Customs clearance is an unavoidable part of international shipping, but with a basic understanding of what the process involves, U.S. businesses can minimize the risk of having a Canada-bound shipment delayed at the border.  Avoiding customs-related delays is especially important as U.S. businesses prioritize Canadian customers’ expectations for increasingly fast and on-time deliveries. In today’s hyper-competitive marketplace, no U.S. business wants to send the dreaded notification: “Your shipment has been delayed by customs.”

The good news though, is most customs-related delays can be avoided, or easily corrected.  But as a U.S. business considers the “extra steps” required to satisfy Canadian customs requirements, it’s important to keep in mind – and learn from – some of the more common reasons for shipment delays:

Table of Contents

Chapter 1: Incomplete or Missing Documentation

Canada Border Services Agency (CBSA) manages the flow of imports and exports across that country’s border.  This includes strict enforcement of paperwork and documentation requirements, which can vary depending on the type and contents of each shipment.  

Following is an overview of standard CBSA documentation requirements.  While the process may seem straightforward, with “only” a handful of documents required, businesses must not underestimate the complexity of compliance.  Another important consideration: In April 2019 CBSA mandated its “single window initiative (SWI)” electronic filing system, which provides a single, unified entry point for transmitting data to CBSA.  While the SWI is helping to streamline and facilitate the customs clearance process, it has introduced a new set of data entry requirements, as described below.  

Formal/Commercial Entries – Documentation Requirements

  • Canada Customs Invoice/Commercial Invoice.  Commercial shipments valued at more than $2,500 CAD require a “formal customs entry,” which starts with either a properly completed commercial invoice or Canada Customs Invoice. CBSA will generally accept either type of invoice, as long as all required information is provided.  A CBSA overview of required information lists more than 20 specific data elements, a subset of which includes: 
    • Vendor name and address
    • Consignee name and address
    • Country of origin
    • Mode of transport and place from which goods began transit to Canada
    • Currency in which vendor was paid
    • Number of packages/Kind of packages/Descriptive marks and numbers on packaging
    • Total weight
    • General description
    • Quantity/Unit Price

While these may seem to be straightforward requirements, shippers are required to provide specific information for each category.  “Total weight,” for example, must show both net and gross weight, and “country of origin” can be especially difficult to identify. As a result, many shipments arrive at the border with incomplete or missing information, which generally results in customs clearance delays.

  • Canada Customs Coding Form – B3.  Another required form is the Canada Customs Coding Form, or Form-B3.  This form is used to account for goods, regardless of value, for commercial use in Canada.  Form-B3 includes 51 fields, which according to CBSA, break down as follows:
    • Fields 1-9:  Referred to as the “Header” portion of the document.  The information in these fields pertains to the shipment as a whole.  A partial overview of required information includes: 
      •  Importer name and address
      • Transaction number (14-digit number assigned by CBSA at the time goods are released)
      • Office number – Three-digit code for applicable CBSA office
      • Mode of transport (i.e. Air =1, Highway = 2, Rail = 6, Pipeline =7, Marine = 9)
      • Total value of duty 
    • Fields 10-19:  Referred to as the “Subheader” section of Form-B3, this information refers to all of the shipments for one vendor or seller.  A partial overview of required information includes:
      • Vendor Name
      • Country of Origin
      • Tariff Treatment – Code for the tariff or trade agreement under which the goods are being imported into Canada
      • Classification Number – as indicated in Canada Customs Tariff listing
      • U.S. port of exit
      • Currency Code
      • Direct shipment date – This is the date indicated on the customs or commercial invoice.  Only required if the currency code represents a currency other than Canadian dollars.
      • Freight charges for shipments exported from the U.S. 
    • Fields 20-42:  Require listing of all applicable shipment “number values,” including:
      • Quantity of goods being accounted for, in the unit of measure required by the Customs Tariff
      • Value for duty code (selected from a list of numeric options that describe different scenarios).
      • Rate of customs duty for the relevant classification number
      • Amount of customs duties
      • Excise tax rate, if applicable
      • Applicable Goods and Service Tax rate or exemption code
    • Fields 43 – 51: Referred to as the “Trailer” section of Form-B3, this information applies to the entire shipment and includes:
      • Cargo control number or, for postal shipments, the CBSA Postal Import Form control number
      • Customs duties
      • SIMA assessment – applies to shipments which incur provisional duties, anti-dumping duties, or countervailing duties
      • Excise taxes
      • Goods and Services Tax.

As this overview makes clear, many of Form-B3’s fields call for special codes and considerations.  Completion of Fields #7 (mode of transport), and #14 (tariff treatment), for example, require special number codes provided by CBSA, while Fields #12 (country of origin) and #13 (place of export) require three-digit alphabetic codes indicating a specific state in the United States.

According to CBSA, “determining some of these elements, including tariff classification, value for duty, and the origin of your goods, may be complex.”  Despite this acknowledgement, all documentation is expected to be accurate and thorough. Otherwise, a shipment is at risk of being delayed by CBSA, or even denied entry.

  • Cargo Control Document (CCD).  Carriers use the cargo control document to report shipments to CBSA.  The CCD acts as CBSA’s initial record of a shipment’s arrival. The carrier will transmit a copy of the CCD to the shipper, as notification that a shipment has arrived in Canada and is awaiting customs clearance.  Each CCD must include a bar-coded cargo control number (CCN).  The first four digits of the CCN must be a carrier’s unique identifying “carrier code.” 

In addition, a shipper must include the cargo control number on accompanying documentation including Customs Form-B3.

  • Bill of Lading.  The carrier will provide the shipper with a bill of lading, which is a detailed list of a shipment’s contents.  This bill of lading is a legally binding document required to move a freight shipment.

