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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. 

Sales Tax in CanadaSales Tax in Canada

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.

What is GST in Canada?What is GST 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.

What is the HST in Canada?What is the HST in Canada

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. 

Do All Provinces Charge HST?

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.

PST in Canada, What is it?

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. 

How does the GST, HST, and PST Work?How does the GST, HST, and PST Work

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.

How do I Register to Collect Sales Tax in Canada?How do I Register to Collect Sales Tax in Canada

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. 

Registering for PST, QST, and RST

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.

How do I Report my Sales Taxes and How Often Does it Need to be Done?

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. 

Who Pays the GST, HST, and PST?Who Pays the GST, HST, and PST

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. 

Who is Exempt From Paying Sales Tax in Canada?

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:

  1. Only provincial government employees from Alberta, Manitoba, Northwest Territories, Saskatchewan, and Yukon are eligible for exemption; all HST provinces, along with British Columbia, Nunavit, and Quebec agree to have government agencies pay GST/HST on taxable goods.
  2. Individual must have official documentation available at the time of purchase that shows exemption eligibility.
  3. Purchases must be made with government funds; Government employees making purchases as an individual will not be eligible.

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:

  1. The purchase takes place on a designated Indian reserve. Services performed for a fee are also free of sales tax
  2. A purchase takes place off of a reserve, but the goods are delivered directly to a reserve
  3. Goods purchased off of a reserve will be used for band management 

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?

What Goods Are Exempt From Sales Tax in Canada?What Goods Are Exempt From Sales Tax in Canada

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. 

Input Tax CreditsInput Tax Credits

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.

  1. Ensure Your Eligibility to File For ITC’s

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. 

  1. Confirm That the Goods and Services are Eligible for ITC’s

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.

  1. Determine the Correct Amount to Claim

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.

How To Pay Taxes to the CRA

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.

Ship Commercial Goods To And From Canada With R+L Global Logistics

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.

 

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 Goods to USA from Canada CustomsShipping goods to USA from Canada Customs

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.

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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.

Is there Import Tax from Canada to USA?

Under the terms of the North American Free Trade Agreement (NAFTA), 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 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.

Shipping Restrictions to the USAShipping Restrictions to the USA

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.

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Shipping Goods to USA from Canada with R+L Global Logistics

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.

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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.  

How Much Oil Does Canada Produce?

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? 

Where is Oil Produced in Canada?Where Is Oil Produced In Canada

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. 

How Is Oil Extracted in Canada?

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. 

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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. 

How Much Oil Does Canada Export?

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:

Where Does Canadian Oil Go?

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. 

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Why Does Canada Import Oil?

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. 

Price of Canadian OilPrice Of Canadian Oil

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. 

  1. Spot Markets - This is where oil is bought and sold for cash and the delivery of it is immediate. The price of oil in the spot market is dependent upon the price of it in the second market.
  2. Futures Markets - This market trades barrels of oil on paper. It means that oil is traded based on a perceived monetary value and there is yet to be a physical exchange of the product. Paper contracts are bought and sold based on the expected market conditions for the future. 

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

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Who Owns Oil in Canada?Who Owns Oil In Canada

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. 

Notable Canadian Oil and Gas Companies

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. 

  1. Suncor Energy - The largest company in the country is Suncor Energy, operating out of Calgary, Alberta. Suncor produces synthetic crude oil from mining and drilling in the oil sands. After merging with Petro Canada in 2009, Suncor became the leading petroleum producing company in the nation. It’s been named the fourth most valuable business in the country and produces an average of 346,000 barrels of oil a day. The company boasts four high-capacity refineries and has 1,500 gas stations around Canada. 
  2. Canadian Natural Resources - The second-largest Canadian petroleum company, CNR is considered the seventh most important company in the nation. It’s one of the only fully Canadian companies and was started in 1973. It also happens to be Canada’s second-largest producer of natural gas. Similarly headquartered in Calgary, Alberta, CNR has field operations located in Western Canada, the North Sea, and West Africa. 
  3. Imperial Oil - This is the third-largest petroleum producing company in Canada. Founded in 1880, it’s currently headquartered in Calgary, Alberta. Exxon Mobile controls about 70% of the shares of Imperial Oil. Their production largely occurs in the Norman Wells oil field of the Northwest Territories and the Alberta Oil Sands. They produce oil, petrochemicals, and manage retail stores.
  4. Enbridge - Fourth largest petroleum company, Enbridge started in interprovincial pipelines in the 1940s. They focus mainly on energy transportation, distribution, and generation. Interestingly, this company transports crude oil and liquid hydrocarbons via the longest pipelines in the world. It is also a natural gas distributor for Canada. Some of its’ projects include the Alberta Clipper Pipeline and the Northern Gateway Pipeline. 
  5. Syncrude Canada Ltd. - Not one of the largest companies, Syncrude Canada is unique for different reasons. As its name suggests, Syncrude is owned by seven major oil and gas stakeholders. It’s largest partners are Canadian Oil Sands Ltd., Imperial Oil, and Suncor. The rest of the company is owned by two Chinese state-owned enterprises, a Japanese firm, and an American firm. Syncrude doesn’t trade publicly, for this reason, it’s not a stand-alone company but a consortium. Its focus is on synthetic crude oil, or bitumen that’s been uncovered and upgraded but is still not refined. The company actually produces enough low-sulfur oil to supply 20% of Canadians. 

