Brokers, Forwarders Say Launch of Canadian Customs System Could Cause Trade Problems

American, Canadian and Mexican customs brokers and freight forwarders are urging Canada to rethink its upcoming deployment of a new customs management system in two months, saying they’re concerned the country’s current approach could significantly disrupt trade.

The Canada Border Services Agency is preparing in May to launch its CBSA Assessment and Revenue Management (CARM) system, which will become the system of record for Canada’s customs accounting and revenue management processes for imports. The country is planning to deactivate its existing accounting and revenue management systems and immediately switch to the new system on May 13.

But the North American Customs Brokers Alliance said the Canadian government and traders aren’t prepared for this “big bang” approach. In a March 15 letter to CBSA, provided to us by the National Customs Brokers & Forwarders Association of America, the group said users have found “deficiencies” in the new CARM system “almost daily,” including in the “calculation of duties and taxes.”

“CBSA has indicated that these will not be remedied before CARM [can] go-live in May 2024,” said the alliance, which includes the NCBFAA, the Canadian Society of Customs Brokers, the Canadian International Freight Forwarders Association and the Confederación de Asociaciones de Agentes Aduanales de la República Mexicana. “The system is not sufficiently functional to become the sole system of record for customs accounting and revenue management at this time.”

They also said CARM has “low levels of importer registration,” and there is a “lack of clarity for importers and financial security providers about how much financial security they need, and when.” This is presenting “additional barriers to the successful implementation of CARM in May 2024.”

NCBFAA suggested CBSA instead deploy a “phased in approach” to the new CARM system, and give traders the option to voluntarily participate when it launches on May 13. Traders should then be required to switch over to CARM "over a period of 12-18 months,” the letter said.

“During this transition period, the CBSA should provide clear and unequivocal assurances to customs brokers, importers, and other trade chain partners about the application of administrative forbearance (relief of liability obligations) where transitional processes are put in place.”

A similar phased-in approach in the U.S. “caused fewer disruptions to trade during the ACS to ACE transition than if a ‘big bang’ approach had been executed,” the letter said, referring to the Automated Commercial System that CBP used before ACE replaced it. It said Canada can always delay certain phases if it runs into issues in testing. “Deadlines should be a moving target based on partnership and testing, not arbitrarily set.”

The groups warned of the dangers of implementing a customs management system that isn’t yet ready. They said Mexican customs brokers recently went through a “country-wide outage that led to complete border disruption” and no freight clearance for about 24 hours, which impacted perishable food shipments. That led to “loss of revenue to business,” the letter said.

“In the United States and Mexico, we are living the effects of poor implementation of key customs systems and know firsthand the adverse impacts on trade and the economy.”

The groups stressed that Canada can’t afford to launch a new management system “with key deficiencies,” saying it could “force manual processing and workarounds to keep trade flowing.” It wouldn’t only impact Canadian imports, the letter said, but also the “nations where goods originate.

"Canada’s trade problem will be an international trade problem, affecting all NACBA countries and beyond.”