Exporting to Canada: Where do we Begin? · import/export account • Import Compliance – It’s Good for You • Service Providers: Carriers, Freight Forwarded, Customs Broker,

The Logistics of Doing Business in Canada

Exporting to Canada: Where Do We Begin?

Wednesday, November 12, 2014 1:00 – 2:00 pm Eastern Standard Time

The U.S. Commercial Service

Agency: – U.S. Department of Commerce

Mission:

– Promote U.S. Exports – Protect U.S. Commercial Interests Abroad – Facilitate Investment in America

Resources for Companies Overseas:

– Counseling – Fair and Open Markets

The U.S. Commercial Service

Specialists assist American companies in export goals by identifying promising new markets and establishing contacts in foreign contracts

In 2009, assisted 5,600 companies with increasing exports – 85% were small to medium size

The U.S. Commercial Service has a global network of trade specialists located in

109 U.S. Cities 128 U.S. Embassies and Consulates in 77 Countries

Market expert specialists Tailored

assistance Export success

Exporting to Canada: Where do we Begin?

Agenda 1. The Canadian Market 2. Building an Export Plan and Marketing Strategy 3. Entering the Canadian Market – Considerations and Customs 4. Regulatory Considerations 5. NAFTA - Benefits 6. Protecting your IP

Woods, LaFortune LLP Woods, LaFortune LLP is an innovative, flexible and proactively cost-effective boutique law firm that focuses on international trade and business, investment, customs, government procurement and government relations. We provide a wide range of services to our clients including advocacy before domestic and international courts and tribunals, strategic advice and analysis, business planning and analytical research. Michael Woods Catherine Walsh [email protected] [email protected] 613.355.0382 613.513.7131

www.wl-tradelaw.com

Since 1912 - International Trade Expertise Second to None

Customs Brokerage, Consulting, Freight forwarding and Distribution

Thompson Ahern International - clearance at all Canadian ports of entry TAHOCO Logistics, Inc. - clearance at all U.S. ports of entry

Competitive and all-encompassing Brokerage Fees Sophisticated IT Systems - Fast, Efficient Release and Accurate Accounting Specialized Non-Resident Importer services Tailor made Billing and Records Options Customizable Systems, Processes & Reports to best serve Your Needs Canadian ACI eManifest and U.S. ACE EManifest Solutions Information and Education – Training, Webinars, Newsletter & Bulletins Total Compliance Program - effective Compliance & Risk Management Strategies Clients include market leaders at all trade levels in diverse industries

A Tradition of Innovation & Excellence - www.taco.ca

Shane Brown LLB, VP Marketing & Compliance 905-678-5476, mobile 416-301-2415

The Canadian Market – Trends • Biggest bilateral economic relationship –over $700 Billion in goods and services • U.S. exports to Canada have increased by 80% over the last decade: Vehicles ($51.7

billion), Machinery ($45.3 billion), Electrical Machinery ($26.8 billion), Mineral Fuel and Oil ($24.7 billion), Plastic ($13.0 billion)

• U.S. exports of agricultural products to Canada totaled $21.3 Billion in 2013: Prepared

Food ($1.9 billion), Fresh Vegetables ($1.8 billion), Snack Foods ($1.3 billion), Non-Alcoholic Beverages ($1.2 billion)

• Expansion in travel and tourism sectors • Renewable energy, mining, oil and gas and environmental-related sectors

The Canadian Market

Common ties play a big part – John F. Kennedy – address to Canada’s Parliament (May 17, 1961): “But we share more than a common border. We share a common heritage, traced back to those early settlers who traveled form the beachheads of the Maritime Provinces and New England to the far reaches of the Pacific Coast…We share common values from the past, a common defense line at present, and common aspirations for the future – our future, and indeed the future of all mankind. Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder.”

The Canadian Market – Key Opportunities

• Aerospace • Automotive

• Defense • Information and Communication Technology

• Mining • Oil and Gas

• Renewable Energy • Safety and Security

• Travel and Tourism • Pollution Control

*http://export.gov/canada/marketresearchoncanada/bestprospectsforuscompanies/

The Export Plan The export plan is an extension of your business plan that identifies:

• Target market(s) • Export goals • Necessary resources • Anticipated results

The Export Plan - Contents • Market Overview

• Purchasing process and buying criteria • Tariff and non-tariff products

• Market Entry Strategy • Product positioning - Pricing strategy • Terms of sale - Distribution strategy

• Regulatory and Logistics • Intellectual Property protection • Modes of transportation and cargo insurance • Trade documentation

For complete template see: http://www.tradecommissioner.gc.ca/eng/step3.jsp

The Marketing Strategy

The 4 P’s of Basic Marketing:

1. Product – what is the product/service and how will it be adapted to the target market?

2. Price – what pricing strategy will you use? 3. Promotion – how will you make customers aware of your product/service? 4. Place – how and where will you deliver or distribute your product/service?

