Barriers (tariff and non-tariff) U.S. companies face when exporting may include:

• Particularly high tariffs for certain products
• Restrictions on selling to the government of the country
• Import licensing requirements
• Anti-dumping and countervailing duty measures
• Product bans
• Any quarantine measures for agricultural products
• Foreign governments that prohibit participation in the rule-making process
• Rules that discriminate against U.S. products or are unnecessarily trade-restrictive
• Rules that are inconsistent with relevant international standards
• Technical requirements and mandatory standards that are overly restrictive, discriminatory, or more burdensome than necessary

What should you do when you identify a trade barrier?

The United States Department of Commerce’s Office of Trade Agreements Negotiations and Compliance (TANC), within the International Trade Administration, is a vital part of the United States government’s efforts to reduce unfair foreign government-imposed trade barriers.  For assistance with non-tariff barriers related to trade agreement non-compliance, such as standards and technical regulations-related barriers (i.e., technical barriers to trade), contact TANC at tanc@trade.gov, (202) 482-1191, or report a trade barrier online. Other trade agreement non-compliance areas that TANC provides assistance on include import licensing, trade facilitation, customs valuation, rules of origin, anti-corruption, government procurement, investment, and sanitary and phytosanitary non-tariff trade barriers.

Provide the following information from your organization to help assess the barrier:

• A translated copy of the technical regulation
• Identification of the problematic areas, and explanation of why they are problematic
• Background on how the standards and procedures differ from those to which your organization complies
• Information about how your organization may be negatively affected, including the dollar value, if possible

Possible options for resolution:

Seeking voluntary compliance through relevant trade agreements, diplomatic resources, and advocacy from high-level officials is the preferred option to remove trade barriers in a commercially meaningful time frame. The action plan will be tailored to the case and country, and always in concert with the reporting company/industry.

Technical Barriers to Trade

One of the trade barriers U.S. companies may face is a technical barrier to trade (TBT).  Technical regulations and standards specify a product’s characteristics (such as size, functions, and performance), how it is labeled or packaged, and testing and certification requirements before it can enter a country’s market. These measures should serve legitimate public policy goals, but the requirements can be problematic when they are overly restrictive or discriminatory and are used to inhibit trade. In cases where they are more trade-restrictive or more burdensome than necessary, they are technical barriers to trade. The World Trade Organization (WTO) Agreement on Technical Barriers to Trade (TBT) and the United States-Mexico-Canada Agreement (USMCA) set rules aimed at preventing and addressing such barriers. The WTO TBT Committee meets three times a year and the United States Trade Representative (USTR) leads the United States delegation to engage trading partners to remove specific TBTs. This process gives a chance for the United States’ trading partners to come into compliance. 

Examples of Canadian Technical Barriers to Trade

Cheese Compositional Standards

Canada’s regulations on compositional standards for cheese limit the amount of dry milk protein concentrate (MPC) that can be used in cheese making, reducing the demand for U.S. dry MPCs. The United States continues to monitor the situation with these regulations for any changes that could have a further adverse impact on U.S. dairy product exports.

Front-of-Package Labeling on Prepackaged Foods

In 2021, the United States continued to monitor Canada’s proposed regulation to implement requirements for front-of-package (FOP) labeling on prepackaged foods deemed high in sodium, sugars, and saturated fat, and updating requirements for other FOP information, including certain claims and labeling of sweeteners. The approach under consideration uses Canada’s nutrient content claim framework to determine whether a food would be required to carry a FOP symbol, including a nutrient content message. The United States submitted comprehensive comments on the proposed regulations notified to the WTO in April 2018. Since then, the United States has regularly consulted with Canada regarding its plans to produce an updated draft or final regulation. In 2020, U.S. exports of processed foods to Canada were valued at approximately US$14.5 billion.

