In October 2023, the Canada Border Services Agency will implement a new program to change the way it collects duties and taxes from importers. Steve Bunda, Manager of Business Development for Customs, shares information on what's changing, how to act, and illustrates why now is the best time to act in preparation for this massive change.
Chris Parker: Hello everyone, and welcome to The Expeditors Podcast, where we look at the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today's topic is CBSA Assessment and Revenue Management, or CARM. What is it? When is it coming? And how should importers, both Canadian and non-resident, prepare before this program goes into effect? Joining me today is the Manager of Business Development for the customs product at Expeditors, Steve Bunda. Steve, welcome to the podcast.
Steve Bunda: Great to be here, Chris. Thanks very much.
Chris Parker: Yeah, and so Steve, this is a Canadian topic. Where are you based right now?
Steve Bunda: I'm actually stationed in our Toronto office here in Southern Ontario.
Chris Parker: And tell me a little bit about your background. How long have you been with Expeditors? What's your career been like with customs? Why do you like customs? Why is it interesting to you?
Steve Bunda: Why do you like customs? What a great question.
Chris Parker: Do you like customs?
Steve Bunda: Yeah. Yeah. Customs is the kind of business once you get in, you just can't leave.
Chris Parker: Sure.
Steve Bunda: You try, but it keeps pulling you back. It's pretty dynamic and it's always changing. So that's what I think the uniqueness is of this product itself. But hey, Chris, I've been with Expeditors 22 years next month, and I've been in the Canadian customs industry for, well, let's kind of say when you hit the higher levels of 20-plus years, you kind of forget to count. So, it's been a long time and we've seen a ton of changes, and now we're faced with the latest change, and that's the CARM program that's been implemented by our friends at CBSA.
Chris Parker: Looking back at your career and your involvement in Canadian customs, how does CARM compare to other big changes that CBSA has rolled out?
Steve Bunda: Some people are actually referring to the implementation of this program, CARM is as big as when NAFTA was first implemented back, I believe in 1993 if I'm not mistaken. But it is a massive undertaking, and it will change the way they're going to account for the duties in taxes today.
Chris Parker: Yeah, yeah. Well, let's talk about this right now. So CARM wants to change the way duties and taxes are collected or how it's accounted for. Give me the whole story on CARM. What is it and what is it looking to accomplish?
Steve Bunda: Okay. Well, the CARM, Canada Border Services Agency Assessment and Revenue Management Program, it's a multi-year initiative that will transform the collection of duties and taxes for the goods imported into Canada. And then through CARM, CBSA Canadian Customs, will modernize and streamline the process. So many people have asked, well, what's wrong with the existing process today that's in place? Well, today, accounting for commercial imports and assessing the applicable duties and taxes requires extensive administration by both importers and Canadian Customs, and the existing processes and systems in place to support these activities, they're antiquated, requiring substantial paperwork and rely on IT resources that are more than 30 years old.
Chris Parker: Wow.
Steve Bunda: Oh yeah. So that's why it needs to be changed.
Chris Parker: Help me understand the systems now before CARM, how does the CBSA get paid? How do they collect their duties and taxes right now?
Steve Bunda: Today, CBSA receives payment of duties and taxes directly from importers as they have what's known as a release prior to payment bond in place, or they would rely on the customs brokers bond and have the customs broker remit their duties and taxes on their behalf.
Chris Parker: Is one way better than the other, either relying on the broker's bond or having your own?
Steve Bunda: Well, at the end of the day, as long as Canadian Customs receives the appropriate duties and taxes for the imported product, that's their main concern. But under the CARM program itself, security will be a mandatory requirement for all importers to have in place with Canada Border Services Agency.
Chris Parker: So, no more piggybacking off of a broker's bond anymore?
Steve Bunda: With the implementation of the final round of CARM R3 for October? No, the importer will not be able to essentially piggyback off the broker's bond. CBSA wants to build a stronger relationship between the importer and CBSA. And where to start is with the security requirements for the payment of duties and taxes.
Chris Parker: Right. A lot more direct interaction across the board.
Steve Bunda: Correct.
Chris Parker: For sure. All right, so then how does CARM change the relationship between importers who are using a broker's bond? Where does either party win or lose here?
Steve Bunda: Well, Chris, under CARM, which is a mandatory requirement for all importers into Canada, and be it, resident or non-resident importers, all importers will require a bond registered with Canadian Customs CBSA. So no longer will an importer be allowed to use their customs broker's bonds. Some brokers, I would have to say would prefer having an importer use their bond as it's a source of revenue for that broker in assessing a disbursement fee for the use of their bonds. And in reality, this revenue stream could potentially go away, but we could possibly see a raise in rates for our services down the road.
Chris Parker: Let's switch over to the awareness aspect of this. We're talking about CARM for a reason today. It's probably because awareness is a little bit questionable right now regarding this topic. How would you describe the impact and effectiveness, I guess, of the information that's been rolled out, and would you say that importers are acting timely enough? I mean, October's still a ways away. Are people acting as expected?
Steve Bunda: To answer that question, Chris, October may be a few months away, but that date's going to be creeping up on us rather quickly. I can tell you to date, the registration on the CARM portal overall has been limited, and we need to see a drastic increase in the participants to assure we have a successful October rollout. And CBSA has had regular webinars, videos, and working groups. A decent outreach program for the importing community, but as in many cases, much of the onus has been on the service providers and customs brokers to also support and educate the importers.
Chris Parker: Where are the numbers right now in terms of signing on adoption registration?
Steve Bunda: Right now, looking around anywhere from 25 to, I would say 28,000 registrants on the portal.
Chris Parker: Out of how many?
Steve Bunda: Approximately 100,000 active importers.
Chris Parker: Gotcha. So just over a quarter, about a third.
