The Thunder Bay Chamber of Commerce has discovered a loophole where international duties are not being charged when individuals bring items made in other countries, other than the U.S., across the border.
In a statement to The Chronicle-Journal, the commerce chamber said the Canada Border Services Agency (CBSA) is responsible for administering trade agreements to meet Canada’s international obligations.
“When the accounting for imported goods is performed by CBSA, a “tariff treatment” code is assigned based on the country of origin (where the product was made). This code triggers duty rates based on trade agreements with other countries.”
Charla Robinson, president of the Thunder Bay Chamber of Commerce, says if duties are not paid by the many individuals importing international products into Canada and only the small businesses are paying, this is an added disadvantage for local retailers because they are gong to have to include those overhead costs in their prices — and it’s a pretty significant difference.
Many items bought in the U.S. are actually manufactured in China, Malaysia, India or other countries. Canada has a free trade agreement with the U.S.
“We don’t have a free trade agreement with those countries, so where a retailer is paying a full duty, as is required depending on where that product is made, individuals that are crossing the border are not necessarily paying the appropriate duty,” she said.
“The challenge we are seeing is where individuals are placing an order with an online company and shipping it to Rydnen’s Border Store and doing that “quick one-hour across the border to go and pick it up.”
Robinson says they found when people get randomly called into the customs office to check what was purchased while they were in the U.S., in many cases, customs officials are not marking the “country of origin” appropriately.
“That’s because there seems to be an override in the system that automatically marks things that you are bringing from across the border from the U.S. as it is made in the U.S.,” she said.
The chamber has put forth a resolution to the government to make sure that when those duties are being collected from cross-border pickup shoppers, that they are marking them appropriately, evening things out for those retailers that are having to pay that full duty.
“If you are buying it, shipping it to Ryden’s and driving across, you should have to pay the full duty as well,” said Robinson “This is all about levelling the playing field. We have international agreements with these countries and we need to be applying those international agreements. If you are literally doing a same-day border-cross, you should be paying duties on those (items) regardless.”
There is an entirely different process for businesses to import goods across the border into Canada than it is for individual shoppers.
“We don’t want to slow down the border crossing, we don’t want there to be a big backlog of people trying to get across the border because every singe car is getting stopped and asked to go in — we don’t want to do that,” she said. “What we are saying is when the border guard says they want you to come in so we can look at this and process this — which they do on a rotation or every so many cars, — make sure that when they are going through that process, they are marking that place of origin appropriately so that those people are paying the duties they are supposed to and not getting a duty free made in the U.S.”
Robinson added that retailers have been decimated by the COVID-19 pandemic and the Chamber of Commerce wants to make sure that the government is fixing this loophole in their system to make sure that the duty of origin is being applied appropriately.