Indonesian exporters working with a Canadian partner, such as an agent or importer, will want to be sure that the partner is knowledgeable about Canadian import requirements for their product. Indonesian exporters should work closely with their Canadian partner to make sure their products for export meet all Canadian import requirements and regulations.
FAILURE TO COMPLY
Goods that do not meet all applicable laws and regulations will be refused entry at the Canadian border at the expense of the importer. To avoid delays and penalty fees, Indonesian exporters must work closely with their importers and buyers to make sure the specifications of their product comply with Canadian import requirements.
Canadian Border Services Agency
The Canadian Border Services Agency (CBSA) (www.cbsa-asfc.gc.ca/menu-eng.html) is the federal agency responsible for customs services and compliance with Canada’s border legislation. All products entering Canada must be reported to CBSA and are subject to inspection, whether they are transported by the exporter or a carrier. Many goods must comply with Canadian laws and may require permits, certificates, or inspections. For more information, CBSA offers a Step-by-Step Guide to Importing Commercial Goods into Canada (www.cbsa-asfc.gc.ca/import/guide-eng.html).
Canadian Food Inspection Agency
The Canadian Food Inspection Agency (CFIA) (www.cbsa-asfc.gc.ca/menu-eng.html) regulates imports of food products to Canada. The CFIA develops policies on imported food, and these rules are then enforced at the border by CBSA officers who examine food products at the entry point to Canada.
Other Government Departments
CBSA provides a reference list (www.cbsa-asfc.gc.ca/import/reflist-listeref-eng.html) of other government departments that may require permits, certificates, or inspections for goods imported to Canada. CBSA is responsible for enforcing the legal import requirements at the border on behalf of these other government departments.
Delays at the border can cost a lot of money. Two common causes for delays at the Canadian border include:
- Incomplete documentation. Indonesian exporters must make sure the person from their company who is filling out export documents can write well in English or French (the language depends on the Canadian port of entry). They have to be careful when measuring and weighing their product and make sure appropriate HS codes are used. They must thoroughly review their documentation to make sure it is complete.
- Untreated wood. Shipments containing wood products, including wooden crates for packaging, must be accompanied by an official certificate from the Indonesian Agriculture Quarantine Agency, confirming that it has been treated. See page XX for more information.
Laws and Regulations
Federal, Provincial, and Municipal
Most laws and regulations that apply to imported goods are governed at the federal level. However, Indonesian exporters should be aware that additional laws and regulations may apply at the provincial (e.g., alcoholic beverages) and municipal levels (e.g., recycling of packaging). Knowledgeable Canadian intermediaries should be able to assist the Indonesian exporter to ensure their products meet all federal, provincial, and municipal regulations.
QUEBEC LANGUAGE REQUIREMENTS
Products sold in the province of Quebec are subject to additional language requirements. French must be used for all inscriptions on the product container and packaging, as well as for catalogues, brochures, leaflets, commercial directors, order forms, invoices, and receipts. Visit the Quebec French Language Office (www.spl.gouv.qc.ca/fileadmin/medias/pdf/ABCPolLinQc_Ang_Web.pdf) for more information.
The Canada Business Network provides useful information on regulations and standards for each region in Canada. It also provides information for regulated industries, such as food products, pharmaceuticals, and natural health products. www.canadabusiness.ca/eng/page/3424/
Exporters selling to Ontario can also visit Canada Business Ontario’s web site: www.cbo-eco.ca/en/index.cfm/managing/regulations/
Important Tool: Automated Importing Reference System
CFIA maintains an Automated Import Reference System (AIRS) (www.inspection.gc.ca/plants/imports/airs/eng/1300127512994/1300127627409) tool that allows Indonesian exporters to verify Canadian import requirements for their food and agricultural products. AIRS can be searched by HS Code and product information (country of origin, destination, end use, etc.) to generate a list of import recommendations, required documentation, prohibitions, and references to relevant Canadian acts and regulations. View TFO Canada’s Webinar (www.tfocanada.ca/webinarsview.php?view=6) for CFIA to learn how to use the AIRS tool.
Intellectual Property Rights
Canadian International Property Office
Intellectual property rights are regulated by the Canadian International Property Office (CIPO) (www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/Home) to ensure that owners and creators benefit from their original work or investment in creations, designs, or inventions. These rights can apply to a wide range of products, services, or processes, including: creations of the mind, literary and artistic works and symbols, and names or images used in commerce. The CIPO web site allows exporters to search databases of trademarks, patents, copyrights, and industrial designs already registered in Canada. CIPO also provides guidance on how to apply for these forms of intellectual property protection of your goods in Canada.