Proposed Integrated Management Approach to Plastic Products

 In June 2019, Canada signaled its intent to reduce plastic waste by banning certain single-use plastics. Canada then announced in an October 2020 discussion paper, entitled A Proposed Integrated Management Approach to Plastic Products to Prevent Waste and Pollution, that its proposed ban will include plastic checkout bags, straws, stir sticks, six-pack rings, cutlery, and food ware made from hard-to-recycle plastics. Canada’s plan to manage plastics also proposes improvements to recover and recycle plastic and establish recycled content requirements in products and packaging. The United States commented on the discussion paper and the proposed order in December 2020 and requested any implementing measures be notified to the World Trade Organization (WTO). Canada published the final order adding “plastic manufactured items” to Schedule 1 (“the Toxic Substances List”) of the Canadian Environmental Protection Act (CEPA) on May 12, 2021. This designation provides the Canadian Government with the regulatory authority to manage plastic production, importation, and use. On December 25, 2021, Canada published draft regulations to prohibit the manufacture, import, and sale of certain single-use plastics in the Canada Gazette, which started a 70-day public comment period. Canada notified the draft regulations to the WTO on January 7, 2022. As of December 20, 2022, certain single-use-plastics were banned from manufacture and import for sale in Canada and will be banned for sale writ large in Canada by the end of 2023. In April 2023, the Canadian government published a Regulatory Framework Paper outlining proposed regulations for plastic packaging and certain single-use plastics including a minimum of 80% recycled content requirements and labelling rules for recyclability and compostability. Additionally, the Canadian Government published a technical paper outlining the technical details and reporting requirements being considered for Canada’s Federal Plastics Registry. Draft regulations are expected for both the recyclability content requirements and labelling and plastics registry by the end of 2023. The United States will continue to engage and collaborate with Canada on these issues and will closely monitor their impact.

Sanitary and Phytosanitary Barriers

Restrictions on U.S. Seeds Exports

For many major field crops, Canada’s Seeds Act generally prohibits the sale or advertising for sale in Canada, or import into Canada, of any variety of seed that is not registered with Canada’s Food Inspection Agency (CFIA). Canada’s variety registration gives CFIA an oversight role in maintaining and improving quality standards for grains in Canada. The registration is designed to facilitate and support seed certification and the international trade of seed; verify claims made, which contributes to a fair and accurate representation of varieties in the marketplace; and to facilitate varietal identity, trait identity, and traceability in the marketplace to ensure standards are met. However, there are concerns that the variety registration system is slow and cumbersome, and disadvantages U.S. seed and grain exports to Canada. Under the Canada Grain Act, only grain of varieties produced from seed of varieties registered under the Seeds Act may receive a grade higher than the lowest grade allowable in each class. The USMCA includes a commitment to discuss issues related to seed regulatory systems. In January 2021, CFIA announced that it was beginning seed regulatory modernization efforts. The United States will continue to discuss with Canada steps to modernize and streamline Canada’s variety registration system.

Digital Trade Barriers

Data Localization

The Province of Québec adopted a law in September 2021 that amends its data protection regime. Under the new law, the transfer of personal data outside of Québec is limited to jurisdictions with data protection regimes deemed equivalent to Québec’s. Implementation of the law is being phased in through the end of 2024. The United States will monitor the implementation of this provincial law and any other proposed measures to ensure they do not place restrictions on the cross-border transfer of data in a manner inconsistent with the obligations set forth in the USMCA.

Digital Services Taxation

On December 14, 2021, the Canadian Government published draft legislation for a unilateral digital services tax (DST). Canada’s proposed DST was open to public comment until February 22, 2022. Canada has taken these steps despite joining the October 8, 2021 OECD/G20 Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, which called for all parties to commit not to introduce DSTs while multilateral negotiations to reform international tax laws were underway. As noted in U.S. comments to Canada, most foreign DSTs have been designed in ways that discriminate against U.S. companies, as they single out U.S. firms for taxation while effectively excluding national firms engaged in similar lines of business. Further, Canada’s proposed DST would create the possibility of significant retroactive tax liabilities starting with revenues earned as of January 1, 2022, with immediate consequences for U.S. companies. Moreover, in July 2023, Canada was one of only five countries out of 143 nations participating in the OECD/G20 Inclusive Framework, that declined to endorse a new OECD/G20 Statement that would extend by one year (until 2025) the freeze on imposing new DSTs while multilateral negotiations proceed.

