3 Ways To Improve Your Value Chain In The New Year

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By Maria Mate, ABC Customs Brokers Jan 07, 2016

Sometimes maintaining the status quo can cost businesses a significant amount in market share to competitors that are adapting to changing conditions. With businesses just starting to pick up momentum after the holiday season, January is a fantastic time to take stock of processes and review operations.

When it comes to Canadian Customs related matters, here are some suggested areas you could review to improve your value chain:

1. Suppliers:

a. Trade Agreements:

Exploring current and upcoming trade agreements can greatly benefit your company.  The United States has always been our strongest trading partner. Similar culture and ease of doing business have made our southern neighbors a substantial market to sell into. However, over the last few years, the Canadian Government has been busy negotiating new trade deals like the Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP) to benefit Canada.

The Comprehensive Economic and Trade Agreement (CETA) will provide better access for purchasers to source products without having to worry about the impact of duty upon import.  The exact date for the roll out of CETA is not known yet, but Canadian importers should consider the European Union an option for future purchasing alternatives.

The Trans-Pacific Partnership (TPP) will create a free-trade zone among 12 nations around the Pacific, making it the world’s largest. The countries within its scope account for 40 per cent of the world’s economic output. Although the text of the agreement was released on November 5, 2015, each country will need to ratify the final text before it takes effect. In Canada, that will take the form of a vote in Parliament, following the election (source). A vote is expected early this year in the U.S. Congress, and it could prove difficult.

b. Canada’s General Preferential Tariff (GPT):

The General Preferential Tariff (GPT) was implemented in 1974 as Canada’s preferential tariff treatment for developing countries. The original policy intent of the GPT was to encourage imports from developing countries as a means to promote their economic growth and export earnings.  Under the current GPT, Canada offers duty-free or preferential duty rates to imports of most products from 175 designated beneficiaries.

• List of Countries and Applicable Tariff Treatments

c. Supply Chain Logistics:

Reviewing freight lanes and carriers hired to move your freight can also garner some economic returns to your organization. By making the effort to arrange your own transportation you increase you buying power. Consolidating purchasing can help your transportation budget go further.

2. Customers:

Canadian products are well known for their purity, quality, and innovation. The European Union has a desirable demographic market for Canadian products. It is both large and increasingly more accessible than ever before in the world of electronic commerce. Under CETA, it has the potential for breathing new life into the car manufacturing and resource industries with the elimination of tariffs to follow.

Increased service on some ocean lanes by several of the steamship lines makes for easier transportation of Canadian goods to international markets as well.

3. Compliance:

a. Trade Compliance Program

One of the most overlooked aspects of importing and exporting is trade compliance. Importing and exporting are privileges that allow Canadian companies to generate revenue. Having a program in place to systematically review the work being done for your organization in terms of Customs declarations on international transactions is very important.

b. Self Auditing Program

Establishing best practices for reviewing the work that your trade professionals do for you is key to keeping records that will withstand a Customs audit. Sometimes the savings on an entry fee is offset by the cost of retaining a senior customs broker’s expertise to get your organization in front of an audit or penalty under the Administrative Monetary Penalty System (AMPS).

c. Customs Brokers

Buyer behaviour is complex. Some companies use multiple customs brokers for various reasons. These reasons can include pricing, relationship between the parties, and carrier moving the freight. By using multiple customs brokers, the risk for inconsistencies on Customs declarations increases drastically, as there is room for interpretation in the Customs tariff.

Having a solid relationship with your customs broker who knows your business model and is familiar with provisions in the Customs Act and Customs Tariff can help your organization. An experienced customs broker can guide you in  taking advantage of potential savings through trade agreements or end-use applications.

d. Customs Regulations

If declarations are being made “in house”, it is extremely important to make sure internal staff understand the consequences of the declarations they are completing. Staff turnover can put your organization at risk of a Customs audit in a big way, and inexperienced staff can put your organization in jeopardy if they do not understand Customs. Current trade compliance training and education can fill the gaps to create a complete custom compliance program.

2016 looks bright and ABC Customs Brokers wishes you a prosperous New Year!

Speak with one of our Trade Advisors today to learn how ABC Customs Brokers’ trade advisory services can help your business.