How Many Oil Refineries Does Canada Have?

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. 

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Canada Oil ConsumptionCanada Oil Consumption

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. 

Is Canada Energy Independent?Is Canada Energy Independent

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. 

How is Oil Transported in Canada?How Is Oil Transported In Canada

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.  

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How Much Oil is Transported by Rail in Canada?

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. 

Transporting Oil by TruckTransporting Oil By Truck

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.  

Need Help Transporting Oil?

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.

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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.

What Is a Sufferance Warehouse?

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:

Types of Sufferance Warehouses

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.

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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.

Time Limits for Storing Goods in a Sufferance Warehouse

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:

What Is a Bonded Warehouse in Canada?What is a Bonded Warehouse in Canada

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.

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How Does a Bonded Warehouse Work?

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.

  1. You can then make changes to the goods in the warehouse, as we discussed in the last section. This is known as goods manipulation.
  2. Once the goods manipulation phase has ended, you can keep your goods in the warehouse duty-free.

Canada Customs Bonded Warehouse RegulationsCanada Customs Bonded Warehouse Regulations

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.”

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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:

How Long Can Goods Stay in a Customs 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.

What Are the Benefits of a Bonded Warehouse?What are the Benefits of a Bonded 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:

Should I Use a Bonded Warehouse or Sufferance Warehouse?Should I Use a Bonded Warehouse or Sufferance Warehouse

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. 

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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.

Need Help Shipping Freight to Canada?

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!

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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 and 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 important 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. 

Canadian Beef vs American BeefCanadian Beef vs American Beef

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. 

Why Canadian Beef?Why Canadian Beef

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. 

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Furthermore, Canada has a commitment to international regulations, ensuring that the meat products that they ship do meat the right levels of standards to ensure safe quality. The Canadian Cattlemen Market Development Council has also developed and 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.  

Where Does Beef Come From in Canada?where does Beef Come from in 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. 

What are the Grades of Beef in Canada?

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. 

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Canadian Beef Suppliers

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.

Shipping Beef from Canada in BulkShipping Beef from Canada in Bulk

Shipping in bulk is a good way of saving money, which is why a lot of companies choose to do this rather than just ordering what they need when they need it. You are going to have to speak to your individual supplier and see if they can offer you the option to ship in bulk. If not, you might want to consider switching suppliers to someone who can offer you this service. But, this doesn’t mean that you can just ship in bulk without thinking about everything that is associated with this.

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.

Shipping Beef and the Cold ChainShipping Beef and the Cold Chain

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. 

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Packaging Beef for Shippingpackaging Beef for shipping

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.

Canadian Beef and Free Trade Agreements

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. 

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Regulations for Shipping Beef from CanadaRegulations for Shipping Beef from Canada

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. 

Challenges and Technical Trade Issues Shipping Beef From Canada

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:

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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.  

Economic Impact of Beef from Canada

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 Canad accounted for $49.1 billion in the World Agricultural trade. This includes both exports and imports. 

It’s certainly true to say that agricultural trade between Canada and the U.S. has grown substantially since the implementation of NAFTA. Indeed, it is almost as significant in the growth of trade between that of America and Mexico. 

Indeed, in 2002, the value of the US 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 US 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. 

Beef imports have also increased up to 266 million pounds between 1997 and 2002. Live cattle trade from Canada to the US has also risen substantially in recent years. Again, the study suggests that there was a value of $1,146,176,269 for imported cattle from Canada in 2002. 

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. 

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Cost of Shipping Beef from CanadaCost of Shipping Beef from Canada

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. 

Shipping Beef from Canada with R+L Global Logistics

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.

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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.  

What is a Bonded Warehouse in Canada?What is a Bonded Warehouse in Canada

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. 

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How Does a Bonded Warehouse Work?

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. 

What Are the Advantages of a Bonded Warehouse?what are the advantages of a bonded warehouse

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. 

  1. Avoid double payment of taxes. Canada doesn't have free trade agreements with every country in the world. It does, however, have what are known as double-taxation agreements with foreign governments. Let’s say, for instance, that you want to export goods from Canada to Saudi Arabia. Both Canada and Saudi Arabia charge duties on the import and export of products, so there’s a risk of having to pay double taxation. However, when you use a CBSA Bonded Warehouse, the double taxation agreement between the two countries kicks in, meaning that you only have to pay duties when you finally ship your goods to Saudi Arabia. You do not owe taxes to the Canadian authorities. What’s more, the same principle applies in reverse if you’re importing from Saudi Arabia. 
  2. Inventory safety. If you decide to create your own bonded warehouse, then the security of the facility depends on the measures that you take. If, however, you choose to plug into the existing network, then you can benefit from enhanced security. Many bonded warehouses use security personnel, security cameras, and physical perimeter defences to ensure that your goods remain safe while in storage. Insurance companies may agree to lower your insurance costs if you use known, high-quality facilities.
  3. Long-term storage. Finding facilities to hold your goods is a common challenge. The benefit of the CBSA Bonded Warehouse is that it gives you the space you need to keep your products if you need to put them into long-term storage. Often companies ship their goods to bonded warehouses and then wait until demand picks up.
  4. Processing efficiency. Organizing any import/export operation is an administrative challenge. Passing management over to a third-party company can generate substantial efficiencies, helping to reduce shipping, logistics, and inventory processing costs. 