The United States has repeatedly expressed serious concern that Canada continues to pursue a unilateral DST, including as recently as July 2023 when the United States urged Canada to refrain from imposing such a tax while OECD/G20 Inclusive Framework negotiations continue this year.

Services Barriers

Telecommunications

Canada maintains a 46.7% limit on foreign ownership of certain existing suppliers of facilities-based telecommunication services, including the cable television industry. In 2012, Canada made a small change to this regime by allowing foreign investment of more than 46.7% in suppliers with less than 10% market share. In addition to foreign equity restrictions, Canada requires that Canadian citizens comprise at least 80% of the membership of boards of directors of facilities-based telecommunication service suppliers.

Audiovisual Services

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 Canadian Radio-television and Telecommunications Commission (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 non-Canadian channel from the list (thereby revoking approval to supply the service) or shift the channel into a less competitive location on the channel dial. Alternatively, non-Canadian channels can become Canadian by ceding majority equity control to a Canadian partner, as some U.S. channels have done.

The United States is monitoring Canada’s implementation of the USMCA commitments to allow for the cross-border supply of U.S. home-shopping programming.

The CRTC also requires that 35% of popular musical selections broadcast on the radio qualify as “Canadian” under a Canadian Government-determined point system.

The CRTC’s Wholesale Code entered into force in January 2016 and governs certain commercial arrangements between distributors (e.g., cable companies) and programmers (e.g., channel owners). The Code is binding for vertically integrated suppliers in Canada (i.e., suppliers that own infrastructure and programming) and applies as guidelines to foreign programming suppliers (who by definition cannot be vertically integrated, as foreign suppliers are prohibited from owning video distribution infrastructure in Canada).

U.S. broadcasters have complained about Canadian cable and satellite suppliers picking up the signals of U.S. stations near the border and redistributing them throughout Canada without the U.S. broadcasters’ consent. Content owners (including broadcasters who develop their own programming) can apply for compensation for the use of such content in Canada from a statutorily mandated fund into which Canadian cable and satellite suppliers pay. However, U.S. broadcasters consider this compensation, which was recently reduced, to be insufficient and have sought the right to negotiate the carriage of their signals on commercially set rates and terms, as can be done in the United States. The United States will continue to explore avenues to address these concerns.

The Online Streaming Act (Bill C-11 from the 44th Parliament, 1st session), which serves as an update to Canada’s 1991 Broadcasting Act, became law on April 27, 2023, after more than a year of contentious debate within Canada’s Parliament.  The law is intended to change Canada’s broadcasting policy to account for the increased prominence of video, music, and digital media disseminated via the internet and to prioritize the ‘needs and interests’ of Canadians in broadcast programming.  It grants the CRTC regulatory authority over almost all audiovisual content distributed by online or streaming platforms.  Under the law, CRTC can require streaming providers to pay into funds to support Canadian content, make Canadian content more discoverable on their online platforms’ user interfaces, and otherwise promote/prioritize Canadian content. It does not intend to regulate YouTubers, influencers, or individuals making content on social media platforms like Facebook or Instagram for other users to enjoy; podcasters making content that is carried on audio streaming platforms like CBC Listen or Spotify; or producers making content that is sold to an online streaming service like Netflix.

Investment Barriers

The Investment Canada Act has regulated foreign investment in Canada since 1985. National security is a determining factor of Investment Canada Act reviews along with economic net benefits. Foreign investors must notify the Canadian Government when acquiring a controlling interest in an existing Canadian business or starting a new business. For more information on investment barriers, refer to the United States Trade Representative’s 2023 National Trade Estimate Report on Foreign Trade Barriers and the U.S. Department of State Investment Climate Statements website.