Combating Counterfeit Products Act
The Combating Counterfeit Products Act came into force on January 1, 2015. The goal of this Act is to reduce trade of counterfeit goods sold in Canada by giving CBSA officers additional authority and enforcement tools at the border. Owners of trademarks and copyrights registered in Canada can register their rights with CBSA under the Request for Assistance Application (www.cbsa-asfc.gc.ca/security-securite/ipr-dpi/app-dem-eng.html). More information is available from CBSA (www.cbsa-asfc.gc.ca/security-securite/ipr-dpi/menueng.html) and Innovation, Science and Economic Development Canada (www.ic.gc.ca/eic/site/064.nsf/eng/07281.html).
Classification of Goods
As a member of the World Customs Organization (WCO), Canada’s classification system is based on the WCO’s Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS). HS codes define and describe imported products and assign an applicable unit of quantity/measurement and rate of duty. When an exporter exports goods to Canada, having the correct
HS classification of goods is extremely important. It helps the exporter and their Canadian buyer
in a number of ways:
- Indicates applicable Canadian regulations that the goods need to comply with to enter the Canadian market;
- Ensures the correct application of duties and other levies on the goods;
- Avoids delays at the Canadian border; and
- Helps the exporter develop a competitive pricing strategy for the Canadian marketplace by allowing them to estimate the customs valuation of their goods as well as mark-ups along the distribution chain.
Harmonized Tariff System
Canada has its own Customs Tariff Structure based on the World Customs Organization Harmonized
Tariff System. The HS Code is a 10-digit number that defines and describes the imported product to determine the applicable rate of duty. The first six digits are common identifiers used across all countries, while the last 4 digits are unique to Canada.
Determining Your HS Code
Having the correct HS code for exportable goods is vitally important because this is how fees, duties, and other levies will be applied at the border. The right HS code also reduces the risk of noncompliance. Having the wrong HS code can result in penalty fees and delays at the border. Exporters can look up their HS Code in CBSA’s Customs Tariff schedule (www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2015/html/tblmod-eng.html), which includes over 10,000 tariff classifications organized into 22 sections and 99 chapters progressing from raw materials to more processed commodities and finished goods. Chapter 77 is reserved for future use, and Chapter 98 and 99 are country-specific. With the possible convergence of HS product descriptors, classification becomes a complex process. Determining the correct tariff classification should be undertaken in partnership with an experienced importer or customs broker. The Canada Border Services Agency (CBSA) requires individual imports to be identified by 10-digit HS codes. Importers could be fined if the 10-digit code is not provided.
For more information and guidance on HS Codes:
- Harmonized Commodity Description and Coding System (CBSA): www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/hcdcs-hsdcm/menu-eng.html
- Canadian Export Classification Manual (CBSA): www.statcan.gc.ca/pub/65-209-x/65-209-x2015000-eng.htm
Tariffs and Duties
Importers must provide CBSA with a detailed description of goods (based on information from the exporter/supplier), including the ten digit HS code, dollar value, and country of origin. CBSA will help determine the rates of duty based on the appropriate valuation method, classification, and tariff treatment.
Duties are applied at the border and usually paid in person by the Canadian importer or a customs broker representative.
Rates of Duty
Tariff rates are outlined by HS code in the Customs Tariff schedule (www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2015/html/tblmodeng.html). The rate of duty for goods depends on the Canadian tariff treatment in relation to the country of origin, which can be affected by the origin of raw materials and components. There are generally four types of preferential tariff treatments:
Products made in Indonesia receive the Most Favored Nation Tariff (MFN). However, if the raw materials or components of the product come from another country, this may affect the tariff rate. Indonesian exporters should refer to the “Rules of Origin” below for more information.
Duty-Free and Quota-Free Imports
Under the Market Access Initiative (MAI) (www.publications.gc.ca/site/eng/442000/publication.html), Canada has eliminated duties and quotas on goods imported from over 49 of the least developed countries (LDCT). The only goods excluded are raw and unprocessed dairy, poultry, and eggs. Trade flows from eligible countries have increased significantly since the Market Access Initiative began over ten years ago. The ability to claim benefits under GPT and LDCT is determined by the Rules of Origin, based on what percentage of the product and its inputs were produced in an eligible country. Goods must also be shipped directly to Canada from the eligible country and be accompanied by a Certificate of Origin.
