The Single Most Costly Error Importers and Exporters Make

BCBusiness + Willson International

Peter Willson, CEO of Willson International, discusses what companies need to manage so they can reap the benefits of the free trade agreements 

A recent KPMG study revealed that 70 per cent of businesses are not fully leveraging their free trade agreements–a mistake that can have major strategic, financial and administrative implications. “International trade is complex, and there is a fundamental fear of the regulations and red tape,” says Peter Willson, fourth-generation CEO of Willson International, a leading U.S.-Canada customs brokerage. “When your product lands at a foreign port, people start asking questions that you may not know the answer to.” Accessing the benefits of free trade agreements requires expert knowledge and stringent reporting, says Willson, and the level of attention paid can affect pricing–either improving or hurting a company’s competitiveness in the marketplace. Essential factors include: 

Every product requires a 10-digit Harmonized System code that determines the duty owed on it, and it is critical to calculate it precisely by examining a number of factors. “The difference between two digits may mean paying no duty or paying six per cent, which could make you non-competitive,” says Willson.

Rules of origin  
Poor communication with suppliers about where products or even their components were manufactured can result in penalties–potentially affecting your landed costs.

Importers must navigate six possible valuation methods for each category of goods. Declaring the wrong one could result in incorrect duty being applied.

Advanced rulings  
Requesting an advanced binding ruling can offer assurance when a new product could be classified and taxed under any of several possible categories. “When you are importing a product that hasn’t been seen before, you don’t want to find out four years later that Customs has gone back and found you owe duty,” says Willson.

Other agencies  
Border agencies are not the only groups importers and exporters must answer to–there is also the FDA, CFIA and other industry agencies. “Heavily regulated environments like dairy, steel or textiles have very complex trade agreements,” explains Willson. “There may be quota systems in place, or you may need to show that the supply chain is secure.”

Willson says these daunting requirements can lead many companies to keep their business close to home. “That lasts for a while, but at some point in your growth plan you’re going to have to find new markets,” he says. “It comes down to having a partnership with someone who can facilitate your understanding of the information flow to regulatory bodies, so that nothing slows down at the border, and your costs are understood.”

This is a bird’s-eye view of some very complex issues that can affect your landed costs and bottom line. If you are concerned about any of these issues, it is imperative that you call your customs broker. 

Created by BCBusiness in partnership with Willson International