mandated time period? Can you access those records to provide the necessary documentation when Customs request it?

Tariff classification
Have your classifications ever been reviewed for accuracy? Have Customs issued any rulings to you in the past and are they being followed?

Valuation
How are your imported goods valued at the time of import? Is there anything that might affect that valuation, i.e. transactions between related parties, no-charge goods, unsolicited goods, etc.?

Origin
Are you claiming duty-reductions under any Free Trade Agreement (e.g. NAFTA) or any special trade relations (e.g. General Preferential Tariff status)? Do you have the required Certificates and are they complete?

Overage/Shortage Reporting
Do you report overages/shortages back to Customs during the required time-frames? If not, your company is already exposed to potential penalties.

Non-Account Test
Has every one of your import shipments been Customs cleared? Can you prove it? Don’t assume that just because the truck arrived at your dock that the customs process has been completed.

Already going through a Customs Verification Audit?
If you are already undergoing an audit, it still pays to engage our assistance because we can make a positive impact at almost any stage of the audit process.

Need another strong reason to be compliant? It may be mandatory to hold on to some of your best U.S. customers, if Canadian companies have to be approved under the USA’s Customs - Trade Partners Against Terrorism (C-TPAT) or Canada’s Partners in Protection (PIP). Failure to get approval means you customer will be forced to look for a new supplier who can be approved.

For more information or to arrange for a comprehensive Pre-Audit, contact Brian Rowe.

Mandatory Line Release at Windsor Ambassador Bridge

Effective April 1, 2007, all commercial shipments entering Canada via the Windsor Ambassador Bridge must be pre-setup with the Canada Border Services Agency (CBSA) under one of the following line release options: CSA/FAST; PARS; FIRST; A49; Post-Audit; In-Bond.

If not pre-arranged electronically, the driver can no longer revert to a “paper release” at the border. Instead, the truck will be turned away by the CBSA. This will result in delays and extra costs for U.S. tolls and driver waiting time.

This change is part of a joint initiative between the CBSA and Ambassador Bridge, introduced to enhance security and expedite processing of commercial vehicles. Learn more at www.universallogistics.ca/html/newstr-20070323windsor.html. All other ports will introduce Mandatory Electronic Release by October 2007. ACI has already been introduced for ocean and air shipments.

PARS Tracker service for customs brokerage clients

With just one click of the new PARS (Pre-Arrival Review System) Tracker on our Home page, it is now possible to check whether your truck shipment into Canada has been set up for clearance and acknowledged by the Canada Border Services Agency.

The system provides one of the following messages after your unique PARS bar code number is entered:

• Acknowledged = Transaction has been set-up and acknowledged by CBSA - Okay to proceed to P.I.L. for processing.
• Transmitted = Transaction has been transmitted to CBSA and is awaiting their acknowledgment. Do not proceed until status is "Acknowledged".
• Released = Shipment has crossed border and was released by CBSA.
• Blank = If status is blank and the Cargo Control and Transaction number appear, the transaction is in process, but has not yet been transmitted to CBSA. Do not proceed until status is "Acknowledged".
• Cargo Control Number Not Found = Transaction has not been processed.

How to import a motor vehicle into Canada

	The import of a car from the U.S. to Canada is subject to the Registrar of Imported Vehicles

Here is important information for anyone who is planning to import a vehicle into Canada:

First, determine whether or not the vehicle is eligible for importation. Motor vehicles from the USA are regulated by the Registrar of Imported Vehicles (RIV). Refer to the RIV web site for a full listing of eligible vehicles.

The listing is broken down into 13 Sections, based upon type of vehicle (e.g. Passenger Cars, Motor Homes, Motorcycles, etc.). Each Section is then broken down by Manufacturer, Admissible (those models/vehicles that can enter Canada), Inadmissible (those models/vehicles that cannot enter Canada) and Notes. See the Notes section for specific instructions.

