On July 1, 2020, the United States-Mexico-Canada Agreement (USMCA) officially replaced the North American Free Trade Agreement (NAFTA) in an effort to tweak some parts of the agreement while also updating it to reflect a few things that weren’t issues when NAFTA was originally enacted in 1994. One thing that didn’t change, however, was the need for a Certificate of Origin. The NAFTA Certificate of Origin is no more, having been supplanted by the USMCA Certificate of Origin. You might be wondering, as someone who wants to do business across borders, how it all affects you.
The USMCA Certificate of Origin is a document containing specific information about many aspects of your shipment and are required for nearly any importing or exporting between Canada, Mexico and the United States. While it’s not an overly complicated thing, there are differences between the NAFTA and USMCA certificates, and general best practices.
The USMCA Certificate of Origin is a crucial part of shipping goods between the countries of Canada, Mexico and the United States. For the purposes of this article, we’re going to look at the specific relationship this import document has in relation to Canada and the United States — although much of this information can also be applied to Mexico as well.
This certificate is used for the primary purpo se of helping Canada or the United States make the determination on whether goods entering their respective countries qualify for a claim for preferential tariff treatment.
First of all, the USMCA Certification of Origin is a document that contains fields which must be fully and accurately completed. There are nine minimum data elements and the certificate is also accompanied by a statement. Points 1 through 4 are counted as five points by the U.S. Customs and Border Protection (CBP) agency because it is referred to as all information about those entities.
Again, there is no specific way that all of this information needs to be arranged on the certificate, it’s only mandated that it all be included. This document can be filed electronically, but it should also be included in a physical form with the commercial invoice with the actual shipment.
It’s also worthy of notation that there are various levels of preference criteria. If a good is made and assembled solely in Canada, the United States or Mexico, it will receive the highest level of preference, which will result in little to no tariffs assessed.
NAFTA was created with the intention of normalizing the trade relationship between the three member countries. It existed for 26 years before NAFTA was re-negotiated into USMCA. As expected, there have been some changes.
While the differences between the two Certificates of Origin are not a wide chasm, there are enough that it’s important to note the changes so your business can continue to thrive when exporting goods to Canada.
Now the producer, exporter or importer can be the one to complete the USMCA certificate. Before under NAFTA, the importer was not able to fill out this document.
The USMCA has also changed the format for the Certificate of Origin. With NAFTA, it was a requirement that all three countries used a uniform document format to prove they qualified for preferential treatment regarding tariffs. The USMCA, in contrast, must have the 9 data points asked for, but there is no must-have format denoted by the agreement.
Another way that the USMCA has improved upon its predecessor is by no longer requiring a wet signature on the Certificate of Origin. With the update, digital or electronic signatures will now be accepted.
In some cases, clarification was added to an aspect that was up for interpretation for each country. One such case involved how errors or discrepancies used to be handled under NAFTA, where there was no such provision on how these mistakes would be dealt with and was up to the discretion of each nation in the agreement. Now, under USMCA, it is clearly stated that Certificate of Origins should not be rejected due to minor errors and that the importer should be given a minimum of 5 business days to send a corrected certificate.
Finally, there have been several changes to the basis for which a Certificate of Origin is needed. This five-part list with several sub-points can be viewed on the CBP website.
While we outlined the differences of the two Certificates of Origin, there are two very important ways there were no changes. The 9 data elements mentioned in the previous section is a holdover from NAFTA to USMCA. Also, in regard to single or multiple shipments, the threshold value of $1,000 is unchanged.
While the Certification of Origin has changed somewhat, it’s also helpful to see what products see the biggest impact from the recent shift. One of the largest modifications affects the automobile industry. In order to pay zero tariffs on automobiles that cross any of the three countries’ borders, 75 percent of the materials used to manufacture the vehicles must be made in Canada, the U.S. or Mexico.
This is a change from NAFTA, where previously the percentage was 62.5. In the same sector, 40 to 45 percent of car parts are mandated to be produced by employees that make a minimum of $16 per hour.
Another product, this one from the agricultural sector, is the diary market. In the USMCA, America was able to negotiate that Canada give it more access to sell its milk-based goods in the Great White North.
This question was partially answered earlier, but the answer is conditionally yes. The reason that is conditional is because the USMCA Certificate of Origin exists for a highly specific purpose — which is when an exporter is trying to get his goods from one of the three participating countries into another and is attempting to prove that those products actually qualify for preferential tariffs. So the answer is yes in that case.
However, if for some reason, you are not claiming that your goods should receive special treatment in regard to tariffs, then a USMCA Certificate of Origin is not required as part of the process of clearing customs and moving your freight from one country to the next. This point was touched upon earlier, but if you do need the Certificate of Origin included to qualify for preferential tariff treatment, the certificate has to be with the commercial invoice.
In summary, not every shipment to Canada requires a certificate — only shipments where special consideration is given in regard to tariffs.
Previously addressed, the certificate of origin can be a document that you create, or can even be created on your behalf by a company you employ to help you with shipping through customs and borders.
Having said that, the U.S. CBP does actually provide a Certificate of Origin form template on their website. The document, which is downloadable as a PDF and can be viewed and edited in Adobe Acrobat Reader, is a good resource to use. This can be to follow a format that the CBP prefers the necessary information to be composed but the government organization states on the same weblink that it is not mandatory to compile the data in the specific fashion the template is laid out in.
This article also doesn’t suggest you organize the document any particular way, but since the CBP offers a template that can be filled out and electronically saved by an exporter, importer or other person of record, it might take some of the guesswork out of how to build the USMCA Certificate of Origin and show you how to successfully complete this step, at the bare minimum.
Still, it bears repeating you are in no way required to use the CBP’s template and, if you so choose, it doesn’t need to be used as a resource whatsoever.
With the expansion by the USMCA regarding their Certificate of Origin, there are now 3 parties who can take responsibility for submitting this document. This trio is any one of the following:
While any one of these 3 can complete and provide the document, in the most likely of any scenarios, the exporter or importer will predominantly assume this task on behalf of the manufacturer. This is really dictated by the reality of the supply chain — an importer or exporter could absolutely be working on behalf of the manufacturer, but for sizable or constantly repeated shipments, the importer or exporter would usually take the lead on compiling all the paperwork and documents associated with this endeavor.
So, in short, the same people who are allowed to actually create and sign the Certificate of Origin are the same ones who are able to take responsibility for providing it.
Now that a digital or electronic signature is permitted with the USMCA rather than the wet signature required under NAFTA, while also expanding to allow the importer to complete the Certificate of Origin, it’s gotten a whole lot easier to have any number of parties associated with the shipment to sign.
In fact, it’s now easy for the importer, exporter or even the manufacturer to electronically or digitally sign the certificate and then electronically submit it ahead of the shipment so that you’re set. So the most basic answer is any of those three can sign the certificate and it will really come down to what the individual parties who are part of the shipment agree on. In this case, the CBP or Canada Border Services Agency (CBSA) just want the certificate submitted with all the information and signed and the USMCA offers more options than NAFTA did in regard to the Certificate of Origin.
There are really very few changes from NAFTA to the USMCA on which specific goods qualify or are disallowed. So the easiest answer on a general level is almost any commodity is allowed to enter Canada from the United States.
While the individual country in question might have their own restrictions on how a particular good has to cross their border — shipping alcohol into Canada from the U.S. is a good example — it is not the USMCA that is actually placing those limitations. In fact, the way to get the most direct information is to look at the agreement yourself before you even begin the freight shipping process and make sure that anything you used to know about NAFTA is still valid after the rollover into the USMCA.
If you decide to employ a customs broker or another company to help you cross the border and get your goods shipped, they can easily help you get set up with a USMCA Certificate of Origin and also help you pinpoint which of your commodities could benefit from including one with your cross-border paperwork.
In essence, this would be a small item that the customs broker or import consultant could assist you with while giving you the bigger helping hand of their knowledge or actually being present at the U.S.-Canada border in order to deal with the CBP or CBSA
Truthfully though, if you really felt like you wanted the import consultant to help with the certificate, that could be done over the course of a 30 to 60-minute consulting session rather than a bigger investment of time or money.
Another important part of the USMCA Certificate of Origin to pay attention to is the blanket period. The blanket period lasts up to 1 year and covers multiple shipments of identical products shipped over a designated period of time. The start and end dates of these particular products must be listed on the certificate and once you are finished with that time period, you must submit a new Certificate of Origin.
Now that you’re fully up to speed on what a USMCA Certificate of Origin is and why it’s needed, consider partnering with R+L Global Logistics for all of your shipments going across both sides of the border between the U.S. and Canada. We can absolutely offer you fair-priced, expert help either importing or exporting goods and will make the process as seamless as possible.
No matter the type of goods — beef, medicine or even clothes — R+L Global Logistics excels at both domestic and international shipments for clients all over the world. We have agents well-versed in how to get truckloads into or out of Canada, and who know the relatively new USMCA inside and out so that you’ll never be caught flat-footed during the process. R+L Global Logistics also employs dedicated customs brokers who can simplify or even handle the hurdles many companies having their products shipped can encounter.
Yet, when you choose R+L Global Logistics, you’re not just getting a truckload and a rules expert. We also boast industry-leading customer service to assist you every step of the way and include real-time freight visibility so you always know where your freight is at a given moment. Any cross border shipping services can be rendered by us.
R+L Global can help you understand quickly if the goods you’re having shipped require a USMCA Certificate of Origin. To get started on importing to or exporting from Canada — or if you are just looking for a free quote — call us today at (855) 915-0573 to find out how we can make the difference for you right now.
Are you thinking about importing beef from Canada to sell in the United States? If so, then it’s important to be aware of how imports from Canada work — particularly beef products. Importing Canadian beef from farmers and ranchers in the country can be a difficult process with a variety of moving parts that will need to be navigated. That said, it is certainly not impossible to import Canadian beef from Canada and to do so legally. You could also see significant benefits from taking this step, including being able to offer your audience a product that they can not access elsewhere on the market.
Shipping beef from Canada is big business. To make it part of your business, you must make sure that you are using Government Agency Form CFIA/ACIA 5733. This document is filled out by the individual or commercial business that will be exporting the meat to you in the US. It requires information on the country of origin as well as the foreign establishment order.
The main difference between Canadian beef and American beef is the grading. It might be true to say that Canadian beef is generally of a higher quality than beef from the United States. This is because the Canadian grading system relies on higher standards.
The main difference between Canadian Beef and American beef is with the marbling. One study found that there is a massive degree of association of 85% after sampling the marbling standards of over 4,6000 different carcasses. Since this study which took place in 1994, there have been significant shifts with Canada opting for the official USDA marbling photographs. This includes slight, small and slightly abundant.
Another key difference between the two types of meat is that the grading system in Canada is hierarchical. This means that minimum standards must be met over a range of different variables including fat color, muscles and general color. In contrast, America has a weighted system. This means that one area can have more of an impact than another. As such, a higher level for one point can compensate for a deficiency in another. There are no quality attribute offsets in the Canadian grading system.
The prime grade for Canada is virtually identical to the option for the U.S. with the exception that Canada does not allow for dark colored meat to be used. It will also not allow for older animals to be used, for yellow fat to be apparent or for any off-quality characteristics. This is the same for all other grades of Canadian beef with the system constantly favoring a higher level of quality by all standards.
There are many reasons why you might favor Canadian beef beyond the obvious and apparent benefits that it provides over products that you can purchase from the U.S. Even looking at the grading system, it’s clear that the beef produced in Canada is developed with a firm commitment to quality that is not typically rivaled.
Indeed, Canada Beef recently ran its own campaign to market why their products are a great choice. Some of the reasons mentioned included the commitment of farmers and ranchers to uphold a certain level of standards and values. This includes good old fashioned hard work, as well as resourcefulness. The brand also suggested that Canadian beef is a cut above the rest because there is a clear understanding of the value it provides to Canada. This makes farmers keen to ensure that it is the best option available.
Furthermore, Canada has a commitment to international regulations, ensuring that the meat products that they ship do meet the right levels of standards to ensure safe quality. The Canadian Cattlemen Market Development Council has also developed an industry-wide strategy that is understood globally, titled the Canadian Beef Advantage. The main purpose of this brand is to ensure that farmers can expand into other areas of the market. Some of the commitments part of ensuring that this does happen includes:
These are just some of the commitments that have been made to guarantee that there are absolutely no doubts about the high level of quality you gain when you choose beef from Canada.
You might be wondering where the beef comes from Canada. Most of Canada’s beef comes from Alberta, as 41.6% of the country’s cattle and calves come from this province. Additionally, 20.7% of Canada’s cattle and calves come from Saskatchewan; 13% from Ontario; 9% from Quebec; 8.8% from Manitoba and 7% from other provinces.
Canada’s beef market is impressive with the red meat industry tallying a total $21.1 billion through 2018. This includes both fresh and frozen meat.
This should give you an idea of just how important this industry is to Canada. That’s also why there are farms all across the country. Beef farming often takes place on farms that are based on the production of wheat as the cattle are fed a high grain diet.
Producers delivering meat from Canada do live up to the CBA promise so you can ensure that no matter where you purchase your beef from you will be delivering what your customers want.
One of the key differences between beef in Canada and US beef is certainly the grades. It’s important to understand the different grades and what they refer to. As you are about to discover, beef from Canada is substantially different, particularly as you get to the bottom levels. There are four main grades of beef in Canada. These are:
The vital difference here is that even the lowest A grade does not permit dark meat or yellow fat. The same cannot be said for beef that may be purchased and produced in the US. The grades are defined by:
Prime grade beef has marbling that is slightly abundant, is youthful and bright red in color. The meat texture must be firm and yellow fat is certainly not permitted.
The A grade beef is trace, youthful, bright red only with good muscling.
This is substantially different from U.S. grades with a standard grade that is practically devoid of marbling, has an A & B maturity class and is permitted to have dark-cutters as well as yellow fat. There is also no minimum requirement for cutting and the texture of the meat can be soft.
The marbling standards for Canada were changed in 1996. This was to ensure that it mirrored the copywriting standards for the U.S.
Something that you are going to need to consider is Canadian beef suppliers. You need to be able to trust that all of your beef is being shipped legally which is why you need to use a trusted supplier. If this is your first time having beef from Canada shipped, then you are going to have to use reviews of different suppliers to decide which supplier to ultimately use. There is going to be a variety to choose from, so you are going to have to go through them all individually, systematically working out which has the most benefits for the needs that you have.
For example, Canadian American Boxed Meat, Northern Meat Service and Canadian Rangeland Bison & Elk are the first hits if you type it into Google. Keep in mind that this doesn’t mean that any of these companies are who you will end up using. You are going to have to look further than the first three results to figure out which supplier will be best for you.
