While the United States and Canada enjoy the world's largest and most comprehensive trade relationship, with almost $600 billion worth of products crossing the border each year, the reality is that every one of those products must undergo the intense scrutiny and extensive clearance processes of the U.S. and Canadian governments. Many U.S. businesses underestimate the complexity of the border clearance process, and have learned the hard way that failure to know about these requirements, or to comply with them correctly, can result in a shipment being denied entry, or being slapped with unexpected fees and punitive fines.

Many U.S. businesses find it easier to entrust border clearance responsibilities to an experienced logistics provider. But for businesses curious about what's involved with transporting a shipment of goods into Canada, following is a top line overview of what the process entails:

Duties and Fees.
While the 1994 North American Free Trade Agreement (NAFTA) eliminated tariffs on U.S., Canadian and Mexican manufactured goods, any product traveling from the U.S. into Canada — not manufactured in the U.S. — is subject to Canadian customs duties and a service tax (GST). Certain exemptions may apply. Depending on the items being shipped, goods may also be subject to excise taxes and other fees. For example, an "anti-dumping duty" is assessed on any product entering Canada whose manufacture is in any way subsidized by the U.S. government. If fees are owed, the value of the goods being shipped must be converted into Canadian dollars to determine the amount of fees owed.

Registration and Paperwork.
Several agencies within the Canadian government have authority over various aspects of the international commerce process, and not surprisingly, each agency has its own set of paperwork and processes that must be followed. Here is an abbreviated overview of the many regulations a business may face:

• Any business importing or exporting goods to Canada must register with the Canada Customs and Revenue Agency and be issued a "business number" that must be used on all paperwork.
• A cargo control document (CCD) must be submitted for each shipment, along with an invoice and customs coding form. These forms provide examiners with information including: description of the goods, direct shipment date, tariff treatment, country of origin, tariff classification, value for duty, appropriate duty or tax rates and calculation of duties owed.
• The Canadian Border Security Agency (CBSA) requires that specific documentation be submitted in advance of all shipments arriving at the border. That Pre-Arrival Review System (PARS) documentation must include information including shipment components, country of origin, name and address of retailer and value of shipment contents. CBSA will only accept that information if it is submitted electronically. The purpose of this requirement is to give CBSA agents advance notice of incoming shipments, so that a determination can be made if the shipment will warrant additional inspection. This is in accordance with the Canadian government's Advanced Commercial Information (ACI) initiative, which mandates that all companies sending goods into Canada develop an electronic manifest system to provide pre-notification and risk assessment to Canadian officials about incoming cargo.

Trade Incentive Programs
Programs are also available designed to entice U.S. businesses to compete in the Canadian market:

• U.S. businesses that ship to Canada have found that country's "Non-Resident Importer"(NRI) program to be a great equalizer. Through NRI, U.S. companies are able to act as "importers of record," which means they are able to pre-pay all taxes, duties and fees on goods entering Canada, before they arrive at the border. This means that a U.S. company can pass along all fees to consumers up front. Canadian consumers will be aware of the fees at the time of purchase, and be able to pay them at that time. No more surprises - no more instances of the deliveryman arriving at a consumer's doorstep with a second invoice full of unexpected customs and brokerage fees.
• U.S. businesses may also be eligible to participate in the U.S. Customs Service's Duty Drawback program. Intended as a way to prevent businesses from being over-taxed, the Duty Drawback Program gives special consideration to businesses that pay duties on goods imported into the United States, that are then used in the manufacture of products that are subsequently exported. For example, a U.S.-based clothing manufacturer may import silk ribbon from Japan for use in a new line of dresses. The company is required to pay duties on that ribbon when it is imported into the U.S. After the ribbon is sewn onto the dresses and packaged for export, it will again be subject to taxation. Under this scenario, the ribbon would be taxed twice. The Duty Drawback program is intended to address this inherent unfairness by returning to a business the "second" duty payment paid on the same item.

These are only a few of the requirements that must be met before a shipment can enter Canada. While it may seem confusing, it's important to note that dealing with these regulations and processes is the forte of experienced cross border logistics providers. A good logistics provider not only understands these requirements, but can also take advantage of provisions in these programs that can save time and reduce fees. And, unlike individual businesses trying to navigate the process, a qualified logistics provider can qualify for CBSA pre-clearance certification, meaning that shipments will face few-to-no border crossing delays.