Regulations governing the import of motor vehicles into Canada are broken down into two categories:

• Vehicles imported from the USA (regulated by RIV)
• Vehicles imported from any other country (regulated by Transport Canada)

Both new and used vehicles may be imported from the USA (refer to RIV Admissibility listing). However, imports from all other countries are limited to new current model year only and must have been manufactured for the North American market. Used vehicles from countries other than the USA are prohibited from importation into Canada. Note: vehicles 15 years old or older are exempt from Transport Canada requirements and may be imported. However, the vehicle may still require emissions testing according to the province of registration. For more information, contact your province’s Ministry of Transport or Vehicle Emissions Program (e.g. Ontario’s Drive Clean: www.driveclean.com, British Columbia’s AirCare: www.aircare.ca).

The following special notifications have also been issued by the RIV:

Residents of Alberta: www.riv.ca/english/NOTICE0604.pdf
Residents of British Columbia: www.th.gov.bc.ca/cvse/vehicle_inspections/PDF/Bulletin_02-06_Imported_Vehicles.pdf
Residents of Manitoba: www.riv.ca/english/Station_and_Dealer_Advisory_Import_Veh.pdf

U.S. 72-Hour Export Procedure

U.S. Federal law requires notification of all self-propelled vehicles being permanently exported from the USA. Their regulations state that at land border crossing points:

The required documentation must be submitted to U.S. Customs at least 72 hours prior to export; and the vehicle must be presented to U.S. Customs at the time of export.

Procedures and hours of operation vary from port to port. For more information, refer to the U.S. Customs website at www.customs.gov.

Vehicles entering Canada that have not undergone the U.S. 72-Hour Export Procedure will be refused entry and must be immediately returned to the U.S.

To arrange for U.S. Export Procedure, you must contact U.S. Customs at the port of exit from the USA. A copy of the vehicle title must be faxed (note, some ports require the original title in their office) at least 72 hours in advance of export for a check of the Vehicle Identification Number (VIN), a step required to deter the export of stolen/illegitimate vehicles. Most ports will only process vehicles for export during normal business hours, i.e. Monday to Friday, 8:00 - 4:00 pm. Vehicles arriving at U.S. Customs for inspection after close of business will be required to wait until the next business day.

Duty/Taxes/Fees

• Duty 6.1%, duty-free if supplied with a valid North American Free Trade Agreement (NAFTA) Certificate of Origin
• GST payable at the current rate of the province of import (e.g. Ontario 6%)
• Excise Tax - $100.00 if vehicle equipped with air conditioning
• RIV Fee - $195.00 plus GST (and QST for Quebec)
• Green Levy Excise Tax (if applicable), calculated based on a weighted average fuel consumption in accordance with information published by the Government of Canada under the EnerGuide mark. The following rates will apply:
  
  At least 13 but less than 14 litres per 100 kilometres: $1,000
  At least 14 but less than 15 litres per 100 kilometres: $2,000
  At least 15 but less than 16 litres per 100 kilometres: $3,000
  16 or more litres per 100 kilometres: $4,000

The Green Levy is an Excise Tax payable on new fuel inefficient passenger vehicles and certain used vehicles, based upon when the vehicle was “put into service”:

- If the vehicle was put into service prior to March 20, 2007 and imported into Canada on or after March 20, 2007, the tax does not apply.

- If the vehicle was put into service on or after March 20, 2007 and imported into Canada, the tax would apply provided the weighted average fuel consumption rating of 13 or more litres per 100 km.

An automobile is considered to be put into service at the earliest of:

• the date the automobile is registered with a motor vehicle authority
• the date it is plated
• the date on which the automobile's warranty has been put in place
• the date the automobile is appropriated by a dealer for their own use

Refer to the Canada Revenue Agency (CRA) for more information.

Required documentation

• Bill of Sale
• Original Certificate of Title
• Registration
• Recall Clearance Letter
• Statement of Compliance Label (on inside of vehicle door)
• NAFTA Certificate of Origin (if applicable)

Note: if a vehicle is leased or bequeathed, additional documentation will be required.