Like we said above, making sure that all of your beef is being shipped legally is vital. You are going to have to get in touch with the supplier, ask them to prove to you that they follow all of the international and shipping regulations before you can consider using them for your business.
When you are shipping beef, it is important to be aware of the cold chain. The transportation of beef from Canada is completely dependent on the cold chain. This is due to the fact that once it has been slaughtered, meat has a highly limited storage life. In America, beef will often be collected while the animals are alive and transported around. However, when you are importing beef from Canada, it’s quite common for the beef to be shipped frozen.
Some of the things that you are going to need to consider before you ship beef in bulk from Canada are as follows:
Once you have taken all of these points into consideration, you can begin to work out whether shipping in bulk is going to be right for you. Keep in mind that shipping in bulk is only going to be a good idea if you are gaining something from this like a price reduction and if you have the demand. If this is not the case you are going to have beef sitting there with nowhere to go.
When you are shipping beef, it is important to be aware of the cold chain. The transportation of beef from Canada is completely dependant on the cold chain. This is due to the fact that once it has been slaughtered, meat has a highly limited storage life. In America, beef will often be collected while the animals are alive and transported around. However, when you are importing beef from Canada, it’s quite common for the beef to be shipped frozen.
There are a variety of different cold chain solutions to ensure that the standards of meat are maintained during the shipping process. For instance, insulated rolling containers can be used. Here, the temperatures of the meat are maintained for a number of hours using dry ice storage within a drawer. These can be added to a typical truck to ensure that they can be distributed and transported the right way. When they reach the store or the supplier, these are then unloaded into a refrigerator. As such, the integrity of the cold chain is effectively maintained.
If the integrity of the cold chain is impacted, this is going to lead to issues with the quality of the meat. Indeed, this will typically lead to it not being safe for consumption. This can end up costing business owners a fortune.
It is vital that all of the beef being shipped is packed correctly, otherwise, it might not be let through on the border. For this reason, it is important that you familiarize yourself with the correct packaging methods and instructions so that you know what to expect. For example, all of the meat must be stored in boxes to ensure that it is not exposed during transit. A lot of shipping companies use dry ice to keep the meat fresh, but cold packs can also be used. As long as the meat stays refrigerated and at the correct temperature, this is acceptable
Some of the factors that you need to know about packing meat that is being shipped are as follows:
Not only is it important that you know how to package meat for customs, but other than this you need to know how to do this so that the meat does not go off. Whether it is a long shipping journey or a short one, you don’t want the meat to spoil in the meantime. That is why you need to vacuum pack it and make sure that there is some kind of cooling agent in the box with the meat.
We have mentioned ensuring that the meat is correctly packaged for customs, but to do this you need to do your research into the specific guidelines of the country the meat is being shipped from Canada. As different countries have different regulations, it is important that you don’t assume a one shoe fits all approach. This means that you should always be checking that the regulations and rules have not changed since you last had your supplier ship meat to you. It might sound like a tedious task, but it is better to be safe and check that you are following the rules instead of having your package turned away at the border.
Check with your supplier that they know what they are doing in terms of packaging before you allow them to ship your beef order to you.
The Canadian Free Trade Agreement is an intergovernmental agreement that was signed by Canadian ministers and came into effect in July of 2017. The aim of this agreement was to reduce the barriers to the free movement of goods, people and services within Canada to establish an open and stable domestic market. Canada does have a law that allows them to feed growth hormones to the cows that are going to be used for meat, but only if they are not producing dairy products. While Canada trades with a large portion of the world, in July 2019, China suspended the trading of beef from Canada due to having found a banned feed contained in the beef.
At the moment, Canada currently has Free Trade Agreements with more than 40 countries, allowing them to trade beef with these countries including places such as South Korea. These Trade Agreements are at varying degrees of implementation but all are proving successful.
Recently, Canada and the EU came to an agreement where they would remove all of the custom duties for goods that originated inside either Canada or the EU. This process could come into force gradually over the next 3, 5 or 7 years, but by the time it is in full effect, 99% of all Canadian and EU tariffs will be removed. This will be done under the Comprehensive Economic Trade Agreement (CETA), where you will be given a category to understand where you stand on current tariffs.
In 2015, the U.S. eliminated the COOL legislation for both beef and pork. It was established that COOL had concluded which was considered a substantial victory for Canada’s cattle industry. It ensured that country of origin labeling was no longer required. This ended an eight-year legal battle between the Canadian Cattlemen’s Association when the organization claimed that the law violated US international trade obligations. The benefit of the COOL repeal ensures that there is now no longer a need to segregate imported cattle in the US.
There are regulations in place that you must abide by when you are shipping meat from the U.S. into Canada. To understand this, you should first start by exploring what is classified as an illegible or eligible product.
For instance, mechanically separated beef is classified as an ineligible product. This means that it is prohibited by the United States Department of Agriculture (USDA) - Food Safety and Inspection Service.
Imported meat products into Canada are also not eligible for being exported to the U.S. The exception to this rule would be if they are processed as Safe Food for Canadian Regulations. This does include products that have been repackaged and then put into Canadian containers.
The only products that will be accepted are those that have been labeled by the USDA as part of a trans-shipment. This means that they are covered in bond by an original certificate of origin, which shows the name and the address of the consignee who must be located in the US.
It’s worth noting that while these regulations are up to date right now they are constantly changing. For instance, in the future, there could be a reason to believe that beef from Canada is not safe. If this does occur, then regulations will change to reflect this new development and ensure that the population of the US is protected. Safety is the reason for all regulations on meat products entering the US.
It’s also important to note that the majority of food that is imported from Canada does fall under the jurisdiction of the USDA’s Food Safety and Inspection Service. This regulates the import of any meat from common animals and that does include beef which is referred to as an amenable species. Even products with small amounts of meat from amenable species such as beef need to originate from a source that has been approved by the FDA.
It is also important to make sure that issues with particular dangers are met and dealt with. For instance, in the case of beef from Canada, it is typically accepted that there is a potential danger of E. coli 0157:H7 if the meat is being imported raw. As such, the hazard needs to be addressed through the HACCP plan.
There are individual standards and regulations for every type of beef that you might be considering importing. As such, it’s important to be aware of the potential issues here and make sure that you are complying with the correct standards.
It’s true to say that while there have been some significant improvements in trading beef, there have also been some issues and roadblocks. International trade rules have helped break down the barriers such as tariff rate quotas and more typical tariffs. However, there are technical trade barriers that continue to cause problems in the international trade market.
Technical trade barriers typically refer to technical standards and regulations that companies need to conform too. The aim is to make sure that policy goals are met. This could be related to the health of the environment, the animals or the safety of the general public. These can have an unintended impact on the level of trade that can be completed on an international level. Canada does have an obligation to ensure that issues with technical regulations to not restrict levels of global trade, however, it’s fair to say that this isn’t always possible.
However, Canada will typically work to help encourage that countries do not limit levels of trade and instead maintain a predictable as well as transparent trade environment. A few of the issues impacting this currently include:
The pesticide and veterinary drug maximum residues limit are the total level of residues that can be expected to remain in agricultural products like beef. This is to ensure that they are not going to have an impact on human health.
Genetically modified (GM) products are a crucial element of the agricultural and food sector of Canada. So, steps are being taken to ensure that challenges within the regulatory approach to GM products are being effectively addressed. This includes working with trading standards.
Furthermore, Agricultural and Agri-Food Canada are also exploring the issues with Low-Level Presence. This is being used to ensure that transparency and trade predictability can be greatly increased.
There has been a significant impact on the economy due to beef being imported from Canada. This has been felt since the introduction of the North American Free Trade Agreement (NAFTA) that was established in 1994. Indeed, a study run in 2001, suggested that Canada accounted for $49.1 billion in the World Agricultural trade. This includes both exports and imports.
However, NAFTA has since been replaced by the United States-Mexico-Canada Agreement (USMCA). Overall, NAFTA and USMCA are roughly the same in regard to the beef industry. American farmers who export their products to Canada and Mexico might have hoped that the agreement benefitted them more, but the rules are the same as NAFTA as far as Canadian cattle producers and/or the meat industry exporting their products to the U.S.
It’s certainly true to say that agricultural trade between Canada and the U.S. has grown substantially since the implementation of NAFTA and continuation through the USMCA. Indeed, it is almost as significant in the growth of trade between that of America and Mexico.
Indeed, in 2002, the value of the U.S.-Canada beef trade was valued at a staggering $2.76 billion. According to the research, imports from Canada to the U.S. contributed to over 44% of this number. Slaughtered cattle from Canada also accounted for another 40%. Indeed, the percentage of cattle being imported from the U.S. to Canada are significantly lower, leading to a trade disparity. It’s also true to say that most imports of beef into the US do also come from Canada.
It’s true to say that in the future there is sure to be significant changes here. Trade in beef between Canada and the U.S. could become more liberal or there could be barriers put in place blocking it. This will depend on the growing concerns about the safety of imported meat, particularly beef.
If you are exploring the option of shipping beef from Canada, you do need to consider the cost. This is going to impact your bottom line and the revenue stream of your business. It’s true to say that there are a number of variables that you do need to take into account when you are choosing to ship beef from Canada.
For instance, you need to think about whether you are going to import the beef by land or sea. At the same time, you must make sure that the company you choose is able to match the high levels of standards that you require. There is no point in saving on costs if it is going to impact the quality of your products. The price will be impacted by:
It’s worth making sure that you are exploring various different shipping and logistics companies that offer this service before settling on the right one for your needs. You need to make sure that you are exploring reviews and evidence that a company can offer the right service at the right price. If you fail to do this, you could find that the beef is not fit for consumption once it reaches U.S. ports of entry. Generally speaking, the costs can be quite competitive so you are sure to find an option that is going to match your budget and provide an efficient solution that you require.
You now have a better understanding of some of the issues and factors that you need to consider when shipping beef from Canada. We can also help you ship items like machinery, furniture and even Canadian vegetables. At R+L Global Logistics we are thrilled to say that we can provide the solutions that you need. We will make sure that you are able to get your beef fast and provide you with a high standard of service. We are passionate about delivering an efficient and effective solution that our clients deserve when shipping beef from Canada.
No matter whether your beef is crossing the border in Sweet Grass, MT, or Detroit, MI, R+L Global Logistics has the services you need to get your shipment on time and intact. With more than 99% on-time delivery, count on us to get it there.
Are you interested in shipping beef from Canada? As your strategic logistics partner, we are confident that we can match any level of demand and deliver the service that you require. Our aim is to be the ultimate partner for all your beef shipping needs. Call R+L Global Logistics today at 855-915-0573 or contact us online today.
With the amount of business available in Canada, it might come to pass that you need a freight forwarding service to truly maximize your presence in the country. But maybe it’s a bit of a mystery to what freight forwarders in Canada do and also how to find the right one to be an outstanding partner to help you reach your goals.
Freight forwarders in Canada are a single person or company that bears responsibility for getting your goods from Point A to Point B. That could be across the Canadian border, or even province to province. You’ll need an efficient, straightforward and secure shipping service to be processed by the Canada Border Services Agency (CBSA).
When you’re sending a shipment to Canada, arranging customs clearance and making sure your goods get across the border could be the trickiest part of the process. Like all countries, Canada has numerous rules and regulations regarding what can be imported. For exporters and importers, adhering to the relevant regulations and providing the appropriate documentation is extremely important.
For example, you’ll need to ensure that your goods are properly classified, in accordance with the Canadian tariffs. In addition, you’ll need to calculate the tax and duty which may need to be paid when importing your shipment to Canada. Finally, you may want to apply for an exemption, if you believe you are entitled to one. Of course, this involves submitting additional paperwork and providing the relevant evidence to support your application.
When you’re sending a shipment to Canada from anywhere else in North America or from overseas, you may need to include the following documentation:
However, not all shipments require the same documentation. A CCI is only usually required if the value of the goods exceeds CDN $1,600, for example. Similarly, a USMCA certificate of origin applies to goods made in North America (Canada, U.S. or Mexico). While goods made elsewhere may also require a certificate of origin, a USMCA certificate can enable you to avoid paying duty on your shipment.
Of course, some goods are subject to additional restrictions too. You’ll need to determine whether your proposed shipment requires any additional documentation or exemptions. With varying rules and regulations being applicable and subject to change, planning a shipment and ensuring you’ve submitted the correct documentation can be tricky.
No matter what type of freight services you use, getting your shipment across the border is critical. If you submit the wrong paperwork or you’ve completed your documentation incorrectly, your shipment will be held and/or seized. In addition to this, you could face various fines or charges if you have failed to submit the appropriate documents.
Due to the potential complications at the border, it can be advantageous to use customs brokerage services and freight forwarder. With an in-depth understanding of what the cross-border checks involve, a dedicated customs broker can ensure you submit the correct documentation, with the relevant evidence, to the appropriate authorities.
Indeed, when you’re looking for freight forwarders in Canada, you may want to choose a firm that offers in-house customs brokerage services. This can help to minimize the costs of moving freight across the border and can also ensure that your shipment isn’t subject to unnecessary delays.
The Customs Tariff is used to categorize goods and manage importation and exportation around the world. When sending freight to Canada, you’ll need to classify the goods you’re shipping in accordance with the Tariff. Once you have correctly classified the goods, you will be able to identify the classification number.
The classification number is a 10-digit number, sometimes referred to as a HS code. Based on
the World Customs Organization’s Harmonized Commodity Description and Coding System, this coding format ensures that goods can be properly regulated and safely transported. The codes are called HS codes.
However, there are strict guidelines when it comes to classifying goods and it isn’t always easy to determine which classification a shipment falls under. For example, computer equipment may have differing HS codes depending on whether it’s classified as portable equipment or not. Similarly, footwear may require the use of different HS codes depending on what materials are used to construct it. Leather shoes typically have a different code to rubber or plastic footwear, for example.
Used to facilitate international trade, the classification system is strictly applied, and errors can result in delayed shipments, fines and sanctions. Due to this, most importers and exporters rely on the services of a customs broker. With experience of the system and knowledge of the latest modifications to the Customs Tariff, a customs broker can correctly classify your goods and ensure you don’t suffer delays or increased costs due to incorrect classification documents.
Before choosing freight forwarders in Canada, it’s important to assess their shipping rates and pricing structures. While some freight companies offer seemingly low rates, these can swiftly be inflated when hidden charges are added to your final invoice.
When comparing transportation services and logistics solutions, transparent pricing is the key to a successful business partnership. Providing you can access up-to-date pricing information for a door to door shipping service, you can compile your accounts accurately and determine your own company’s costs.
Fortunately, there are freight forwarders in Canada who offer transparent pricing and exemplary service. As well as providing information regarding the fastest shipping services, for example, you’ll want to know about more budget-friendly options too.