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. 

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Customs Bonded Warehouse Rules and Regulations

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. 

How Long Can Goods Stay in a CBSA Bonded Warehouse?how long can goods stay in a bonded warehouse

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. 

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What Does the CBSA Do in a Bonded Warehouse?

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:

  1. The CBSA reserves the right to grant, suspend and terminate licenses. The CBSA uses a Minister - an agent with authority to act on behalf of the organization - to communicate with licensees. If a company or warehouse does not comply with the rules of the CBSA, then the Minister will write a letter informing them of any changes to their license status. 
  2. The CBSA provides literature that companies importing and exporting goods can use to learn about the law governing their activities. The CBSA, for instance, provides documents on the transfer of goods to a sufferance warehouse, what products are restricted, and when tax has to be paid, irrespective of whether or not goods have been sold or not. 
  3. The CBSA has the power to impose sanctions on businesses who do not comply with the Customs Bonded Warehouses Regulations, thanks to the power the Canadian parliament granted it in the Customs Act. The CBSA has the legal authority to impose fines and, in cases of continual non-compliance, suspend licenses.  

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. 

How Many Bonded Warehouses Are There in Canada?how many bonded warehouses are in canada

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. 

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Cost to Use a Bonded Warehousecost to use a bonded warehouse

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. 

How Is This Different From an FTZ?

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. 

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What Changes Can be Made to Goods While in a Bonded Warehouse?what changes can be made to goods in a bonded warehouse

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

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. 

Testing

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. 

Dilution

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. 

Grading

The CBSA allows companies to sort and grade inventory in bonded warehouses. 

Service and Maintenance

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. 

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Alternatives to Bonded Warehouses

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. 

What Is Bonded Cargo?what is bonded cargo

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. 

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What Details Do You Have To Include In A Bonded Warehouse Application?what details do you have to include in a bonded warehouse application 

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. 

Shipping Goods to Canada With R+L Global Logistics

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

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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.

Canada’s Fashion IndustryCanada's fashion industry

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. 

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Canadian Clothing Brands in Your Closet

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

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.

Gildan 

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.

Sorel

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.

Roots

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. 

Arc’teryx

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. 

Herschel Supply

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. 

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Importing Canadian Fashion and Textiles into the United StatesImporting Canadian Fashion and Textiles into the United States

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:

  1. Do you have the time to manage importing and exporting?
  2. Do you have the capacity to meet market demands?
  3. Do you have the required cash flow?
  4. Do you understand the language and culture?
  5. Do you have a reliable distribution network?
  6. How well do you know the market?
  7. Is the market ready for your product or service?
  8. Do you know your target market and competitors?
  9. Are you aware of import regulations and tariffs?
  10. Do you know transportation and shipping costs?

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.

Do I Need a License to Import Clothing from Canada?

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:

What is the Importer of Record?What is the importer of record

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. 

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Crafting an Import/Export Plan for Canadian Clothing

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:

Is There a Duty on Clothes from USA to Canada?Is There a Duty on Clothes from USA to Canada

The North American Free Trade Agreement, or NAFTA, makes shipping between the U.S. and Canada simple and easy. You’ll find that goods, like clothing, manufactured in Canada can be eligible for duty-free or reduced duty rates, according to information from 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 NAFTA, 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%. 

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Free Trade Agreements for Canadian ClothingFree Trade agreements Canada clothing

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. 

Getting Your Clothing or Textile Shipment Across the BorderGetting Your Clothing or Textile Shipment Across the Border

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.

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Canadian Clothing: Being Aware of CounterfeitsCanadian Clothing Being Aware of Counterfeits

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:

Shipping Clothes Cross Border

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:

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.

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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.

Choosing the Right Shipping Service to Move Clothes from CanadaChoosing the Right shipping service to move clothes from Canada

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.

Crossing the Border with R+L Global Logistics

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. We can also assist with Canada's NAFTA certificate of origin and duty on commercial products from the U.S. to Canada questions. You’ll find we have a multilingual staff who has the acumen to work internationally to guide you through the cross-border shipping process. If you have freight to shop 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 to request a quote and get your freight on the road and across the border.

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Many people have a lack of understanding regarding duty on commercial products from the U.S. to Canada. There are many factors that affect the success of your shipment and its arrival at the end destination. Some of the factors include infrastructure limitations, customs requirements, security mandates, and duties and taxes. Knowing how much duty you’re expected to pay when importing goods is an important aspect.

