Benefit from US and Canadian Trade Incentive Programs

Shipping to Canada with Trade Incentive Programs

Both the United States and Canada maintain programs intended to facilitate the flow of goods between the two countries, and to encourage businesses to participate in cross border trade.

  • Non-Resident Importer Program:  U.S. businesses that ship to Canada have found that country’s “Non-Resident Importer”(NRI) program to be a great equalizer.  Through NRI, U.S. companies are able to act as “importers of record,” which means they pre-pay all taxes, duties and fees on goods entering Canada before they arrive at the border.  This means that a U.S. company can pass along all fees to consumers up front.  Canadian consumers will be aware of the fees at the time of purchase, and pay them at that time.  No more instances of the deliveryman arriving at a consumer’s doorstep with a second invoice full of unexpected customs and brokerage fees.

  • Duty Drawback:  NAFTA includes provisions for a duty drawback program, through which businesses are able to obtain a refund on customs duties paid upon importation of a product that is subsequently exported.  In the U.S. the duty drawback program is administered through Customs Border Protection.  Intended as a way to prevent businesses from being over-taxed, the duty drawback program gives special consideration to businesses that pay duties on goods imported into the United States, and then used in the manufacture of products that are subsequently exported.

  • Pre-Arrival Review System (PARS):  Administered by CBSA, PARS is a customs clearance program, whereby importers and brokers are able to electronically submit shipment documentation for pre-arrival review and processing. Shipments traveling under the PARS program generally arrive at the border pre-cleared for entry into Canada.
  • Customs-Trade Partnership Against Terrorism (C-TPAT):   Voluntary program administered by CBP through which businesses and shippers agree to take steps to ensure the safety of their supply chains, in exchange for expedited clearance upon arrival at the border. 

  • Free and Secure Trade (FAST) program:  Joint U.S./Canadian security program designed to facilitate cross border trade by allowing qualified shippers expedited processing.

  • Partners in Protection (PIP) program: CBSA-administered program through which businesses agree to voluntarily ensure the security of their supply chains. Similar to the U.S. government’s Customs Trade Partnership against Terrorism (C-TPAT) program.

  • Pre-Arrival Processing System (PAPS)CBP-administered program that utilizes barcode technology to allow carriers to submit clearance documentation as much as 30 days prior to a shipment’s expected arrival at the U.S. border.  PAPS is the companion program to the CBSA’s PARS program, although the two programs are not interchangeable.

  • NEXUS:  Program administered jointly by the CBSA and CBP to allow expedited clearance to low-risk, pre-approved drivers and passengers.

 

 

Security Clearance Programs

With almost $2 billion in goods crossing the U.S./Canadian border each day, each government is committed to minimizing border clearance delays and fostering the flow of goods wherever possible. The desire for expedited trade, must be weighed against the critical need to protect each country’s border against threats to security.  Following is a snapshot overview of key security programs currently maintained by the U.S. and Canadian governments:

 

Canadian Security Programs

 

U.S. Security Programs  

  • Automated Export System: The Automated Export System is an electronic filing mandate for U.S. exporters. As of September 30, 2008, all filings are required to be done electronically, through the “Automated Export System” (AES). The regulations, issued by the U.S. Census Bureau, are designed both to improve reporting accuracy, and to enhance security procedures.
  • Customs-Trade Partnership Against Terrorism (C-TPAT): Voluntary program administered by CBP through which businesses and shippers agree to take steps to ensure the safety of their supply chains, in exchange for expedited clearance upon arrival at the border.
  • Pre-Arrival Processing System (PAPS): CBP-administered program utilizing barcode technology to allow carriers to submit clearance documentation up to 30 days prior to a shipment’s expected arrival at the U.S. border.  PAPS is the companion program to the CBSA’s PARS program, although the two programs are not interchangeable.

 

Joint U.S/Canadian Security Programs

  • Free and Secure Trade (FAST) program: Joint U.S./Canadian security program designed to facilitate cross border trade by allowing qualified shippers expedited processing.
  • NEXUS: Program administered jointly by the CBSA and CBP to allow expedited clearance to low-risk, pre-approved drivers and passengers.

 

 

Penalties

Failure to comply with the Canadian customs processes can have detrimental effects. Non-compliance can result in the assessment of fines and penalties, additional inspections, or denial of entry.

The Administrative Monetary Penalty System has been authorized by CBSA as the agency responsible for reviewing all cases of non-compliance and administering penalties.

In addition to government-imposed fines and penalties, a U.S. business should beware of the negative consequences that border delays will have on their Canadian customers. As U.S./Canada cross border sales have increased – particularly as e-commerce has taken hold in Canada – so too have Canadian consumers’ expectations that shipments from the U.S. will arrive on time, free of any unexpected hidden fees or taxes.