How imported electronic cigarettes are posing risks

Electronic vaporizing cigarettes imported from China are innovative products that fill a gap in demand from smokers looking for less-expensive alternatives to tobacco smoking. Imported e-cigarettes also pose significant financial risks to businesses that distribute these nicotine delivery systems to local consumers.

E-Cigarettes Failing Inspections at Customs

The sale of electronic cigarettes containing nicotine is illegal in Australia. Therefore, customs officials can seize any shipment of e-cigarettes into Australia.

In the United Kingdom, the use of e-cigarettes is legal and unrestricted by government authorities. This may explain why the UK already has a company that makes its own brand of e-cigarettes, while other jurisdictions including Canada and the United States are bogged down in bureaucratic red tape and government posturing.

A couple of years ago Health Canada issued a statement informing Canadians that “Persons importing, advertising or selling electronic cigarette products in Canada must stop doing so immediately.” In Canada, electronic smoking products are governed by the Food and Drugs Act and therefore require federal government approval.

Later, the United States Food and Drug Administration (FDA) blocked 17 shipments of imported electronic cigarettes due to concerns about abuse and addiction to e-cigarette nicotine delivery systems.

The FDA issued a press release then reporting that trace amounts of tobacco-specific carcinogens plus a chemical used in antifreeze were found in a study of 2 e-cigarette brands. The press release went on to discourage the use of electronic cigarettes and repeated concerns that electronic cigarettes lacked health warnings, particularly to younger adults.

Tariff Classifications for E-Cigarettes

Importers should always verify with customs officials the international tariff classification for products they propose to import. The tariff classification determines the amount of any customs duties payable for a shipment.

In the case of a new product like electronic cigarettes, most importers apply for an advance ruling for that tariff classification because the tariff classification can change as more facts about the innovation become known.

The Canada Border Services Agency has issued two different advanced rulings on the tariff classification for e-cigarettes. The latest considers e-cigarettes as an electric nicotine delivery system under tariff item 8543.70.00 which is tariff-free.

After the Health Canada warning about importing e-cigarettes, some critics have said that electronic cigarettes may one day be subject to the same 12.5% customs duty as currently imposed on regular cigarettes containing tobacco under tariff item 2402.20.00.

Low Quality Nicotine Delivery Systems

Importers should verify with their foreign suppliers that the e-cigarette products are quality-tested, and that product includes all certification that government authorities require. Because most e-cigarettes are marketed as reusable products, businesses should also investigate and compare the craftsmanship, safety features and durability of candidate electronic cigarette products to import.

High-quality electronic cigarette kits should also include a plain language manual that clearly explains best practices for using e-cigarettes to first-time consumers.

Before establishing a relationship with an e-cigarette exporter, experienced exporters often ask for reference letters from the prospective supplier’s existing clients.

E-Cigarette Dumping Can Mean Additional Tariff Duties

Some countries have been imposing extra duties on products from low-cost nations like China accused of dumping. Dumping describes a situation when many inexpensive products that a foreign government unfairly subsidizes put local businesses at a disadvantage because they cannot produce those same goods at a comparable price.

Importers should check with their local customs authorities to see whether e-cigarettes from China are currently marked for dumping penalties. The Canadian Border Services Agency publishes an online SIMA Monthly Index that identifies specific products and their countries of origin that are subject to anti-dumping tariff duties.

Electronic Cigarette Labeling and Packaging Requirements

Given that the FDA and Health Canada are studying electronic cigarettes and their health effects in detail, one might expect that government authorities will one day require specific wordings on e-cigarette labels and packages.

Even if not as onerous as the required wording on the packages of tobacco cigarettes, electronic cigarettes may be subject to expensive relabeling and repackaging at the importer’s expense.

Canadian importers should check with the Competition Bureau of Canada for labeling and packaging requirements well in advance of signing a purchase order with a Chinese e-cigarette supplier.