On May 27, the Canada Border Services Agency (CBSA) launched a consultation on a proposed amendment to the valuation of imported shipments that specifically aims to modify how customs duties are assessed to non-resident importers (NRIs). Under the Safe Food for Canadians Regulations (SFCR), a NRI is a person that imports food into Canada whose fixed place of business is located in a country other than Canada. This change will directly impact any U.S. companies acting as their own importer in Canada, though analysts point to the potential to impact all Canadian importers.

Interested companies may file comments with CBSA by July 26.

What is changing?

The proposed modification would change the method for determining the value for duty (VFD) of imported goods. Under the amended definition of "sold for export to Canada", the relevant sale for calculating VFD is the "last sale". This means that the declared VFD will be based on the "last sale" price of the transaction that causes the goods to be imported into Canada, as compared to the current method of assessing when title transfers, or whether the purchaser is a resident or maintains a permanent establishment.

The CBSA Regulatory Impact Analysis Statement states that this valuation change is needed because the existing framework creates an unfair advantage for non-resident importers. Scroll to the bottom of this page to see the actual text of the draft amendment.

What is the expected impact?

Analysts note that the duties paid for imports into Canada are expected to increase, as may costs throughout the supply chain, including to Canadian importers, retailers, wholesalers, and others.

CBSA intends to use enforcement measures to ensure compliance with the new rules, which may subject importers failing to declare goods in compliance with the amendments to adjustments and penalties. Importers declaring a VFD that does not reflect the transaction price of the sale to an "actual buyer located in Canada that brought the goods into Canada" may be subject to a future trade compliance verification focused on valuation.

How to Comment

USDEC members with concerns may file comments directly with CBSA via the Canada Gazette website. The comment period ends July 26. Members wishing to file comments through USDEC should send them to Sandra Benson at sbenson@usdec.org and Aimee Pinkerton at apinkerton@usdec.org by July 19. Contact Sandra or Aimee for more information or with any questions.