While air freight services — including expedited air cargo — may be ideal for express shipments, your freight forwarding company should be happy to tell you about alternative options too. When you don’t need to ship goods urgently, for example, ocean freight can be a cheaper way to transport your goods across the border.
Selecting the right freight forwarders may seem tricky at first, but you’ll soon identify the companies who offer a genuine, transparent and cost-effective service. Comparison shop with shipping companies prior to booking freight services and be sure to find out exactly what their advertised pricing includes.
Many people assume that freight forwarders in Canada only deal with the transportation and shipping of goods. However, there are a range of additional services that can simplify your shipping processes. In fact, if you find the right freight forwarding firm, they can manage your entire global supply chain.
With warehousing and logistics services, for example, you can rely on your freight forwarder to manage your inventory and dispatch goods to your customers. Essentially streamlining the supply chain can greatly reduce your costs and facilitate swift dispatch and international shipping.
Of course, you’ll need to find a freight forwarding company that can store your goods appropriately. When you’re considering which freight forwarders in Canada can manage your warehousing and logistics, remember to consider the following:
All of these areas are key points to assess, as each can have a significant impact on the success of your shipping. Warehouses should be strategically located close to key distribution routes and shipping ports, for example. This minimizes the time and cost of transporting goods to a major dispatch point and ensures products reach their destination as quickly as possible.
Similarly, you’ll want to choose freight forwarders in Canada who use advanced warehouse management systems. With an integrated WMS, your goods can be monitored, accessed and inventoried in real-time. This facilitates the appropriate management of stock, increases picking accuracy and minimizes delays.
As well as being able to track your goods through the warehousing process, you’ll want to be able to monitor items as they’re being shipped too. Whether you’re moving tons of freight or shipping a small parcel to a customer, it’s vital you can track its movements in real-time.
The easiest and most effective option when it comes to shipment tracking is to choose a firm that provides integrated warehouse and freight tracking. When both systems work in conjunction with one another, you can track goods seamlessly.
Furthermore, you’ll want to ensure your chosen freight forwarders in Canada offer access to real-time information. Any delay in the data you’re able to access means you aren’t getting the latest information. By insisting on access to real-time data, you can determine exactly where your goods are at any given time.
As well as enhancing security, this enables you to provide a high level of customer service to your own customers. If a customer queries a shipment, for example, you’ll be able to access specific, up-to-date information regarding their order, without the need to defer to your freight forwarders directly.
When freight forwarders are moving your goods or managing your supply chain, you’ll want to have a reliable and consistent line of communication with them. In addition to having a dedicated account manager or point of contact, having access to an electronic system can make tracking far simpler.
With electronic data interchange (EDI), for example, you can follow your goods as they move through the shipping process. EDI provides real-time transaction information at various points throughout the logistics journey, such as:
However, standardized data may not provide all of the information you really need. When discussing your requirements with freight forwarders in Canada, be sure to ask whether they can customize your EDI, based on your specific requirements. This will give you the opportunity to state what type of information you want to receive and what format you want to receive it in.
With EDI in place, you effectively remain in constant contact with your freight forwarding firm. Having the option to track goods at any point means you can access the data you need, without delays or limitations.
Of course, having a reliable team to provide further information when it’s required is also beneficial. While digital interfaces have revolutionized the logistics and transport industry, maintaining contact with a dedicated account or shipping manager is also essential.
When you’re shipping goods to Canada with a freight forwarder, you’ll want to access the best shipping rates possible. With reduced transportation costs, you can pass these savings on to your own customers and increase your profits too.
Of course, not all freight forwarders offer the same rates, so it’s important to do your research before you choose your transport and logistics partners. Generally, the cost of freight will depend on various factors, including:
Choosing a freight forwarding company that offers a range of transport services is one way to ensure low freight rates, for example. When you don’t need to ship goods via express services, slower shipping options can reduce your costs. You may find that ocean freight services are more budget-friendly than air charters, for example.
Similarly, if goods require specialist services, such as temperature-controlled transportation or additional security, you may expect to see this reflected in the cost of freight services.
However, the best freight forwarders in Canada will have the ability to negotiate when it comes to shipping rates. If you plan to import goods into Canada on a regular basis, for example, a freight forwarding company may be able to offer you reduced shipping rates.
Before selecting a freight forwarding company, be sure to discuss their pricing structure in detail and ask whether or not they’re prepared to negotiate. If they say no, find a company that will!
Organizing freight services from the United States to Canada may not seem too complicated, but it can be trickier than you think. While a freight forwarder isn’t, technically, required for shipments traveling to Canada from the U.S., using a freight forwarding company can save you time, money and stress.
The United States-Mexico-Canada Agreement (USMCA) ensures good relations between the U.S., Canada, and Mexico when it comes to transporting goods. However, shipping goods from the U.S. to Canada is still considered to be an international shipment. Due to this, you will still need to complete the relevant paperwork and ensure your shipments meet the relevant standards at customs.
This means you will still need to categorize your goods correctly according to the Customs Tariff, identify the relevant documentation to be sent with your shipments, complete the paperwork correctly and in full, as well as identify the fastest way to submit this type of information to the relevant authorities.
Of course, one shipment may contain a variety of different goods. If so, you’ll need to complete this paperwork for every different product classification and ensure that the relevant documentation accompanies the shipment throughout its journey.
Due to the complexities involved with international freight shipping, most importers and exporters choose to use freight forwarders in Canada, even when shipments originate in the U.S.
With expert knowledge, streamlined processes and exemplary standards, a freight forwarding company in Canada can ensure your U.S. shipments cross the border without delay and without unnecessary costs.
If you plan on shipping goods to or from Canada, you’re going to require dedicated shipping services. By using a dedicated freight forward company to handle the transportation, you can also take advantage of customs brokerage services, advanced technological input, and enhanced safety and security. We offer services from many states and cities, including Michigan and in Detroit.
At R+L Global Logistics, we’re committed to providing effective and efficient freight forwarding services across the world. With an array of freight services, we can provide swift transportation of goods to and from any location. Whether you require domestic shipping from one town to another, ocean freight services across the water or express shipping via a dedicated air charter, we can make it happen.
From temperature-controlled transportation and movement of high-value goods to trade show logistics and warehousing, we’re on hand to provide the support you need. Our freight services incorporate various intermodal options, so we’ll always find the most efficient shipping route. As well as offering air charters, expedited shipping, and ocean freight services, we have a wide range of land-based options too.
Our freight forwarding services ensure we can move less than truckload (LTL) shipments and partial truckload shipments, as well as providing haulage vehicles for exclusive use. We’ll find the most suitable method of carriage for your shipment and ensure it arrives at its destination ahead of time.
What’s more – our innovative electronic data interchange (EDI) system enables you to track your goods as they move through the transportation process. With continuous access to real-time data, you can customize your transaction updates and access the data you need, when you need it.
To learn more freight forwarders in Canada or to arrange a freight shipping service now, contact R+L Global Logistics on 877-510-9133 now.
Shipping medicine to Canada can often be a frustratingly complicated process, and even small mistakes can lead to huge delays. The regulations for shipping medicine into Canada have been steadily tightening over time. And yet, it can be hard to resist breaking into the lucrative industry. The U.S. pharmaceutical industry generated over USD$55 billion in exports just in 2018 alone!
Shipping medicine to Canada requires importers to follow strict guidelines in order to clear Canadian customs. This means securing a site license, DIN, and label approval from Health Canada, as well as ensuring that all shipments meet the set quality standard.
Health Canada is the department of government that regulates the import of pharmaceuticals and other health-related products. It is also responsible for ensuring compliance with all health-related laws, and has many other responsibilities besides just regulating medicine and medical devices.
Health Canada is also responsible for:
If you are a drug manufacturer who is going to be shipping medicine to Canada, you are going to need to understand the guidelines and regulations set in place by the Health Canada department. One thing Health Canada is very stringent on is proper labeling and packaging for any pharmaceuticals or health-related products that want entry into Canada. This particular topic will be addressed later in the article.
Shipping medicine to Canada can be quite a different process depending on whether you are just an exporter, or if you’re a non-resident importer as well.
If you are a regular exporter, you would only have to worry about the product itself, and getting it to the border. This includes correct labeling, safe transport, and good communication with the importer on when the shipment would be ready for them to pick up. The rest of the process would become the importer’s responsibility.
If you are a non-resident importer, however, you would act like the exporter and the importer of record at the same time. That means that you would be responsible for labeling and transport to the border, but you would also have to manage the customs clearance process and arrange shipping on the Canadian side of the border.
Being a non-resident importer can be a lot of added responsibility, but it can also give you a lot more control over the process. Additionally, by taking up the importing responsibilities, you can offer your customers an easier buying experience. However, if the responsibility is too much to bear, you could still become a non-resident importer anyway with the help of a good third-party logistics company.
Customs clearance can be a difficult process to understand, especially when dealing with a tightly regulated commodity in an unfamiliar country. Even if you understand the basics of shipping into Canada, the strict regulations on medicine make it difficult for companies to get involved. However, with just a little instruction, you could be well on your way to doing business in Canada.
Every single person involved in the process of handling medications must have a valid site license for the location in which the medication will be handled. This includes manufacturers, packagers, labelers, and importers. It is unlawful to handle medications for sale without having a site license.
For medications being imported, the importer of record would need to have a site license to verify that the foreign manufacturer meets the Canadian regulations and quality standards.
Applicants for site licenses will need to include specific information on their application, like:
Information can be filled out in the Site License Application (SLA) Form, and when applicable, the Designated Party Authorization (DPA) Form.
A Drug Identification Number (DIN) is a special code assigned to all prescription and over-the-counter medications in Canada. It is assigned once the medication has been evaluated by Health Canada to be effective and safe for use.
The DIN identifies a number of key features about a specific medication:
When shipping medications to Canada, you will need to ensure that you have the correct DIN for the product. If any of the factors listed above are altered, like if it was a different dosage of the same medicine or if the method of administration was changed from an injectable to pill, then the DIN would no longer apply and it would be treated as a new medicine.
If you are shipping a new medication to Canada that is not already on the market, then the process for approval is far lengthier. Not only would you need to apply for a DIN, but you would also need to include a Notice of Compliance (NOC) in order to make it to the Canadian market. More information on applying for review is available on the Health Canada website.
When labeling medicine for sale in Canada, you will need to ensure that your labels are compliant with all the regulations. Under no circumstances should any label be false, remotely misleading, or deceptive in any way, especially not to give the product a more positive perception among consumers. Failure to follow basic labeling guidelines also constitutes as being misleading.
The principal display should include:
Other labels should include:
Additionally, all labels must be in both French and English.
As anyone who has even the most simple of OTC medicine in their bathroom cabinets, pharmaceuticals can see reduced efficacy or be rendered completely ineffective if not stored in the appropriate way. The following guidelines might not be put forth by the Canadian government but are definitely essential in making sure your customers get the most potent version of the medication they require.
Like any country, Canada is not going to accept medicine that has spoiled or expired due to improper storage methods during transit. Therefore, it is the responsibility of the company exporting the medicine to Canada and also the transport company chosen as a partner to ensure this doesn’t occur.
While there is no one universal temperature for all medicine to be kept at, most medicines respond well to being stored at 59 to 77 degrees Fahrenheit (15 to 25 degrees Celsius). A medicine such as the antibiotic Amoxicillin can be kept as low as 52 degrees Fahrenheit (11 degrees Celsius) without spoiling. On the opposite end, 86 degrees Fahrenheit (30 degrees Celsius) is the known cutoff where no medicine should be stored. Extended exposure at that temperature or above can lead to it having to be discarded.
Since Canada sees a wide range of temperatures, especially depending on the season, your medicine may require a temperature-controlled truck to make sure there isn’t any loss during transit. This is also why ordering medicine through the mail, no matter which side of the border you’re on, can be a dicey proposition.
The previous section talked about proper storage methods and temperatures during the shipping of medicine. But besides thinking about and preparing the pharmaceuticals as far as the temperature goes, it’s also very helpful to be mindful of doing everything you can to help reduce the likelihood of the medicine being damaged because of lax packaging.
Just so there’s no confusion, it’s not a matter of if you put that Tylenol in a strong enough plastic bottle — it’s that those bottles are packaged in a way to protect your investment during the actual transit portion of their path to Canada. So for medicine that doesn’t require special accommodations, sturdy, sealed corrugated cardboard boxes should do the trick. These will be stackable and also provide ample protection
For temperature-sensitive medicines, this can include using temperature-controlled packaging (TPC). This phrasing applies to anything that regulates the conditions in which the pharmaceuticals are traveling under. It can be packing peanuts or foam to insulate the medicine and protect it from the bumps of the road.
Some medicine might need to be completely shipped in a Styrofoam container with dry ice or a gel pack, on top of being in a refrigerated truck, to keep it very cold. For medicine that comes in liquid form that could be prone to leakage occurring in transit, waterproof plastic packaging and a cooler or cardboard box lined with absorptive material can be used.
When shipping natural health products such as vitamins, teas, and other natural remedies, you might assume that the process is easier—but you’d be wrong. Natural health products are treated very similarly to over-the-counter medicine and require a lot of the same attention from importers and customs officers.
The only thing that really differs is that the product will require a Natural Product Number (NPN) instead of a DIN. Otherwise, you can expect to have to go through all the steps you would if you were importing regular over-the-counter medication.
Shipping medicine to Canada doesn’t have to be complicated! With R+L Global Logistics, you can have your freight delivered temperature-controlled and expedited to the border, where our trusted Canadian partners will pick it up to finish the job.
You wouldn’t have to worry about anything, since R+L Global Logistics’ real-time tracking solutions give you complete visibility from start to finish. We can help you clear customs in Canada and also be in compliance with any regulations Health Canada can throw at you.
Some additional freight shipping services R+L Global Logistics are able to offer to its customers include:
If you have medicine to ship, R+L Global Logistics can get it there quickly, safely, and for the best price, to ensure you get the best value for your money. To start shipping medicine to Canada, give us a call at (855) 915-0573 to get a free quote.
Residing behind only China, Canada is the United States’ second-largest trade partner each year. So knowing about shipping goods to the USA from Canada is crucial knowledge, knowledge you may not have acquired yet.
With some consideration given to taxes, shipping and restrictions on certain items, shipping goods to the USA from Canada shouldn’t be a great cause for concern for your business. Pairing with the right logistics company can help even more when you’re ready to cross the border to engage in international trade.
Shipping from Canada for entering the United States can be complex because of U.S. customs. But the difficulty can be greatly reduced with one key aspect — preparation. The more prepared you are beforehand, the easier clearing customs will be.
Other than just motivational speak, most of the problems getting through customs are linked directly to incomplete or inaccurate forms.
