Red Tape Directive Meets CARM Launch Day: What Actually Changes for Importers

The Directive Lands on CARM Launch Day

October 21, 2024, the Government of Canada released a new Cabinet Directive on Regulatory Competitiveness and Red Tape Reduction. Same day CARM Release 3 went live and the CAD replaced the B3. The timing is either ironic or deliberate—hard to say which.

The directive replaces the 2018 Cabinet Directive on Regulation and sets three headline commitments: a competitiveness assessment for all new regulatory proposals, a requirement to offset $2 of regulatory burden on business for every $1 introduced, and a mandate to review all regulations at least every 10 years.

If you’re managing an import program, the natural question is whether any of this touches customs and border regulations, or whether it’s aimed at other parts of the federal regulatory universe. Worth looking at both what the directive says and what actually drives compliance cost on the ground.

The $2-Out-for-$1-In Math

The offset rule is the most concrete part of the directive. For every dollar of new administrative burden a regulation imposes on business, the responsible department has to find two dollars of burden to cut elsewhere. The mechanics aren’t fully spelled out yet, but the intent is clear: net reduction over time.

The question for importers is scope. Customs and border regulations fall under CBSA, which operates under the Customs Act, the Special Import Measures Act, and a pile of Orders in Council and D-memoranda. Some of that is statute (Parliament), some is regulation (Governor in Council), some is CBSA administrative policy. The offset rule applies to regulations—the middle category. It doesn’t bind CBSA’s internal processing requirements or D-memo updates, which is where a lot of day-to-day friction lives.

CARM itself is a good test case. The CBSA portal requirements that came with CARM Release 3 include mandatory client registration, RPP bond posting, monthly Statement of Account reconciliation, and payment within two business days of the accounting date. Those aren’t regulation in the Governor-in-Council sense; they’re system design and administrative procedure. The offset rule probably doesn’t touch them.

That’s not a criticism of the directive. It’s just clarity on what levers it actually pulls.

The 10-Year Review Mandate

The review requirement is more interesting. Every regulation has to be reviewed at least once every 10 years to see if it’s still needed, whether it can be simplified, and whether the compliance cost is proportionate to the policy goal.

Customs has regulations that haven’t been meaningfully updated since the 1980s. The Accounting for Imported Goods and Payment of Duties Regulations (SOR/86-1062) were made in 1986 and have seen patchwork amendments but no full rewrite. Parts of the Customs Brokers Licensing Regulations date to 1986 as well. The Presentation of Persons (2003) Regulations are newer but still predate eManifest, ACI, and the entire CARM architecture.

If the 10-year review mandate actually runs, and if CBSA applies it seriously, there’s a case for consolidating some of the overlapping reporting requirements. Right now an importer or customs broker files a CAD (Commercial Accounting Declaration), maintains records for six years under the Customs Act, possibly files SIMA documentation if the goods are subject to antidumping or countervailing duties, and separately deals with CFIA import permits and Health Canada NOCs if the goods are regulated by another agency. The data CBSA asks for overlaps across all of it, but the forms don’t talk to each other.

A real review would ask whether all of those separate filings are necessary, or whether a single integrated declaration could carry the load. That would be a material reduction in compliance cost. Whether it happens is another question.

What Actually Drives Burden Right Now

Most of the compliance cost importers see comes from three sources: CBSA verification activity, AMPS penalties for paperwork errors, and the monthly CARM payment cycle.

CBSA origin verifications under CUSMA, CETA, and CPTPP have ramped up over the past two years. A verification request lands, you have 30 days to produce the supplier’s cost breakdown and origin worksheet, and if the documentation doesn’t satisfy the verification officer, the preference claim gets denied and you pay MFN duty retroactively. The administrative load is significant, especially if your supplier is outside Canada and doesn’t naturally keep records in the format CBSA expects. The verification process itself is CBSA policy, not regulation. The offset rule doesn’t apply.

AMPS penalties are another pressure point. A classification error on a CAD, an incorrect tariff treatment code, or a missing CFIA import permit reference can trigger a penalty ranging from $400 to $25,000 depending on the infraction tier and the importer’s compliance history. The penalty amounts are set by regulation (the Administrative Monetary Penalty System Regulations), so in theory the 10-year review could look at whether the tiers are proportionate. In practice, CBSA has been consistent that AMPS penalties are a compliance incentive, not a revenue tool, and the agency is unlikely to recommend scaling them back.

The CARM payment cycle is the new one. Under the old K84 system, most brokers paid CBSA monthly on the 24th of the following month. Under CARM, payment is due within two business days of the accounting date for importers without an RPP bond, or monthly via Statement of Account if you have the bond. The two-day window is tight, especially for importers who don’t have standing trade credit or daily treasury visibility. CARM compliance support has become a weekly call for a lot of import managers, not because the rules are unclear but because the cash-flow timing is new.

None of that is regulation in the sense the directive addresses. It’s system design, penalty policy, and verification procedure. The directive might create space for CBSA to rethink some of it, but it doesn’t require it.

Whether It Matters

The competitiveness assessment piece could be useful. If CBSA proposes a new certification requirement, a new pre-arrival data element for eManifest, or a new origin documentation format, the directive requires the agency to assess the impact on business competitiveness and consider whether there’s a less burdensome way to achieve the same policy outcome. That’s a gate that didn’t exist under the 2018 directive.

Whether the gate actually stops bad ideas depends on how rigorously Treasury Board Secretariat enforces the assessment requirement, and how much weight CBSA gives to importer feedback during the consultation period. The track record is mixed. The CARM design went through multiple consultation rounds, importers flagged the RPP bond math and the two-day payment window as problems, and both made it into the final release with minimal change.

The offset rule is harder to game out. If CBSA wants to add a new data field to the CAD or a new certificate requirement for duty relief programs, and the administrative cost to importers is quantified at $1 million annually, the agency has to find $2 million of burden to cut elsewhere. That could mean retiring an old reporting requirement, simplifying a form, or automating a manual process. It could also mean CBSA decides the new requirement isn’t worth the offset cost and drops it. Either way, it changes the incentive structure.

What to Watch

The directive is live as of October 21. The first test will be whether CBSA applies it to its own rulemaking, or whether the agency treats border regulations as a carve-out on national security or revenue protection grounds. The Customs Act gives CBSA wide authority to set terms and conditions for release and accounting, and the agency has historically interpreted that authority broadly.

If you’re running an import program, the practical watch item is whether CBSA’s D-memo updates and CARM portal changes start including a regulatory burden assessment and an offset calculation. If they do, that’s a signal the directive has teeth. If CBSA continues issuing updates the way it did pre-directive, the October 21 announcement is policy communications, not operational change.

Most import managers don’t have time to track federal regulatory policy. That’s fine. If the directive works, you’ll see it in the form of fewer CBSA paperwork requests, simpler origin certification formats, or a CARM portal that doesn’t require three clicks to see your Statement of Account. If it doesn’t work, you’ll see the same rulemaking pace you’ve seen for the past decade, and the directive will be one more Ottawa announcement that didn’t move the compliance needle.

If your CARM Statement of Account is running hot and the RPP bond math isn’t adding up the way you expected, that’s not a red tape question, that’s a broker filing and bond structuring question. We run those calls daily.

Source: CSCB