Exporting to the United States Guide

TABLE OF CONTENTS

1. The U.S. Market
2. Methods of Selling
3. Labelling, Marking, Packing and Product Certification
4. Shipping
5. U.S. Customs
6. Business Travel
7. Intellectual Property
8. Canadian Export Information

1. The US Market

The American market offers great potential to the Ontario exporter. As our wealthy neighbour and our largest trading partner, the US market offers more than 300 million potential customers known worldwide for their purchasing power, brand loyalty and consumer savvy. While American companies provide for many of their own consumers, there are tremendous opportunities for progressive and innovative firms to gain a foothold in the market.

The American market is complex and constantly changing. Before entering the market it is generally a good idea to have a clear understanding of both its trends and possibilities. Doing some form of market research into burgeoning sectors would provide information that could help accurately target those that might prove profitable.

For further information:
visit the website: Organisation for Economic Co-operation and Development - United States

For regulatory or legal questions, it may be useful to contact a lawyer that deals with business regulations through the Law Society of Upper Canada's Lawyer Referral Service.

For further information:
call 1-800-268-8326
visit the website: Law Society of Upper Canada's Lawyer Referral Service

The North American Free Trade Agreement (NAFTA) has provided for easier access to the US market through the elimination of most trade barriers, the recognition of products manufactured in North America, the protection of intellectual property and the permission for business travel across borders.

For further information:
visit the websites:
The U.S. Customs Service Web site
North American Free Trade Agreement (NAFTA)

Given the sheer size of the United States, both geographically and demographically, it is impossible to target the entire country all at once. It is recommended that each firm narrow their focus to include only a couple of cities or states at one time. It is also important to treat each state as a unique market as consumer habits and competition differ greatly.

For further information:
see the document Exporting to World Markets Guide

A great way to learn about all of the aspects of exporting to the US is to participate in a New Exporters to Border States mission. These 2-day missions run six to eight a year, to either Detroit, MI or Buffalo, NY. For information on the NEBS mission, see New Exporters to Border States - NEBS (Ontario).

Regional Markets of the United States: A Guide for Canadian Exporters

This guide is intended to provide small- and medium-sized Canadian exporters with practical information about doing business in the United States.

For further information:
visit the website: Regional Markets of the United States: A Guide for Canadian Businesses

CanadExport: Trade and Investment Publication

CanadExport, Foreign Affairs and International Trade Canada's flagship newsletter, is designed to promote Canadian exports abroad through columns on trade and investment opportunities, potential markets, upcoming trade fairs and missions, trade policies and agreements and general market intelligence. And you will find a section on the United States.

For further information:
visit the website: CanadExport: Trade and Investment Publication

2. Methods of Selling

Companies in Ontario have many options for selling their products or services to the US, including methods commonly used in Canada. It is up to each firm to decide which method best suits their export objectives and business capacity. Each method has its advantages and disadvantages.

A product manufacturer or service provider might consider selling directly to the customer through catalogue mail order, direct marketing, trade shows or by e-commerce through their website:. A very common method of selling is to appoint a manufacturer's representative or agent, just as you would in Canada, to represent your firm and promote your products south of the border on a commission basis. Distributors can purchase your products and sell them directly to their existing customer base along with other similar product lines. Perhaps a partnership is the best route for your firm to take by establishing a joint venture or licensing agreement with a complementary American company in order to take advantage of their market share, location and manufacturing capacity. Finally, many Canadian companies find it useful to maintain a US address to facilitate warehousing, shipping services, customer returns, etc.

Each selling method will impact your company's costs and profit margin differently and must be worked into the pricing. Other issues to consider are returns, service and repair, warranties, shipping, insurance, competition and receiving payment.

3. Labelling, Marking, Packing and Product Certification

An important aspect of successful exporting involves the preparation, and sometimes testing, of your product to meet the guidelines of the export destination. The United States maintains packaging and labelling guidelines for various products crossing the US border just as we do in Canada. Every item must be marked indelibly with the country of origin ("Made in Canada").

If product testing is required by the importer, Canadian Standards Association's certification and testing services will help you meet US requirements. Many health-related, food and beverage products will require additional documentation in the form of a certificate. Some types of these certificates can be obtained from the Canadian Chamber of Commerce for a small fee. Others (or an equivalent, acceptable to the requesting foreign authority) may be obtained from an appropriate Canadian regulatory body or industry association. These products might also have particular labelling and marking requirements. Please see the appropriate US government agency for guidelines for your products. The services of an export broker, experienced in the target market, would also be invaluable.

