Includes import documentation and other requirements for both the U.S. exporter and foreign importer.
The Canada Border Services Agency website lists the required documents for import at www.cbsa-asfc.gc.ca/menu-eng.html. The most important document required from a U.S. exporter is a properly completed Canada Customs Invoice or its equivalent for all commercial shipments imported into Canada. The exporter can use its own form if the required information is provided. At the border, the importer or customs broker also submits Form B3, the customs coding form. Further information on Form B3 can be found in the brochure “Importing Commercial Goods into Canada – How to complete Form B3 when importing commercial goods” (www.cbsa-asfc.gc.ca/publications/pub/bsf5079-eng.html). Other documents that trucking companies provide for customs clearance may include a cargo control document and bill of lading. Some goods such as food or health-related products may be subject to the requirements of other federal government departments and may need permits, certificates, or examinations.
Customs brokers can assist U.S. exporters with details of the import documentation process, including Canada’s non-resident importer program, in which the United States exporter in the United States obtains a “business number” and can then be the “importer of record” for purposes of customs clearance. This arrangement offers many marketing advantages, in particular the opportunity to remove the burden of customs clearance of commercial shipments from the Canadian customer. Large retailers often demand that an exporter complete whatever paperwork is required so that all the retailer needs to do is unload the goods from the truck and pay the exporter for the goods. Many brokers advertise their non‑resident importer programs on their websites.
To claim dity-free status under the U.S.Mexico-Canada Agreement, goods need to meet certain eligibility. To learn more about qualifying goods and certifyign origin, visit trade.gov/usmca website.
For most mail-order shipments, the only paperwork needed is a standard business invoice. Companies should indicate the amount the customer paid for the goods, in either U.S. or Canadian dollars. If goods are shipped on a no-charge basis (samples or demos), the company must indicate the retail value of the shipment.
U.S. companies shipping commercial goods to Canada need to be aware that the Canada Border Services Agency (CBSA) eManifest program (https://www.cbsa-asfc.gc.ca/import/menu-eng.html). eManifest requires carriers, freight forwarders, and importers in all modes of transportation (air, marine, highway, and rail) to transmit cargo, conveyance, house bill/supplementary cargo, and importer data electronically to CBSA prior to loading in the marine mode and prior to arrival in the air, rail, and highway modes.
Agricultural Supply Management
Canada uses supply-management systems to regulate its dairy, chicken, turkey, and egg industries. Canada’s supply-management regime involves production quotas, producer marketing boards to regulate price and supply, and tariff-rate quotas (TRQs) for imports. Canada’s supply-management regime severely limits the ability of U.S. producers to increase exports to Canada above TRQ levels and inflates the prices Canadians pay for dairy and poultry products. Under the current system, U.S. imports above quota levels are subject to prohibitively high tariffs (e.g., 245% for cheese and 298% for butter).
The USMCA created additional access for U.S. exports of supply managed products, with TRQs growing over the through 2039, following the July 1, 2020 entry into force of the agreement.
Special Milk Classes
Canada establishes discounted prices for milk components for sales to domestic manufacturers of dairy products used in processed food products under the Special Milk Class Permit Program (SMCPP). These prices are “discounted,” being lower than regular Canadian milk class prices for manufacturers of dairy products and pegged to U.S. or world prices. The SMCPP is designed to help Canadian manufacturers of processed food products compete against processed food imports into Canada and in foreign markets. An agreement reached between Canadian dairy farmers and processors in July 2016 introduced a new national milk class (Class 7) that establishes discount pricing for a wide range of Canadian dairy ingredients used in dairy products. Provincial milk marketing boards (agencies of Canada’s provincial governments) began implementing Class 7 in February 2017. Class 7 is aimed at decreasing imports of U.S. milk protein substances into Canada and increasing Canadian exports of skim milk powder into third country markets. The United States has raised its serious concerns with Class 7 with Canada bilaterally and at the World Trade Organization (WTO) Committee on Agriculture. Under the USMCA, Canada will eliminate Class 7 within six months of entry into force. In addition, Canada will ensure that the price for non-fat solids used to manufacture skim milk powder, milk protein concentrates, and infant formula will be no lower than a level based on the USDA price for nonfat dry milk. Transparency provisions obligate Canada to provide information needed to monitor compliance with these commitments. Canada will apply charges to exports of skim milk powder, milk protein concentrates, and infant formula in excess of thresholds specified in the USMCA.
Restrictions on U.S. Grain Exports
Several grain sector requirements limit the ability of U.S. grain exporters to receive a premium grade (a grade that indicates use for milling purposes as opposed to grain for feed use) in Canada, including the provisions of the Canada Grain Act and Seeds Act.
Under the Canada Grain Act, the quality grade certificate for grain grown outside Canada, including U.S. grain, can only state the country of origin for that grain and not issue a grade. Also, the Canada Grain Act allows the Canadian Grain Commission to “establish grades and grade names for any kind of western grain and eastern grain and establish the specifications for those grades” by regulation. The explicit definitions of “eastern grain” and “western grain” as grain grown in the eastern and western divisions of Canada in the Canada Grain Act further underscores that grading is only available to Canadian grains. Under the Canada Grain Act, only grain of varieties registered under Canada’s Seeds Act may receive a grade higher than the lowest grade allowable in each class.
