Trade facilitation programs

Businesses with shipments valued at less than C$3,300 can benefit from CBSA’s Courier Low Value Shipment Program (CLVS).  CLVS simplifies and expedites the clearance process for low-value shipments transported via a qualified courier.  The program benefits shippers of low-value goods – including e-commerce shippers – by allowing informal entry.  This streamlines processing and offers beneficial accounting procedures.

NOTE:  This program is only available for qualified goods valued at less than C$3,300 that are transported by an approved courier.

Canada’s Non-Resident Importer (NRI) program allows U.S. businesses to compete on a level playing field in the Canadian market by addressing obstacles that include:

• Landed Cost: S. businesses that register as NRIs are permitted to collect Canadian sales taxes at time of purchase.  This means U.S. businesses can charge Canadian customers a landed cost, allowing all sales taxes and customs fees to be paid up front.  Without NRI status, Canadian customers would be presented with a bill for those taxes and fees at time of delivery.
• Importer of Record: NRIs can act as importers of record.  As an importer of record, a business is eligible to clear goods through customs.  Without NRI status, U.S. businesses run the risk of having to involve their Canadian customers in the clearance process.

Duty drawback allows businesses to obtain refunds of up to 99 percent of the amount of import duties paid on products subsequently exported or destroyed.  In recent years, drawback eligibility has been expanded to include certain taxes and fees.  U.S. businesses apply for drawback through the U.S. Customs and Border Protection (CBP) agency, which sets a very high bar for eligibility.  A business must maintain meticulous records and provide a clear trail proving that a product initially imported into the United States is the same – or in some cases nearly the same – as the product subsequently exported (or destroyed).  But given that a successful drawback claim can reap huge financial savings, the end result is often worth the aggravation and time.

The United States-Mexico-Canada Agreement (USMCA) took effect in July 2020.  The USMCA replaced the North American Free Trade Agreement (NAFTA), which had been in place for 26 years.  The USMCA maintains core provisions of NAFTA, including the elimination of tariffs on originating goods moving between the three partner countries.  The agreement also expands on NAFTA to address the realities of 21^st century commerce with provisions for e-commerce, digital trade, and intellectual property.

U.S. shippers can benefit from USMCA provisions that outline changes to Canada’s de minimis threshold level for duties and taxes.  (The de minimis threshold refers to the value below which no duties and/or taxes are collected on a particular product.)

• Canada increased its de minimis level from C$20 to C$40 for taxes, and set a de minimis threshold of C$150 for duty-free shipments.
• Businesses that ship goods that fall below the de minimis threshold do not have to follow “formal entry” procedures. This means a faster and less onerous clearance process for businesses that tend to ship goods valued at less than C$150. 
• BUT, only shipments arriving in Canada via express delivery carriers can benefit from the duty and tax savings. This is a critical distinction, and means shipments delivered to Canada through the postal system are unaffected, and subject to the same C$20 threshold that was in place prior to the USMCA taking effect. 

Low Value Shipment Threshold

• Shipments valued at less than C$3,300 can also benefit. The USMCA allows informal entry for all commercial shipments valued up to $3,300.  This means an expedited clearance process with reduced paperwork.

Note:  In Canada, the trade agreement is referred to as the Canada-United States-Mexico Agreement (CUSMA). 

Both the U.S. and Canadian governments have implemented single window filing systems that serve as the central entry point for required customs documentation.  Each country’s single window system replaced outdated, obsolete, and often redundant processes that had become a source of frustration for the trade community.

The single window allows information and documentation to be submitted once.  The system automatically routes required information to each applicable government agency. 

In the United States for example, almost 50 government agencies are involved in the trade process.  Prior to implementation of the single window, each agency maintained its own filing process – many of which were paper based – for submitting documentation.  As a result, importers and exporters were often required to submit the same data to multiple agencies.

The U.S. single window system is called the Automated Commercial Environment (ACE), and it is managed by the Customs and Border Protection (CBP) agency.

Canada’s system is called the Single Window Initiative (SWI).  The system is administered by the Canada Border Services Agency (CBSA).

The U.S. and Canadian governments offer “trusted trader” programs that allow important benefits to qualified participants.  The purpose of these programs is to strengthen supply chain security and facilitate entry of low-risk shipments.  Businesses undergo extensive application and review procedures, and certify the security of their supply chains, along with the supply chains of their suppliers and vendors.  In exchange, businesses are eligible for important benefits that help expedite the customs clearance process.  Core Trusted Trader programs include:

• Customs-Trade Partnership Against Terrorism (C-TPAT) is the main trusted trader program for members of the U.S. trade community. Businesses that successfully meet program requirements receive benefits that include:
  • Reduced likelihood of border inspections.
  • “Front of Line” treatment for shipments that are chosen for on-site inspection.
  • Shorter wait times.
  • Assignment of a designated supply chain security specialist.
  • Access to Free and Secure Trade (FAST) expedited clearance lanes at land crossings.
  • Potential to enjoy benefits offered by countries with which the United States has signed Mutual Recognition agreements.

• Partners in Protection (PIP) is the core trusted trader program administered by Canada Border Services Agency (CBSA). Benefits for program members include:
  • Access to CBSA security assessments, awareness sessions, and CBSA expertise.
  • Recognition as a Trusted Trader upon arrival at the border, which can save time.
  • Reduced examination rate at the border.
  • Eligibility to apply for the Free and Secure Trade (FAST) program, which allows access to designated FAST lanes at land crossings.
  • Eligibility to participate in the Courier Low Value Shipment (CLVS) program.
  • Eligibility to benefit from Mutual Recognition Arrangements that Canada has in place with other countries’ customs organizations.

CBSA and CBP have committed to harmonizing the PIP and C-TPAT programs, especially with regard to highway carriers.  Through harmonization, the two programs enjoy mutual recognition, with benefits extended to each other’s members.  U.S. and Canadian companies can apply to both programs using a single application process, undergo a single site validation, and have a single point of contact.

The Free and Secure Trade (FAST) program allows expedited processing for commercial carriers whose truck drivers have completed background checks and meet certain eligibility requirements.  The program is available to both U.S. and Canadian businesses. FAST participants have access to designated “FAST lanes” at several major U.S./Canadian land crossings, which can significantly improve the time required to move a shipment across the border.