The U.S. and Canada share the world’s longest border – and strongest trade relationship
The United States and Canada enjoy the world’s most lucrative and enduring trade relationship, with almost $1.6 billion in goods crossing the border each day. Goods and services trade totaled almost $675 billion during 2017, according to the Office of the U.S. Trade Representative.
Canada exported almost $300 billion worth of goods to the U.S. during 2017, while U.S. businesses sold more than $282 billion in goods to Canadian businesses. The U.S. goods trade deficit with Canada was $17.5 billion during 2017.
Browse through the information below to understand the historic relationship and ongoing commitment to secure, efficient and fair trade between the U.S. and Canada.
Mutual commitment to a growing trade relationship
The U.S. and Canadian governments have historically recognized the importance of cross border trade, and have taken steps to encourage businesses in their countries to seek out growth opportunities. This includes efforts to minimize tariffs, consolidate regulatory mandates and facilitate the customs clearance process.
The two countries initially solidified their commitment to expanded trade with the 1989 Canada-U.S. Free Trade Agreement (CUSFTA). The agreement eliminated tariffs, reduced many non-tariff barriers and improved U.S. access to Canadian markets for manufacturing, agricultural, high technology and financial services.
That agreement was superseded by the North American Free Trade Agreement (NAFTA), which took effect in 1994, and includes Mexico along with the United States and Canada. NAFTA remains in effect, and has eliminated tariffs on most qualified goods moving between the three partner countries. NAFTA also includes provisions on a wide range of topics including agricultural and services trade, government procurement, protection of intellectual property rights and dispute settlement procedures.
Since then, the U.S. and Canada have sought to facilitate the border clearance process by harmonizing processes where possible. In 2011, leaders of the two countries announced the “Beyond the Border” initiative, which included a detailed action plan for improving cooperation with regard to border security and trade facilitation. Key benefits of that initiative have included the two countries’ Trusted Trader Programs and Single Window Initiatives.
Border security initiatives
With nearly $1.6 billion in goods crossing the U.S./Canadian border each day, the two countries are committed to increasing trade volume and minimizing border clearance delays wherever possible. The desire for expedited trade, however, must be weighed against the critical need for national security.
U.S. Customs and Border Protection (CBP) and the Canada Border Services Agency (CBSA) are responsible for ensuring no contraband or illicit substances penetrate their borders, and for the careful inspection of all high-risk shipments.
Following is a snapshot overview of key programs in place to ensure the highest levels of border security.
Canadian security programs
Advance Commercial Information (ACI) program. The Advance Commercial Information program is the cornerstone of CBSA’s border security initiatives. ACI requires submission of electronic pre-arrival information for all shipments heading for the Canadian border.
CBSA uses this advance information to evaluate shipment risk. Low-risk shipments are generally pre-cleared for entry while resources are allocated to shipments determined to be high-risk.
Shipment information must be transmitted based on the specific mode of transport, as follows:
Transport Mode Affected Marine Cargo loaded in non-U.S. Ports Air Cargo and Marine Cargo loaded in U.S. Ports Cargo traveling via Highway or Rail Rules of Compliance Electronic manifest must be filed at least 24 hours before a shipment’s scheduled arrival. Air: Electronic transmission of data at least 4 hours prior to arrival at Canadian airport. For flights less than 4 hours in
duration, information must be filed at time of departure.
Marine: Electronic transmission of data 24 hours prior to scheduled arrival in Canadian port.
Rail: Electronic transmission of cargo data at least 2 hours prior to arrival in Canada.
Highway: Electronic transmission of cargo data at least 1 hour prior to arrival in Canada and up to 30 days in advance.
Partners in Protection (PIP). Trusted trader program administered by CBSA as a way to better gauge the risk level of shipments arriving at the Canadian border. Through PIP, members of the trade community voluntarily undergo a strenuous application process in exchange for certain benefits. PIP members certify the security of their own supply chains, as well as the supply chains of their suppliers. PIP is similar to the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) program.