Clothing and textiles, are considered "trade sensitive", and subject to more regulations than some other goods. The Federal Trade Commission is responsible for the enforcement of regulations for these products. Since quotas may apply, it is recommended that you contact a Customs Broker for assistance.

For further information:
visit the websites:
US Federal Trade Commission - textiles

The US Food and Drug Administration (FDA) maintains guidelines for the labelling of food and beverage products. These guidelines under the Nutrition Labelling Act (some exemptions for Canadians may apply), cover the size of the label, font type and size, weights and measures, etc. It is recommended that you submit your food or beverage product label to the FDA for examination to ensure compliance before exporting a shipment.

For ease of exporting, your goods should be packed so they arrive in good condition, labelled appropriately for timely arrival and documented correctly for both Canadian and US customs. You will want to consider your shipping options before you send orders to the United States for efficiency, cost and reliability.

Boxes should be labelled clearly with the details of origin, details of destination, transit instructions, details for consignee, dimensions and weight, serial number and invoice number. A freight forwarder can assist your firm in making the best shipping decision based on your needs and can advise you on packing guidelines for the US To find a freight forwarder, see the Canadian International Freight Forwarders Association (CIFFA)

4. Shipping

Goods entering the United States do so in one of two ways: by Formal Entry or Informal Entry. The following are a few guidelines to help you determine which entry you should use:

i. Formal Entry

Your shipment enters by Formal Entry when:

• it is over US $2000; or
• it includes controlled or regulated goods (i.e., requires Canadian or US permits, certificates or licences).

Formal entries must be cleared by a US Customs Broker.

Documentation required:

NAFTA Certificate of Origin (PDF - freeAdobe® Reader® required);

Commercial Invoice including type of currency, freight charge, the type of containers, who is paying the US duty and if it is included in the invoice, and if the shipper and consignee are related through ownership or blood.

See Canada's Export Control List at Export and Import Controls for a listing of Canadian goods that require extra documentation and/or permits. For US import regulations, contact a US Customs Broker.

A licence or permit from the appropriate US agency is required for the following goods:

alcoholic beverages, Bureau of Alcohol Tobacco Firearms and Explosives;

animals and animal products, US Department of Agriculture;

artefacts and cultural property, US Customs and Border Protection;

biological materials, US Food and Drug Administration;

firearms and ammunition, Bureau of Alcohol Tobacco Firearms and Explosives;

fish and wildlife, US Fish and Wildlife Service;

fruit and nuts, US Food and Drug Administration;

hunting trophies, US Fish and Wildlife Service;

meat and meat products, US Department of Agriculture;

medicines, narcotics and certain drugs, US Food and Drug Administration;

milk, dairy and cheese products, US Food and Drug Administration;

pets, US Fish and Wildlife Service;

plants and plant products, US Department of Agriculture;

poultry and poultry products, US Department of Agriculture;

petroleum and petroleum products, US Department of Energy;

trademarked articles, US Customs and Border Protection;

vegetables, US Department of Agriculture.

For further information:
visit the website: Export Information Spotlight

ii. Informal Entry

Your shipment enters by Informal Entry when:

it is under US $2000;

goods are not controlled or regulated;

it includes Business-to-Business and Business-to-Consumer transactions.

These shipments do not require a US Customs Broker unless the shipment is unaccompanied (i.e., consignee not present to accept the goods at the border).

Documentation required:

NAFTA Certificate of Origin (PDF - free Adobe® Reader® required);

A Commercial Invoice stating "Informal Entry as per Section 321" as well as the name, address and phone number of your customs broker should a formal entry be required.

Some shipping choices include: mail, courier, express shipments, bus, truck, rail and air. For more information on shipping, see the sector entitled "7 Shippers and Shipping: Delivering the Goods" of the document "Step-by-Step Guide to Exporting".

INCOTERMS are a set of 13 terms used in international trade to describe the nature of a foreign contract and obligations of the buyer and seller. Some commonly used Incoterms include: FOB (Free on Board), CIF (Cost, Insurance and Freight) and FCA (Free Carrier Multimodal). For more information on Incoterms, see the International Chamber of Commerce's Incoterms 2000.

5. US Customs

Providing timely and accurate documentation at the border crossing can ensure faster processing and eliminate future hassles. If your paperwork is not correct, your company might be flagged and subsequently inspected as each shipment crosses the border.

