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January 2020

News and Views for the clients of Universal Logistics

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New NAFTA almost at the finish line


On January 29, 2020, U.S. President Donald Trump signed the new trade deal into law, replacing the 26year old North American Free Trade Agreement (NAFTA). On the same day, a bill was introduced into the House of Commons to ratify the deal in Canada. With a minority Canadian government, opposition have requested analysis on forestry, agriculture, aluminum and steel sectors which may delay Canadian ratification.

The agreement will come into force on the first day of the third month after the final country, i.e. Canada, has ratified and serves notice it is ready to proceed. The period provides all parties time to develop their uniform regulations.

The new deal is referred to as USMCA (United States-Mexico-Canada Agreement) in the U.S., CUSMA (Canada-United States-Mexico Agreement) in Canada and T-MEC (Tratado entre Mexico, Estados Unidos y Canada) in Mexico.

The full text of the agreement can be found here and following are links to some key provisions:

National Treatment and Market Access for Goods

Rules of Origin
Origin Procedures
Textile and Apparel Goods

Key points of interest:

  • Facilitating trade in goods:
    • The original NAFTA eliminated virtually all tariffs between Canada, the U.S. and Mexico, with very few exceptions. The USMCA maintains these benefits and ensures that the vast majority of USMCA trade will continue to be duty-free. Additionally, a new Customs Administration and Trade Facilitation Chapter, standardizes and modernizes customs procedures throughout North America to facilitate the free-flow of goods.
  • Automotive country of origin rules:
    • To qualify for zero tariffs, automobiles must have 75 percent (previously 62.5 percent) of their components manufactured in Mexico, the U.S. or Canada, including 70% North American steel and aluminum.
    • Labour provisions: By 2023, an increased percentage of automobile parts (40 to 45 percent) has to be made by workers who earn at least $16 an hour.
  • Agriculture:
    • Canada has agreed to give U.S. farmers more access to the Canadian market in the form of tariff rate quotas for dairy, poultry and egg products.
    • New market access in the form of tariff rate quotas for refined sugar and sugar-containing products.
    • A modernized Committee on Agriculture Trade, which will provide a forum for Parties to address issues and trade barriers.
    • Obligations for agricultural biotechnology that will increase innovation, transparency and predictability.
  • Dispute settlement:
    • Preserving the use of binational panels to resolve disputes on countervailing and anti-dumping duty matters, which is critically important to preserving market access outcomes and defending Canada’s interests in trade remedy cases.
    • Preserving the state-to-state dispute settlement process of the original agreement, and to improve elements of this process with respect to transparency and expediency.

Importers should obtain valid Certificates of Origin for both trade agreements for 2020, to ensure there is no lapse in preferential trade status prior to the new deal taking effect. Once the new trade agreement becomes effective, NAFTA Certificates of Origin will no longer be valid and must be replaced with USMCA/CUSMA Certificates of Origin.

All goods must be certified under the new Rules of Origin, which are different than the current NAFTA rules, in order to obtain benefits under the agreement.

For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

U.S. signs Phase One deal with China


On January 15, 2020, the United States Trade Representative (USTR) announced the U.S. had signed an Economic and Trade Agreement (informally known as a Phase One agreement) withChina.

In good faith of the deal, the U.S. advised in December 2019 that additional tariffs scheduled to become effective December15, 2019 were not beingimplemented, but tariffs imposed on $250 Billion of China origin goods (known as List 1, 2 and 3) will remain in effect at 25%. The remaining tariffs ($120 Billion) have been reduced to 7.5% from the previous rate of 15%. Those tariffs being reduced were implemented effective September1, 2019 and referred to as List4A.

Additionally, the U.S. had also provided China Tariff exemptions to a number of products effective January 6, 2020 (retroactive to September 24, 2018).

Full information on the China Tariff actions and exclusions may be found here.

For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

Post Chinese New Year blank sailings expected to be worst in 7years

Container ship at sea

According to a container shipping expert, ocean carriers are planning the most post-Chinese New Year “blank” sailings in over seven years.

A blank sailing is one where the steamship line has cancelled sailings on a particular lane for a particular week. By decreasing capacity on a certain route, they are able to maximize capacity on their vessels. This is not a new phenomenon – carriers do this every season around Chinese New Year.
In addition to potentially higher prices, the reduction of capacity could also create space issues and the potential of rolled containers for many shippers.

Carriers suffered in 2019, primarily due to a downturn in U.S.-China trade, which has pushed the number of blank sailings to an all-time high. Approximately 24 weekly sailings between Asia and the West Coast have been cancelled in the first eight weeks of 2020, and nine of the cancelled sailings are over the period of Chinese New Year (January 25-30). The blank sailings will continue after Chinese New Year until Chinese manufacturing companies are back from holidays and back to normal operations.