The Marketing Strategy - International 13 P’s of International Marketing: Payment How will you collect payments? What regulations or

laws apply?

Personnel Does your staff have the necessary skills?

Planning Export plan, marketing plan and market entry plan?

Paperwork Customs, regulations, is all the ppw complete?

Practices What are the differences in culture and practice?

Partnerships Partnerships to build a domestic presence?

Policies Planned policies

Positioning How will you be perceived in the market?

Protection IP

The Marketing Strategy - Contents Product or Service Analysis Unique selling points

Market Analysis Economic, social, political and cultural factors

Competitive Analysis Pricing and marketing strategies

Goals Market share, positions, revenue and profit

Marketing Strategy Pricing recommendations, mode of delivery

Implementation Activities, target date, budget

Evaluation KPIs

The Marketing Strategy

• Developing a sales-oriented website • Strong web presence – social media • Establishing a local presence – partnerships

• Licensing • Franchising • Cross-Licensing • Cross-Manufacturing • Co-Marketing

Preparation to be an Exporter and/or Canadian Importer

• Canada Border Services Agency (CBSA) • Importer of Record • Business Number (BN) issued by Canada Revenue Agency (CRA) for an

import/export account • Import Compliance – It’s Good for You • Service Providers: Carriers, Freight Forwarded, Customs Broker,

Customs, Commodity Taxes, Corporate/Commercial and Corporate Tax Counsel(s)

Preparation to be an Exporter and/or Canadian Importer

• Bonded Warehouse Program, Duty Deferral Programs, Duty Drawback upon Export

• Customs Self Assessment (CSA) • Import Security Program (PIP) • Free and Secure Trade (FAST) Program • Returned goods and export procedures

Preparation to be an Exporter and/or Canadian Importer

Resources:

• CBSA – Checklist for Importing Commercial Goods into Canada http://www.cbsa-asfc.gc.ca/import/checklist-controle-eng.html • CBSA – Importing Goods into Canada http://www.cbsa-asfc.gc.ca/import/menu-eng.html • Broker’s website, e.g. Thompson Ahern International http://www.taco.ca/en/canadian_customs_brokerage_non_resident_services.php • CBSA Border Information Services (BIS) from U.S. 204-983-3500 or 506-636-5064

Shipping / Exporting • Carrier or Freight Forwarder • Container, full truck loads, less than truckloads (LTL) • Choice of Carriers – depends on time, product, volume, rate, service

requirements issues: • Trucking company, airline, marine • FEDEX, UPS, DHL • USPS – CBSA via Canada Post deals directly with addressee

• Insurance – loss, damage

• ACI: eManifest; ATD; CSA

Shipping / Exporting

• Warehousing: Customs bonded or post-release • INCO or other terms of shipment, and other terms of sale: Importer,

passage of title, etc. • The Low Value Shipment Program – VFD C$2,500 or less

• http://www.cbsa-asfc.gc.ca/import/courier/lvs-efv/menu-eng.html

• Courier Imports Remission Order – applies to imports via all carriers

Exporting/Importing Specific Products

• US export regulation • Customs Duty and Commodity Taxes • Customs Valuation • Tariff Classification • Tariff Preferences (NAFTA, etc.) • Tariff Classification + Tariff Treatment (e.g. NAFTA TTs = % rate of duty,

if any)

Exporting/Importing Specific Products

• Declaring Packaging • Country of Origin, and Origin Marketing • Anti-Dumping & Countervailing Duties • Cross Border (Div. III) Goods and Services Tax (GST) and Excise Taxes • Duty Relief: Annex Codes, End-Use, Remissions Orders, Damaged

Goods, Returns • NAFTA “Lesser of” Rule and Duties Relief • Duty/GST Deferral

Exporting/Importing Specific Products

• Permits, restrictions or regulations by the CBSA or other government departments

• Other government departments – http://www.cbsa-asfc.gc.ca/import/reflist-listref-eng.html

• Food, plants, animals and related products

• Canadian Food Inspection Agency – http://www.inspection.gc.ca/plants/imports/airs/eng/1300127512994/1300127627409

• National Import Service Centre 1-800-835-4486

• Prohibited Goods – Customs Tariff s. 136, 9897.00.00-9899.00.00; weapons, publications, protected species etc.