Any product found on the list in Section 4 - Shipping, under Formal Entry, will likely be examined at the border by US Customs on behalf of over 40 government agencies. Please refer to the appropriate agency (e.g. Food and Drug Administration (FDA), Environmental Protection Agency (EPA)) for the rules and regulations that pertain to bringing your product into the US

Some goods, such as motor vehicles, apparel, textiles, fur and wool, that are not controlled or regulated, might still require additional documentation at the border. Please refer to the appropriate US government agency for guidelines (in these cases, Department of Transportation and Federal Trade Commission, respectively).

Canada has an agreement with the US government whereby US Customs tracks Canadian imports on behalf of the Canadian government therefore it is not necessary to submit Form B13A (Export Declaration) to the Canada Border Services Agency (CBSA) as you would for exports to other countries. Visit the website: Exporting Goods From Canada: A Handy Guide for Exporters, and read the sub-heading, entitled "Exports to the United States". For more information on Canadian customs regulations for exporters, visit the website: Exporting Regulations.

Operation Safe Commerce (OSC) and C-TPAT (Customs-Trade Partnership against Terrorism) are key security measures that have been put in place. They aim at enhancing security throughout international and domestic supply chains while facilitating the efficient cross-border movement of legitimate commerce through the United States. Canadian SME that will be CT-PAT compliant will have to go through a different process. The expected process for the next five years is as follows:

C-TPAT Application Process

1.1. Conduct self-assessment of company's security according to specified guidelines
1.2. Complete supply chain security profile questionnaire
1.3. Develop enhanced corporate supply chain security program according to feedback from Customs
1.4. Explain to Customs how company will self-monitor security
1.5. Communication of security guidelines with supply chain partners
1.6. Demonstrate acceptable level of trade compliance
1.7. CT-PAT Certified carrier and driver

Technology requirements

2.1. Electronic manifest 4 hour prior to border crossing
2.2. Data accuracy audit
2.3. Driver: NEXUS card or biometrics
2.4. Container: electronic door seal3
2.5. Truck: CVISN transponder
2.6. Traceability and visibility of shipments through the supply chain via Radio Frequency Identification (RFID)

For further information:
visit these websites:
Lean Logistics Technology Roadmap
C-TPAT: Customs-Trade Partnership Against Terrorism
Tracking use of Radio Frequency Identification tags in Canadian organizations
see the document: Partners in Protection

6. Business Travel

Under the NAFTA, Canadians are permitted to travel and conduct some forms of business in the United States. The Agreement allows for Canadians to attend trade shows, business meetings, perform market research, negotiate contracts and take orders, without a work visa. Direct selling is prohibited in the US unless you have a work permit, are a dual citizen or hire a US citizen to do the selling. Any further questions on this matter should be directed to the US Citizenship and Immigration Services, not US Customs.

For further information:
visit the website: U.S. Citizenship and Immigration Services

When travelling to the US for business, it is best to carry a letter on your Canadian company's letterhead, signed by the senior executive of your firm, stating the following:

Purpose and length of your trip;

where you will stay;

that it is a business trip;

that it is international in nature;

which companies you will be visiting;

the fact that you are not receiving any remuneration from a US source and that your salary is paid by the Canadian company.

Be prepared to show identification (i.e. passport, drivers licence) at the border crossing. American law requires everyone entering the United States by AIR, LAND and Water to have an approved travel document. A valid passport remains the most reliable form of travel document

All Canadian citizens, whatever their age, travelling by AIR to, through or from the United States must present one of the following valid documents:

a passport; or

a NEXUS card when used at a kiosk at designated Canadian airports and at all U.S. airports when returning to Canada.

As of June 1, 2009, Canadian citizens are required to present one of the following valid Western Hemisphere Travel Initiative (WHTI) -compliant documents when entering the United States by LAND or Water:

a passport; or

a NEXUS card valid at participating NEXUS air, land and marine ports of entry; or

a Free and Secure Trade (FAST) card (by land only); or

an Enhanced Driver's Licence (EDL) from a province or territory where an EDL/EIC approved program has been implemented; or

Enhanced Identification Card (EIC) from a province or territory where an EDL/EIC approved program has been implemented; or

a Secure Certificate of Indian Status (when this certificate is available and approved by the United States). In the interim, the current Certificate of Indian Status is an acceptable document to present when entering the United States by land or water.

In addition, persons travelling to the US to perform a service (e.g. consulting, training), must have either a work permit or their profession must be listed in Chapter 16 of the NAFTA and the services they intend to provide must be related to that profession.