For more information, contact Debbie McGuire, Manager – Freight Solutions.

Are you on the list of customs verification priorities?

Compliance stamp

The latest semi-annual list of verification priorities for the Canada Border Services Agency (CBSA) has been released. It includes many items that have appeared on previous lists:

  • Articles of plastics, Subheading 3926.90
  • Batteries, Heading 85.06
  • Olive oil, Headings 15.09 and 15.10
  • Bags, Heading 42.02
  • Mountings and Fittings, Suitable for Furniture, Heading 83.02
  • Air Heaters and Hot Air Distributors, Heading 73.22
  • Pasta, Heading 19.02
  • Safety headgear, Subheading 6506.10
  • Disposable and Protective Gloves, Subheadings 3926.20 and 4015.19

Chapters 2 and 4 remain on the tariff classification list for Import Permit Numbers. The risk identified is that imported goods could be classified under “within access commitment” tariff items within Chapter 2 (meat of bovine animals and poultry) and Chapter 4 (dairy products), without the required import permit number on the declaration.

With respect to valuation, there are two continued items:

  • Apparel, Chapters 61 and 62
  • Footwear, Chapter 64

For origin, there is one continued item:

  • Bedding and Drapery, Headings 63.01, 63.02 and 63.03

CBSA also maintains a historical verification priorities list, which should be reviewed by all importers as they will likely circle back to these reviews in order to ensure compliance.

Both the current and historical items contain information as to the risk assessment and results of the verification priority. As an example, following are the results of the 2017 Spent fowl verifications:

Michael & Mark Glionna and Universal's Employee Fundraising Thermometer

The next list of priorities is expected in July 2020.

For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

Global Spotlight Quiz
Global Spotlight

This Buddhist temple is situated
at the foot of Wulaofeng.

Global Spotlight Quiz

Which city features a Buddhist temple built during the Tang Dynasty (618-907)?

  • Important port city that encompasses 2 main islands and a region on the mainland. It has a very deep and well-protected natural harbour.
  • Formerly known as Amoy, it was a British-run treaty port from 1842 to 1912.
  • Gulangyu Island is pedestrian-only and a UNESCO World Cultural Heritage Site, accessible by ferry.
  • The annual average temperature is around 20degrees Celsius.
  • Boasts the world’s longest elevated cycling path, stretching 7.6 kilometers and 5 meters above ground.
  • People from this city have been moving to other countries for hundreds of years. It is said that 400,000 people living overseas descend from this city.

See the answer

For more information about shipping freight to or from this city, contact Debbie McGuire, Manager – Freight Solutions.

Quick Tip

Quick Tip

Ensure basic information is completed on all commercial invoices

The commercial invoice is the basis for the Canadian customs entry and determines any applicable duties and taxes. Ensuring proper information is included is vital for the accurate processing of your shipment. The following information should always be shown:

  • Buyer & Seller
  • Full description of goods
  • H.S. classification
  • Country of Origin
  • Marks & numbers
  • Net & gross weights
  • Unit and extended price with currency
  • Cost of freight, insurance & packing
  • Terms of Delivery (Incoterms 2010)
  • Terms of payment
  • Date of Direct Shipment
  • Reference numbers (P.O., Import or Export Permit number, Letter of Credit number, etc.)

If any of the above information is not supplied, delays or even seizures may occur at Customs and extra charges may result.

Stephen Hatton, Airport Operations

Stephen Hatton,
Airport Operations

At Your Service: Stephen Hatton,
Airport Operations

Stephen Hatton joined the Universal Customs Operations team in 2014, having obtained an Advanced Diploma in International Trade from Sir Sanford Fleming College, as well as the professional designation of Certified Customs Specialist (CCS).

Stephen’s versatility makes him a key member of our Airport Operations team, and allows him to provide a high level of customer service in all areas of our Airport operation. On a daily basis, Stephen is involved with import and export airfreight, human remains shipments, customs clearances and distribution.

Stephen can be reached by phone (905) 676-2763, ext. 2030 or by email.

January 2020

is produced monthly for the clients of Universal Logistics. Reader comment and story ideas are welcome. Comments of general interest to all Route readers will, with the permission of the writer, be published. Copyright ©
Universal Logistics Inc. All rights reserved. Reproduction for any commercial use is strictly prohibited.

Route is produced by Universal Logistics. Editor: Bettina Scharnberg. While every effort has been made to ensure the accuracy of information contained herein, Universal Logistics accepts no responsibility or liability for errors or omissions. Written correspondence should be forwarded to:

Universal Logistics Inc.
125 Commerce Valley Drive West
Suite 750, Thornhill, Ontario L3T 7W4
Tel: 905-882-4880 Fax: 905-882-2250
Attention: Bettina Scharnberg
Universal Logistics

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