U.S. grain can be sold without a grade directly to interested Canadian purchasers at prices based on contract specifications. However, contract-based sales are a relatively small proportion of all sales in Canada. Most sales occur through the bulk handling system in grain elevators. Grain elevators offer economic efficiencies by collecting and storing grain from many small-volume growers, giving them the ability to fulfill larger contracts and to demand higher prices for that ability.
The barriers to assigning U.S. grain a premium grade encourages both a price discounting of high-quality U.S. grain appropriate for milling use and segregating U.S. and Canadian grain at Canadian elevators. The requirement that the quality grade certificate for grain grown outside Canada state the country of origin also encourages segregating at Canadian elevators.
The USMCA requires Canada to treat U.S. wheat no less favorably than Canadian wheat with respect to assigning a quality grade. Under the USMCA, Canada will not be allowed to require a country of origin statement on a quality grade certificate for U.S. wheat.
Personal Duty Exemption
Canada’s personal duty exemption for residents who bring back goods from short trips outside of its borders is less generous than the United States personal duty exemption. Canadians who spend more than 24 hours outside of Canada can bring back C$200 worth of goods duty free, or C$800 for trips over 48 hours. Canada provides no duty exemption for returning residents who have been out of Canada for fewer than 24 hours. U.S. retailers have raised concerns about the effect of this policy on purchases by Canadians on short trips to the United States.
De Minimis Threshold
De minimis refers to the maximum threshold below which no duty or tax is charged on imported items. U.S. companies shipping to Canada should be aware that Canada’s de minimis threshold remains at C$20, which is the lowest among industrialized nations. By comparison, in March 2016, the United States raised its de minimis threshold from $200 to $800. Some stakeholders, particularly shipping companies and online retailers, maintain that Canada’s low de minimis threshold creates an unnecessary trade barrier.
Wine, Beer, and Spirits
Canada allows residents to import a limited amount of alcohol free of duty and taxes when returning from trips that are at least 48 hours in duration. If the amount exceeds the personal exemption, duties and taxes apply. The taxes vary by province, but generally inhibit Canadians from importing U.S. alcoholic beverages when returning from shorter visits to the United States.
Most Canadian provinces restrict the sale of wine, beer, and spirits through province-run liquor control boards, which are the sole authorized sellers of wine, beer, and spirits in those provinces. Market access barriers in those provinces greatly hamper exports of U.S. wine, beer, and spirits to Canada. These barriers include cost-of-service mark-ups, restrictions on listings (products that the liquor board will sell), reference prices (either maximum prices the liquor board is willing to pay or prices below which imported products may not be sold), labeling requirements, discounting policies (requirements that suppliers offer rebates or reduce their prices to meet sales targets), and distribution policies.
In 2015, British Columbia (BC) introduced wine measures that discriminate on their face against imported wine. These measures allow only BC wine to be sold on regular grocery store shelves, while imported wine may be sold in grocery stores only through a so-called “store within a store” option. The United States believes these measures are inconsistent with Canada’s obligations pursuant to Article III:4 of the GATT 1994 because they are laws, regulations, or requirements affecting the internal sale, offering for sale, purchase, or distribution of wine and fail to accord products imported into Canada treatment no less favorable than that accorded to like products of Canadian origin. In January and October 2017, the United States requested WTO dispute settlement consultations with Canada regarding measures maintained by BC governing the sale of wine in grocery stores. The WTO Secretariat entitled the dispute Canada —Measures Governing the Sale of Wine in Grocery Stores and assigned it the dispute number DS520. At its meeting on July 20, 2018, the WTO Dispute Settlement Body established a panel.
In an exchange of letters signed November 30, 2018, Canada committed to ensure that BC modify its measures and implement any changes no later than November 1, 2019. The United States has paused its dispute settlement action at the WTO and is reviewing regulatory changes made by British Columbia in July 2019.
Under Regulation 232/16, effective December 2016, grocery stores are permitted to sell wine under certain conditions, including conditions related to the size of the winery producing the wine, the size of wineries affiliated with the producing winery, the country where the grapes were grown, and whether the wine meets the definition of a “quality assurance wine.” Working with U.S. industry, the United States is analyzing these conditions for sale in grocery stores as well as other developments in Ontario to help ensure U.S. wines are not disadvantaged.
Canada maintains a 46.7% limit on foreign ownership of certain suppliers of facilities-based telecommunication services (i.e., those with more than 10% market share), except for submarine cable operations. This is one of the most restrictive regimes among developed countries. Canada also requires that Canadian citizens comprise at least 80% of the membership of boards of directors of facilities-based telecommunication service suppliers. As a consequence of these restrictions on foreign ownership, the role of U.S. firms in the Canadian market as wholly U.S.-owned operators has been limited to that of resellers, dependent on Canadian facilities-based operators for critical services and component parts.