For further information:
visit these websites:
Cross-Border Movement of Business Persons
Passport Canada - Frequently Asked Questions
Travel Documents for Entering the United States - CBSA
NEXUS
Enhanced Driver's Licence/Enhanced Identification Card (EDL/EIC)
Entry Requirements to the United States
Ontario Enhanced Driver's Licence
see the document Free and Secure Trade (FAST) for Canada - U.S. Border

If you are travelling with samples, your samples must be made unsuitable for sale by tearing or perforating them and marking indelibly "Sample" on them. A Temporary Import Bond (TIB), obtained from your US Customs Broker, on their advice, may be required for samples and/or tradeshow displays. Controlled and regulated goods will most likely require a TIB.

A carnet is a document that allows those travelling with professional equipment (e.g. laptop computer) or commercial samples to reduce paperwork at US customs offices. If a person or group arrives at a customs office without a carnet they must either purchase a temporary import bond or pay all tariffs and excise taxes on entry, then file for a refund on departure. Carnets are issued in Canada exclusively by the Canadian Chamber of Commerce and must be validated by the Canada Border Services Agency (CBSA) before departure.

For further information:
visit the websites:
Canadian Chamber of Commerce - Carnet 
D8-1-7 - Use of Carnets - CBSA

Business gifts valued under US $2000 can enter under Informal Entry (see section 4 of this document). Gifts made from textiles and textile articles (e.g. T-shirts, hats) valued over US $200 must enter under Formal Entry as quota restrictions apply to textiles entering the US

7. Intellectual Property

Intellectual property includes patents, trademarks and copyrights; however, your work is only protected in countries where you have applied for protection or ones that are signatories of the Berne or Universal Copyright Convention. The United States is a signatory to both these conventions. Patents are granted for new technologies or processes, for 20 years and are valid within the US, its territories and possessions. A trademark (or service mark) protects a word, name or symbol from others using a similar mark. A copyright provides protection for written material, literature, music and software. For information on how to apply for patents and trademarks visit the United States Patent and Trademark Office website and for information on copyrights visit the US Copyright Office website.

The Patent Prosecution Highway (PPH) is an initiative that provides a means of significantly accelerating examination of patent applications if examination work has already been conducted at another intellectual property office.

For further information:
visit the websites:
United States Patent and Trademark Office
US Copyright Office
see the document Patent Prosecution Highway Pilot Program

8. Canadian Export Information

Further information on exporting to the US can be obtained by calling the export information service line at 1-888-576-4444, available through the network of Canada Business Service Centres and speaking with one of our trained Information Officers. While general export information is provided directly, clients who require more expert advice or export counselling are referred to appropriate domestic export development services.

Support to the Export Industry

CMHC International assists exporters in expanding their business internationally by helping them to identify new housing export opportunities in select high potential markets. CMHC provides promotional support, organizes trade missions, provides matchmaking services, and promotes Canadian know-how abroad. In turn, facilitating export contracts that create jobs contributes to the well being of the Canadian economy.

For further information:
visit the website: CMHC International - Support to the Export Industry

Exporting Cultural Property

The Cultural Property Export and Import Act ensures the preservation of important objects related to Canadian heritage by establishing export restrictions for certain categories of objects of historical, scientific and cultural significance. The Canadian Cultural Property Export Control List identifies the categories of cultural property for which a permit is required before the object can be exported. The Cultural Property Export Regulations states that anyone exporting cultural property falling within one of the identified categories of the list will require an export permit.

For further information:
visit the website: Canadian Heritage - A Guide to Exporting Cultural Property from Canada

The Canadian Standards Association (CSA) is a not-for-profit membership-based association serving business, industry, government and consumers in Canada and the global marketplace.

For further information:
see the website: Canadian Standards Association (CSA)

Export Controls On-Line (EXCOL) is a user friendly web-based application where exporters are able to submit applications for export permits and certificates, as well as request amendments. EXCOL also offers the functionality to submit online, quarterly utilization reports for military goods, as well as the ability to print selected permits in your office.

For further information:
visit the website: Export Controls Online (EXCOL)

Related Reading

• Directory of Canada Border Services Agency (CBSA) Offices
• Exporting to World Markets Guide
• Business Guides

Need more information?

Click: Canada Business
Call: The Business Info Line, a collaboration between ServiceOntario and Industry Canada, at 1-888-745-8888
Visit: Find a Community Partner Location near you

DISCLAIMERS

Information contained in this document is of a general nature only and is not intended to constitute advice for any specific situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.