U.S. security programs
Automated Commercial Environment (ACE). ACE is the backbone of CBP’s trade processing and risk management activities, and the platform for agency’s single window initiative. By providing a single point for data entry, ACE allows customs agents complete visibility with regard to shipments entering and leaving the country. CBP uses this information to allocate scarce resources to focus on high-risk, or unknown shipments. At the same time, shippers benefit from a more streamlined process, and from an expedited clearance process.
Automated Export System (AES). The Automated Export System is the central point through which export shipment information is transmitted. AES is a joint venture between CBP, the Foreign Trade Division of the Bureau of the Census, the Bureau of Industry and Security, the Directorate of Defense Trade Controls, other federal agencies, and the export trade community.
Customs-Trade Partnership Against Terrorism. (C-TPAT) is CBP’s key trusted trader program. Businesses voluntarily undergo a strenuous application and certification process in exchange for specific trade benefits. C-TPAT members certify the security of their own supply chains, as well as the security of their suppliers’ supply chains. C-TPAT is similar to CBSA’s Partners in Protection program.
Joint U.S./Canadian security programs
Free and Secure Trade (FAST). PIP and C-TPAT members are eligible to participate in the Free and Secure Trade (FAST) program. FAST allows expedited processing for commercial carriers whose truck drivers have completed background checks and fulfill 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.
U.S. government export assistance resources
According to the U.S. Commerce Department, small-and-medium sized businesses account for 98 percent of all export activity. While 60 percent of businesses export to just one foreign market, Canada is by far the most popular destination.
The U.S. government offers numerous resources to assist businesses interested in expanding to international markets. Following is an overview of some programs and materials that may be of interest:
“A Basic Guide to Exporting.” The U.S. Commercial Service, which is a division of the U.S. Department of Commerce, produces this publication, which provides comprehensive information about the export process, and is considered a “must read” for any business interested in pursuing export opportunities.
Centers of excellence and expertise
The Customs and Border Protection (CBP) agency maintains a network of industry-specific “Centers of Excellence and Expertise” that oversee trade policy and serve as a resource for the trade community. Each center serves as a “one-stop” solution provider for the industry it serves. Centers are staffed by trade specialists who are experts in that industry, and who are empowered to make decisions and give direction on related import and export issues. Following is the current list of Centers for Excellence and Expertise offices:
- Miami, Florida: Agriculture & Prepared Products
- San Francisco, California: Apparel, Footwear & Textiles
- Detroit, Michigan: Automotive & Aerospace
- Chicago, Illinois: Base Metals
- Atlanta, Georgia: Consumer Products & Mass Merchandising
- Los Angeles, California: Electronics
- Buffalo, New York: Industrial & Manufacturing
- Laredo, Texas: Machinery
- Houston, Texas: Petroleum, Health & Chemicals
- New York, New York: Pharmaceuticals, Health & Chemicals
District Export Councils (DECs). Organizations comprised of business leaders from local communities, who are appointed by the U.S. Secretary of Commerce to provide professional advice for local firms. Currently more than 60 DECs operate throughout the U.S., comprised of approximately 1,500 members who volunteer their time and share their expertise to assist local businesses interested in pursuing export opportunities.
Export.gov. Export.gov is the gateway to the trade promotion and export finance programs of the federal government. Administered by the International Trade Administration, Export.gov is a collaborative effort with the 19 federal agencies that offer export assistance programs and service. Export.gov is the go-to source for information on key topics including:
- Export Basics
- Access to webinars
- Access to Country Commercial Guides, which include detailed market overviews for more than 125 different countries.
- Information about export finance programs
- Access to local trade specialists.
Export Assistance Centers. Integral to federal efforts is the network of Export Assistance Centers located across the United States and in more than 80 countries worldwide. Each center is staffed by professionals from one or more of the following: Small Business Administration, Department of Commerce, Export-Import Bank and other public and private organizations. Businesses can also take advantage of the agency’s “Global Markets (GM)” service, through which trade professionals work directly with business owners to develop export strategies.
Export-Import Bank. The official export credit agency of the United States. The Ex-Im Bank assists U.S. exporters by extending credit to foreign buyers, presumably boosting sales from U.S. companies.
