Take advantage of U.S. and Canadian trade facilitation programs
Canada is even closer with trade facilitation programs
Both the United States and Canada offer programs to facilitate the border clearance process, and to encourage businesses to participate in cross border trade. Browse through the programs below to learn more.
Courier Low Value Shipment (CLVS) program
Businesses with shipments valued at less than CAD $2,500 can benefit from CBSA’s Courier Low Value Shipment program. Essentially, the program simplifies the clearance process for low-value goods transported via a participating courier. Prior to arrival at the border, the courier provides CBSA with a “Consist List,” which details the contents of a shipment. CBSA will either release the goods into Canada, or detain the shipment for further inspection.
Duty drawback is a refund of up to 99 percent of duties, taxes and fees paid on imported products that are subsequently exported or destroyed. Drawback is administered by U.S. Customs and Border Protection, which sets a very high bar for eligibility. A business must maintain meticulous records and be able to provide a clear trail that a product initially imported into the U.S. is the same – or in some cases nearly the same – as the product subsequently exported (or destroyed). But given that a successful drawback can reap huge financial savings, the end result is often worth the aggravation and time.
Canada’s Non-Resident Importer (NRI) program allows U.S. businesses to compete on a level playing field in the Canadian market by eliminating several important obstacles. Among other things, a U.S. business that registers as an NRI is permitted to collect Canadian sales taxes at time of purchase, and can act as “importer of record” in clearing goods into Canada.
This means a U.S. business can charge a landed cost at time of purchase, allowing a Canadian consumer to pay all sales taxes and customs fees upfront. Without NRI status, a U.S. business would have to collect those taxes and fees at time of delivery. And, as importer of record, a U.S. business can clear goods through customs, rather than have to enlist a Canadian agent – or end customer – to oversee the clearance process.
A U.S. business can register as a non-resident importer through the Canada Border Services Agency.
North American Free Trade Agreement (USMCA)
The North American Free Trade Agreement (USMCA) took effect in 1994 and sets trade practices for shipments between the United States, Mexico and Canada. A key USMCA provision is the elimination of tariffs on virtually all originating goods traveling between the three countries. But determining whether or not a product fits within USMCA’s terms for “origination” can be tricky. Origination is not restricted only to goods wholly produced within the U.S., Canada, or Mexico. Instead, the agreement makes allowances for products to include percentages of non-USMCA materials and still qualify for preferential benefits. To determine if a product is eligible for USMCA benefits, it is necessary to consult USMCA’s rules of origin, which specify content requirements for all products. Once a product is determined to qualify for benefits, a USMCA Certificate of Origin must be completed along with all other import documentation.
Single Window Initiative
Both the U.S. and Canadian governments have implemented single window filing systems that serve as the central entry point for import documentation. Each country’s SWI replaces outdated, obsolete processes that had become a growing source of frustration for the trade community.
In the United States, 47 agencies are involved in the trade process. Prior to implementation of the SWI, each agency maintained its own filing process – many of which were paper-based – for submitting documentation. As a result, importers and exporters were often required to submit the same data to multiple agencies at multiple times.
With the single window in place, information is entered into the system once, and is automatically routed to all applicable agencies.
Trusted Trader Programs
The United States and Canadian governments maintain a number of “trusted trader” programs whereby qualified businesses are granted certain benefits in exchange for their commitment to certify the safety of their supply chains, as well as the supply chains of their vendors and suppliers. Participation in trusted trader programs has become an important part of ensuring a hassle-free border clearance process.
For U.S. businesses, the Customs-Trade Partnership Against Terrorism (C-TPAT) is the key trusted trader program. Businesses that successfully meet program requirements are entitled to benefits including:
- Reduced number border inspections
- “Front of the Line” access for shipments that are chosen for inspection
- Access to Free and Secure Trade (FAST) lanes at land crossings
- Access to database of other C-TPAT benefits.
- Recognition as a “trusted trader,” which can save time
- Reduced likelihood of inspection
- Access to CBSA’s Trusted Trader Portal, which provides easy access to all membership documents.
- Eligibility for the FAST program, which offers access to designated lanes at certain land border crossings
- Eligibility to participate in CBSA’s Courier Low Value Shipment (LVS) program, which offers streamlined processing of shipments valued at less than CAN$2,500
- Mutual recognition status with similar international trusted trader programs.
Fortunately for the trade community, the two programs are harmonized. A C-TPAT member can join PIP, and vice versa.
Free and Secure Trade (FAST)
The Free and Secure Trade (FAST) program allows expedited processing for commercial carriers whose truck drivers have completed background checks and meet certain eligibility requirements. FAST participants have access to designated “FAST lanes” located at several major U.S./Canadian border crossing points, and can have a significant impact on the time it takes to move a shipment across the border.