Understanding duty on commercial products from the U.S. to Canada is an important part of shipping goods across the border. Not paying the right amount of duty for your products can cause significant delays with the CBSA and possible fines. Since many products fall into different categories in terms of duty that’s required, mistakes can occur. Many businesses choose to work with a logistics company that specializes in cross border shipments to ensure hassle-free shipments from the U.S. to Canada. 

What Are the Duty Rates in Canada?

The U.S. and Canada have a very close trade relationship. Shipments between the two from the U.S. to Canadian customs and back are considered to be commercial transactions. This means that if you are importing goods, these will be subject to rates of duty. Goods imported into Canada from the U.S. have federal and regional customs tariffs attached. The rates of duty on commercial products from the U.S. to Canada are regulated strictly by the Canada Customs Act, which is then enforced by the government of Canada and the Canada Border Services Agency (CBSA).

Examples of duties and taxes for major imports include:

Duties and Fees

If you are unsure about which category your goods fall under, it’s important to get the right advice. It can be difficult to work out the duty on commercial products from the U.S. to Canada, so don’t hesitate to get some help.

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What is Duty-Free From U.S. to Canada?

It is important to know what is duty-free from U.S. to Canada when you are shipping commercial goods, as fines for export violations can reach up to $1 million per violation - especially in criminal cases. Administrative cases where fines are present can amount to penaltis as high as $250,000, or twice the value of the transaction. Prison is a possibility for those who have a criminal violation and the penalties can also include denial of export privileges. 

Nearly all tariffs were removed from industrial and agricultural products under the terms of NAFTA. There are tariffs in place for dairy and poultry lines, though. Baby clothing, athletic equipment was also made duty-free, too. If there is any confusion, the best thing to do is contact a transportation and logistics company that specializes in cross border transportation between the U.S. and Canada. Most of these companies will partner with or have customs brokers on staff that are able to assist with this step. R+L Global Logistics has customs brokers available to assist in determining duties and taxes.

Does Canada Tax U.S. Imports?Does Canada Tax U.S. Imports

Canada charges a goods and services tax (GST) on items from the U.S. These tax rates vary depending on the item, and even if the item is duty free. The rates of GST stand at 5% across various categories of goods, but r beer/wine/liquor/tobacco etc, the rates vary according to province and can be found on the Canada Border Services Agency Website. 

The majority of products imported into Canada are must be charged GST/HST. GST/HST registrants must file returns on a regular basis, collect the tax on taxable supplies they make in Canada, and remit any resulting net tax owing.

All businesses providing taxable goods need to register and collect GST or HST.

Unless specifically exempted, the 5% GST must be paid and the CBSA will calculate the duties owing based on the value of the goods imported. 

How to Pay Duty When Shipping Goods From the U.S. to Canada

You can pay your duty in one of two ways. The first is with a customs broker under a customs bond. This How to Pay Duty When Shipping Goods From the U.S. to Canadaautomatically posts payments of duties and taxes for you. A customs broker will do all the paperwork for you, and you don’t have to worry about any of it. The second way to pay duty is to pay it yourself for your commercial goods. 

When submitting payment on your own, there is a wealth of paperwork required. You must present some of these in person at the Canada Border Services Agency office, and these include:

There are some Canada Border Services offices that provide you with self-service systems of Commercial Cash Entry. These systems make it easier to complete the B3-3 coding form. A major reason for this is that the system automatically calculates duties and taxes for you. 

Looking to Ship Freight to or From Canada?

If you are struggling with working out the duty on commercial products from the U.S. to Canada, why not trust the professionals to help? With R+L Global Logistics, you can ship freight to and from Canada with a team of efficient and trusted experts. We care about your shipment, and we want you to have the best possible service in a timeframe that suits you. We handle everything from Canada's NAFTA Certificate of Origin to complying with CFIA transportation regulations. Our certifications on our website show our commitment to excellence and level of expertise in the industry, with domestic and international shipping our specialty.

Don’t wait around, we are ready to do business all over the border, in states like Idaho and in cities like International Falls. From supply chain management to warehousing, RL Global Logistics would be proud to work with you on your shipment needs. Give us a call today at 855-915-0573 or fill out a form below to get started.

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The Canada NAFTA Certificate of Origin is a document used by businesses and organizations that trade goods with Canada. The certificate of origin covers goods imported and exported between the US, Canada, and Mexico. If an importer has a certificate of origin, which is provided by an exporter, for a product that qualifies for preferential tariff treatment, they can take advantage of more competitive pricing. The primary purpose of the NAFTA Certificate of Origin is to determine whether or not goods that are imported from other member nations are eligible for reduced or favorable tariffs. If products do qualify, and they have a valid certificate, the relevant duties will either be decreased or waived. 

To qualify for preferential tariffs when importing and exporting from Canada, every Canada NAFTA Certificate of Origin should be completed according to specified guidelines. This includes providing detailed information about the goods. If the form isn’t completed properly and signed by the exporter, there may be delays or complications related to duty relief. 

Our informative guide below answers the most common questions regarding the NAFTA Certificate of Origin.  

Do I Need a Certificate of Origin to Ship to Canada?