There are two ways for the shipment to enter the country — as a formal (or commercial) entry, or as an informal entry. Let’s break down the differences:
However, if you’re shipping certain kinds of items, you might have extra requirements to fulfill. For instance, the Federal Trade Commission (FTC) presides over clothing and textiles while the Food and Drug Administration (FDA) monitors — you guessed it — food and beverage products.
If your shipment is a formal entry, required documents will be needed in order to import from Canada to the United States:
There are also a few others that depend on the situation like the entry/immediate delivery form, which is shipped by the carrier to the port of entry for time-sensitive items like produce, or other permits or licenses, or a packing list.
Overall though, if you’re prepared with all of your forms and know what is required of your shipment, you should not run into trouble with customs clearance.
Under the terms of the United States-Mexico-Canada Agreement (USMCA), many goods traded between Canada, the USA and Mexico are free of tariffs. As a byproduct, this particularly boosted the trading of textiles, agriculture and automobiles between the countries.
So that is the good news if you’re attempting to import goods from Canada into the USA. However, on certain items, there can still be an import tax or customs duties levied.
Examples of duties and taxes for major imports include:
But USMCA — just like its predecessor, the North American Free Trade Agreement (NAFTA) — overall eliminated a lot of potential extra costs via taxation that should become a potential barrier to free trade. So even small businesses should feel confident that they’ll still be able to be successful when shipping its products to the USA from Canada.
When the USMCA replaced NAFTA, many of the same aspects were rolled into the new agreement. However, there were enough changes made that the USMCA is not just a like-for-like replacement for NAFTA.
The USMCA was pushed for by America in order to bring the trade agreement binding itself with Canada and Mexico to a more modern level. This is very wide-ranging but one of the aspects worth noting was the return of some manufacturing jobs to the U.S.
One thing both businesses and customs brokers will rejoice about is reduced paperwork overall for customs while certain shipments that are considered lower-value or lower-risk goods can now enter either country with even more minimal procedures on formal entries.
Textiles have benefitted from an American standpoint with the USMCA, since not Tariff Preference Levels (TPLs) have been increased for U.S. businesses exporting to Canada. This should have the effect of increasing the number of opportunities.
Still, as much that has changed, some of the things that stay the same should also see importers and exporters rejoice. For instance, any goods that enjoyed zero tariffs under NAFTA will continue to do so under the USMCA.
There are more widespread effects that might not be thought of quite as much. Automobiles, for one, are now required to have a greater percentage of domestic parts. So if a car is being built in Canada for the American market, that car’s parts that are required to be American-made went up from 62.5% to 75% with the USMCA. Also 40 percent of the labor force in the Canadian (and Mexican) factory must make a minimum of $16 per hour.
There are few things utterly prohibited from entering the USA, but special care will have to be taken to make sure certain items are able to clear customs.
For instance, soil has to be accompanied by an import permit and be proven to be free of potential pests or even disease-riddled wood.
Also plants, seeds or even fruits and vegetables must be found free of pests or possible diseases as well and come from an approved country, which Canada is.
Absinthe, a type of alcohol, is forbidden from any country of origin if it doesn’t meet certain criteria centered around branding, labeling and if the product has hallucinogenic properties.
Really though, other than a few basic minor restrictions, trade is very open between Canada and the USA as long as the proper steps are followed. The USMCA hasn’t done anything to change that. Practically any commodity can be shipped between Canada and the USA, even if they are accompanied by a few rules.
If you’re shipping goods to the USA from Canada, the smartest choice you could make is to let R+L Global Logistics be your carrier and customs broker.
R+L Global Logistics can offer a comprehensive list of services, beginning with transporting your freight from Canada to its final point in the United States and also help handle all of the requirements at the border.
Other services we provide include:
Those offerings, coupled with an on-time delivery rate of 99.5 percent, real-time freight visibility and outstanding customer service, make R+L Global the right logistics provider for your business. No matter whether your freight is crossing the border at Derby Line or you're seeking Detroit cross border freight, R+L Global Logistics has the services you need to get it there.
Call 855-915-0573 today to get a quote from R+L Global Logistics for your next shipment and let us make shipping your freight the breeze it should be.
When most people think of Canada, they think poutine, maple syrup and hockey. Other people might think fashion, and they may be onto something. Many Canadian clothing brands have cult followings on both sides of the border. From activewear to haute couture, Canadian clothing brands offer a big boost to the country’s economy and cross-border shipping brings it all into the United States.
Popular Canadian clothing brands include:
With so many popular clothing options coming from Canada under NAFTA regulations, you might be wondering how all your favorite styles get across the border. Cross-border shipping is essential for Canadian clothing brands, as you’ll find threads from the Great White North on the backs of stylish folks south of the border, too.
According to information from the Government of Canada, the country’s apparel industry consists of manufacturers who specialize in making clothes and accessories. The clothing and accessory business is a big deal on their side of the border. In fact, the fashion industry’s market value adds up to $43.6 billion Canadian dollars each year. Nearly 50,000 people are employed by fashion-related manufacturing jobs in Canada, including clothing, footwear, textile and leather goods manufacturing.
Canada’s fashion and apparel industry produces a variety of goods, including:
Nearly half of all of the apparel and related goods manufactured in Canada is either exported or re-exported. Much of it comes south into the United States.
Some might argue that Montreal is the fashion capital of Canada. This Quebecois city is the third leading North American city for clothing manufacturing. There are more than 1,800 fashion and clothing related companies in Montreal and these companies bring in more than $7.6 billion in annual sales. Additionally, the fashion sector provides nearly 30,000 jobs to Montreal residents. In fact, Montreal is home to 70 percent of the businesses in Canada’s fashion sector according to information from the Chamber of Commerce of Metropolitan Montreal.
Important pieces of the fashion industry in Canada and Montreal include design, manufacturing, marketing and distribution.
In addition to Montreal, you’ll also find a fashion industry presence in British Columbia. Many major brands are based in British Columbia. Additionally, one of Canada’s best design schools, the Wilson School of Design at Kwantlen Polytechnic University, is located in Richmond, B.C. The design school is very exclusive, only about 20 students graduate annually.
You’ll find a number of Canadian clothing brands hanging in your closet, especially if you’re a member of the active set. Activewear is huge in Canada, as the temperate climate creates tons of opportunities for recreation, adventure and sports.
Lululemon Athletica is a retailer of athletic apparel based in Canada. Many of their designs are yoga-inspired, but you’ll find attire for other fitness options, too. Today Lululemon’s offerings include performance shirts, dresses, shorts and pants, along with undergarments, accessories and lifestyle clothing. The company dates back to 1998 and was originally established in Vancouver, British Columbia. The company has grown quickly and now has 460 stores internationally.
If you have a screen-printed shirt in your wardrobe, you might be sporting a Gildan style. Gildan is a Canadian manufacturer of blank t-shirts, sport shirts, fleece sweatshirts and more. Many of Gildan’s products are decorated by screen printing companies with original designs and logos. Gildan is also known for manufacturing socks, and works with brands including Under Armour, New Balance and Gold Toe.
If you’ve dealt with wet winter weather, you might know that Sorel boots are among the best options for keeping your tootsies dry and toasty. Sorel has made winter and work boots since 1962, originally by the Kaufman Rubber Company of Kitchener, Ontation. Today the famous boots are made by Columbia Sportswear. Since purchasing the brand, Columbia Sportswear has added other winter gear to the Sorel lineup.
Toronto-based Roots is a publicly-held Canadian brand. They produce a variety of products, including apparel for men, women and children; shoes; handbags; activewear; and even home furnishings. Roots dates back to 1973, when it originally launched as a footwear brand. Roots has also been a big part of past Olympics, as they have supplied the Canadian team with clothing and uniforms.
This outdoor clothing and accessory brand was founded in Vancouver, British Columbia. Arc’teryx is known for their high-end products, all of which come with a lifetime warranty. Each of their collections is based around certain outdoor activities, many of which are part of the Candian lifestyle. Arc’teryx offers collections for rock climbing and mountaineering, skiing and snowboarding, hiking, running, and technical urban activities.
If you’re among the cool hipster set, you’re likely familiar with Herschel Supply backpacks and duffles. These canvas bags feature retro- throwback styles. The company was founded in British Columbia and is available at more than 10,000 retailers in Canada and the U.S. You can find Herschel Supply bags stateside at retailers like Nordstrom, Zumiez and Tillys.
High fashion is also a big deal in Canada. You’ll find that many of the designers you see strutting down the runway have Canadian roots. Jason Wu, Joe Mirman, Alfred Sung, Liz Vandal and Adrianne Ho all come from our northern neighbor.
With so many Canadian clothing brands making an impact in fashion on both sides of the border, it’s easy to see why the country is becoming a fashion destination.
While this company is no longer Canadian-owned like it once was, its corporate headquarters in Brampton, Ontario, and former life as North America’s largest fur-trading outfit point to a storied history in Canada. Known as HBC, this now privately-owned company is also the official clothing outfitter of the Canadian Olympic team, having outbid fellow Canadian company Roots for the privilege in 2005 and since has extended the deal through the 2020s. While the company features many famous brands in its stores, HBC also has its own store brand for clothing as well.
Created in Toronto, this fashion-forward outerwear company debuted in 2013 and hasn’t looked back since American websites began taking notice of the brand’s offerings later than year. Another company that has its clothes made in the same country where they’re designed, this brand has 3 co-founders, one of whom is a former art school student.
Based in Vancouver, British Columbia, Reigning Champ came into existence in 2007 and has been designing and producing athletic wear known for quality materials that are uniquely comfortable for its wearers. This includes comfortable clothing made of pima cotton, which is known to be more durable, wrinkle-resistant and softer than normal cotton.
Reigning Champ does business online through its website and also has several Canadian store locations. It is featured in many Canadian, U.S. and international retailers on four different continents.
Founded in 2008 by a pair of men in Ottawa, this streetwear label has attracted attention for its high-quality graphic tees, hoodies, hats and more. Raised by Wolves has also partnered with other Canadian clothing brands in the past to collaborate on designs. More than just a designer, their outerwear is made in Canada and sold by many different retailers.
High fashion is also a big deal in Canada. You’ll find that many of the designers you see strutting down the runway have Canadian roots. Jason Wu, Joe Mirman, Alfred Sung, Liz Vandal and Adrianne Ho all come from our northern neighbor. Some smaller Canadian clothing brands — such as Tamga Designs — also strive to be eco friendly in many respects, including using organic cotton to craft its wares.
With so many Canadian clothing brands making an impact in fashion on both sides of the border, it’s easy to see why the country is becoming a fashion destination.
The United States offers a great market for Canadian clothing brands. It is close to Canada and is similar in culture and lifestyle to Canada. Exporting and importing Canadian fashion offers a new and exciting way to expand your business.
When you are getting ready to export or import Canadian clothing, there are a number of things to think about. Prepare yourself by considering the following 10 points:
Many of the considerations above depend on your target market. As a business professional, you likely know that market research is essential. Things to think about when doing market research include:
After you’ve done the research and you’re in the know, you can make an informed choice about your imports and exports.
For the vast majority of clothing, especially of the mass-produced variety, packaging clothes for shipping from Canada to the USA might not be very complicated at all. For things like basic shirts, pants and underwear, placing them in a plastic bag to ship in bulk and then putting them in a sturdy cardboard box should be quite sufficient.
On the other hand, clothing that retails on the higher end might need a bit more subtlety in the way it is handled. It can’t afford to show up wrinkled or disheveled, so it is often packaged with very thin layers of paper to keep the clothing in place and prevent the material from rubbing against itself while being shipped. You’ll still want to make sure to use a carrier who will take care of these containers while in transit but these types of clothes don’t require white-glove delivery.
It’s never advisable to ship any clothing on hangers since it is not only unwieldy for mass shipping but can actually cause damage to the garments you’re trying to get out of Canada and into the United States.
You don’t need a license to import clothing from Canada. In fact, the U.S. is one of the few countries in the world that doesn’t require a license. This doesn’t mean there isn't any paperwork involved.
Even without a license, you’ll still need to be aware of taxes and duties, along with entry documents. When you’re shipping Canadian clothing across the border, you’ll need to know a few things:
When you’re importing clothing from Canada into the U.S., you'll need to indicate the Importer of Record on your customs paperwork. The Importer of Record assumes responsibility for making sure that the goods are legal for import and more. The Importer of Record is also responsible for paying duties and other fees.
In most cases, if you’re importing the clothing from Canada, you’ll be the Importer of Record. You have ownership of the goods, and you are the responsible party. This can become more convoluted when you start working with suppliers, distributors and your customers. When you are importing clothes you’ve already sold, you might that that your customer is the one required to pay duties and fees. However, if you’re importing the goods for your customer, you should be the Importer of Record. You’ll become the temporary owner until the goods reach the distribution center and then your customer.
While the majority of the time you’ll be the importer of record, another scenario that can arise is if you use a licensed customs broker to import the clothing on your behalf. In that case, you can designate the customs broker as such.
After you’ve made your considerations and done your market research, it’s time to start creating your plan for importing and exporting Canadian clothes and textiles. You’ll want your plan to answer a number of questions. These questions include:
The United States-Mexico-Canada Agreement (USMCA) replaced the long-standing North American Free Trade Agreement, or NAFTA, in 2020. NAFTA had already made shipping between the U.S. and Canada simple and easy, while also eliminating many of the tariffs surrounding the import and export of textiles, which includes clothing.
According to Global Affairs Canada, the USMCA “preserves the important benefits of NAFTA, modernizes the agreement’s disciplines, and makes it easier for Canadian companies to benefit from preferential access to the U.S and Mexican markets.”
The new USMCA has done nothing to really change that aspect; it’s lowered some tariff preference levels while increasing others. Overall though, you’ll find that goods, like clothing, manufactured in Canada can be eligible for duty-free or reduced duty rates, according to information from U.S. Customs and Border Protection.
To be eligible for duty free or reduced duty treatment, the shipper or importer must be able to produce a Certificate of Origin. This document proves where the clothing was made. Working with a customs broker or import specialist can help you determine the duties on your goods.
Even with the USMCA, duties can vary when you’re importing clothing from the U.S. into Canada. If tariff preference levels are not applied, the duty to import clothing and textiles into Canada is between 17% and 18%.
After you have your business plans worked out, it’s time to start moving your shipments across the border. You might find that it’s easy to bring Canadian clothing brands into the United States. Whether you’re working with a major designer or manufacturer like those mentioned above for a smaller fashion distributor, you’ll find regulations in place to make importing easy.
Canada has free trade agreements (FTA) for clothing and textiles with North American neighbors the United States and Mexico. Canada also has free trade agreements with Chile, Costa Rica and Honduras. This means the agreements have set tariff preference levels (TPL) which set import controls. The TPL is a rule that allows for certain amounts of products including apparel, yarns, fabrics and textile articles to be traded with a special tariff rate. In most cases, the TPL reduces the tariffs on most clothing and textile items. Clothing and textile goods being imported and exported within the free trade zones get preferential tariffs to make importing and exporting easy.
