Trade compliance verification
Priorities updatedFind out how the Canada Border Services Agency (CBSA) approaches the verification of commercial goods destined for Canada. Review the results of our ongoing efforts to ensure trade compliance.
About trade compliance
To be trade compliant, the importing community must meet all of the requirements governing the accounting of commercial goods imported into Canada, including, but not limited to:
- classifying their commercial goods under the appropriate tariff classification
- accurately declaring the origin and value of the goods, in accordance with legislative requirements
- paying the appropriate duties and taxes on the goods
The CBSA monitors the extent to which commercial goods are trade compliant by conducting targeted verifications and by issuing verification priorities.
Verification and compliance priorities
Targeted verification priorities are determined through a risk-based, evergreen process, meaning that new targets are added throughout the year. Verification priorities may also be carried over from previous years.
New compliance priorities
The CBSA has identified the following compliance priorities:
- Tariff rate quota and classification of supply managed goods
- Verifications on the classification of frozen desserts containing 5% of dairy products
- Tariff classification of gloves
- Third round of verifications on gloves classified under headings 39.26 and 42.03
- GST and excise duties and taxes
- GST exemption codes
- Vaping products subject to excise duties and taxes
- Import origin verifications under:
- Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
- Canada-United Kingdom Trade Continuity Agreement (CUKTCA)
- Duties Relief Program (DRP)
- Verifications of licensees importing supply managed goods
- Most-Favoured-Nation (MFN) tariff treatment withdrawn from Russia and Belarus
As the risk environment evolves, CBSA can change priorities at any time during the course of the year.
Tariff classification
The current verification priorities are:
Gloves Round 3 New
Harmonized System Number(s): Headings 39.26 and 42.03
Harmonized System Number(s): Headings 39.26 and 42.03
Risk identified: Imported goods could be incorrectly classified as gloves within Headings 39.26 and 42.03, instead of being properly classified within Chapter 61 or 62, and potentially be subject to higher duty rates up to 18%.
This verification priority was released in and is now complete. A second round of verifications was released in and it is also complete.
| Targeted companies (Rounds 1-2) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 49 | 49 | 40 | 82 | 2,617,772 | 68,900 | 2,686,672 |
A third round of verifications was released in . Results are not yet available.
The results of the first 2 rounds show that the goods that were found to be misclassified were properly re-classified under Chapters 39, 40, 42, 62 and 65 of the Customs Tariff.
Bags Round 3
Harmonized System Number(s): Heading 42.02
Harmonized System Number(s): Heading 42.02
Risk identified: Imported goods could be incorrectly classified as bags within Heading 42.02, instead of being properly classified elsewhere within the same heading, and potentially be subject to duty rates up to 11%.
This verification priority was released in and is now complete. A second round of verifications was released in and it is also complete.
| Targeted companies (Rounds 1-2) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 60 | 60 | 44 | 73 | 3,656,166 | 12,550 | 3,668,716 |
A third round of verifications was released in and the results to date are included in the following table.
| Targeted companies (Round 3) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 29 | 10 | 9 | 90 | 384,884 | 47,000 | 431,884 |
The results of the first 3 rounds show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Heading 42.02 of the Customs Tariff.
Spent fowl Round 3
Harmonized System Number(s): Heading 02.07, 16.01 and 16.02
Harmonized System Number(s): Heading 02.07, 16.01 and 16.02
Risk identified: Imported goods could be incorrectly classified as spent fowl within Headings 02.07, 16.01 and 16.02, instead of being properly classified under tariff items subject to tariff rate quotas (TRQs) within the same chapters, and potentially be subject to very high duty rates.
This verification priority was released in July 2017 and is now complete. A second round of verifications was released in May 2020 and it is also complete.
| Targeted companies (Rounds 1-2) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 120 | 120 | 46 | 38 | 250,308,409 | 211,950 | 250,520,359 |
A third round of verification was released in and the results to date are included in the following table.
| Targeted companies (Round 3) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 34 | 4 | 0 | 0 | 0 | 0 | 0 |
The results of the first 3 rounds show that most of the goods that were found to be misclassified were properly re-classified under another spent fowl tariff item or as broiler chicken under Chapter 2 of the Customs Tariff.
Freezers and other freezing equipment
Harmonized System Number(s): Heading 84.18
Harmonized System Number(s): Heading 84.18
Risk identified: Imported goods could be incorrectly classified as freezers and other freezing equipment under duty-free tariff items within Heading 84.18, instead of being properly classified elsewhere within the same heading and be subject to duty rates up to 8%.
This verification priority was released in and the results to date are included in the following table.
| Targeted companies (Round 1) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 24 | 12 | 9 | 75 | 351,262 | 1,500 | 352,762 |
The results of the first round show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Heading 84.18 of the Customs Tariff.
