U.S./Canada Border Clearance: It's Not as Easy as You Think
Many U.S. companies underestimate the complexity of shipping to Canada, thinking of it almost as an extension of their own country. Geographic proximity, shared language, and common culture leave the impression that sending goods across the border should be a breeze.
Yet increasingly stringent security mandates, bureaucratic customs requirements, and a battery of taxes, tariffs, and fees can result in shipments being delayed at the border, subject to penalties, or even denied entry.
Whether you are bringing Canadian goods into the United States, exporting to Canada, or managing cross-border customer returns, it's vital to understand some key aspects of both U.S. and Canadian customs processes.
To start, any business sending goods to Canada must obtain a business number from Revenue Canada for tracking all tax and financial transactions. That number must be included on all forms and paperwork, and is the tip of the iceberg in terms of compliance.
The Canada Border Services Agency (CBSA) also requires shippers to:
- Pay all taxes, including federal and provincial sales taxes, and applicable duties and tariffs.
- Determine proper harmonized tariff code.
- Complete numerous forms, including a Cargo Control Document, NAFTA certificate of origin, and cargo manifest.
Canada recently introduced a new eManifest portal, which requires all carriers to submit an electronic accounting of incoming shipments prior to arrival at the border. The eManifest requirement is still in an "informed compliance" period, but CBSA will start to impose fines for non-compliance once that period ends.
Similarly, the process for importing goods into the United States is bureaucratic and technical, and in many ways mirrors the Canadian process. A telling sign on the U.S. Customs and Border Protection Web site warns, "Importing goods without researching entry requirements in advance can be a costly experience."
In addition, each country implements border security programs intended to track the contents of shipments arriving at their borders. The good news is that each government offers "trusted shipper" programs to help facilitate compliance, and minimize the likelihood of shipments being delayed at the border.
These programs—the Free and Secure Trade Program, administered jointly by the United States and Canada; CBSA's Partners in Protection and Customs Self Assessment programs; and the United States' Customs-Trade Partnership Against Terrorism and air cargo Certified Cargo Screening Program—are a tremendous help, but require participants to undergo an arduous application process.
If it seems like there is redundancy in these processes, it's because there is. Businesses on either side of the border have been asking for relief, and the two governments have pledged to find efficiencies where possible. But any changes are sure to come slowly.
With more than $600 billion in goods crossing the U.S./Canadian border every year, it has never been a better time to consider integrating an export/import component into your business. Thousands of businesses are already finding success in cross-border sales. But as you make your plans, be sure to include a viable process for border compliance.