Indonesia is eligible for the Most Favoured Nation Tariff (MFN) rate.
How this could affect an Indonesian exporter is as follows: If an Indonesian exporter is exporting hiking footwear from Indonesia to Canada, since Indonesia is eligible for MFN, they will be subject to the MFN tariff (16%), while exporters from LDCT countries—such as Cambodia—will have a tariff of 0%. Indonesian firms have to keep this in mind when developing their pricing strategy.
Rules of Origin
Rules of origin determine preferential tariff treatment for imported goods. The correct rate of duty is applied to goods based on the country from which the inputs of the final product were sourced and the country where the final good was assembled. Goods from these countries have preferential access to the Canadian market, and a certificate of origin must accompany the goods as part of the documentation. The onus is on the exporter to provide a valid certificate for the Canadian importer. This will prevent delays in goods being released. An example of a preferential tariff treatment is the LDCT and GPT Regulations. Two rules of origin methods determine if goods are entitled to the benefits of duty-free access to Canada. The first method is the general rule, under which all goods currently entitled to the benefits of the LDCT can qualify under a “wholly produced rule” or a “cumulative” manufacturing process in a LDC or GPT country with value-added inputs or cumulations from other LDCs or Canada. The second method applies specific rules to textile and apparel goods (HS 50–63 classification). A good can qualify under the general rules or one of the more specific rules of origin. For more information on LDCT’s rules of origin please visit CBSA Memorandum D11-4-4 (www.cbsa-asfc.gc.ca/publications/dm-md/d11/d11-4-4-eng.html).
Tariff Rate Quotas and Seasonal Tariffs
Canada enforces tariff rate quotas (TRQs) (www.international.gc.ca/controls-controles/prod/agri/tarif.aspx?lang=eng) on certain agricultural products on the Import Control List, including dairy, poultry, and eggs. Imports within the quota amount are subject to low rates of duty, and imports over the amount are subject to higher rates of duty. Privilege to import is allocated to firms through import allocations (or “quota-shares”). Seasonal tariffs (www.cbsa-asfc.gc.ca/publications/dm-md/d10/d10-14-3-eng.html) apply to certain fresh fruits and vegetables.
Anti-Dumping and Countervailing Duties
In alignment with WTO rules, Canada’s Special Import Measures Act (SIMA) regulates the application
of antidumping and countervailing duties on imported goods that cause injury to Canadian industry through dumping and subsidies in the country of origin. Anti-dumping and countervailing duties may also be assessed if goods are imported at prices that are less than their selling price in the country of origin. CBSA maintains a List of Goods Subject to Anti-Dumping Countervailing Duties (www.cbsaasfc.gc.ca/sima-lmsi/mif-mev-eng.html).
Releasing Goods at the Border
All products entering Canada must be reported to CBSA. This is usually done in person at the point of entry by the importer or a customs broker representative. Generally, the goods are released immediately
upon presentation of the required documentation. Within a few days, either the importer or the broker must present the final customs documents and pay any duties and taxes owing. To facilitate the clearance of goods, Indonesian exporters must give importers timely and complete documentation. Indonesian exporters can consult CBSA’s guidance on Importing Goods into Canada (http://www.cbsa-asfc.gc.ca/import/guide-eng.html) for more information on documentation requirements and the release of shipments. CBSA’s Database of Forms (www.cbsaasfc.gc.ca/publications/forms-formulaires/b246-eng.html) provides templates and instructions for completing each type of document.
Types of Documents
Depending on the product and country of origin, required documents may include:
- Bill of Lading or Airway Bill: Contract for carriage issued by the ocean or air carrier. Gives title to the goods, and signed copies are proof of ownership.
- Cargo Control Document: Used by carriers to report shipments to CBSA (first record of shipment’s arrival). Also used for shipments moved in-bond to an inland CBSA office, sufferance warehouse, or bonded warehouse.
- Certificate of Origin (Form A): Required by CBSA to establish where goods were manufactured and to determine the applicable rate of customs duty, including any claims for preferential rates of duty. More information can be found in Memorandum D11-4-2 (www.cbsa-asfc.gc.ca/publications/dm-md/d11/d11-4-2-eng.html).
- Canada Customs Coding Form (Form B): Used to account for goods regardless of the value imported for commercial use in Canada. An example of the form is available from CBSA (www.cbsa-asfc.gc.ca/publications/formsformulaires/b3-3.pdf).
