Implications of FTA/ NAFTA for Goods Suppliers - Exporting in a Changing World

Exporting in a Changing World

The U.S. offers vast market for Ontario exporters. While the similarities of language, laws, standard of living and attitudes give Canadians a unique advantage over exporters from other countries, they can also cause us to overlook the many ways in which the two nations are different.

Canadian exporters must treat the U.S. as a market separate from Canada. The events of September 11, 2001 and the resulting security measures have affected border wait times, packing legislation, reporting requirements, travel many other export-related issues.

Cross-Border Movement

If you're a Canadian citizen, there is currently no legal requirement for you to present a Canadian passport in order to enter the U.S. However, given American security concerns it is wise to acquire and carry one when you cross the border. Your driver's license or birth certificate may satisfy an U.S. border official, but your passport is the only definite proof of Canadian citizenship.

If you need a Canadian passport, you can find information for how to obtain one on the Passport Canada website.

You can find additional information about the various classifications of business travelers and their related documentation on the Foreign Affairs and International Trade Canada (DFAIT) webpage Cross-Border Movement of Business Persons.

DFAIT's Canada-United States Relations website includes links to many resources covering various aspects of the bilateral relationship, including visas and immigration, border cooperation and politics, as well as trade.

After September 11, 2001, Canada and the U.S. signed the Smart Border Declaration and Action Plan. This identifies initiatives that promote bi-national cooperation in border security and management needed to ensure public safety and the security of both countries' economies.

Free and Secure Trade Program (FAST)

Certain programs, such as the Canada Border Services Agency's Free and Secure Trade program (FAST), provide exporters with additional travel options and new requirements. The FAST program is a joint Canada-U.S. initiative involving the Canada Border Services Agency, Citizenship and Immigration Canada, and the U.S. Bureau of Customs and Border Protection (CBP).

FAST supports moving pre-approved eligible goods across the border quickly and verifying trade compliance away from the border. It is a harmonized commercial process offered to pre-approved importers, carriers, and registered drivers. Shipments for approved companies, transported by approved carriers using registered drivers, will be cleared into either country with greater speed and certainty, and at a reduced cost of compliance. In Canada, FAST builds on the Customs Self-Assessment (CSA) program and its principles of pre-approval and self-assessment, as well as increased security measures under the Partners in Protection (PIP) program.

FAST includes aligning the requirements of Canada's PIP program and the U.S. Customs Trade Partnership Against Terrorism (C-TPAT) program. As part of these programs, companies will have to adopt and implement security procedures to be compatible with guidelines set by both customs agencies.

FAST focuses on greater speed and certainty at the border and reduces the cost of compliance by:

reducing the information requirements for customs clearance
eliminating the need for importers to transmit data for each transaction
dedicating lanes for FAST clearances
reducing the rate of border examinations
verifying trade compliance away from the border
treamlining accounting and payment processes for all goods imported by
approved importers (Canada only)

Partners in Protection Program (PIP)

The Partners in Protection Program (PIP) enlists industry's help in dealing with terrorism, increasing border security, reducing smuggling and combating organized crime. In Canada, PIP is managed by the Canada Border Services Agency's (CBSA). Companies that sign up for the program give the CBSA a self-assessment of their security methods. In return, the CBSA will help the business remedy any flaws in its security.

PIP benefits companies through faster movement of low-risk personnel and goods through U.S. customs, improved security for the company and better understanding of customs requirements.

Customs-Trade Partnership Against Terrorism Program (C-TPAT)

The Customs-Trade Partnership Against Terrorism (C-TPAT) program helps businesses work with U.S. Customs to keep international supply chains secure. If you produce goods and export them to the U.S., it may be to your advantage to be a CTPAT participant.You will benefit from reduced inspections at the border, be provided with a customs account manager and allowed to use the FAST program.

To enroll in C-TPAT, you'll have to carry out a thorough self-assessment of your supply chain security, using the C-TPAT guidelines developed by U.S. Customs and Border Protection. You'll also have to develop a program to enhance your supply chain security in accordance with those guidelines. For more information, refer to the C-TPAT web page of the U.S. Customs and Border Protection website.

Security Alerts

The U.S. Department of Homeland Security (DHS) issues revised security alerts when it believes there is increased danger of terrorist attack. The level of such alerts may affect movement of goods and people across the border. Refer to the DHS website for information about the current threat level.