In many cases, the FTA depends on the “Rule of Origin.” To get the benefits of the agreements, clothing and textiles exported from Canada into the U.S., Mexico, Chile, Costa Rica and Honduras must be produced in one of the countries in the agreement.
With the FTA, you might be eligible to export your goods duty free or with reduced tariffs. All TPL-eligible exports and imports are dependant on rules and regulations under the Canadian Export and Import Permits Act. This means a permit issued by the Canadian Government is required. Exports to Mexico and the U.S. need a Certificate of Eligibility.
Clothing is one of the most popular items to cross the U.S.-Canadian border, however, that doesn’t make it exempt from customs regulations. There is some paperwork required to get your clothing across the border. Making sure your paperwork is thorough and complete can ensure your goods get across the border without hassle. Problem-free customs clearance is a possibility!
You’ll find there are two major ways you can get your Canadian clothing across the border and into the U.S. You can opt for a formal or commercial entry, or choose an informal entry. Formal entry requires the use of a customs broker, while informal entry does not. Informal entry requires the shipment to be accompanied by the exporter or for the consignee to collect the shipment at the port of entry.
When you’re shipping clothing in from Canada, you’ll likely select a formal or commercial entry. Formal entry is required when shipments are valued at more than $2,000. If you’re shipping large amounts of clothing cross border, you’ll need to work with a customs broker. A broker can help you ensure all paperwork is complete and correct and can guide your shipment across the border.
A customs broker can provide a number of beneficial services when you’re moving truckloads of clothing across the U.S.-Canada border. These benefits and services include:
Working with a customs broker is essential for getting your shipment of Canadian clothing across the border. You can learn more about customs bonds through customs consulting and import consulting services.
A Canada Goose down parka can retail for more than $1,000. This is a lot of money for a quality product with a designer label. With so many expensive designer items coming into the U.S. from Canada, it’s important to be aware of the implications of importing counterfeit goods. There are legal implications, along with other risks that come with bringing in counterfeits.
Counterfeit goods can be seized by Customs and Border Protection when they enter the U.S. Other risks of importing counterfeit clothing and other goods include:
Counterfeit goods violate intellectual property rights. According to statistics from Customs and Border Protection, the products seized for violating intellectual property rights in fiscal year 2017 at the country’s borders include:
There are many major ports of entry for clothes coming into the U.S. from Canada. Because Montreal and British Columbia are Canada’s two major apparel and fashion regions, most clothing from Canada uses ports of entry near these regions. Common ports of entry for clothing include:
While Montreal and British Columbia on opposite ends of the country are the leaders, don’t discount the burgeoning apparel scene in Toronto. With its own Fashion District (which is also called the Garment District) starting back in the 20th century, Toronto employs about 50,000 people in the industry. This counts as one of the highest concentrations in the country.
Toronto is directly across Lake Ontario from upstate New York, so a boat across that Great Lake is a possibility. But even using the more common truck to transport your goods is pretty easy with many U.S. ports within a half-day’s drive.
In the same vein, crossing from Toronto and its surrounding areas into Michigan is an extremely strategic entry point for any goods — including clothing — to enter the U.S. Detroit is less than 4 hours from Toronto and shares a major bridge over the Detroit River with its Canadian neighbor Windsor. Another popular route from eastern Canada into America is into Port Huron, Michigan.
When you’re shipping clothes cross border into the U.S., you can make the process simple by using a PAPS number. A PAPS number is a special Shipment Control Number (SCN) assigned by a carrier when the shipment requires pre-arrival processing. Using a PAPS number can speed up the processing and release of commercial goods at the border.
Similarly, when you’re shipping clothes cross border into Canada, you can make the process simply by using a PARS number. A PARS number is a Cargo Control Number (CCN) that identifies the carrier and the shipper to the Canada Border Services Agency. This can expedite the shipment processing and help you get goods across the border quickly.
It is important that you choose the right freight shipping service when you’re moving clothes from Canada into the U.S. You’ll likely want to ensure that your freight broker matches you with a carrier that has experience and expertise when it comes to moving freight across the U.S-Mexico border. Things can go wrong at the border with the wrong shipper, and your goods could end up detained by customs. When it comes to shipping clothes and logistics, time is money. Time spent at the border is money leaving your pocket. You might even be charged a fee if your shipment is detained or incorrectly documented.
You can avoid complications by using a reliable and experienced carrier. Working with a strategic third-party logistics partner can be the most cost-effective and safest way to find the right carrier to move your freight. A 3PL partner will also come with the benefit of managing your shipment and serving as the liaison between the carrier and you the shipper.
Besides just the actual freight hauling, an experienced 3PL company will have other services readily available that can enhance your business. Customs brokerage and consultation, warehousing and order fulfillment (including pick and pack delivery) are all part of an international supply chain and could factor into your decision on which shipping service can best handle your unique business needs.
When you’re moving products from Canadian clothing brands and other goods made above the border, you need a shipping partner that can make the process easier. R+L Global Logistics can be your strategic partner for all your cross-border truckload shipping needs.
R+L Global Logistics can pair you with an experienced carrier that will get your shipment across the border with the care and consideration you’ll only find with a family-owned company. We offer solutions to all your logistics needs, including customs brokerage, warehousing, supply chain management, and more.
For those instances where you require faster movement, one of the additional freight shipping services offered by R+L Global Logistics is expedited shipping. For longer journeys, such as Quebec to Los Angeles, this can trim valuable hours or even a day or two off the trip for your clothing. We also have 24/7 tracking for your freight loads and boast a 99.5 percent on-time delivery rate.
You’ll find we have a multilingual staff who has the acumen to work internationally to guide you through the cross-border shipping process while also providing excellent customer service as a matter of course. If you have freight to ship like clothing, baked goods or even heavy equipment, work with R+L Global Logistics to get it there intact and on time.
Contact us today by calling (855) 915-0573 to request a quote and get your freight on the road and across the border. Whether you need freight shipping to Canada or from it, R+L Global Logistics has you covered.
Understanding the difference between GST, HST, and PST in Canada can be a challenge. Sales tax alone can be a difficult subject to grasp, but dealing with 3 different types in one country certainly adds to the complexity. Despite how confusing it may be, companies that do business in Canada need to understand the important details surrounding GST, HST, and PST. Not understanding this can lead to poor financial performance and potential penalties for businesses that conduct business in Canada.
GST, HST, and PST in Canada are the three types of sales taxes levied in Canada. GST and HST are administered and enforced by the CRA (Canada Revenue Agency). PST is handled through the individual revenue agencies of each province in Canada that collects PST separately. The tax that’s collected varies from province to province.
The information below is provided to give general guidance on the definitions and differences between each type of sales tax collected in Canada*. Knowing the ins and outs of the sales tax system in Canada will help businesses be successful and remain in compliance with tax regulations.
For residents living in Canada that aren’t business owners, understanding the sales tax system is likely not a top priority. Visitors to Canada will probably share this sentiment as well. Of course, when visiting Canada you’ll want to know what tax rate to expect when you pay for things. However, beyond this general knowledge and awareness, there’s little reason to develop a deeper understanding of the overall system.
On the other hand, business owners in Canada (especially small business owners) need to know many important rules regarding sales tax to ensure they’re in compliance. Failing to comply with tax regulations set forth by the Canadian or provincial governments can lead to severe penalties. Even though sales tax isn’t typically applied on exported goods from Canada, foreign companies should still have a basic understanding of Canada’s sales tax system. There may be some situations in which a foreign company is responsible for paying sales tax in Canada.
GST, or Goods and Services Tax, is a tax in Canada that is collected on the purchase of nearly all goods and services throughout Canada. As of September 2019, the GST rate was 5%. The GST applies to all provinces in Canada regardless of other sales taxes levied within the individual provinces. The first federal form of GST for Canada was implemented in 1920.
The rate of GST is levied in all Canadian provinces either separately along with the PST, or included within the HST. However, in 2019, the GST was the only sales tax levied in 4 Canadian provinces. These provinces are:
This means that residents of these 4 provinces experience far less sales tax than those in other territories.
The Harmonized Sales Tax, or HST, is a combined sales tax consisting of the GST and PST within a province. HST rates differ in each province since it’s a combination of the 5% GST throughout all of Canada and the different PST rates for each province or territory. HST was first introduced in Canada in 1997 in the provinces of Newfoundland & Labrador, Nova Scotia and New Brunswick. When HST was first implemented, the GST for Canada was 7%. Since then, there have been adjustments to both the GST and PST within each province, which in turn has affected the HST.
On the surface, the HST creates a more simplified sales tax system for the provinces that employ it. Before HST, business owners responsible for filing taxes would need to complete additional paperwork to satisfy the needs of both the GST and PST. Since HST is fully managed and administered by the Canada Revenue Agency, business owners have less paperwork to keep track of and complete.
Presently, the following provinces implement HST at these rates:
Upon further inspection, though, there’s more to the HST than simply combining the Goods and Services Tax and the Provincial Sales Tax.
The additional changes that occur when switching to an HST system include:
Due to this multitude of changes, adoption of the HST isn’t a simple process. Citizens, business owners, and lawmakers alike take sides on their support or opposition of the HST. The issue was particularly contentious for the province of British Columbia from 2010 to 2013. In addition to the 3 original provinces that adopted the HST, Ontario and British Columbia also approved the system in 2010. This approval occurred despite some reports showing as much as 90% of citizens in the two provinces opposed the new system.
Opposition in British Columbia didn’t waver after the HST was in place. In 2011, citizens voted to revoke the HST and return to the two-tax system of the GST and PST. This change took place in 2013.
As of September 2019, not all provinces have adopted the HST system.
The provinces in Canada that operate under the HST are:
Prince Edward Island became the newest adoptee of the system, when it was implemented in April of 2013. While there’s certainly the possibility of more territories converting to the HST in the future, it won’t be without careful consideration. British Columbia proved that it’s also within the realm of possibility to switch back from the HST system. Lawmakers in Canada are constantly reevaluating and looking at the sales tax system to determine if changes should be made.
Provincial Sales Tax (PST) is a sales tax that applies to goods and services and is unique to each province/territory in Canada. The PST rate and the goods and services that are eligible and exempt from PST vary from province to province. PST rates range from 6-10% depending on the province.
In 2019, only 4 provinces charged PST and GST separately. These 4 provinces are:
The remaining territories incorporate their PST within the HST or charge no PST at all. While PST is levied in Manitoba and Quebec, the term PST isn’t actually used. In Manitoba, PST is referred to as RST (Retail Sales Tax), while in Quebec it is QST. Other than the name difference, it operates the same as PST.
Knowing what each type of sales tax is and the difference between them is only part of the equation. For most Canadian residents, having a basic understanding of the sales tax system that’s applicable in the province they live in is sufficient. Business owners, however, must have a deeper level of awareness when it comes to the relevant sales tax in their territory. As noted earlier, a lack of knowledge can potentially lead to costly errors and financial penalties for business owners.
When it comes to what business owners need to know beyond the basics of Canadian sales tax, there’s a short, but important list. The need to know questions include:
Finding the answers to these questions will help business owners ensure they’re in compliance with tax laws and regulations. Residents and foreign companies also benefit from knowing the answers to a couple of these questions as well. Listed below are the answers to these questions.
During the course of doing business with foreign companies, it's likely you'll need to fill out a NAFTA Certificate of Origin at some point. To learn more about Canada's version of this form, check out our blog that discusses Canada's NAFTA Certificate of Origin.
The first step in the sales tax process in Canada is obtaining the proper certification to be able to collect GST, HST, and/or PST. This process starts by applying for a BN (Business number) with the CRA (Canada Revenue Agency). This is required because regardless of where you operate or where your customers purchase from, GST will be applicable. To obtain a BN from the CRA, Form RC1 needs to be completed. Once a business number is obtained a business can begin charging and collecting sales tax. The business number allows businesses to charge and collect both GST and HST; there isn’t a separate form for both.
In addition to registering to collect sales tax, there are optional sections within the same form that will allow businesses to initiate other programs as well. These other programs include import-export, payroll deductions, corporate income tax, charity and more.
For many businesses in Canada, more forms will need to be completed to satisfy other sales tax requirements. Businesses that are located in a province that separately charges and collects PST will need to complete additional documentation. Additionally, businesses that don’t have a physical location in a PST province, but sell goods or services to customers in one of these provinces is required to register with that province to collect PST. Some businesses, like online e-commerce retailers, may need to register in all PST provinces. For instance, an online clothing store based in Alberta (a territory that only charges GST), that sells clothes to all of Canada, including Manitoba (a province that charges GST and PST) would need to register for PST in Manitoba.
The additional forms required to register for PST(RST in Manitoba and QST in Quebec) in other provinces are listed below:
The only exception to required registration for businesses is the small supplier rule. The small supplier rule in Canada dictates that a business can be exempt from registering for the GST/HST. A business is considered a small supplier if the total revenue of the last four quarters is $30,000 or less. In this instance, the CRA classifies a quarter according to a standard calendar quarter, rather than a fiscal calendar. The rules vary slightly when it comes to designating a charity as a small supplier. For example, the revenue threshold is $50,000 and charities don’t have to register in their first year of operation, regardless of total revenue.
The rules can be different for a foreign company operating in Canada. For more information, check out our article Becoming a Non-Resident Importer in Canada.
Reporting of sales tax information to the CRA and/or local provincial revenue department is obviously a necessity. Failure to properly follow the guidelines for reporting and remitting payment can result in significant fines and penalties. Since the rules on reporting aren’t the same for all businesses, owners need to know which group they fall into and how they need to handle their returns. Most of the rules are organized based on the amount of annual revenue generated from taxable goods or services. For example, businesses that generate $1.5M or more in taxable revenue must file their returns electronically.
In terms of reporting periods, annual revenue is the deciding factor.
All businesses are assigned a reporting period when they receive their BN. It’s possible that the assigned reporting period is different from the general standards listed above. If a business wants to change their reporting period, they can submit a request to the CRA or local provincial authority. It’s worth noting that a business can only submit returns more frequently than the standard period and not less frequently
Unless the CRA directly sends you a paper copy of a return to complete, it’s safe to assume that you’re required to submit electronically. It’s likely that in the future all returns will need to be submitted electronically. There are some situations in which a particular type of electronic filing is required. If you’re unsure about how or when to file your returns, the CRA or local revenue authority can provide the needed information once your provide them with your BN.
