Canada: Canada Border Services Agency Publishes Update Of Trade Verification Priorities—July 2023

The Canada Border Services Agency (CBSA) has released an updated list of trade compliance verification priorities for 2023. The CBSA periodically sets verification priorities which reflect its evaluation of the risk of non-compliance with customs regulations concerning the importation of specific categories of goods or supply chains.

In July 2023, the CBSA's trade verification priorities have been updated to remove:

• air heaters and hot air distributors under Heading 73.22;
• bags under Heading 42.02;
• batteries under Heading 85.06;
• flashlights and miner's safety lamps under Heading 85.13;
• footwear under Heading 64.03;
• gloves under Headings 39.26 and 42.03; and
• other mountings and fittings, suitable for furniture under Heading 83.02.

Freezers and other freezing equipment under Heading 84.18 and washers and dryers under Headings 84.50 and 84.51 are new additions to the CBSA's priorities.

Trade verification audits usually encompass three main areas: (1) tariff classification, (2) customs valuation, and (3) origin. These audits tend to concentrate on one of these customs programs, specifically targeting a specified "verification period," which is typically the last complete fiscal year. Based on the updated list of trade compliance verification priorities, an importer may be required to modify past import entry declarations that were non-compliant within a period of up to four years prior to the date of amendment.

All importers are at risk of random or compliance-based verifications. It is important to note that not all audits are based on verification priorities. Although the priorities identified in this list focus on risk in the three main customs areas of tariff classification, valuation and country of origin, verifications of import compliance can also include other customs programs. This includes, for example, trade incentives and compliance with areas of regulation administered by other government departments.

There are currently 15 active verification priorities, some of which are new while others have been in place for many years. This list contains 14 priorities for tariff classification and one for customs valuation. There are no origin verification priorities at this time.

The following summarizes the CBSA's current verification priorities:

Greater detail regarding the list of all current verification priorities is available on the CBSA website.

Businesses that import goods listed as verification priority items should be prepared for the possibility of a CBSA trade compliance verification in the near future. If non-compliance is discovered, CBSA trade compliance verifications may result in payment of additional duties, GST, interest and penalties against businesses. Due to their retroactive nature, recovering these assessments through higher pricing tends to pose challenges.

Importers of goods not listed should still be mindful that the CBSA also carries out verifications based on complaints or through random selection. It is advised that importers remain vigilant in reviewing their customs compliance practices to ensure they adhere to current regulations and can withstand CBSA audits.

The Bennett Jones International Trade and Investment groupis available to help client importers assess their compliance/non-compliance and to assist them in the steps that should be undertaken to correct errors resulting from past non-compliant practices and improve these practices going forward.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.