Washers and dryers
Harmonized System Number(s): Headings 84.50 and 84.51
Harmonized System Number(s): Headings 84.50 and 84.51
Risk identified: Imported goods could be incorrectly classified as washers and dryers under duty-free tariff items within Headings 84.50 and 84.51, instead of being properly classified elsewhere within the same headings and be subject to a duty rate of 8%.
This verification priority was released in 2023 and the results to date are included in the following table.
| Targeted companies (Round 1) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 10 | 6 | 2 | 33 | 147,967 | 1,000 | 148,967 |
The results of the first round show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Heading 84.50 of the Customs Tariff.
LED lamps Round 2
Harmonized System Number(s): Heading 85.39
Harmonized System Number(s): Heading 85.39
Risk identified: Imported goods could be incorrectly classified as light-emitting diode (LED) lamps under Heading 85.39, instead of being properly classified under Heading 94.05, and be subject to a duty rate of 7%.
This verification priority was released in , and a second round in , and the results to date are included in the following table.
| Targeted companies (Rounds 1-2) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 44 | 37 | 33 | 89 | 3,156,632 | 81,500 | 3,238,132 |
The results of the first two rounds show that most of the goods that were found to be misclassified were properly re-classified under Heading 94.05 of the Customs Tariff.
Furniture for non-domestic purposes Round 4
Harmonized System Number(s): Headings 94.01 and 94.03
Harmonized System Number(s): Headings 94.01 and 94.03
Headings 94.01 (Seats) and 94.03 (Other furniture and parts thereof) classify furniture for domestic purposes or other furniture for non-domestic purposes.
Risk identified: is that goods may be misclassified as furniture for non-domestic purposes, which is duty-free, instead of furniture for domestic purposes, which attracts a duty rate up to 9.5%.
This verification priority was released in and is now complete. A second round of verifications was released in and a third round in , and they are also complete.
| Targeted companies (Rounds 1-2-3) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 131 | 131 | 109 | 83 | 5,624,714 | 216,350 | 5,841,064 |
A fourth round of verifications was released in . The results to date are included in the following table.
| Targeted companies (Round 4) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty Assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 59 | 49 | 41 | 84 | 2,617,504 | 205,200 | 2,822,704 |
The results of the first 4 rounds show that most of the goods that were found to be misclassified were properly re-classified as furniture for domestic purposes.
Bicycle parts Round 3
Harmonized System Number(s): Heading 87.14
Harmonized System Number(s): Heading 87.14
Risk identified: Bicycle related goods could be incorrectly classified within Heading 87.14, instead of being properly classified elsewhere within the same chapter, and potentially be subject to various duty rates up to 13%.
This verification priority was released in and is now complete. A second round of verifications was released in and is also complete.
| Targeted companies (Rounds 1-2) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 104 | 104 | 96 | 92 | 875,113 | 127,375 | 1,002,488 |
A third round of verifications was released in and the results to date are included in the following table
| Targeted companies (Round 3) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 17 | 14 | 14 | 100 | 271,743 | 35,100 | 306,843 |
The results of the first 3 rounds show that the goods that were found to be misclassified were properly re-classified under many different Chapters, such as 40, 62, 73, 85, 87, 90 and many more, of the Customs Tariff.
Indicator panels and light-emitting diodes (LED)
Harmonized System Number(s): Headings 85.31 and 85.41
Harmonized System Number(s): Headings 85.31 and 85.41
Risk identified: Imported goods could be incorrectly classified as indicator panels or light-emitting diodes (LED) under Headings 85.31 and 85.41, instead of being properly classified under Headings 85.28 or 94.05, and be subject to duty rates up to 7%.
This verification priority was released in and the results to date are included in the following table.
| Targeted companies (Round 1) | Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 14 | 10 | 9 | 90 | 1,002,694 | 21,000 | 1,023,694 |
The results of the first round show that the goods that were found to be misclassified were properly re-classified within Heading 94.05 of the Customs Tariff.
Disposable and protective gloves Round 5
Harmonized System Number(s): Subheadings 3926.20 and 4015.19
Harmonized System Number(s): Subheadings 3926.20 and 4015.19
Risk identified: Disposable and protective gloves, which are duty-free if the gloves qualify for specific end-uses, may be properly classified under tariff items 3926.20.91 or 4015.19.90, which attract a duty rate of 6.5% and 15.5% respectively.
This verification priority was released in and is now complete.
A second round of verifications was released in , a third one in , and a fourth one in , and they are also complete.
| Targeted companies (Rounds 1-2-3-4) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 62 | 62 | 53 | 85 | 4,617,604 | 31,000 | 4,648,604 |
A fifth round of verifications was released in and the results to date are included in the following table.
| Targeted companies (Round 5) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 15 | 9 | 9 | 100 | 598,829 | 19,500 | 618,329 |
The results of the first 5 rounds show that the goods that were found to be misclassified were properly re-classified under tariff items 3926.20.91 and 4015.19.90, and under Headings 48.18, 62.10 and 63.07 of the Customs Tariff.