Foreign Agricultural Service (FAS). A department of the U.S. Department of Agriculture (USDA), FAS works to facilitate export opportunities for U.S. agriculture in the global marketplace. Businesses can access one of four State Regional Trade Groups (SRTGs) that help U.S. businesses identify international markets for their agricultural products.
Office of the U.S. Trade Representative. Agency charged with negotiating directly with foreign governments to develop trade agreements, resolve disputes and participate in global trade policy organizations. USTR officials also meet with governments, business groups and public interest groups around the world to promote U.S. trade relations.
Small Business Administration: Independent agency charged with assisting small businesses to start, grow and prosper. The SBA’s International Trade division assists potential exporters in several ways.
A business interested in exploring export opportunities may wish to consider one of the following:
- Export Express Loan Program: Offers streamlined financing up to $500,000. It is the simplest export loan product offered by the SBA. Any business in operation at least one year that can demonstrate that loan proceeds will support export activity is eligible.
- Export Working Capital Program: Offers financing up to $5 million as a credit enhancement. This program is delivered through SBA Senior International Credit Officers located in U.S. Export Assistance Centers.
- International Trade Loan Program: Offers loan financing for fixed assets and working capital to businesses that plan to start or continue exporting, or that have been adversely affected by competition from imports.
Export assistance centers
Together with the Commerce Department and the Export-Import Bank, the SBA maintains a network of Export Assistance Centers across the U.S. as well as in more than 80 countries worldwide.
U.S. Commercial Service (USCS): Trade promotion arm of the International Trade Administration, located within the U.S. Department of Commerce. Through its Trade Information Center (TIC), businesses can take advantage of multiple resources including:
- Online and customized market research
- Assistance in finding qualified international partners by participating in an agency trade mission, or via its International Buyer Program.
- Participation in overseas and domestic trade shows
- Individualized counseling and advocacy
- Personalized services, available for a fee, such as the Gold Key Service, through which Commercial Service specialists provide an array of services, including face-to-face meetings between U.S. businesses and potential foreign partners.
- Training programs and webinars on subjects including export basics and documentation.
Industry specific agencies
Beyond these agencies, which offer assistance to a broad scope of businesses, support is available to specific industries:
Office of Energy and Environmental Industries (OEEI): International Trade Administration division that promotes exports of goods and services associated with renewable energy (biofuel, biomass, geothermal, hydro, solar, wind), civil nuclear energy, fossil energy (oil, gas, coal), smart grid, transmission and distribution, pollution prevention, air pollution control, water and waste.
Office of Health and Information Technology (OHIT): Located within the International Trade Administration, OHIT promotes trade policy and export opportunities for U.S. medical devices and healthcare products. In addition, the office’s Information Technologies Team promotes exports of semiconductor and related equipment, telecommunications equipment, cable TV and broadcasting equipment, and information technology hardware.
Office of Transportation and Machinery Aerospace Team: International Trade Administration division that promotes exports of aerospace products including aircraft parts, general aviation aircraft, rotorcraft, business jets and large civil aircraft.
Office of Transportation and Machinery Automotive Team: International Trade Administration division that promotes exports of motor vehicles (passenger cars, light trucks and heavy trucks) and automobile parts (original equipment, aftermarket and specialty equipment).
Office of Transportation and Machinery — Machinery Team: International Trade Administration division that promotes exports of agricultural, construction and mining machinery and related equipment; diesel engines, food processing machinery; material handling equipment; machine tools and other manufacturing equipment.
U.S. businesses can look north to Canada and see a potential market of more than 36 million people, more than 80 percent of whom live in urban areas. Almost 70 percent of the population live within 100 kilometers of the U.S. border – a geographic area that represents only about four percent of Canada’s total territory.
Delve deeper into the Canadian marketplace
Despite the close proximity of Canada, and the apparent similarities between the two countries, there are significant differences when it comes to conducting business. A U.S. business must do its homework before reaching out to the Canadian market, and gain a good understanding of key areas including:
- Canadian Demographics
- Canada’s Uniquely Canadian Culture
- Snapshot of the Canadian economy