Businesses and companies that ship freight to Canada may be required to complete a Certificate of Origin, but this documentation is only relevant to a shipment that qualifies for preferential tariffs. A certificate is not needed if an exporter based in a NAFTA nation is sending a shipment to an importer in another NAFTA country where the goods are not eligible for duty reductions or relief. 

If you are dealing with products that do qualify for preferential treatment under NAFTA, you will need to complete a certificate in order to benefit from lower fees, provided that the value of the shipment bound for either Canada or Mexico is lower than $1,000 USD or an export from Canada is worth less than $2,500 Canadian dollars. In this case, the shipment should be accompanied by a statement that confirms that the goods are eligible for lower tariffs under NAFTA rules of origin. The statement should be either typed or handwritten and stamped, and it should be attached to the commercial invoice. 

It is the duty of an exporter to determine whether or not the shipment they are sending needs a NAFTA Certificate of Origin. If a certificate is required, the document must be completed in full, signed, and dated. 

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Where Can I Get a Certificate of Origin?Where Can I Get a Certificate of Origin

A Certificate of Origin is designed to incentivize trade between NAFTA countries and to make it easy for exporters and importers to arrange deals with businesses in member nations. Exporters are required to obtain and complete a Certificate of Origin when seeking preferential treatment for eligible goods that exceed the value of either $1,000 USD or $2,500 Canadian dollars. There are various options when looking for a Certificate of Origin, including:

Agency websites provide detailed information to accompany the form, which is designed to inform exporters about the data they need to include and ensure they fill in the relevant boxes correctly. It’s crucial to provide the necessary information to prevent delays and to ensure the relevant duties are applied. 

What is a Blanket Period on the Certificate of Origin?

A blanket period is a window of time, which can be specified by an exporter when shipping multiple deliveries that contain identical goods. When exporting shipments from one NAFTA nation to another, you will usually need to complete a certificate for each individual shipment, but this does not apply to exporters who send identical products to the same importer. In this case, the exporter can ship multiple loads within the blanket period. 

The blanket period must be up to 1 year long, and the start and finish dates should be clearly marked. It is important to note that the ‘from’ date constitutes the date upon which the certificate becomes relevant to the goods. It is possible for the date to precede the date of signing. The ‘to’ date is the date of the expiration of the blanket period. To qualify for preferential rates for eligible shipments, the products must be sent during this blanket period. If the blanket period has expired, a new certificate will be required. The time window should not exceed 365 days. If a blanket window starts on January 1st, for example, the period will terminate on December 31st. 

It’s essential for exporters to understand that the blanket period is viable for multiple shipments of identical items. It is not possible to specify a blanket window for shipments of different types of goods to multiple importers. The dates should be accurate and clearly marked on the form. If there is an error, for example, the end date is more than a year away from the start date, the form will need to be redone. 

Who is Responsible for Providing a NAFTA Certificate?Who is Responsible for Providing a NAFTA Certificate

Exporters are responsible for providing a certificate, and they are required to complete the NAFTA certificate in order to benefit from preferential tariffs. 

The first step for an exporter is to determine whether the goods qualify for reduced tariffs. If they do, and the value of the shipment exceeds the base value, a Certificate of Origin will be required. 

It is possible for a producer to complete the certificate for use by an exporter. 

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To fill in a Certificate of Origin, an exporter will need to provide the following information:

  1. Their name and address
  2. Their tax identification number: In Canada, this is the business number provided by the Canada Revenue Agency or the importer or exporter number assigned by the Canada Border Services Agency. In Mexico, this is the RFC, the federal taxpayer’s registry number, and in the US, this is the employer’s identification number or the Social Security number
  3. The blanket period (if applicable): this is relevant to multiple shipments of identical products and will constitute a period of time that is no longer than one year
  4. The full name, address, and tax number of the producer
  5. The full name, address, and tax number of the importer
  6. A detailed description of the goods
  7. The HS tariff number (more information about HS tariff numbers is available in the section entitled ‘What Products are Included in Nafta’)
  8. The chosen preference criterion (A-F)
  9. State ‘yes’ or ‘no’ depending on whether the exporter is also the producer
  10. State whether the goods listed are subject to RVC (regional value content)
  11. Specify the NAFTA country to which preferential tariffs apply, for example, US, MX or CA
  12. Sign the certificate: the form must be signed and dated by the exporter

Who Should Sign the NAFTA Certificate of Origin?

The NAFTA Certificate of Origin should be completed, signed, and dated by the exporter. When signing the document, it’s critical to ensure that the signature is provided by an individual who has in-depth knowledge of the process and the facts that underpin the NAFTA agreement. If the form is signed by a clerk or a packer, for example, this may raise suspicions. Generally speaking, the Certificate of Origin should be signed by those in more senior positions, including plant controllers, engineers or purchasing professionals. 

In order to ensure a smooth transition and enable importers to benefit from preferential tariffs without any hiccups, it’s important to make sure that every certificate is signed by somebody who has the relevant expertise and experience. The form should be signed and dated, and the date provided should represent the date on which the document was signed. 