Vehicle Registration

On import and payment of duty/taxes/fees, a Vehicle Import Form 1 will be completed and forwarded (by the CBSA) to the RIV. Upon acceptance by the RIV, a Vehicle Import Form 2 will be mailed to you, approximately 10 days post-import. The Form 2 will indicate any vehicle modifications needed. The vehicle must have all necessary modifications completed within 45 days, or must be exported from Canada. Note: to register/license the vehicle, you must present the Form 1, Form 2 and proof of customs clearance/payment of duty/taxes.

For more information, refer to Transport Canada, www.tc.gc.ca/roadsafety/importation/menu.htm, or the RIV, www.riv.ca/english/html/how_to_import.html, or contact Brian Rowe at 905-882-4880.

Mandatory E-Manifest for trucks entering Michigan and New York

Effective May 24, 2007, an E-Manifest became mandatory for all truck carriers entering Michigan and New York. This is part of the U.S. Customs Automated Commercial Environment (ACE).

Here is the Deployment Table provided by the U.S. Customs and Border Patrol (CBP)
www.cbp.gov/xp/cgov/toolbox/about/modernization/carrier_info/e-manifests_info/scheduled_dates.xml

Procedural change for meat certificates at Windsor

The Canadian Food Inspection Agency (CFIA) has modified the process for handling original meat and phytosanitary certificates. Note there are different regulations for each category:

This program supports the CBSA requirement for mandatory line release at Windsor Bridge, effective April 1, 2007.

The following article was issued by the CFIA on April 24, 2007:

Starting May 1, 2007, the European Union (EU) will require all shipments of imported fishery products to be accompanied by a new format of certificate. These certificates are now available for any shipments that you anticipate arriving in the EU after May 1, 2007.

The new certificates require new information from exporters, such as the HS Code for the products being shipped, the harvest area for molluscan shellfish products, and the identity of the Border Inspection Post (BIP) at which the shipment will be cleared for entry into the EU. Please ensure that you provide inspectors with all of the details that are needed to complete the certificate with each request.

The new certificates also require the inspector to complete fish health attestations that are applicable for any shipments that include aquaculture fish products. Aquaculture products must be eviscerated and must have been derived from fish that were clinically healthy on the day of harvest.

Old EU certificates will not be accepted after May 1, 2007.

Please ensure the appropriate actions are taken to obtain the new EU certificates for any consignments arriving on, or after May 1, 2007. The CFIA understands that EU officials will refuse any consignments that arrive with old certificates on, or after May 1, 2007.

The requirements for signing the new EU certificate are still the same. Establishments must be on the EU list and all information must accurately describe the products being shipped. Also, the name and registration number of the establishment described on the certificate must match information posted on the EU list as well as information described on the labels.

	Shipping stats released by U.S. Customs: Do you know how many containers pass through the U.S. border on a typical day? See the end of this caption for the answer. It’s just one of the stats recently released by the U.S. government. Answer: 70,900 truck, rail and sea containers cross the U.S. border daily.

Going far and wide to serve you better

To build on our existing strengths in the UK trade lane, Andrew Doick, a member of our sales team, spent a week this past March with our long-time UK partner, World Transport Agency Limited in England.

He held numerous meetings, including a session with two of WTA’s senior managers: Tony Butler (Import Director) & Gerry Lawler (Managing Director).

Voluntary compliance made easy

Looking for a quick, effective way to ensure your company is fully compliant – and hence not at risk of paying significant penalties for AMPS (Administrative Monetary Penalty System) violations?

Check out our popular Voluntary Compliance Made Easy seminars.

	Josie Tobia – Branch Supervisor, Montreal Office

AT YOUR SERVICE

Josie Tobia has been appointed Branch Supervisor of our Montreal Office, where she will work with our clients and our network of international agents in Montreal.

She brings to her new position 14 years of industry experience and two unique strengths: 1) the ability to negotiate favourable terms with carriers; 2) speaks three languages (English, French, Italian).

Josie looks forward to speaking to clients who have an existing relationship with our Montreal office and welcomes new inquiries from companies within Eastern Canada looking for better ways to manage freight costs and reduce transit times.