Formal Entries — Additional Documentation Requirements

Certain shipments require additional permits, licenses and/or documentation that must accompany all materials submitted to CBSA.  Such requirements may include:

For a U.S. business, it’s necessary to determine if a product is subject to OGD regulation, identify the compliance requirements, and ensure that all paperwork is complete and accessible when a shipment arrives at the border.  A good place to start is by reviewing CBSA’s listing of some of the most frequently imported commodities that may require permits and/or certificates.

  • USMCA Certificate of Origin.  The North American Free Trade Agreement (USMCA)* eliminates duties on all qualified products moving between the three signatory countries – the United States, Mexico and Canada.  The most important factor for eligibility is for a product to have “originated” within a USMCA country or to meet USMCA standards for domestic content. The trade agreement establishes clearly-defined “rules of origin” for determining domestic content requirements for specific goods.

U.S. businesses are responsible for determining if their shipments are eligible for USMCA benefits, and for initiating the process for demonstrating eligibility.  The government does not automatically assign USMCA benefits, and if a business does not apply, no benefits will be awarded.

Once eligibility is determined, a USMCA Certificate of Origin must be completed and presented at time of entry.  The Certificate of Origin is the primary document used by customs to detail all shipment information, including origin of all product parts, proper tariff classification, and harmonized coding.

Completing the certificate of origin can be a highly confusing, exacting process.  A business must only entrust this responsibility to a highly trained employee, or to a qualified customs broker or logistics provider.  Improper claims for USMCA eligibility may result in significant penalties assessed on the individual who signed the form or made the claim.

*In October 2018, leaders of the three USMCA participants agreed to an updated trade agreement called the United States-Mexico-Canada agreement (USMCA).  That agreement is currently under review by each country’s federal legislature. Until USMCA is ratified, USMCA will remain in effect.

Informal Customs Entries – Documentation Requirements

Canada-bound shipments intended for non-commercial use, or valued at less than $2,500 CAD are considered “informal entries,” or “low-value shipments,” and subject to less onerous documentation requirements.  This category captures the bulk of e-commerce shipments traveling between the United States and Canada.  

In general, informal entries will either arrive in Canada via mail or through a qualified courier.  

Shipments arriving by mail

Canada Post, which is the equivalent of the U.S. Postal Service, is responsible for collecting and presenting all international mail, including parcels, letters and airmail, to CBSA.  In general, documentation requirements include:

  • Customs Declaration – Form CN22 or CN23 (depending on value)
  • Invoice – which can be a standard business invoice that includes the amount paid for the goods, in either U.S. or Canadian dollars.
  • Every parcel must have a proper label affixed, with information including:
    • Complete and address for sender and receiver
    • Accurate description of shipment contents
    • Country of origin/manufacture
    • Harmonized system tariff code
    • Value of contents in Canadian dollars
    • Proof of payment
  • Additional required documentation may include:
    • Form E14 – CBSA Postal Import Form.  This is the document used by CBSA to assess duties and taxes and keep track of shipments arriving in Canada through the mail.  If a shipment arriving in Canada is determined to owe taxes and/or duties, Form E14 will be affixed to the shipment when it is delivered.
    • OGD Import Permits or Licenses (if applicable to shipment)
    • USMCA Certificate of Origin (if applying for USMCA benefits).

Upon arrival in Canada, border security agents will inspect each piece of mail or parcel package to determine its admissibility and confirm whether contents are taxable or subject to duties.  If CBSA determines the package does not contain goods prohibited from entering Canada, and is not subject to duties or taxes, the shipment is released to Canada Post for delivery.

If additional consideration is required, the shipment will be held for further review either by CBSA or another government department or agency.

Canada Post makes clear that shippers are responsible for ensuring all customs documentation and item contents are complete, accurate and legible.  “Failure to provide any of the information required may result in delays, non-delivery and voids any delivery guarantees.”

Commercial Goods Arriving by Courier

Commercial goods valued at less than $2,500 CAD that arrive in Canada may be eligible for CBSA’s Courier Low Value Shipment Program, which offers expedited clearance for shipments carried by qualified couriers.

In this instance, the sender is responsible for providing the courier with data elements including the value, country of origin and a detailed description of the goods.  This program is not available for goods that require an OGD permit or license, or that are prohibited, regulated or controlled.

Single Window Initiative –MORE and Different Data Requirements

In 2019, CBSA mandated that all CBSA-required paperwork and documentation be submitted via the Single Window Initiative (SWI).  The SWI is CBSA’s new integrated processing system for the electronic capture of all information and documentation required by customs and by other government departments (OGDs) and participating government agencies (PGAs).

With the SWI in place, information is entered once, and then seamlessly transmitted to all relevant government departments and agencies.  SWI replaces prior procedures in which agencies maintained their own systems, which were not linked. As a result, information often had to be submitted multiple times, including via fax and hard copy.

Accompanying the new filing system are new requirements for documentation and data elements.  Key changes include:

  • Businesses will need to provide more shipment information than is currently required.  
  • Importers must provide greater detail about shipment contents.  For example, it is no longer acceptable to list “auto parts,” or “textiles,” or “appliances” on a bill of lading.  Instead, an importer must list specifics such as “wiper blades,” “children’s hats,” or “refrigerators.”
  • Quantity indicators are also changing.  Essentially, bills of lading can no longer use terms including “skid” or “pallet.”  Instead, a term must be selected from an approved list of descriptive terms.  

The Single Window Initiative will have a transformative effect on simplifying and streamlining the customs compliance process and minimizing the risk of delays.  But, the trade community will need to familiarize themselves with new data requirements, and make the necessary adjustments.

Chapter 2: Incorrect Tariff Classification Codes
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