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Bulletin | Covid-19

Canada Trade Update: Navigating the Challenges of COVID-19 - Part 2

Reading Time 4 minute read

International Trade & Customs Law Bulletin

CBSA's More Recent Response to COVID-19

Since our last update Canada Trade Update: Navigating the Challenges of COVID-19 , the Canada Border Services Agency (CBSA) has taken the following actions. In some cases the CBSA has announced new procedures and payment deferrals, and in others it has clarified existing procedures relevant to our current remote economy.

  1. Deferral of Anti-dumping and Countervailing Duty Payments: The CBSA has confirmed that payments made in relation to anti-dumping and countervailing measures are included in the payment deferral under Customs Notice 20-11. Such payments will come due on June 30, 2020.
  2. Deferral of duties and GST payments: Customs Notice 20-11 provides that payments of duties and GST taxes by importers are deferred until June 30, 2020. CBSA has since confirmed that interest will not be charged on duties and GST payments that have been deferred, providing payment is received on or before June 30.
  3. Major Increase in Risks for Customs Brokers and Surety Companies: Even though payment of duties and GST have been deferred until June 30, 2020, and absent immediate full payment by the importer, goods will not be released for import into Canada unless the importer or its customs broker has posted a bond with CBSA to guarantee payment in the event the importer fails to pay. As a result, the amounts of duties and GST being guaranteed by security bonds will increase significantly. In effect, the security bonds will now be covering four months of duties and taxes, rather than the usual one month. The present crisis has increased the potential for business failures in the importing community, and consequent calls on the security bonds. While various business associations are seeking relief, CBSA has not yet indicated whether they will address this issue.
  4. No Deferral of Excise Duties: Excise duties are charged on imports of spirits, wine, beer and tobacco products. The payment of excise duties has not been deferred. CBSA is expected to release a new Customs Notice to this effect shortly. 
  5. E-appeal pilot procedures: CBSA has a process for submitting a request by email for re-determination, a further re-determination or a review by the President of the CBSA. In light of the current situation, it is still possible to join this project. Questions on how to submit an e-appeal can be directed to CBSA.
  6. Tariff Codes for Medical Supplies: Customs Notice 20-12 provides the tariff classification number and other information for certain medical supplies. Importers should ensure they have reviewed the tariff classifications and import their goods under the correct tariff classification. A failure to do so could result in a needless liability for payment of duties. Importers are recommended to add the terms "URGENT – COVID-19" to the description of goods in the release information.

Customs Notice 20-08 provides that medical supplies required for an emergency may qualify for duty and tax relief if imported temporarily on behalf of federal, provincial or municipal entities under the emergency tariff code. For example, the difference between importing certain facemasks under the emergency tariff code as opposed to the non-emergency tariff code is 18%. Note that such goods must be exported from Canada when they are no longer required, unless they are consumed or destroyed during the emergency.

Supply Chain and Logistics Issues Resulting from COVID-19

Blockages to cargo movement  

The closure of many businesses ordered under various provincial orders means those businesses cannot or do not wish to receive imported cargo. That is creating backlogs at ports, rail facilities and others hubs in the supply chain and may even block the movement of essential goods.

At this time, the CBSA has not taken action to address this issue.

Importation documents

CBSA requires wet-ink documents at points of entry. However, businesses that are closed may not be able to access or may be delayed in accessing printers necessary to provide carriers with the paper copies. This causes increases the lead time on shipments crossing the border and delays for goods crossing the border.

At this time, the CBSA has not taken action to address the requirement for 'wet-ink' signatures.

Medical supplies

To retain essential supplies for domestic needs, over sixty (60) countries have imposed restrictions on the exportation of certain medical equipment and products such as masks, PPE, and respirators. For example, Germany has prohibited the sale of masks outside of its borders and until recently the US told 3M Company, a large US-based N95 mask manufacturer, to stop exporting its masks to Canada and Latin America. The US government now agreed to allow 3M to continue exporting masks.

At this time, there does not appear to be an attempt by Canada to prevent the export of masks from Canada. Canada is working with Canadian businesses to provide medical supplies; anticipating possible supply chain issues.

Food supply chains

While food supply chains currently appear to be holding steady, Canada has taken some action to support Canada's food supply.

Canada has increased Farm Credit Canada's borrowing capacity by $5-billion to account for payment deferrals and other financial supports that have been extended to farmers with the intention of minimizing bankruptcies while strengthening Canada's food-producing capacity.

While it has restricted cross-border travel, Canada has put in place an exemption for temporary foreign workers, who are essential to ensure stability in the agriculture and agri-food sector. Canada has also increased the maximum allowable employment duration for workers in the low-wage stream of the Temporary Foreign Worker Program from one to two years.


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