Valuation
Apparel Round 4
Harmonized System Number(s): Chapters 61 and 62
Harmonized System Number(s): Chapters 61 and 62
Risk identified: Given the high rates of duty associated with the apparel industry (Chapters 61 and 62), importers of apparel may not be in compliance with the valuation provisions of the Customs Act. The duty rates vary from 10% to 18%.
This verification priority was released in and is now complete. A second round of verifications was released in and a third round in , and they are also complete.
| Targeted companies (Rounds 1-2-3) |
Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 228 | 228 | 133 | 58 | 85,644,909 | 317,700 | 85,962,609 |
A fourth round of verifications was released in and the results to date are included in the following table.
| Targeted companies (Round 4) | Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 46 | 38 | 19 | 50 | 4,183,083 | 63,600 | 4,246,683 |
The results of the first 4 rounds show that many goods were found to be valued incorrectly (e.g., assists were not added to the price paid or payable).
Origin
Bedding and drapery Round 3
Harmonized System Number(s): Headings 63.01, 63.02 and 63.03
Harmonized System Number(s): Headings 63.01, 63.02 and 63.03
Risk identified: Manufacturers in the United States of America were using fabrics not produced in the former North American Free Trade Agreement (NAFTA) territories as an input for bedding and drapery (under Headings 63.01, 63.02 and 63.03), but were declaring the goods as "Made in USA" in order to qualify for NAFTA.
This verification priority was released in , and is now complete.
A second round of verifications was released in and is also complete.
| Targeted companies (Rounds 1-2) | Cases closed | Cases in error | Percentage (%) non-compliance | Duty assessed (dollars) | Penalties (dollars) | Total (dollars) |
|---|---|---|---|---|---|---|
| 37 | 37 | 18 | 49 | 1,900,812 | 69,475 | 1,970,287 |
A third round of verification was released in October 2023. It will focus on imports made under the new Canada-United States-Mexico Agreement (CUSMA), which was implemented in 2020. Results are not yet available.
The results of the 2 rounds confirmed that some of the products that were verified did not qualify under NAFTA because of the inputs used in their production.
CARM as a compliance tool
In addition to the priorities above, the CBSA will use the CARM (CBSA Assessment Revenue Management) system to validate duties and taxes and conduct compliance interventions to address areas of suspected non-compliance.
Other CBSA tools for trade compliance
The CBSA uses 3 additional compliance intervention tools to target various circumstances and risks of non-compliance. These tools do not replace trade compliance verifications; they complement them.
Each tool (letter or notice) requires a certain level of CBSA intervention, as described here:
- Trade advisory notice (TAN)
- This is a letter to the importer asking them to review a declaration when there is a potential for non-compliance. It includes guidance resources to help the importing community comply. No monetary assessment follows as a result of a trade advisory notice.
- Compliance validation letter (CVL)
- This is a letter to the importer asking for more information when the CBSA suspects an instance of non-compliance. Importers must send information to the CBSA within 30 days.
- Directed compliance letter (DCL)
- This is a letter to the importer accompanied by a monetary assessment. It addresses instances of known non-compliance.
As with trade compliance verifications, recourse provisions of the Customs Act apply to any resulting assessments.
Difference between compliance intervention tools and verifications
Traditional trade compliance verifications are not always an efficient way to identify and address instances of non-compliance.
Traditional verifications are:
- lengthy and labour-intensive
- they examine all importations over a period of time (normally 1 year)
- generally done well after the importations have occurred
- this can result in higher costs to industry, particularly when recurring non-compliance is confirmed
In contrast, the 3 trade compliance intervention tools:
- target specific import transactions
- promote voluntary compliance
- enable early correction of errors, and
- mitigate future costs of non-compliance where recurring importations repeat undetected errors
Trade compliance verifications will continue to be the CBSA's most comprehensive compliance tool. However, as part of its Trade Compliance Strategy, the CBSA is using compliance intervention tools to enhance the overall efficiency and effectiveness of its trade compliance regime.
Most-Favoured-Nation tariff treatment withdrawn from Russia and Belarus
Since , the Most-Favoured-Nation (MFN) tariff treatment no longer applies to goods imported into Canada that originate in Russia or Belarus.
This includes goods shipped:
- directly from Russia or Belarus
- from a third country
You must now account for these goods under the General Tariff rate of customs duty of 35%.
If a good is produced with inputs (materials, labour, etc.) from Russia or Belarus, at least 50% of the cost to produce the good must be incurred in one or more MFN beneficiary countries or Canada. This is required by the rule of origin respecting the MFN tariff.
It is a priority for the Government of Canada that goods originating from Russia or Belarus do not enter the Canadian economy under the MFN tariff treatment.
The list of goods currently being monitored and risk assessed includes, but is not limited to:
- products of iron or steel
- fertilizer
- petroleum
- non-ferrous metals
- tires
For more information:
Contact us
If you have any questions regarding this list, please send an email to the following address: cbsa.trci-erecio.asfc@cbsa-asfc.gc.ca
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