In short, the end consumer is generally responsible for paying sales tax in Canada. The amount that customers pay will be based on their geographical location. For traditional in-shop purchases, the tax rate(s) of the province that the shop is located in will apply. Transactions that occur across province lines follow a different rule. The location of the purchaser, not the supplier, determines the rate of sales to be charged. For example, if a customer in Nova Scotia purchased 70 pallets of products from a business in Alberta, the customer would pay HST at the Nova Scotia rate, rather than GST at the Alberta Rate.
When importing products from other countries, business owners are responsible for paying the GST or the GST portion of the HST depending on where the province that the goods are being imported into. Ultimately, this cost is typically passed onto the end consumer, but business owners are responsible for the up-front cost of importing the goods. Tax credits do come into play in the case of importing, which we discuss below.
There aren’t many exceptions when it comes to paying sales tax in Canada. The exceptions and situations in which individuals don’t need to pay sales tax are outlined below. Keep in mind that the information below applies to GST/HST. Provinces that charge PST separately follow different guidelines in terms of exemptions.
Some Provincial Government Employees
In general, employees of government organizations are required to pay sales tax. However, there are some situations where these individuals can be exempt.
The conditions that must be met in order to be exempt are listed below:
Only if the above conditions are met, can a business exempt an individual from paying sales tax. Business owners are advised by the CRA to keep records of certification documents to go along with tax free transactions. It’s possible that the CRA will review tax free purchases to verify compliance.
First Nations Individuals/Indians
Indians in Canada (sometimes referred to as First Nations people) are eligible for sales tax free purchases in some cases. This often comes down to how the purchase is used and whether it occurs on or off of a reserve.
Purchases of goods and services by Indians are free of sales tax if:
The above scenarios are contingent on the individual purchasing the goods or services having valid documentation stating their eligibility for tax free status as an Indian. Similar to the record keeping recommendation for tax-free purchases by a provincial government, the CRA insists on the same for tax-free purchases by First Nations individuals.
Special rules apply in Ontario due to a relief plan included in the Retail Sales Tax Act of Ontario. The relief plan provides Indians with valid documentation a point of sales rebate when purchasing goods off of a reserve while in Ontario. Full details of the relief plan are available here.
Foreign Companies Importing Canadian Goods
When selling and shipping goods to companies outside of Canada, no sales tax is charged. Even though the goods are still taxable, they’re taxed at a rate of zero which means no tax is charged. This is a positive for foreign companies looking to do business with Canada. Even moreso, companies that export goods are sometimes eligible for income tax credits on these goods even though they aren’t taxed when exporting.
If you conduct business with companies outside of Canada, some of the details can be confusing. Use the links below to read a few of our other articles that can provide some clarity on the subject.
Duty on Products From the U.S. to Canada
Shipping Goods to USA From Canada
Do I Need to Charge GST to Foreign Clients?
Business owners need to know which products and services they cannot charge sales tax on. Making a mistake and charging sales tax on something that’s either zero-rated or exempt can become a significant problem. With that being said, it’s important to make a distinction between exempt and zero-rated. Both zero-rated and exempt goods and services are free from sales tax. For reporting and rebate purposes, there’s an important difference. Exempt goods and services are generally not eligible for input tax credits, while zero-rated goods and services typically are eligible. Only public service bodies- non-profit organizations, charities- are eligible for tax credits on exempt goods and services.
The list below is an example of goods and services that are exempt from sales tax in Canada:
Examples of zero-rated goods and services are:
A full list and explanation of zero-rated and exempt goods can be found here on the Canada Revenue Agency’s website. It’s important to note that in provinces that charge PST (British Columbia, Manitoba, Quebec, and Saskatchewan) there may be different rules that apply to the PST portion for zero-rated and exempt goods. It’s important to consult a tax professional regarding which goods or services offered by your business should have sales tax applied.
Business owners in Canada can take comfort in knowing that it’s likely you’re eligible for input tax credits, or ITC’s. Claiming ITC’s can have a significant positive impact on the overall tax burden of a business. For most businesses, this will mean less tax is owed to the CRA. However, for some this can potentially lead to receiving a tax refund in rare cases.
Before business owners claim ITC’s it’s important to be aware of the requirements and process that needs to be followed. While being granted ITC’s is a plus, missing vital steps in the process can lead to costly errors. For example, incorrectly claiming ITC’s on a tax return can trigger a thorough audit by the CRA. Blatant errors found during an audit have the potential to bring about pricey fines.
Luckily, the steps required to properly file for and receive ITC’s aren’t too complicated. Take a look below at each of the steps in the process.
First and foremost, in order to be able to claim ITC’s, your business needs to be registered for the GST/HST. As noted earlier, this can be accomplished at the same time when obtaining a BN from the Canada Revenue Agency.
When it comes to which goods and services are eligible for ITC’s, there are important factors that need to be confirmed first.
Listed below are a few general guidelines that need to be followed to determine if goods qualify for an ITC
Additional rules and restrictions can apply when ITC’s involve financial services, real estate, and multiple companies.
Typically, the full amount of GST/HST paid for goods used for your business can be claimed through ITC’s. Of course, like most rules there are exceptions. Many of these exceptions come into play when a product is only partially used for commercial activities.
After you’ve collected taxes, it’s time to forward that money onto the CRA. If you’re a small business, the onus is on you to have saved the taxes you collected. Hopefully you still have it, and don’t have to scrounge it together in order to pay the government. The proper term for forwarding this money to the CRA is to remit payment.
For each different kind of tax, you will need a separate account, although there is a single registration process for both the GST and HST. After that is taken care of, you can choose to pay the taxes monthly, quarterly or annually, depending on which period you initially file in.
You can wire the money electronically, have your bank issue a check or send the payment by mail. Any payment over $50,000 cannot be sent by mail and will have to be remitted electronically or by your bank.
As far as PST goes, if you are in Quebec, Saskatchewan, Manitoba or British Columbia, you will need to file with the appropriate provincial government.
Whether you’re a U.S. based company shipping products to Canada or a Canadian business importing goods from the U.S., we can help you.
R+L Global Logistics offers anything you’d need, from warehousing your products until they’re ready to be shipped and sold to moving your goods to the final destination to sell. Our 99.5% on-time rate ensures your items will get there safe and sound, and our customer service team is prepared to be there every step of the way should you need help.
We also offer reverse logistics, pick and pack, and kitting and assembly services to offer a truly comprehensive cross border shipping service.
R+L Global Logistics can also arrange customs brokerage and complete the process for you. If you have any questions or are ready to begin the process of importing commercial goods to or from Canada, call 855-915-0573 to get started today.
As a country with the world’s third-largest oil reserves, oil production in Canada is massive. With advanced technologies and an ever-growing global economy, Canada is moving to the forefront of the oil industry. From Western Canada to the Atlantic Coast the country known for moose, maple syrup, and hockey may be the next big player in the world’s list of oil-producing countries. Understanding the oil industry in Canada and its complex interactions with other countries will help you have a better grasp on the trajectory of oil production in the area.
The four modes of transporting oil in the U.S. and Canada are rail, truck, pipeline, and ship. Oil production in Canada increases each year, producing more than the country can consume. Most of the oil comes from the Alberta Oil Sands and Sedimentary Basin. But, Canada still imports oil from foreign countries and exports a majority of its oil to the United States.
There are many aspects to the oil industry in Canada. Our complete guide below will take you through all of these details, helping you gain a comprehensive awareness of Canada’s oil production.
Canada produces a surprisingly large amount of crude oil. While one generally thinks of the Middle East when talking about oil production, Canada is actually the fourth-largest producer and exporter of crude oil. Additionally, according to the Canadian Association of Petroleum Products, the country’s overall crude oil production will grow over the next several years. Canada is considered one of the top ten oil-producing countries on a list that contains big players such as China, Russia, and Saudi Arabia. With an output of 5.27 million barrels per day, it’s no wonder Canada is counted among the key players.
In fact, Canada shared 5% of the total world oil production in 2018. That is a significant increase from 2016 when the country’s output was only 2.47 million barrels per day. Crude oil is produced across the country from coast to coast. Melting of the Arctic ice may also reveal more deposits of oil that Canada will have access to. With this rate of growth and increasingly more adept technologies, oil production in Canada is likely to continue increasing.
But where is oil produced in Canada and how is the industry growing so quickly?
As mentioned earlier, Canada extracts oil across the country. But, the greatest reserves of crude oil are found in Alberta’s oil sands. Alberta is a region of Canada located right next to British Columbia above Montana and Idaho in the United States. Other places oil reserves are located are the Western Canada Sedimentary Basin and off-shore oil fields in the Atlantic Ocean.
The oil sands contain the third-largest proven oil reserve in the world. They represent 97% of Canada's proven oil reserves and are an important part of the country’s economy. What exactly are oil sands? Oil sands are a naturally occurring mixture of sand, clay, water, and bitumen. Bitumen is the component that’s extracted and processed into crude oil. Similarly, shale oil and light tight oil are found in sedimentary rock and are another way Canada produces crude oil.
There’s no right or wrong way to extract oil, it simply depends where you’re getting it from. There are different methods for extracting oil from the oil sands versus the sedimentary basin. Don’t forget about the refining process after it’s been extracted either. Here is a short list of several different methods of extraction and refining.
Horizontal drilling and multi-stage hydraulic fracturing are used when extracting shale oil and light tight oil. The mining method and in-situ method are used for extracting oil from oil sands. Finally, upgrading is how bitumen extracted from oil sands is turned into synthetic crude oil. With 97% of the country’s oil reserves found in oil sands, the mining method and in-situ method are most widely used.
The mining method is just like it sounds, it employs traditional mineral mining operations and is used when oil sand reserves are closer to the surface. To start, the oil sand is scooped into trucks that move to crushers where the earth is processed. The oil sand is then crushed and hot water is added while it’s pumped to the extraction plant. At the plant, more hot water is added and the mixture of sand is allowed settling time. As the sand settles, various components separate and bitumen froth rises to the surface. This is then removed, diluted, and refined into crude oil.
Similarly, for the in-situ method the bitumen is extracted using hot water, or in this case steam. This method is used for 80% of bitumen that is too far underground for regular mining. First, two wells are drilled, one higher than the other. Then steam is injected into the top well and as the temperature rises the bitumen becomes liquid and flows into the lower well. The bitumen is then pumped to the surface from the lower well.
Canada is in an interesting position where it produces more oil than it consumes. This allows the country to be a net exporter of crude oil. Also, it’s largest trading partner for oil is the United States. In 2018, Canada was the largest foreign supplier of oil to the United States. The country exported 3.5 million barrels of oil a day to its neighbor which accounted for 96% of total crude oil exports.
Moreover, crude oil can be separated into two categories: heavy crude oil and light crude oil. Of the total exports to the U.S. about 78% was heavy crude oil while the remaining 22% was light. This is significant because the majority of oil produced from oil sands is heavy crude oil. In addition, U.S. refineries have upgraded their technology that processes heavy crude oil and prefer that type of oil, boding well for the Canadian market.
To further break down Canadian oil exports, the following list shows the U.S. regions that received crude oil in 2018:
As mentioned above, Canadian oil largely goes to the United States. The reason for that is because the United States has a higher capacity to deal with heavy crude oil than Canada does. The U.S. has 142 refineries and is in the process of building two more in Michigan and Illinois whereas Canada only has 19. The refining capacity of the U.S. ensures that oil will continue to flow south.
Likewise, Canada produces more oil than it has the ability to consume, even while only refining a quarter of the oil it produces. This means any new refineries would be refining oil for exportation, not internal use by Canadians. For this reason, it’s much easier to simply export the oil to U.S. operations.
In spite of the fact that Canada produces more oil than it can consume, the country still finds itself importing a large amount. The country supplying them is the oil-producing mogul Saudi Arabia and their relationship is not likely to end anytime soon. From 2008 to 2018, Canada imported $20.9 billion of Saudia Arabia’s petroleum oils. The Middle Eastern country supplies about 10% of Canada’s total oil imports. As of 2017, Saudia Arabia is its second-largest supplier of foreign oil, second only to the United States.
But if Canada possesses nearly the third-largest oil reserve in the world, why are they dependent on Saudi Arabian oil? It has to do with the type of oil reserves the country has and the refining process. The Alberta oil sands, which is where the majority of Canadian oil is found, produce bitumen. This mineral is extremely hard to refine and produces a very heavy crude oil. In fact, it’s so heavy that it must be refined before it can even pass through a pipeline. Canada doesn’t have the infrastructure or the means to refine such a heavy crude oil. Meanwhile, anyone can process Saudia Arabian crude oil. Compared to the thick tar-like hydrocarbon that comes from the oil sands, Saudi Arabia’s oil is like gold.
Additionally, to get Canadian oil to the eastern side of the country it would have to be shipped overland as there is no east-west pipeline in existence. This would increase the total cost of the oil. Rather, Saudia Arabia utilizes tanker shipment which is cheaper than overland shipment even though the country is farther away. Ultimately, Canadian oil is of lesser quality in some aspects than Saudia Arabia’s and is considered further from customers in terms of the refining process.
Finally, as its closest neighbor and trading partner, the U.S. is Canada’s second-largest importer of crude oil. In fact, in 2018 the country’s imports of U.S. crude oil actually increased. Crude oil from both Saudia Arabia and the United States goes to refineries in Ontario, Québec, New Brunswick, and Newfoundland and Labrador.
The price of crude oil is determined by the global market. Oil moves from one market to another by ship, barge, or pipeline and is traded globally, making its price dependent on the supply and demand balance. Prices of oil will change based on the cost of transporting it and the difference in quality between the varying types of oil. There are two types of markets for buying crude oil.
In the futures market, there are two types of buyers and sellers. The first type is the producers of oil themselves or refineries. Refineries will buy paper contracts of oil to lock in the purchasing price of that oil. It ensures they will receive a profit and protect themselves from price volatility. The second type is investors who don’t produce or consume oil themselves. They purchase paper contracts as an investment and can make money by correctly guessing if the price of oil will increase or decrease in the future.
Newspapers and other news media usually report the futures market price of oil for the nearest month as a representation of the current price of oil. In Canada, the average price per barrel of oil was $43.10 in August of 2019.
The Canadian oil industry is dominated by a few big players. While there are smaller oil extracting and processing businesses out there, the majority of oil is controlled by a select few. Those few large corporations are owned by multiple different shareholders. For example, less than 20 of all the operating companies in Canada handle the majority of oil production, refining, and marketing.
Currently, the Canadian stock market is dominated by energy companies, some who have become giants. It’s no surprise with Canada’s oil reserves projected to supply the country’s energy needs for the next 140 years. Also, it’s not just Canadians who hold the shares to Canada’s big oil companies. Investors, wealthy families, and banks are just some of the shareholders. Other entities that hold part of the companies are even foreign countries such as Norway, Japan, and the United States.
No matter your perspective, oil production in Canada is an industry that will most likely flourish for years and years to come.