Steve Bunda: Just over a quarter. And you know, you made the comment that it's still a way away, but it's going to go quickly. And probably one of the key elements of a potential delay here is the setup of the bonds. Not all importers have the bond and the security in place, and that's a process to get that done through a security company. And also, once that's received, CBSA has to register it in Ottawa. So that process takes some time, and I can tell you as we get closer and closer to that date, it's only going to get busier and busier because importers are going to step up and start working on these bonds. So, as I mentioned, it's critical that we get more importers on the program as soon as possible.
Chris Parker: Yeah, yeah. Actually, let's walk down the checklist here then. So, walk me through the process, I'm an importer, and I haven't registered yet with the CARM client portal. What do I need to be doing and why does it need to be right now? I mean, obviously, it's going to get busy later on as I try to get my ducks in a row, but yeah, walk me through the process here.
Steve Bunda: The actual application or registration process on the CARM client portal is, it's relatively straightforward, and the first step really is identifying who will be registering your company on the program. And by default, the person that does the registering will become what's known as a BAM, that's a business account manager. It's suggested that each company importer has two managers registered in the event that one's not available, and that's coming back from CBSA.
Chris Parker: I got to be honest with you, I mean, just for me, this sounds like a lot of work, is it?
The next step would be really to determine your sign-in preference, and this is essentially a government sign-in security key. There are two options. One is the GC key or Sign-in partner. Sign-in partner is where users authenticate themselves using their own banking credentials. But I would have to say with experience, the most common by far is registering for a GC Government Canada Key as a registration requirement.
And from there, Chris, as an importer, you have your business number, which is known as a BN9. You'll then need to provide Canada Border Services Agency with historical import transaction data from your past monthly statement of account SOA, also known as the affinity questions. And it really identifies as security questions to identify transaction number, total duties and taxes, and last payment of duties and taxes on the statement account. And from there, the importer would then delegate authority to your customs broker, allowing your broker to access the transactions on your behalf.
Steve Bunda: It does sound like a lot of work, but it really isn't because you have those details. And what CBSA has actually provided is a CARM client portal business registration checklist. So basically, a document where you gather this information that you need for proper registration, and then we would suggest you register onto the portal.
Chris Parker: Gotcha. So go through the checklist, and make sure you have all that. Then registering should take what within a day, I would imagine?
Steve Bunda: Yeah. Again, in registering, you could do it in 10 minutes, but the key is to have this information in advance of setting up the portal.
Chris Parker: So, as we get closer to October and CARM is rolled out, what are some of the challenges or struggles that you see with transitioning over to a post-CARM environment?
Steve Bunda: Our biggest concern, Chris, here, is the key component of CARM, and that's having security in place with Canadian Customs. All importers, as mentioned, must have the appropriate security in place with CBSA, and this will take time to facilitate. As I mentioned with the surety company, they have to issue the bonds, and then those bonds need to be processed through CBSA in Ottawa, and that timeline can take anywhere from six to eight weeks today.
Chris Parker: So, I'm going to change the math here a little bit. We've got seven months until October. You're saying six to eight weeks. That's about two months to get your surety, right?
And as more importers are being told that they have to get onto the program, it's going to be essentially a bottleneck with surety companies and also with CBSA in processing these requirements. So leaving it till the start date, I wouldn't suggest it. I would suggest that you start on this immediately and work with your service provider and customs broker to get the bond set up and get them registered with CBSA. That's where we're going to see the key time element, you know, can still register onto the program without the security in place. But again, for implementation in October this year, you will require registration on the program, and you're going to need a bond in place.
Steve Bunda: Okay.
Chris Parker: That's not a lot of time, especially anticipating a massive bottleneck of many other importers coming in and making these requests and trying to get their sureties.
Steve Bunda: Exactly. And we absolutely anticipate a bottleneck. And I can tell you we've been working with our clients for many months, years to get the security in place. But again, with the number of importers that have not registered, yeah, we'll see a bottleneck and delays.
Chris Parker: Let's look at the order end. So how does it affect physical freight moving across the border? What does October look like when not everyone has signed up for CARM?
Steve Bunda: We cannot have delays at the border, period. We can't have delays at the border. And CBSA is doing everything in its power to assure that we don't have these delays.
Chris Parker: So even if you don't see much of a delay then come October in terms of freight moving across the border, since that is a situation that we cannot have, we don't want to have that. Should importers still be concerned with how they're moving their goods to anticipate any kind of disruption?
Steve Bunda: The importer supply chain today should not really change under the CARM program because CARM only pertains to the collection of duties and taxes, and the actual release facilities provided by Canadian Customs do not change under the CARM program.
Chris Parker: All right. So, as we bring this episode to a close here, what kind of conversations should importers be having, either with their customs brokers or internally in order to be successful once CARM is implemented?
Steve Bunda: Most importantly, importers should reach out to their customs broker because their customs broker will provide support and guidance through the application process.
Chris Parker: If there was one last sentiment to leave people with that you want to make sure that they understand, what would that be?
But internally, importers have to take a look at their existing procedures in place today on how they make payment of the duties and taxes. Because that's, that's going to change under CARM here with, under CARM and the security bond in place, importers will now have the facility to remit the duties and taxes directly to the Canadian government. And that can be done in an electronic fashion.
Steve Bunda: Don't leave it too late. If you're not registered at this time, take the time to get registered, reach out to your broker, or your service provider for support, and if you don't have your bond in place at this time, this needs to be looked at immediately.
Chris Parker: Yeah. Plenty of resources out there. It's a matter of just getting out there, understanding what's needed, and just getting it done.
Steve Bunda: Absolutely. Absolutely.
Chris Parker: Thanks for listening to today's episode. If you've got questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.