Which Preference Criterion Should I Choose?

When completing a NAFTA Certificate of Origin, exporters will be asked to select a preference criterion. There are several preference criteria, which are represented by letters A to F. These letters relate to the originating good and provide more information about the composition and origins of the products contained within the shipment. Most commonly, exporters select A, B, C or D, but there are six criteria in total:

In order to qualify for preferential tariffs, goods must satisfy at least one of the criteria listed above. Detailed information about the rule of origin and guidelines about the criteria can be found within the Rules of Origin, which are outlined in chapter 4 of the NAFTA Agreement.  

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What Products Are Included in NAFTA?What Products Are Included in NAFTA

NAFTA was introduced to create seamless trade opportunities between Canada, the US, and Mexico. These countries traded with each other on a regular basis, and forming an agreement was a logical step forward. In 1994, the North American Free Trade Agreement came into play, and over the course of time since then, tariffs on several popular products and commodities have been eliminated. The aim was to encourage economic activity and build stronger trading relationships between the three participating nations. Preferential tariffs now apply to a diverse range of goods, with exporters and importers across the NAFTA region benefiting from lower fees and duties. 

NAFTA was implemented to provide mutual benefits for the US, Canada, and Mexico which traditionally had strong trading relationships. Approximately a quarter of all US imports come from Mexico and Canada, and these countries represent the second and third largest importers to the US. NAFTA tariff preference relates to a host of goods, such as:

Goods that are imported and exported within NAFTA countries are classified according to tariff schedules, which are outlined by authorities in the country into which the shipment is imported. NAFTA nations are members of the World Customs Organization, and as such, they employ a system known as the Harmonized Commodity Description and Coding System. This is a system that is utilized by more than 200 countries across the globe and it is designed to simplify international trade processes, to form a basis for customs tariffs and to make data collection more accessible. 

The Harmonized System, also known as the HS, includes thousands of commodity groups, and it uses six-digit codes to classify goods. The 6-digit code represents uniform classification, which facilitates the straightforward, swift movement of goods across borders. The code is created using the first two digits to indicate the chapter, the first four figures to represent the heading and the six numbers to produce the subheading. In some cases, an eight-digit code will be used to provide more information. These longer sequences refer to tariff items. 

Once a product has been classified according to the HS system, the next step is to determine whether the goods are eligible for preferential duties under the tariff schedules set out by individual NAFTA countries. In the US, the tariff schedule has ‘general’ and ‘special’ columns, while in Canada, there are ‘MFN’ or ‘Applicable Preferential Tariff’ columns. If the goods are listed in the general or MFN boxes, this means that no tariff applies, and the duty rate is set at zero. In Mexico, this arrangement is represented by ‘Ex.’ If the figure is not set at zero in the ‘general’ column, the next move is to check the rate that is outlined in the ‘special’ or ‘preferential’ column. Country codes MX, CA, and US will be used to identify the three nations. 

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Who Should I Speak to if I Have Questions About the Certificate of Origin?Who Should I Speak to If I Have Questions About the Certificate of Origin

If you’re not familiar with the NAFTA Certificate of Origin, the process of finding out if you need to complete a form and then filling in the certificate may seem daunting. If you have questions or concerns, for example, you’re unsure which criterion to choose, there is help and advice available online via the relevant US, Mexico, and Canada border agency websites. However, these websites can be difficult to navigate and actually getting in touch with a representative can take a significant amount of time. 

Many people choose to work with an experienced logistics firm to eliminate issues and speed up the process of sending shipments to and from Canada. When looking for a logistics company, it’s important to ensure that they manage shipments in the area that you’re looking for. 

Ship Freight To and From Canada With R+L Global Logistics

At R+L Global Logistics, we understand that our clients want to export and import goods as quickly and seamlessly as possible. These goods include everything from wood to furniture and heavy machinery. We know that our customers have reputations to protect, and we provide a swift, stress-free process for domestic and international clients. We work with customers across a broad spectrum of sectors, specializing in shipping and logistics services for businesses in the technology, consumer goods, life science and medical, chemical, engineering, and business franchise industries. We transport products rapidly, safely, and securely, taking the stress out of domestic and international shipping. Enjoy service across the border, including Detroit and Port Huron in Michigan

We have many years of experience in shipping freight to and from Canada, and we know everything there is to know about getting products to their destination on time. Whether you’re dealing with importers down the road or in another country, we’re confident we’ll exceed your expectations. Give us a call at 855-915-0573 or fill out the form below to get started. 

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There are a whole host of benefits to importing your wood from wood suppliers in Canada. This North American haven certainly has the forestry and natural wood supply to provide your company with some of the best quality wood in the world. An astounding 140 wood species are native to Canada alone. Each of those could help you to provide a unique quality product that no competitor could hope to beat. 

Finding wood suppliers in Canada is far from impossible and can be accomplished successfully by following some important tips. These tips include: identifying the specific types of wood that you plan to import, developing an inventory strategy, negotiating purchase and volume rates, establishing a transportation plan and more.  

Following the 9 tips below will ensure you find the right wood supplier to help your business thrive. 