- Commercial Invoice: Used by the exporter to charge payment of goods to the Canadian buyer. Exporters can provide either a Canada Customs Invoice (CCI) (www.cbsa-asfc.gc.ca/publications/dm-md/d1/d1-4-1-eng.html) or their own forms that include all of the necessary and standard information. CBSA uses the invoice to apply duties and other import taxes (e.g., GST). Avoid later reassessments by ensuring your invoice has enough detail to identify the goods, determine the quantity, and establish the tariff classification correctly, by means of: date of issue, name and address of buyer and seller, contract number, description of goods, unit price, number of units per package, total, weight, and terms of delivery and payment.
- Inspection Certificates: Sanitary and other certificates are required for some types of products entering Canada, including plants, seeds, animals, pharmaceuticals, nursery stock, and meat. More information is available from Health Canada (www.hc-sc.gc.ca/dhp-mps/compli-conform/import-export/index-eng.php).
- Export Permits: Permits may be required, such as those for endangered species, and are issued by the Indonesian government.
- Import Permits: Global Affairs Canada requires import permits for goods such as textiles and clothing, agricultural and steel products, and some food items, such as dairy products, poultry, and eggs. Other government departments (www.cbsa-asfc.gc.ca/import/reflist-listeref-eng.html) may require import permits for a range of goods.
- Packing List: May be required to supplement a commercial invoice and is provided by the shipper. It identifies the shipper, the shipping company, and the importer.
- Insurance Documents: Issued by the insurance underwriter and provides proof that the goods are insured as they are being transported.
Import Control List
CBSA requires an import permit for all goods listed on Canada’s Import Control List (www.laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._604/page-1.html#h-1 ). Buyers must obtain an import permit
(www.international.gc.ca/controls-controles/about-a_propos/impor/permits-licences.aspx-?lang=eng) from the Export and Import Controls Bureau (EICB) of Global Affairs Canada (GAC).Goods that are subject to import controls include:
- Agricultural Products: Applies to beef and veal, eggs and chicken, dairy products (including cheese), margarine, peanut butter, pork, turkey, wheat, and barley.
For more information, visit GAC’s Import Controls page (www.international.gc.ca/controls-controles/about-a_propos/impor/importing-importation.aspx?lang=eng) and Memorandum D19-10-2 (www.cbsa-asfc.gc.ca/publications/dm-md/d19/d19-10-2-eng.html).
International Import Certificates
Although a product may not be subject to import controls, the issuance of an International Import Certificate may be required, which is a document that formally recognizes that the Government of Canada is aware of (and has no immediate objections to) the proposed import of specific goods to Canada, by the
stated importer, for the stated end-use and end user. Canadian International Import Certificates are issued to Canadian applicants who in turn provide a copy to their foreign suppliers, who in turn use the International Import Certificates to obtain a foreign export permit. Applications for International Import Certificates may be submitted online using Export Controls On-Line (EXCOL) (from the EXCOL home
page, (www.excol-ceed.gc.ca/Main-Principal/Home_Accueil.aspx), by clicking on International Import Certificate on the left-hand menu bar). Paper application forms are also available at the Global Affairs Canada web site (www.international.gc.ca/controls-controles/report-rapports/list_liste/formsformulaires.aspx?lang=eng).
Certain goods cannot be imported into Canada. Prohibited goods (www.cbsaasfc.gc.ca/publications/dm-md/d9-eng.html) include child pornography, hate propaganda, dangerous materials, narcotics, base or counterfeit coins and offensive weapons, as well as goods manufactured or produced by prison labour.
Transshipment involves the transport of Indonesian goods through an intermediary country to get them to Canada. This includes transferring goods from one transportation vessel to another in a country other than Canada. Transferring goods from one ship to another or from a ship to an airplane or rail are examples of transshipment. To keep the Country of Origin intact, transshipment must adhere to a number of terms. For example, the goods must:
- remain under customs transit control in the intermediate country;
- not undergo any operation in the intermediate country other than unloading, reloading, or splitting up of loads, or any other operation required to keep the export items in good condition;
- not enter into trade or consumption in the intermediate country; and
- remain in temporary storage in the intermediate country for no more than six months.
There are no direct routes when exporting products from Indonesia to Canada by sea. All ships must go through at least one other country, and sometimes more than one. It is generally not recommended for Indonesian exporters to use transshipments that are routed through the United States. Typically, products arriving in the U.S. would need to be unloaded from the ship and sent to Canada by truck, which is a very expensive option. This route should only be considered after careful consultation with your freight forwarder.