There are a number of major trade regulation changes coming in 2014, unprecedented in both number and magnitude. Many of these new regulations center around food import quality and safety, and if companies are not compliant they risk costly fines and penalties at – or after – an international border crossing.
These shifts affect every company that imports into, or exports from, Canada or the U.S., with some regulations requiring new licensing and others mandating significant software updates. The most noteworthy are:
- Food Safety Modernization Act (U.S.): This policy requires companies to change registration processes for domestic and foreign facilities, as well as comply with added certifications for food safety. Food importers will need to contend with added food safety certifications because there will be more rigid requirements to identify their foreign suppliers.
- Canadian Food Inspection Agency (CFIA) Inspection Modernization Program (Canada): The CFIA is developing a more comprehensive inspection approach across all imported and domestic food commodities – for both interprovincial and international trade. All regulated companies will need to obtain an Imported Food Sector License, and the CFIA will conduct more inspections and enforcement for non-compliance. In addition, the types of regulated commodities are expanding. While currently only importers of meat, fish, dairy and eggs are regulated, the new program regulates all other food commodities, including coffee, baked goods, spices, infant formula, snack foods, meal replacements and others.
- Single-Window Initiative (U.S., Mexico and Canada): This initiative applies to any goods coming into or leaving the U.S. It requires shippers to interact with approximately 40 different partner government agencies through a single web-based interface system. Companies must transition from a paper-based process to a digital one to meet the initiative's goal of increasing real-time tracking and visibility of shipments. It begins rolling out in 2014, and when it is completely implemented, shippers will know the status of their shipments from the partner government agencies more quickly and benefit from decreased wait time and exam costs.
- e-Manifest (Canada): All shipments into Canada must be declared electronically before arrival. This requires new software and IT upgrades to ensure compatibility with the new system; otherwise, companies risk an additional duty fee at the border.
Although these updates will make the customs process smoother and more up-to-date, it is unprecedented to have this many major trade regulation changes implemented at the same time.
To manage this level of change, investing more time now is necessary for businesses to meet these new requirements that take effect next year. Managing trade compliance is undeniably an investment, but it is offset by reducing the risk of costly audits and fines.
These major regulatory changes will affect small and medium-sized businesses more, because they rarely have trade compliance expertise in-house. Trade professionals are preparing for the forthcoming changes by educating importers and exporters and providing access to:
- Trusted Trader Program: A voluntary certification program is offered through Customs to help educate companies and customs brokers on the new regulatory changes. But importers may need help navigating the program's stringent guidelines to be successfully approved for certification, which leads to faster and smoother border crossings.
- Additional free trade agreement coverage: Customs is making it easier for importers to manage their shipments, offering companies access to more free trade agreements (FTAs) to save on duties. But companies may need help identifying which FTAs they can take advantage of, from NAFTA to the emerging TransPacific FTA.
The multitude and timing of these regulatory changes pose a unique challenge to food importers. A customs broker can help navigate these changes to ensure your company can continue to be an effective importer and keep abreast of any future regulatory updates. Being proactive -- not only in knowing about these changes but also preparing to comply with them -- is vitally important to protect your company's bottom line.