1. Settle on the Specifics of What You Want

First, you need to settle on what it is that you’re after. This is the case when it comes to any business purchase, but it’s especially important when you’re considering importing. This is a time-consuming process, after all. While it is worth the wait if you get things right, ordering items that aren’t 100% suited to your needs will lead to wasted time that your business can’t afford.

To avoid that, do your research to get an idea of the type of wood you need to get the results you’re after. This level of planning ensures that you know exactly what you want by the time you start contacting suppliers, and that makes sure you never need to face silly and costly mistakes later on.

2. Decide How Important Sustainability Isdecide how important sustainability is

Sustainability and the ongoing efforts towards that goal are increasingly crucial for some businesses in the modern climate. A company that has put sustainability at the heart of its ethics should undoubtedly consider this before importing wood from anywhere to avoid reputational backlash. 

Admittedly, choosing wood suppliers in Canada tends to be a good move here. Canada is recognized as a global leader in sustainable forest management thanks to stringent Canadian forestry laws. That said, jumping into an ill-informed wood investment here could still do some damage or leave you trusting a non-compliant company.

If sustainability is an issue that matters to you or your company's reputation, then make sure you seek suppliers that operate in accordance with best sustainability practices. One way to do this would be to find suppliers who are approved by the Forest Stewardship Council (FSC), 22% of worldwide certifications are held by Canadian companies. The FSC will also work to make sure companies all along the supply chain are keeping with said regulations. That guarantees no hidden surprises crawl out of the woodwork along the way.

3. Know What Types of Wood You Want

Once you know the purpose of your wood and the ethics you want behind it, it’s time to consider the actual types of wood available. This is especially essential given that, as mentioned, 140 wood species found in Canada are native to North America alone. As such, you’ll need to do your research to understand your options here.

Some of the primary wood species you could benefit from importing out of Canada include:

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By researching these wood species and more, you can make sure that you’re knowledgeable when you do reach out to wood suppliers in Canada. That can save you time searching for the best wood, and should even secure you the best deal in the long-run. 

4. Determine the Amount of Inventory You Need and How Often You’ll Need It

Determining supply and demand is always vital with business stock, but getting this right is especially important when buying from wood suppliers in Canada. You can’t just order an extra unit or two if you get this wrong. Instead, every single shipment you make is going to need its own budget and a larger time frame than you’re used to from local suppliers.

Of course, most business owners would still consider the benefits of quality lumber imported straight from North America entirely worth the effort. But that doesn’t change the fact that you’re going to need to plan if you want to make this work. For one, you need to be 100% certain that you’re shipping the correct amount of wood with your first order. That means making sure you consider how much wood you need right now and in the coming months. If in doubt, it might be worth looking at your previous sales/business logs. Consider how much wood you’ve used in production until now, and use that as a starting point for importing.

Even once wood arrives, you’re going to need to think ahead when it comes to repeat orders. With a little forward-thinking, you can make sure you maintain a continuous cycle of the wood products you need. What you can’t afford to do is wait until you’re down to your last few pieces before reordering. Instead, work out roughly how long this supply will last, again turning to your previous sales and production logs. This may change over time, but forming a basic idea will give a baseline to work with for now that helps you to keep on top at all times so you never need let customers down.

5. Reach Out to Multiple Suppliersreach out to multiple suppliers

Most companies will reach out to multiple suppliers when it comes to their stock but never is this more important than when you’re importing products. To develop lasting and workable long-distance supplier relationships, you need to be sure that you’ve chosen the absolute best compatibility match for you. One thing’s sure; settling on the first supplier you come across could soon see you struggling with general importing processes and communications. Instead, make sure that you reach out to multiple suppliers to get a broad idea of your options. With each interaction, it’s worth considering/asking about critical aspects of business such as:

  1. Pricing. How much is a supplier compared with others you’ve spoken to? If more, how do they justify the extra cost? Would they be able to price match?
  2. Stock. Your best bet would be a supplier who caters for all your wood needs, so comparing stock lists is always beneficial.
  3. Company ethics. As discussed, understanding company ethics is vital to businesses with sustainability at their heart. Ask about this even with companies found through FSC.
  4. Supply capabilities. If you need large amounts of wood stock, you need to know that a supplier can provide it. Make sure that they have the capacity/workforce necessary.
  5. Ease of process. You’d soon regret signing up with a company that uses long-winded reordering processes and communications. Make sure that you check out the ease of operation from every supplier you come across to find the best option. 

6. Clearly Communicate Your Needs

As you’re considering the above, it’s beneficial to be as transparent as possible about your needs. Long-distance business communications require transparency to work. If you withhold information such as expected demand or potential business growth, a supplier may agree to a contract under a false impression of what you’re expecting. This could lead to business-supplier relationship breakdowns, as well as leaving your supplier unable to provide the products you need. That’s not good for either party, and it’s something you can avoid by simply being as honest as possible in the first place. 

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In general terms, this need for honesty is most applicable from a supply standpoint. It’s no good signing up with small-scale wood suppliers in Canada using a modest first order, then suddenly springing double or triple that amount on them next time, even if your research shows they can handle it. Be honest about whether orders are liable to grow over time, and by how much. 