Border security procedures are continuously evolving. The CBSA's website includes news and regularly updated estimates of the wait times at major border crossings.

U.S. Customs Regulations

Although U.S. customs regulations are very complex, clearing goods into the U.S. can be relatively uncomplicated if you're well prepared for it - for example, by preparing complete and accurate export documentation. Inaccurate or incomplete documentation is the most common reason for export shipments having trouble entering the U.S.; so a little extra time spent on your paperwork will contribute to problem-free customs clearance.

There are two major ways in which your goods can enter the U.S. - as a formal entry, also called a commercial entry, or as an informal entry. Most exports enter the U.S. as a formal entry, for which U.S. customs regulations recommends the use of a U.S. customs broker. Informal entry doesn't require a broker if the exporter accompanies the shipment, or if the consignee comes to the port of entry to collect it.

A broker will clear your goods through customs quickly, sparing you storage costs. To find a U.S. customs broker, check the searchable membership directory on the National Customs Brokers & Forwarders Association of America (NCBFAA) websiteNational Customs Brokers & Forwarders Association of America (NCBFAA) website. Alternatively, you can find a broker at a particular port of entry by visiting the U.S. Customs and Border Protection site's Ports of Entry page. Select the port of entry and scroll down the page to the link for its brokers list.

Required documentation for formal entry

Your shipment, if destined for formal entry, will require the following documents and information:

Commercial invoice

Also known as a business invoice, this must exactly represent the content and value of your shipment. Never declare goods, such as promotional items or samples, as being of "No commercial value." U.S. customs officials may decide to impose a value of their own or may even refuse entry of the goods. Another invoice tip - when using part numbers, provide a written description that will help classify the goods for customs purposes. Also, be sure that each invoice also shows the total amount charged to the buyer for the shipment; never use the net value.

NAFTA Certificate of Origin

Determining the eligibility of goods for NAFTA treatment and providing the importer with the Certificate of Origin is the exporter's responsibility. To claim NAFTA treatment, the importer must be in possession of a valid Exporter's Certificate of Origin from the Canadian exporter that certifies that the goods in question meet the NAFTA Rules of Origin. Exporters can obtain copies from Canada Customs and Revenue Agency offices in Hamilton, London, Ottawa and major border crossing points, or visit the Canada Customs and Revenue Agency website.

Country of Origin Marking Rules

NAFTA marking rules are distinct from the NAFTA content rules. The marking rules serve the domestic purpose of informing the ultimate consumer of a good where that goods were made. In contrast to the content rules, which are common to all three parties, each NAFTA member is required to establish its own set of marking rules.
The marking rules of each NAFTA country apply only to imports from its NAFTA partners. Accordingly, the U.S. marking rules will pertain only to imports from Canada and Mexico. Similarly, Canada's marking rules apply only to imports from Mexico and the U.S.The NAFTA marking rules do not apply to exports or to goods that are produced and sold domestically. Marking must be sufficiently permanent to remain in place unless deliberately removed.

Importer ID Number

Also known as the Customs Assigned Number, this is used by U.S. Customs to establish bond coverage, release and entry of merchandise, liquidation, the issuing of bills and refunds, and drawback processing. Your customs broker can help you obtain the number or you can get it yourself by submitting U.S. Customs and Border Protection Form 5106 to U.S. Customs.

Bill of lading or airway bill

Your freight forwarder, carrier or broker is responsible for filling it out. A bill of lading isn't needed for mail shipments.

Entry manifest

The carrier is responsible for filling this out. Again, this isn't needed for mail shipments.

Entry/immediate delivery

This is used for time-sensitive shipments, such as fresh produce, and replaces the entry manifest. The carrier is responsible for submitting this to U.S. Customs before the shipment arrives at the port of entry.

Harmonized System Tariff Classification (HS Code)

Depending on the nature of the goods, the shipment may also need to be accompanied by permits or licenses (if they're controlled goods) and a packing list.

Informal entry of goods

Your goods are considered an informal entry if their value is less than US$2,000, and provided they are not controlled goods. Informal entry doesn't require a broker if the shipment is accompanied by the exporter, or if the consignee comes to the port of entry to collect it. Documentation for informal entry is less stringent than it is for formal entry. The shipment must be accompanied with its commercial invoice.You should also include a NAFTA Certificate of Origin; while this isn't legally required by U.S. Customs, providing one will smooth your shipment's path across the border.