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Customs Brokerage 101: Everything You Need to Know

If you want to succeed in today’s global market, you have to master the art of International trade. That includes knowing your way around the complexities of customs clearance. Alternatively, you can simply outsource all of the stress and use the services of quality customs brokerage experts.

What does customs brokerage involve?

Doing export and import is by no means a simple endeavor. There are documents to be collected and e-forms to be filled. Depending on the nature of the goods, there are various taxes, duties and excises to be paid. Also, international trade is governed by a whole host of regulations. To maximize compliance, importers/exporters need to be familiar with all applicable laws.

As experts in the field, customs brokers help you navigate the sea of changing regulations and understand import specifics related to particular commodities. They are highly knowledgeable in all entry procedures, admissibility requirements, classification, valuation, and the duties and taxes imposed on imported goods.

Customs brokers can do their job as employees or associates of freight forwarders, independent businesses, shipping lines, importers, exporters and customs brokerage firms.

To engage in the customs business, companies must have a broker license. This means that they have to employ at least one individually licensed officer, partner or associate. As a client, you grant your customs broker the authority to act on your behalf.

customs brokerage, customs broker

Things your customs broker can do for you

The job of your customs broker is simply to help you clear your shipments at the border. But, this is by no means a simple task.

In the scope of achieving this for you, a customs broker will:

  • Help your goods meet state requirements governing import and export and act as liaison between you and the relevant agencies
  • Prepare and submit necessary information and payments to the Customs authorities on your behalf (country of origin and destination, suppliers, routings, intended use of goods, etc)
  • Assess commercial documents to see if they are compliant with regulatory requirements, prior to their submission
  • Make sure your goods are correctly classified so duties and taxes can be properly determined
  • Use their expertise to help you spread your business to new markets. If you’re interested in reaching customers across the border, a customs broker with presence at both sides of the border can make sure your goods reach your customers quickly and safely.
  • Provide personalized advice – all enterprises have specific business needs, especially small-size businesses with lower export/import volumes. A good broker will pay due attention to your particular needs and contribute to your business success.

Why should you use the services of a customs broker?

There are many reasons why you should consider using customs brokerage services, and it depends on your particular business. What follows are the main reasons that are likely to resonate with your particular needs.

1. Knowledge in complex regulatory requirements

Some businesses can’t afford personnel versed in the complex regulatory requirements governing the transport of goods across borders. In this case, they can outsource this business hassle and hire a customs brokerage company.

Good companies offer a complete portfolio of import/export services, including logistics, freight forwarding, warehouse and distribution, so you can rest assured your business is fully taken care of.

customs brokerage, logistics

2. Skills to facilitate the customs clearance process

Customs brokers make sure your shipments cross the border and reach their intended destination safely. They have the skills to facilitate the entire customs clearance process, regardless of the port of entry.

3. Help in avoiding unnecessary costs

Rules and regulations in cross-border transactions keep changing. As experts in the requirements for each type of goods, customs brokers can help you avoid costly delays, fines, confiscation of the merchandise and other penalties.

4. Verification of declarations

Another thing to keep in mind is that you are legally responsible for all customs declarations prepared on your behalf. As faulty declarations can result in audits, fines and even sanctions for your business, make sure to have your declarations verified by a licensed customs broker.

customs brokerage services, verification of declarations

5. Convenient paperwork

Although you’re not required by law to use the services of a customs broker, many companies prefer to work with one. This is because of the convenience in entrusting all the paperwork and communication with relevant agencies to an expert. Even more importantly, their expertise in the field can save you from making costly mistakes.

6. Correct identification of goods

Customs brokers are well versed in the Harmonized Tariff Schedule – a compilation of duties or taxes levied on goods as they enter a country. Each good receives a specific classification number and they are divided into major groups and sub-groups to allow correct and easy identification for the purposes of charging customs duty.

7. Easy clearance of shipments with formal entry

Some commodities automatically require a formal entry (formal declaration of specific information on the imported goods). This applies to food and pharmaceutical products, cosmetics, chemicals, biological materials for research and medical use, as well as agricultural and dairy products.

A formal entry is also needed if your shipment exceeds a certain value, regardless of its nature. For instance, any shipment exceeding $2500 in value ($250 for textile) requires a formal entry.

These goods are held at the customs until the necessary paperwork and requirements are met for the shipment. In this case, it’s a good idea to hire a customs broker because of their knowledge of the rules, regulations and protocols needed to clear your shipments.

customs brokerage, clearance of shipments

How your customs broker can help you with the NAFTA certificate

When it comes to collecting customs data, some documents are easy to complet. This includes packing slips, commercial invoices and customs invoices. All you need is shipping or invoicing data, such as shipper, consignee, carrier name, description of goods, etc.

However, the NAFTA Certificate of Origin is a different story. The main difference is that all the products you list on this document must qualify under the NAFTA and there are rules that must be observed.

customs brokerage, NAFTA regulations

NAFTA is the North-American Free Trade Agreement signed by USA, Canada and Mexico, granting importers substantial reduction or even elimination of customs duties on qualifying goods.

To benefit from these advantages as an importer, your goods must have valid certificates of origin. If required, the exporter should provide the customs authorities with evidence that your goods qualify under the rules of origin (NAFTA Certificate of Origin).

As this can get a bit complicated, certification of the originating status of the goods is best left to the customs experts. Keep in mind that any irregularities in your NAFTA Certificate of Origin can expose you to penalties, fines and shipment delays.

Your customs broker is uniquely positioned to help you with this issue. They can conduct a thorough analysis to determine the origin of the goods and recommend alternative solutions if the good doesn’t meet NAFTA requirements.

With over 44 years of experience, A & A is the leading provider of freight, warehousing, and customs brokerage services. Contact our A & A customs brokers at any time of day and night to help you ease the entire clearance process.

NOTE: All details pertaining to CARM R2 processes are based on the current information available at the time of writing. As this is subject to change, it’s recommended you periodically check in with the CBSA or your customs broker.