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Import/Export Controls

Canada restricts the import and export of certain goods by regulations enacted pur- suant to the Export and Import Permits Act. In particular, Canada restricts the export of specified products, primarily for security reasons, under the Export Control List. Through the Area Control List, Canada restricts exports to certain countries (namely, Myanmar [Burma] and Belarus). These controls are based on several international agreements to which both Canada and the U.S. are a party. Therefore, the controls are largely similar, though not identical.

There is also an Import Control List, which imposes restrictions on the importation of specified goods that primarily relate to certain agricultural and food products that are part of Canada’s agricultural supply-management system and goods made from endangered species.

To import or export goods that are subject to such controls, a permit authorizing the particular import or export must be obtained through the Department of Foreign Affairs and International Trade. Depending on the specific goods, it may be necessary to obtain additional permits from other government departments (e.g., from Natural Resources Canada, Health Canada, or Environment Canada).

In addition, in relation to exports of defense articles and services to Canada for end-use in Canada, the U.S. International Traffic in Arms Regulations (ITARs) that regulate export and licensing of certain defense articles and services from the United States, contain a limited exemption for a “Canadian-registered person” for which registration under the Canadian Defence Production Act is required.

Financial: The financial implications of non-compliance with the rules governing the importation of products could be substantial, including monetary fines to the company and/or the seizure of products. The financial impact of such fines and seizures, including the monetary value of the fines or products seized, expenses involved in resolving the issue and costs of supplying alternate products to the customer if required, could all impact the bottom line of the company.

Strategic: The strategic implications for a company that does not comply with these legal requirements is that the company runs the risk of financial detriment due to the fines or seizures, reputational harm if such non-compliance occurs frequently and becomes public knowledge, and long-term adverse effects on customer relation- ships if there are regular delays in supplying customers due to non-compliance with relevant legislation.

Consumer: From a consumer perspective, if a company repeatedly runs afoul of the legal requirements and this becomes known to customers, the customers may raise concerns as to the reliability of the product as well as the company. Over the long- term, this would be detrimental to the company, as it would damage customer relations and the company’s reputation in the industry.

Implications

Visa e-commerce cross-border handbook for U.S. retailers

Copyright 2010 Visa. All rights reserved.

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