CARM Launch Delayed until October 2024.CBSA issued Customs Notice 24-17 on April 26th announcing the unsurprising delay to the CARM R2 launch until October of this year. An exact date will be forthcoming.
CBSA has publicly explained the delay as a cautionary approach to expected labour disruptions within the Public Service Alliance of Canada (PSAC) membership this summer. Citing reduced staffing available to handle the transition to the new official system of record.
The reality, however, is that CBSA was simply in no position to launch R2 successfully in May.
On-boarding of importers was slower than expected, and answers to critical questions posed by all sectors of the trade chain community were absent. Trade Chain Partners (TCPs) submitted a joint letter to the House of Commons Standing Committee on International Trade (CIIT) outlining their deep concerns over gaps in the CARM system, and highlighting the damage that would be caused by the inevitable problems that would occur upon launch. The committee agreed with the information provided and presented their report to the House requesting a delay to allow additional time for program review.
Ultimately, it was the loud, clear, and consistent warnings from TCPs of the real danger of launching an un-proven system with obvious faults that pushed CBSA into making the correct decision to delay the implementation of CARM R2. Wisely, CBSA have decided to launch R2 internally on May 13th to “Advance the Agency’s compliance and enforcement efforts.” This allows CBSA time to understand what works and what doesn’t, and to hopefully resolve most, if not all, issues before October.
While most TCP’s agree that a more modern and robust system is needed to replace the aged CADEX platform, it is questionable whether CARM is the correct answer. Revenue management and importer accountability are among the key reasons behind CARM, issues that were mentioned in the Auditor General’s report that began this modernization process years ago, but there will be unintended consequences with the new system.
Currently, some 300 Customs Brokers, collect and remit over $12 billion in duty and tax annually to the Government on behalf of over 180,000 importers. Under CARM R2 the responsibility to remit duty and tax falls to the importer, so CBSA will be required to reconcile the import accounts of 180,000 importers rather than 300 brokers of today. A tall order to be sure.
The collection of duty and tax for casual imports handled by a licensed customs broker also presents issues regarding joint liability. The release prior to payment (RPP) structure will put the onus on the individual importer rather than the broker, creating more administrative work for CBSA and brokers. The question of e-commerce imports handled by couriers has not been effectively addressed. And there are a myriad of additional concerns which need to be resolved prior to October if CARM is going to be successful. We remain hopeful that the necessary solutions will be found and implemented.
We will continue to monitor updates from CBSA as the new CARM R2 date nears, and we will communicate this information with our clients.
In the interim, please do not hesitate to contact our office and speak with one of our qualified brokers with any questions you may have.
CBSA issued Customs Notice 24-17 on April 26th announcing the unsurprising delay to the CARM R2 launch until October of this year. An exact date will be forthcoming.
CBSA has publicly explained the delay as a cautionary approach to expected labour disruptions within the Public Service Alliance of Canada (PSAC) membership this summer. Citing reduced staffing available to handle the transition to the new official system of record.
The reality, however, is that CBSA was simply in no position to launch R2 successfully in May.
On-boarding of importers was slower than expected, and answers to critical questions posed by all sectors of the trade chain community were absent. Trade Chain Partners (TCPs) submitted a joint letter to the House of Commons Standing Committee on International Trade (CIIT) outlining their deep concerns over gaps in the CARM system, and highlighting the damage that would be caused by the inevitable problems that would occur upon launch. The committee agreed with the information provided and presented their report to the House requesting a delay to allow additional time for program review.
Ultimately, it was the loud, clear, and consistent warnings from TCPs of the real danger of launching an un-proven system with obvious faults that pushed CBSA into making the correct decision to delay the implementation of CARM R2. Wisely, CBSA have decided to launch R2 internally on May 13th to “Advance the Agency’s compliance and enforcement efforts.” This allows CBSA time to understand what works and what doesn’t, and to hopefully resolve most, if not all, issues before October.
While most TCP’s agree that a more modern and robust system is needed to replace the aged CADEX platform, it is questionable whether CARM is the correct answer. Revenue management and importer accountability are among the key reasons behind CARM, issues that were mentioned in the Auditor General’s report that began this modernization process years ago, but there will be unintended consequences with the new system.
Currently, some 300 Customs Brokers, collect and remit over $12 billion in duty and tax annually to the Government on behalf of over 180,000 importers. Under CARM R2 the responsibility to remit duty and tax falls to the importer, so CBSA will be required to reconcile the import accounts of 180,000 importers rather than 300 brokers of today. A tall order to be sure.
The collection of duty and tax for casual imports handled by a licensed customs broker also presents issues regarding joint liability. The release prior to payment (RPP) structure will put the onus on the individual importer rather than the broker, creating more administrative work for CBSA and brokers. The question of e-commerce imports handled by couriers has not been effectively addressed. And there are a myriad of additional concerns which need to be resolved prior to October if CARM is going to be successful. We remain hopeful that the necessary solutions will be found and implemented.
We will continue to monitor updates from CBSA as the new CARM R2 date nears, and we will communicate this information with our clients.
In the interim, please do not hesitate to contact our office and speak with one of our qualified brokers with any questions you may have.