Not all Canadian oil and gas companies are created equal. Here is a list of the top five companies and a few quick facts about each one.
Canada’s refining industry is ranked 11th in the world in capacity, even though they process only a small fraction of their own crude oil. This is because Canadian refineries were built to process light crude oil, not the heavy crude oil that’s currently coming out of Western Canada. Much of Canada’s crude oil is transported to other countries, but some remains. That which remains goes to one of Canada's 14 full refineries or their 2 asphalt refineries.
Refineries are located near major waterways, crude oil production, or near major population centers. The location helps a refinery determine where it sources its crude oil and the type it processes. Canada’s total refining capacity is 1.9 million barrels per day. In fact, Québec and Atlantic Canada has the largest refining capacity, second only to Western Canada which is then followed by Ontario.
Refineries in Canada produce refined petroleum products (RPP’s). This includes things like gasoline, diesel fuel, jet fuel, and heating oil. These products are largely for domestic use, but some of them do become exports.
Demand for oil is growing, in spite of the rise of many countries becoming energy conscientious. Canada is a country with a good international reputation for safety and innovation. They are set to take full advantage of this rise in demand.
Currently, Canada’s consumption of oil makes up 3% of the world share. Even though Canada is a huge country, it only makes up 0.5% of the world’s 7 billion inhabitants. The country consumed 110 billion liters of refined petroleum products in 2018. In spite of this, it’s a widely spread out country. Many people and goods have to travel long distances, they also have to use oil for heating and cooling with the varied weather patterns in Canada.
Conversely, it’s close neighbor the United States is the world’s biggest consumer of oil and natural gas. The U.S. consumes 20% of the world's total share, which is 19.69 million barrels of oil a day. If Canada’s oil consumption is considered low one only has to look towards its neighbor.
As discussed earlier, Canada imports oil from foreign countries. It is not an energy independent country, but it certainly has the capacity to be. There’s even a shift in government thinking that is pushing for energy independence. Both the Conservative Party and the Green Party in Canada want to stop depending on foreign countries for oil, but both for different reasons.
The Conservative party in Canada wants to rely solely on domestically produced oil in order to stop supporting rogue states and invest inside Canada instead. Their goal is to cut off all foreign oil imports by 2030. In order to do that, they want to spearhead several new pipeline projects. One of the main issues Canada has in using its own oil is the inability to transport heavy crude oil through pipelines and its lack of a west-east pipeline.
On the other hand, the Green party wants to become energy independent for more intrinsic reasons. First, they want to stop climate change by refusing to use foreign oil imports. Rather, they would ensure that Canadians only use Canadian oil if they have to use it at all. The Green party also disagrees with all new pipeline projects.
But, to become energy independent as these groups desire, Canada may have to upset some of its close trade partners. First, the United States is one of its main importers of oil as well as its biggest export partner. Canada would also have to say no to Saudi Arabia, Kazakhstan, and Venezuela.
The idea of becoming energy independent is appealing but most likely not going to happen anytime soon. But, that doesn’t mean that Canada’s vast oil sands and sedimentary basin won’t be producing much of the world's oil. As the country with the third-largest oil reserve, the world will surely rely on Canada for it in the future.
Transporting oil involves a complex network of pipelines, railways, trucks, and ships. Currently, almost all of Canada’s exported oil goes to the U.S., although they are looking to diversify that to stabilize the industry’s future. For example, Canada has incredible access to India, China, and Southwest Asia from the west coast. Asian markets are only an 8 to 11-day sail from Canada’s coast. But, transporting oil isn’t as easy as it may first appear.
Pipelines are the number one way oil is transported, not to mention one of the most efficient ways. In Canada, however, many argue that the pipeline infrastructure is severely lacking. There is no existing pipeline from east to west in the country, which makes it even harder to trade on a global scale. Canada is looking to meet the growing capacity and enter into new markets with the creation of several new pipelines, such as the TransCanada Keystone XL Pipeline and the Trans Mountain Expansion Project.
The other way in which oil is transported is via oil tankers. These ships have been moving safely around Canada’s coast since the 1930s. An average of 580 million barrels of oil is transported along Canada’s coasts by oil tankers. All ships are regularly inspected against international standards, in fact, Canada outlawed all single-hulled ships in 2010. Now only double-hulled tankers are allowed to operate in Canadian waters. Additionally, in the event of a spill or other accident, the Western Canada Marine Response Corporation is certified by Canada to respond.
Finally, railway systems allow oil to be transported to areas that could not otherwise be reached. They give producers greater flexibility to meet demand and get oil to areas where there is no pipeline infrastructure. U.S. and Canadian governments have worked together to increase safety standards for the rail system to ensure the industry continues to function appropriately.
Without the necessary pipeline infrastructure, rail is the alternative mode of transportation for oil producers. In order to meet the rapid growth from new supply regions like the oil sands, producers are having to rely on rail or face a build-up of product. Without the pipelines, every new barrel of oil is moved by rail.
For example, in 2016 the number of barrels moved per day by rail was only 100,000. In 2017 that number increased to 140,000 barrels per day, about three percent of all of Western Canada’s supply. Finally, in 2018 the number reached an incredible 200,000 barrels of oil per day that are being moved by Canada’s railways. It’s apparent that to meet this increased production, rail systems will continue to be important.
In fact, many oil production companies, such as Suncor Energy and Imperial Oil, are actually appealing to the Alberta government to send more crude oil via rail. They’re seeking to increase monthly production of oil barrels, but they can only do it by committing to ship a certain amount through the railway. Similarly, their goal is to meet new market needs in places such as the U.S. Gulf Coast.
In the economy of the industry, transporting oil by rail plays an important role. Pipelines are regulated by the federal government and oil-producing companies usually have to enter into long term contracts with the pipeline companies. Meanwhile, shipping oil by rail does not require long term contracts, making it more financially appealing. There is also no regulated rate of return for railroad companies. Transporting oil by rail also gives producers more options on where the oil will be picked up and delivered.
When shipping by rail there are many safety and environmental concerns to take into consideration. For example, the Canadian railway system has enhanced its safety regulations and protocols to combat the risk of a derail, which could then cause an oil spill. Still, transporting oil via rail is a viable and generally safe way to move oil from one location to the next.
The other option available to oil producing companies is to transport oil by truck. Out of the four ways of transporting oil, truck is the least common. For example, in the United States, only 4% of oil shipments were done by truck, which is more than the 3% that was done by rail. But, in Canada, nearly all of the oil is transported via pipeline.
Still, getting oil to market is a process and requires various transportation and storage means. Oil is often produced far away from where it is consumed, requiring lots of travel and storage to measure supply and demand. While trucks may not be used often for getting produced oil to refineries, they are helpful in delivering refined petroleum products. They have the greatest flexibility in destination, even in spite of their small storage capacity. Transporting oil by truck is usually the last step in the process.
The advantage of utilizing trucks is that they provide direct travel from the source to the destination. Ultimately, these four methods of transporting oil will likely be used for the foreseeable future. Advancements and changes will occur in ways to reduce emissions, increase efficiency, and prevent spills and leaks.
If you are looking to transport oil between the United States and Canada, R+L Global Logistics can help with NAFTA Certificate of Origin and moving machinery questions. We are an international shipping company with expertise in a variety of industries that can help with everything from bonded warehouses to understanding duties on commercial products. Our experience ranges from technology and consumer goods to chemical products and business franchises. In house supply chain consultants will work with you to identify and solve all your logistical needs, from storage to business cycles. Our trained domestic ground and international certified employees understand how to handle high-risk cargo and will make sure your product safely gets from point A to point B. We also offer service along the border, including in convenient cities like Oroville and Derby Line and in states like Idaho and North Dakota.
When transporting oil between the U.S. and Canada, be it via rail, truck, or ship, make sure you have the help you need. Fill out the form below or give us a call at 855-915-0573 and we’ll carefully arrange your next oil shipment.
Companies looking to ship goods to Canada might be confused about the difference between a bonded warehouse and a sufferance warehouse. After all, when you ship goods to another country, they don’t just get sent straight there. Instead, a regulatory agency will inspect the goods for legitimacy and legalities. In Canada, the entity that does this is known as the Canada Border Services Agency (CBSA). If your goods can’t get immediate clearance, then they can sit, and sit, and sit. To delay excise taxes, customs duties, and more, you might stash your goods in a bonded or sufferance warehouse. What are these and what's the difference?
Both bonded warehouses and sufferance warehouses are private facilities that are regulated by the CBSA and used to defer duties for a period of time. Sufferance warehouses are used for short term storage (40 days or less depending on the product), while bonded warehouses can hold goods for up to 4 years in most cases. There’s also some other important differences between bonded and sufferance warehouses in regards to modifications that can be made to goods in each warehouse.
In this article, we will expand more on the differences between bonded warehouses and sufferance warehouses, including the warehouse types, time limits, regulations to adhere to, and the benefits. By the time you’re done reading, you’ll be able to decide if a bonded warehouse or a sufferance warehouse would work best for your company.
Let’s begin with the definition of a sufferance warehouse. As we mentioned above, a sufferance warehouse is one that’s privately owned and regulated by the CBSA. Like with a bonded warehouse, you can avoid customs duties for the duration of time the goods stay in a sufferance warehouse.
Before you can get your item into a sufferance warehouse, you must post your financial security bond. It’s important to note that the only modifications that can be made to goods in a sufferance warehouse are markings or stampings. Even this can only occur in special circumstances.
What are those circumstances? According to Canadian law, alterations or modifications can occur through licensees for:
The products you may keep in a sufferance warehouse vary. That’s why there are five types of sufferance warehouses for related goods. These are Type A, Type B, Type C, Type S, and Type PS facilities.
Let’s talk about each warehouse type in more detail now.
Type A
The first category of sufferance warehouses, Type A, encompasses all general merchandise. Those who use these warehouses include stevedoring companies and harbor commissions (AW), cargo handlers (AH), railway companies (AR), marine companies (AM), and airlines (AA).
Type B
Type B sufferance warehouses also store general merchandise, but this time for commercial motor vehicles made for highway use.
Type C
Yet another type of sufferance warehouse for general merchandise, Type C spaces are run by a third party. These may include customs brokers, bonded freight forwarders, deconsolidators, or consolidators. The parties will import, sort, deconsolidate, and/or store the items in question.
Type S
Specific commodities go into Type S sufferance warehouses. These include licensed warehouses (SO), provincial liquor jurisdictions (SL) and used personal effects and household goods (SH). Human plasma, flowers, poultry, fish, fresh meat, vegetables, and fruits (SF) can also get stored in these warehouses.
Type PS
Only private railway siding gets stashed in a sufferance warehouse that’s Type PS. These importers may operate or own the railway sidings. They have imported goods in carloads that have yet to be released through the CBSA.
As noted earlier, sufferance warehouses are designed for short-term storage. The time limit is 40 days or fewer. If you need to keep your goods in storage for longer than 40 days, then you’d want to think about using a bonded warehouse instead.
Looking at the nature of the items you can store in a sufferance warehouse, it doesn’t necessarily make sense to keep them all in a facility for 40 days. Edible items like vegetables and fruits would surely go bad by then.
That’s why the CBSA mandates different time limits depending on the item. Here’s a breakdown:
What happens if you by chance don’t get your imported goods out of the sufferance warehouse in time? Per the law, the CBSA or another Canadian authority will do the following with your items:
A customs bonded warehouse is the other option you can use for storage of imported goods into Canada. These warehouses are licensed by the CBSA. The items stored here are on their way to being imported yet aren’t released. There are no duty payments despite the imported status of the goods.
You also have more freedom to change your goods when in a bonded warehouse compared to a sufferance warehouse. For example, you can trim or cut the item down. You may also choose to dilute it.
You can even test defective parts or products while your item sits in a bonded warehouse in Canada. If you want to package the product for the first time, change the packaging, or upgrade the labels, you can.
If you’re contemplating a bonded warehouse for keeping your company’s imported goods, then you’re going to want to know how these warehouses work. Below are the steps you may follow if you wish to use a bonded warehouse.
While bonded warehouses offer the convenience of a duty-free facility with more time for goods storage, these warehouses have rules. Make sure you familiarize yourself with the following Canadian warehouse regulations.
Customs Bond Posting
If one is necessary, then you must post your customs or financial security bond with the chief officer of customs. Your bond can be in the form of a transferable bond, certified check, or cash.
Licensed Facilities
For all facilities licensed as a bonded warehouse, they must have security requirement signs, window and door locks, and “components of sturdy construction.”
Warehouse Use
When a facility enters use as a bonded warehouse, the license owner must ensure goods are stored in a secure and safe manner. All goods must also be labeled or otherwise identifiable. This allows for CBSA officers to compare documentation of the goods against the product itself.
No one can take the goods from the warehouse or deliver them unless they’re a carrier, related employee, or licenser.
Restricted Items
The following items are not allowed in a bonded warehouse:
While very strict limits exist on goods arriving to a sufferance warehouse facility, that’s not the case with a bonded warehouse. At the very least, you may keep your goods stored for a few months, and at longest, over 10 years.
Here’s how the goods storage times go for a customs bonded warehouse:
Even the shortest timespan, the 90 days for trade show goods, is a lot longer than the 40 days you get when keeping your items at a sufferance warehouse.
On that note, let’s discuss the benefits your company could reap if you were to choose a bonded warehouse for the storage of duty-free imported goods:
While bonded warehouses certainly do have a slew of benefits, they’re not your only choice. You should also consider a sufferance warehouse for your cargo control and goods storing needs. Now that you know the differences between the two, the question becomes how to choose from a bonded warehouse or sufferance warehouse?
The first factor that can guide your decision is how long you need your goods in storage. If you need to put a short-term stop on your import duty, then a sufferance warehouse makes the most sense. Remember that you get only 40 days, so a little over a month. Many other products may have shorter spans, with the briefest only four days and some longer periods up to two weeks.
If you don’t have immediate plans for releasing your imported goods, then it’s best to go with a bonded warehouse. At most, you can keep your goods in one of these warehouses for 15 years. While those are products of a specific nature (aircraft and watercraft parts and components), even for more general products, you won’t have to take them out any sooner than four or five years. That’s much better than a mere 40 days.
Another factor you have to think about is how much access you want to your stored items. If you don’t mind keeping your goods behind lock and key, then choose a sufferance warehouse. You’re not totally cut off from your goods, but you need to acquire permission before you can access them. Considering your items are only stored in the warehouse for 40 days, this might not be worth it.
With a bonded warehouse, not only can you see your goods as desired, but you can also make changes or manipulations to them. As you recall from earlier in the article, these approved manipulations include cutting the item, disassembling and reassembling, labeling it and changing the labeling, testing for defects, and diluting the item. You can’t do any of that when your goods go into a sufferance warehouse.