Exporting/Importing Specific Products

• Import Labelling • Required documents: Cargo Control Documents (CCD), Invoices,

Certificates of Origin, Import Permits etc. • Customs Reporting, Release and Accounting • Non-Resident Non-Registrant Importer and Div. II GST • Managing Risk and Exposure

Post Importation

• Records – 6 years • Corrective self-adjustments • Verification and adjustment by the CBSA • Penalties, Seizure and Forfeitures (s.110 147 Customs Act) • Administrative Monetary Penalty System (AMPS) • Appeal Rights

Regulatory Considerations • Quotas exist for some products – See Import Control Measures

• http://www.dafit-maeci.gc.ca/eicb/menu-en.asp • Specific requirements for consumer products: Food, Clothing,

Pharmaceuticals, Cosmetics etc. • Enforcement:

• CBSA (http://www.cbsa.asfc.gc.ca/) • Canadian Food Inspection Agency (http://www.inspection.gc.ca) • Health Canada (http://www.hc-sc.gc.ca) • Industry Canada (http://www.strategis.ic.gc.ca)

• Labelling requirements: Rules against Misleading Information, Bilingual

Regulatory Considerations • Consumer Packaging and Labelling Act

www.inspection.gc.ca/English/reg/rege.shtml

• Food and Drugs Act and Regulations

http://www.inspection.gc.ca/English.reg/rege.shtml

• Textile Labelling Act

http://laws.justice.gc.ca/en/T-10/

• Hazardous Products Act

http://www.hc-sc.gc.ca/ahc-asc/legislation/index_e.html

• Guide to the Consumer Packaging and Labelling Act and Regulations

http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_01436.html

• Consumer Packaging and Labelling Regulations

http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01248.html

• Guide to Food Labelling and Advertising

http://www.inspection.gc.ca/English/fssa/labeti/guide/toce.shtml

Regulatory Considerations - Standards

Standards Council of Canada co-ordinates Canada’s participation in the International Standards System.

• Canadian Standards Association • Underwriters Laboratories of Canada • Canadian General Standards Board • Bureau de normalization du Quebec • International Standards (NAFTA Chapter 7 & 9, WTO Agreements, TBT, SPS,

TRIPS

NAFTA and Regulatory Co-operation/Harmonization

• Canada-United States Regulatory Cooperation Council (RCC) Action Plan

• 4 sectors – 29 specific initiatives • Scientific and technical cooperation • Harmonized testing procedures • Joint standards

NAFTA-Benefits

“To preserve and extend the benefits our close relationship has helped bring to Americans and Canadians alike, we intend to pursue a perimeter approach to security, working together within, at, and away from the borders of our two countries to enhance our security and accelerate the legitimate flow of people, goods, and services between our two countries.” -http://photos.state.gov/libraries/Canada/303578/pdfs/us-Canada-btb_action_plan.pdf

International Standards and Contracts

• NAFTA – signed January 1, 1994 – Canada, Mexico, United-States • Canada-U.S. Free Trade Agreement (FTA) – 1988 Services • U.S. goods and services trade with NAFTA $1.2 Trillion/year • Exports total $600 Billion • Integrated market – moving to NAFTA Plus

NAFTA – Market Access

• NAFTA goods – duties and quantitative restrictions eliminated by January 2008

• Chapter Three: National Treatment / Non-Tariff Barriers • Chapter Four: Rules of Origin – Is it a NAFTA good?

NAFTA – Sectorial Provisions

• Chapter 6 – Energy and Basic Petrochemicals • Chapter 7 – Agriculture / SPS – Supply Management / Science Based

Standards • Chapter 9 – TBT • Government Procurement – Canadian Government is the largest

single purchaser • http://www.wl-tradelaw.com/government-procurement-and-citt-bid-

challenges-a-brief-guide/

NAFTA – Investment, Services, IP, Labour Mobility

• Chapter 11 – Investment Obligations (Non-discrimination, Fair and Equitable Treatment, Compensation for Expropriation)

• Chapter 11 – Investor-State Dispute Settlement • Chapter 12 – Services – National Treatment Standard • Chapter 16 – Temporary Entry for Business Persons • Chapter 17 – Enforcement of IP Rights

Protecting your IP

• U.S. copyright or patent protection DOES NOT automatically provide equivalent protection in Canada.

1. Have an overall strategy to protect your IP in Canada (consult locally) 2. Rights must be registered in Canada under local laws.

• U.S. Government cannot enforce rights for private individuals or

corporations in Canada.

Questions??

This presentation is intended to provide general information only to authorized users and does not constitute legal advice. No user should act on the basis of any material contained in the presentation without obtaining legal advice specific to the user’s situation.

Woods, LaFortune LLP

Michael Woods Catherine Walsh [email protected] [email protected] 613.355.0382 613.513.7131