Be clear, too, about the frequency of your orders. You should already know this, and passing the information along is fundamental. A company may only be able to fulfill large-scale orders on an infrequent basis, after all, but having to do so regularly is a different matter.

Lastly, clear communication can be a huge help with regard to your set budget. Instead of asking suppliers how much their wood costs, you may find it beneficial to be upfront about the money you’re setting aside for this purpose. That makes it more likely a supplier will fit with you rather than charging you over the odds, especially if you promise them some level of representation overseas. While it isn’t always easy to discuss money in these candid terms, doing so is vital the moment you open communications like these. 

7. Negotiate Purchasing Rates if Possible

Being upfront about the budget isn’t the only way to gain supplier rates that suit you. In most cases, you’ll find that it’s also possible to negotiate prices in other ways. This is always beneficial when it comes to developing long and sustainable supplier connections. 

Admittedly, not every supplier will offer this, and you may find that those with the most reasonable rates are still worth your time. In many cases, though, it may be possible to agree to reduced rates for large volume or regular orders (yet another reason to be as transparent as possible). 

As mentioned, suggesting your budget rather than asking for a cost estimate is always a good way to open the negotiation floor here. Equally, asking outright for bulk discounts to be written into a contract often leads to desirable results. 

Remember that you need to prove why a connection with you would benefit your chosen wood suppliers in Canada to achieve these privileges. The best leverage you have here is, of course, expanding their business reach. By promising to list them on your website or keep their logo on your wood, you should be able to agree on a good deal indeed.

Equally, committing to a long-term contract with the potential for significant growth is always worthwhile. This proves that you’re not intending to switch suppliers the moment someone better comes along, thus making discounts far more useful for the company in question. 

Even if a supplier is unable to reduce costs, there’s no harm in seeing what you can get for your money. Once you broach the subject, the chances are that most suppliers will at least provide you with some additional benefit because you’ve made that negotiation effort.

8. Determine Logistics and Transportation of the Wooddetermine logistics and transportation of the wood

As you may have already guessed, your efforts here don’t stop when you find wood suppliers in Canada that suit your needs. In fact, you could argue that the hard work begins from this moment, because this is when you need to consider shipping. 

Wood is bulky and unwieldy to transport even locally, so considering how you’re going to get it from Canada regularly can be a real headache. Some suppliers may offer to take care of shipments themselves but, honestly, you would be best off taking the reins here. Suppliers are liable to use their own outsourced companies, and thus charge you extra for their time and the shipment itself. 

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By comparison, determining logistics and transportation yourself with companies like R+ L Global Logistics could see you saving costs and achieving arrangements that are best suited to you. Some things to consider during this deliberation process include:

These are just some primary considerations, but they can help you to start working through the technicalities to ensure you go into transportation with your eyes wide open. 

9. Finalize Details through a Written Agreementfinalize details through a written agreement

Once you’ve found your supplier and have begun working through the technicalities of shipment, it’s time to finalize things with a written agreement. No different from working with a supplier close to home, a contract makes sure that everyone knows where they stand. It also guarantees that you’re both committed to an ongoing business-supplier relationship. 

Within the agreement, include everything that you’ve agreed upon with your chosen supplier. Thanks to your transparency about your needs, this should be a comprehensive list that covers every possible aspect of this business relationship. Taking the time to write everything down also ensures that you’re able to lock down any discounted prices that you’ve agreed upon when moving forward. 

Of course, contracts like these need to be signed, and this isn’t as simple as asking a supplier to visit you in the office one day. Even across countries, though, signing contracts is now relatively easy thanks to technology. One simple option would be to sign the agreement on your end and then scan and attach it to an email for your supplier to do the same. Or, you could turn to an e-sign platform like DocuSign for ease and security. Electronic signatures are recognized in both the U.S. and Canada.

As simple as clicking a button, this could ensure that your agreement is finalized and that both parties have access to electronically stored copies of their contract. 

Ship Wood from Canada with R+L Global Logistics

Here at R+L Global Logistics, we offer extensive shipping and logistics services to businesses, including overseas operations like those you’ll need now once you have a Candian supplier. We can move machinery and more

As a world-class provider of international shipments, we’ve worked with multinational businesses as well as small-scale operations. We offer long-distance shipping to suit you by either air, ground, or ocean. We work in many cross border states and cities, including Oroville, Washington. And, we do it all with extensive experience and end-to-end point of contact support to make your life easier. In fact, our mission statement as a business is literally ‘to empower businesses worldwide to ship smarter.’ We really do put customer satisfaction at the heart of our services.

It’s fair to say, then, that working with us could be just the thing to get the best possible product and efficiency from your wood suppliers in Canada. Whether you need to ship wood furniture or you need help learning how to ship freight to Canada, we have you covered. Given how much trouble you’ve gone through so far, it’s essential to make sure your efforts don’t go to waste. So, what are you waiting for? Give us a call at 855-915-0573 or fill out a form below to contact us and get started. 

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