Do you want to ship freight into or out of Canada and need a logistics company to help make it happen? Call on us at R+L Global Logistics. We offer the freight carrier and shipping services you're looking for to ship everything from beef to clothes using services such as bonded warehouses to store your goods. Our company has freight that delivers to over 50,000 customers, including those in Canada. We ship from cities and states like Detroit, Michigan.
For your international shipping needs, R+L Global Logistics offers warehousing, ocean shipping, exporting and importing, ground shipping, customs brokerage, air charters, and air freight. We cover a variety of industries as well, among them business franchises, engineering, chemicals, medical, life sciences, consumer goods, and technology.
The next time you wonder about the difference between bonded warehouses and sufferance warehouses and which is better for you, call on our team at R+L Global Logistics. We’ll help get you there. Give us a call at 855-915-0573 today!
If you’re looking for more information about CBSA Bonded Warehouses, then you’ve come to the right place. In this article, we’re going to take a look at what exactly these types of warehouses are and how they can help you, whether you’re an entrepreneur, established business or importer acting on behalf of other firms. It’s important to note from the outset that not all warehouses in Canada are the same. The type of warehouse that we’re going to discuss here brings a number of benefits that help to take some of the risks out of your enterprise and keep your balance sheet healthy.
If you want to supply goods into and out of Canada, then you want to know whether you have to pay import duties the moment that they arrive on Canadian soil or if you can defer taxes until you release the goods for consumption in the Canadian market. In this article, we’re going to answer this question and many more by looking at the policies of the Canada Border Services Agency and the role of CBSA Bonded Warehouses.
By the end, you’ll have an understanding of what these facilities are and how they can benefit the financial position of your firm.
Thousands of companies import and export goods to and from the Canadian market. If these goods come from countries that do not have free trade agreements with Canada, they’re subject to trade duties. Trade duties are taxes that importers and exporters must settle with the Canadian authorities when supplying goods to Canada, or from Canada to countries that do not have a free trade agreement with Canada.
Trade duties present a problem for companies engaged in international trade. While customers shoulder the burden of the tax in the final purchase, companies have to pay import duties based on the MSRP of the products if they want to sell them in the domestic Canadian market.
Bonded warehouses, however, provide a helpful workaround. Bonded warehouses are select facilities approved by the CBSA that allow companies to defer the payment of customs duties until they sell products into the market.
If you’re a company owner that imports products from overseas into Canada or exports abroad, you’ll immediately see why this is so appealing. If you have to pay import/export duties up front, you take an immediate hit to your cash flow. You must pay taxes now but may have to wait until you receive money from buyers in the future. After a large shipment, therefore, your cash position can take a significant hit, making your business less financially stable.
There’s an opportunity cost of paying duties up front too. You can’t use the money you pay in taxes to accumulate interest in the bond market or invest in other aspects of your company. Making large upfront payments before you’ve received money for the goods can erode wealth creation over the long-term.
So, how exactly does a bonded warehouse work in practice? Bonded warehouses in Canada are privately-run facilities that participate in the Customs Bonded Warehouse Program operated by the CBSA. The idea is to provide a space in which companies can store items and defer the payment of taxes and duties until the release of goods to market. Custom bonded warehouses are, therefore, a way of giving both importing and exporting firms inventory flexibility while making the timing of tax payments more financially manageable.
CBSA Bonded Warehouses can benefit the following types of organizations and businesses:
Once you operate a bonded warehouse in Canada, you’re able to defer all of the taxes that you’d ordinarily have to pay until you eventually come to sell the goods. It’s important to note that bonded warehouses are not a government-run facility, nor are there specific bonded warehouses that you must use. Instead, bonded warehouses are best thought of as being part of the Custom Bonded Warehouse Program. You can either choose to use a warehouse already in the network or build one of your own and apply for membership.
If you’re a business owner, you can appreciate the utility of being able to defer taxes with a bonded warehouse. As we discussed, being able to put off taxes until you actually sell your goods helps to dramatically improve your cash position and avoid costly cash flow issues.
It’s worth pointing out that there are other advantages too. Let’s take a look at some of the benefits you can expect.
While most business leaders will be most interested in the duty deferment component of CBSA bonded warehouses, there are many other benefits, particularly if you decide to slot into the existing network. Bonded warehouses provide the same efficiencies and benefits that you find in the private third-party inventory management industry. In fact, given that CBSA bonded warehouses are private facilities with membership of the Custom Bonded Warehouse Program, this is precisely what you’d expect.
As with any program of this nature, there are rules and regulations to prevent abuse of the system. The main goal of the program is to grease the wheels of international trade, helping to reduce transaction costs associated with cross-border trade. It is not designed as a tax avoidance scheme or a way for companies to indefinitely defer tax payments on goods entering and leaving Canada.
If you’re thinking about using CBSA bonded warehouses, you probably have questions about what is allowed under the system, and what’s forbidden.
The CBSA defines what it calls “allowable activities” in its policy document. These are actions that you can apply to the goods in your inventory while inside a bonded warehouse.
Take a look at the following examples of what are allowable “minor alterations” under the scheme:
The CBSA rules also allow you to perform other minor modifications of stock such as cleaning, preserving, diluting, sorting and grading, and trimming, slitting, and cutting. The basic idea is that you’re doing things that prepare the goods for market. You’re not doing anything that adds value, besides enabling products to remain in storage for longer.
What about other regulations? As you might imagine, once inside a custom bonded warehouse, inventory has to meet the regulatory requirements of Canadian law. Banned goods cannot be imported to CBWs, for instance. Neither can products that do not meet government department requirements - including permits and authorizations.
Anyone who wants to operate a custom bonded warehouse must complete Form E401 - Application for a License to Operate a Customs Bonded Warehouse. You must then take this form to the CBSA office that’s closest to the location of the proposed warehouse. If you plan on using a third-party warehouse, you must still complete the form.
If you run a business looking to ship freight to or from Canada, then the question of timing is essential. How long can you keep goods in a CBSA bonded warehouses?
The standard answer is that you’re allowed to keep goods in storage for four years. This length of time differs from that of the US where the authorities there let exporters and importers keep inventory for five years tax-free.
The start of the four years begins from the moment that the goods enter the warehouse. However, while the four-year limit applies to the majority of products, there are some exemptions.
Schedule 19 of the Custom Bonded Regulations lists four groups of goods all with varying time limits. The first group are non-consumer goods, including aircraft, ships, drilling supplies and other heavy plant and machinery. These goods attract a time limit of 15 years. The second category is beer and wine. The CSBA allows you to hold these in bonded warehouses for five years. The third category includes goods that you might want to use for marketing purposes. So, for instance, if you’ve imported products that you’d like to display at a trade show or exhibition. In this case, you have 90 days before the tax is due.
All other goods fall into the fourth category and attract the four-year limit we discussed above.
The CBSA’s role is to oversee bonded warehouses in Canada and ensure that the businesses using them remain compliant with the regulations set out in the Customs Bonded Warehouses Regulations Document. The rules put specific requirements on CBSA warehouses, dictating how they must operate if they wish to remain a part of the Custom Bonded Warehouse Program.
Here are some of the things that the CBSA does regarding bonded warehouses:
The primary role of the CBSA in bonded warehouses is to oversee operations. As you can see, they’re similar to any other regulatory body. They don’t have any experience in operating warehouses themselves. Instead, they set the rules and then use the law against anyone who violates them. The purpose of the organization in this regard is to establish that importers and exporters correctly use the facilities, and manage them according to CBSA standards.
While official figures are not available on the precise number of bonded warehouses in Canada, common sense leads you to suspect that there is a high number. Custom bonded warehouses in Canada are facilities that are licensed by the CBSA and have obtained a license to operate. These warehouses don’t have to be custom-designed storage spaces in the traditional sense. They can be any facility that meets the requirements of the Custom Bonded Warehouses Program.
This fact means that the number of bonded warehouses in Canada is likely to be high. A business can create a custom bonded “warehouse” out of its existing office space if it wants, as long as it meets the regulatory requirements set out in Memorandum D7-4-4. This memorandum provides general guidelines and information that the occupiers of custom bonded warehouses in Canada must follow. These guidelines include detailed instructions for how companies are allowed to both process and store bonded goods in their possession.
As you might expect, space in custom bonded warehouses isn’t free, just as it isn’t for any other storage facility. There are many costs associated with using these facilities, besides any tax or duties that you might be liable to pay.
The first charge relates to storage area accommodation. If you’re using a third-party warehouse, then you’ll need to pay a fee that is proportional to the space you need. Different warehouses have different rates, so it’s worth inquiring ahead of time to find out which offers the best value.
The second cost you’ll likely face is the cost of insurance. The more valuable the goods in your inventory, the more your insurance premiums will be.
The third cost is customs duty handling charges. The CBSA considers goods in bonded warehouses in Canada to be imports that have not yet attracted import duties.
The Receiver General for Canada also has an additional requirement for Customs Bonded Warehouses. Warehouses must offer a security of 60 percent of the total amount of duties and taxes owed at any given time. The idea here is to ensure that even if there is a dispute or issue with the business model, the Receiver General still gets paid.
An FTZ is a “free trade zone” - a special area in Canada where businesses can get tax exemptions for goods and materials that come into the country. The idea of FTZ is to allow companies to import products into Canada for assembly and then re-export them abroad without attracting taxes. As with bonded warehouses, it’s a way for businesses wanting to ship freight to avoid double taxation and only pay duties in one country.
Businesses can store goods in an FTZ, process them, or assemble them as they see fit. Then, if the products are destined for a foreign market, the company doesn’t pay any duties or taxes. Or, if the goods are for the Canadian market, the company can defer paying taxes until the products are sold.
At first glance, FTZs and bonded warehouses seem quite similar, but there are several differences.
It’s important to note that the CBSA considers FTZs in Canada to be outside of the territory of Canada for collection of trade duty purposes. The border authorities do not insist that companies create a record for when particular goods entered the country in an FTZ, whereas they do for a bonded warehouse. As a business, you’re free to ship products from a bonded warehouse to an FTZ. However, if you move products to an FTZ, it must be for destruction or export purposes. You cannot process goods in an FTZ and then send them back to a bonded warehouse for distribution in Canada.
We’ve hinted already in our discussion that you’re able to make changes to goods while in a bonded warehouse, but there are limits to the kinds of changes that you can make. In general, you’re not permitted to make changes that will substantially alter the character of the goods that you intend to import or export. The primary role of the Custom Bonded Warehouse Program is to provide you with a facility for the delay of tax payments on your inventory. It’s not meant to be a way to bypass certain import or export restrictions.
So what changes can you make?
Labeling is essential if you need to distribute items in the post or ship to a variety of locations. It helps make it clear who the intended recipient is, what’s in a particular parcel, and provides tracking facilities. Labeling, according to CBSA rules, does not constitute a significant change to the goods themselves.
Many companies need to verify that the items in their inventories are functional. The CBSA, therefore, allows importers and exporters to test the goods in their possession to ensure that they are fit for the market.
Some chemicals and other products require dilution before being shipped. You could argue that this involves a material change to the product, but it is allowed under the CBSA rules.
The CBSA allows companies to sort and grade inventory in bonded warehouses.
Companies are allowed to service and maintain equipment in bonded warehouses. This feature is particularly helpful for companies importing and exporting expensive vehicles, such as airplanes.
While bonded warehouses might seem like a great choice for the majority of businesses there are alternatives. What's more, these alternatives may be far more suitable for particular kinds of operations.
Here are some of the alternatives to bonded warehouses:
Which of these programs you choose is related to the kinds of activities that you undertake. Each comes with a host of benefits but also qualifications.
Take the Duties Relief Program, for instance. This program, available through bonded warehouses, relieves duties on goods that you import into the country for processing. The qualification, however, is that you must export them within four years.
The Drawback Program is similar. The program refunds duties on goods coming in and out of the country. To claim, however, the products must have been exported within the last four years.
The Export Distribution Center Program provides upfront relief on Goods and Services Tax (GST) and Harmonized Sales Tax (HST). You’re able to take part in the program if exports make up 90 percent of your sales and 90 percent of the money your business makes is from commercial activities.
The Exporters of Processing Services is something different again. This program allows companies to import goods that are not destined for the Canadian market and then export them back without paying duties. The interesting thing about this program is that it does not place any restrictions on the value of the sales that you can add to the goods of non-residents. So, for instance, you could import cars, modify them, and then ship them off overseas at a massively inflated value, attracting no additional tax.
Some goods enter Canada in the form of an in-bond shipment. The vast majority of these in-bond shipments come from the US, Canada’s largest trading partner. The way the concept works is simple. Instead of processing the truck carrying goods at the border and settling any import duties there and then, it is allowed to travel on Canadian highways “in-bond.”
In-bond cargo, like CBSA bonded warehouses, helps to make the process of conducting international trade smoother. The in-bond truck drives to the appropriate bonded warehouse or CBSA office, deposits the goods, and then returns to its depot. The products then remain in the warehouse or offices until the seller in Canada distributes them. Once released, the seller then pays any import duties owed to the Canadian government.
It’s worth pointing out that only bonded highway carriers are allowed to take part in in-bond shipment processes. These are entities that the CBSA trusts to make the requisite deliveries to approved facilities throughout Canada.
Any business that wants to make use of a bonded warehouse has to complete Form E401 which we discussed above. They must also provide the CBSA with additional information about the bonded warehouse that they intend to use.
Here are some of the details that you’ll need to include in your application to the CBSA:
Once the CBSA receives your application, they will consider it. If they believe that what you propose meets the requirements of the Custom Bonded Warehouses Program, then they will grant you a license with a unique number.
If you’re planning on shipping goods to Canada, then you need partners who you can trust to get the job done. While navigating Canada’s complicated import and export rules can be a challenge, we’re here to help simplify the process and give you what you want: effortless shipping. We can help you ship everything from clothes to wood, all while keeping you apprised of NAFTA Certificate of Origin regulations and duty on commercial product regulations from the U.S. to Canada.
At R+L Global Logistics, we’re committed to shipping goods to Canada and helping you find solutions that enable you to defer taxes and get exemptions where applicable. We serve clients of all sizes, from mom-and-pops to large multinationals. We are your single point of contact for all shipping services that you might need for Canada. We work in cities and states all along the border, including Sweet Grass in Montana. Our team of specialists can deal with issues surrounding CBSA bonded warehouses, in-bond transport, the Canadian Duties Relief Program and much, much more. With R+L Global Logistics as your partner, you’re able to open up new markets, protect against double taxation, and improve your cash flow by deferring duties on imports and exports to Canada.
Ready to import or export goods from Canada and want a partner who can take care of all the legwork? If so, get in touch with us today by filling out a form below or give us a call at 855-915-0573.
