For many small U.S. business exporters, Canada is often the first port of call and a good place to begin exporting if not already doing so. Canada was the United States' largest goods export market in 2015. Each day, almost $1.8 billion in U.S. goods and services are exported to Canada. Canada is currently the U.S.’ second largest goods trading partner with $575 billion in total bilateral goods trade last year.
The geographic proximity of two of the world’s most open and prosperous economies combined with a highly skilled workforce and strong infrastructure also support a robust cross-border supply chain. This makes the marginal cost to expand a company’s sales into Canada much lower than markets more removed by distance and culture. Furthermore, according to the Office of the U.S. Trade Representative (USTR), the U.S. trading partnership with Canada is growing with exports to Canada from the U.S. increasing by 179 percent since 1993. Canada is a growth market on our doorstep.
Opportunity - A Two Way Street
The top categories of U.S. goods exports to Canada in 2015 were vehicles ($48 billion), machinery ($43 billion), electrical machinery ($25 billion), mineral fuels ($21 billion) and plastics ($13 billion). U.S. exports of services to Canada were an estimated $57.3 billion in 2015, 6.6 percent less than 2014, but 74.8 percent greater than 2005 levels and up roughly 237 percent from 1993.
Canada was also the United States' second largest supplier of goods imports in 2015. The third largest import category from Canada was agriculture, totaling $22 billion in 2015. Though Canada is the largest supplier of agricultural imports to the U.S., American agriculture also benefits from the strong trading relationship.
Canada is an ideal market for U.S. exporters for all of these reasons. Yet despite similarities between economies, culture and close geographic proximity, there are some differences of note between the two economies. Canada is officially bilingual. It is based on the metric system with different standards and regulations on products. More importantly, shipments to Canada cross an international border and are therefore subject to customs regulations. U.S. exporters to Canada need to be aware of customs clearances to ensure that the mandatory information requirements of the Canadian government are met.
For border clearance purposes, the Canadian Border Services Agency (SBSA) accepts either a commercial invoice or a Canada Customs Invoice. A commercial invoice may be used if the following conditions are met:
- the value for duty is not exceeding $2,500 Canadian Dollars (CAD)
- the value of Canadian goods being returned has been increased, but is not exceeding $2,500 CAD
- the goods qualify for unconditional duty-free entry (not including cases where entry is contingent on end use) regardless of the selling price. Goods subject to duty at specific times of the year cannot be considered unconditionally exempt; or
- the goods qualify for the benefit of classification under the Harmonized Tariff System USA, Chapter 9810
Canadian Customs Invoice (CCI)
If these conditions can’t be met, the CBSA requires a CCI for U.S. exports to Canada. Don’t take the chance of delaying your shipment at the border due to an incomplete or inaccurate CCI. Make sure these seven mandatory fields are completed.
- Date of Direct Shipment – used to obtain the exchange rate to convert duty to CAD.
- Country of Origin – helps determine application of fair trade agreement duties.
- Currency of Sale – used for conversion basis for field.
- Quantity – Customs will check the number of pieces declared versus the shipment.
- Value – fair market value of the goods, regardless of the sale, based on the six valuation methods, transaction value of the goods, transaction value of identical goods, transaction value of similar goods, deductive method, computed method or residual method.
- Weight – should match the carrier’s bill of lading weight.
- Purchaser/Importer of Record – purchasing party for purpose of identifying the responsible party for handling the Customs Clearance, duties and taxes owing on items being imported.
Financing Your Exports
According to the latest data available to the Department of Commerce, U.S. exports of goods and services to Canada supported an estimated 1.7 million jobs in 2014. If you want to learn about financing to grow your business with our friendly Northern neighbor, contact us today.