Foreign ownership of transmission facilities is limited to 20% direct ownership and 33% through a holding company, for an effective limit of 46.7% total foreign ownership of certain suppliers of facilities-based telecommunications services (i.e., those that have more than 10% market share), except submarine cable operations. Canada has one of the most restrictive regimes among developed countries. Canada also requires that at least 80% of the members of the board of directors of facilities-based telecommunications service suppliers be Canadian citizens. Because of restrictions on foreign ownership, the role of U.S. firms in the Canadian market as wholly U.S.-owned operators has been limited to that of resellers, dependent on Canadian facilities-based operators for critical services and component parts.
Canadian Content in Broadcasting
The Canadian Radio-television and Telecommunications Commission (CRTC) imposes quotas that determine both the minimum Canadian programming expenditure (CPE) and the minimum amount of Canadian programming that licensed Canadian broadcasters must carry (Exhibition Quota). Large English language private broadcaster groups have a CPE obligation equal to 30% of the group’s gross revenues from their conventional signals, specialty, and pay services.
In March 2015, the CRTC announced that it will eliminate the overall 55% daytime Canadian-content quota. Nonetheless, the CRTC is maintaining the Exhibition Quota for primetime at 50% from 6 p.m. to 11 p.m. Specialty services and pay television services that are not part of a large English-language private broadcasting group are now subject to a 35% requirement throughout the day, with no prime-time quota.
For cable television and direct-to-home broadcast services, more than 50% of the channels received by subscribers must be Canadian channels. Non-Canadian channels must be pre-approved (“listed”) by the CRTC. Upon an appeal from a Canadian licensee, the CRTC may determine that a non-Canadian channel competes with a Canadian pay or specialty service, in which case the CRTC may either remove the nonCanadian channel from the list (thereby revoking approval to supply the service) or shift the channel into a less competitive location on the channel dial.
The CRTC also requires that 35% of popular musical selections broadcast on the radio qualify as “Canadian” under a Canadian government-determined point system.
In September 2015, the CRTC released a new Wholesale Code that governs certain commercial arrangements between broadcasting distribution undertakings, programming undertakings, and exempt digital media undertakings. A proposal in the new Wholesale Code to apply a code of conduct designed for vertically-integrated suppliers in Canada (i.e., suppliers that own infrastructure and programming) to foreign programming suppliers (who by definition cannot be vertically integrated, as foreign suppliers are prohibited from owning video distribution infrastructure in Canada) has raised significant stakeholder concerns. Additionally, stakeholders have expressed concern related to provisions in the Wholesale Code that affect U.S. broadcast signals and services within Canada. The Wholesale Code came into force January 22, 2016.
The Investment Canada Act (ICA) has regulated foreign investment in Canada since 1985. Foreign investors must notify the government of Canada prior to the direct or indirect acquisition of an existing Canadian business above a threshold value. Canada amended the ICA in 2009 to raise the threshold for Canada’s “net benefit” review of foreign investment. The threshold currently stands at C$600 million and had been scheduled to increase to C$1 billion in 2019. The government announced November 1, 2016 that the threshold for review will be raised to C$1 billion in 2017, two years sooner than originally planned Innovation, Science and Economic Development Canada is the government’s reviewing authority for most investments, except for those related to cultural industries, which come under the jurisdiction of the Department of Heritage Canada. Foreign acquisition proposals under government review must demonstrate a “net benefit” to Canada to be approved. The Industry Minister may disclose publicly that an investment proposal does not satisfy the net benefit test and publicly explain the reasons for denying the investment, so long as the explanation will not do harm to the Canadian business or the foreign investor.
Under the ICA, the Industry Minister can make investment approval contingent upon meeting certain conditions such as minimum levels of employment and research and development. Since the global economic slowdown in 2009, some foreign investors in Canada have had difficulty meeting these conditions.
Canada administers supplemental guidelines for investment by foreign SOEs. Those guidelines include a stipulation that future SOE bids to acquire control of a Canadian oil-sands business will be approved on an “exceptional basis only.”
For more information, refer to the United States Trade Representative’s 2017 National Trade Estimate Report on Foreign Trade Barriers.
Barriers to Digital Trade
The Canadian federal government is consolidating information and communication technology (ICT) services across 63 Canadian federal government email systems under a single platform. The tender for this project cited national security as a reason for requiring the contracted company to keep data in Canada. This requirement effectively precludes U.S.-based cloud computing suppliers from participating in the procurement process, unless they replicate data storage and processing facilities in Canada. The public sector represents approximately one third of the Canadian economy and is a major consumer of U.S. services, particularly in the information and communication technology sector. The requirement, therefore, is likely to have significant impact on U.S. exports of a wide array of products and services.
British Columbia and Nova Scotia each have laws that mandate that personal information in the custody of a public body must be stored and accessed only in Canada unless one of a few limited exceptions applies. These laws prevent public bodies, such as primary and secondary schools, universities, hospitals, government-owned utilities, and public agencies, from using U.S. services when there is a possibility that personal information would be stored in or accessed from the United States.