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The existence of your business on the World Wide Web means that it is accessible
to anyone in the world with an Internet connection. The international reach
of the Internet has opened up a global marketplace, where small businesses
can compete with larger corporations on a more level playing field.
Once your site is live, you may receive visitors and orders from around the
globe. If you have never sold your products to anyone outside of Canada before,
you will have various questions, such as:
- What paperwork do I have to fill out?
- How do I ship my product?
- What taxes and duties will be charged?
- How do I receive payment?
There are many things to consider when exporting. This Info-Guide will help
you answer many of the key questions related to e-exporting.
There are many regulatory issues that can make exporting quite complicated.
Exporting regulations are both product and country specific. Therefore, it
is very important that you understand what regulations will concern you. Also
keep in mind that you are affected by both export regulations of the country
you are exporting from and the import regulations of the country to which you
are selling your product. Some of the issues you should think about include:
- Jurisdictions - Which nation’s laws are to be applied
(i.e., who has jurisdiction) will affect how your contract is enforced and
the rights of the parties involved.
- Intellectual property – A world trademark does not
exist. You need to file for a trademark in each country in which you plan
to do business. The same holds true for other intellectual property and patents.
- International trade agreements – Trade agreements
between Canada and the country you wish to export to may subject your products
to lower tariffs. To qualify under any trade agreements, you (or the manufacturer)
will need to provide a Certificate of Origin proving the country of origin
of your product and its components.
- Standards – Does your product meet the standards
of the destination country? You will need to find out what regulatory bodies
in the destination country will control your exports (e.g., Food and Drug
Administration (FDA) in the US for foodstuffs).
- Export controls – Is your product subject to export
controls? Certain products require permits, certificates or inspections before
they can be exported. Some software and computer products also fall under
Exporting Information via the Internet
Many products that are traded or sold online never cross a physical border.
The customer, regardless of their location, enters their credit card details
online, the transaction is processed in real time, and the product is immediately
available to them for download. Because information is not a dutiable product
if provided via the Internet, it does not require documentation or reporting.
However, if you physically send your software product (e.g., on a CD or DVD)
to your international customers, then it would be a physical export subject
to the following steps.
7 Steps to Exporting
Get an import/export account number
You will need an import/export account number to report export revenues
to the Canada Revenue Agency (CRA). Application forms are available from
all Canada Revenue Agency offices that clear commercial shipments. For
more information read the document “Importer../../Exporter_Account_Number__rdquo.css; available
or call the CRA at 1-800-959-5525.
Find the HS code(s) that apply to your products
Harmonized System (HS) codes are used in international trade to simplify
the requirements of customs administration, trade statisticians, carriers
and producers. The HS harmonizes trade documentation data and provides
a standard for designating and coding commodities. You need to know your
product’s HS code in order to fill out your export declaration and
to find out the duty rates that apply to your product by its country of
Statistics Canada allows you to search by HS code or commodity on their
website at www.statscan.ca/trade/scripts/trade_search.cgi.
The World Customs Organization provides links to tariff information for
various countries around the world at www.wcoomd.org/ie/En/en.html.
If you require more information, you can contact Canada Border Services
Agency’s Automated Customs Information Service (ACIS) at 1-800-461-9999.
In the US, an HS code is referred to as an Harmonized Tariff Schedule
(HTS) code. To find the HTS Code for your goods, visit one of the following
US government sites: www.usitc.gov/tata/hts/bychapter/index.htm or
a government database called DataWeb http://dataweb.usitc.gov/scripts/tariff2004.asp.
Report your exports
You report your exports by submitting, prior to exportation, an export
declaration, and when applicable, any required permits, certificates, or
licenses for controlled, prohibited, or regulated goods. If your goods
are not controlled and you are exporting to the US, you do not need to
report your exports. Otherwise, you can file an export declaration for
controlled products using one of the following methods:
- Canadian Automated Export Declaration (CAED) program –
An electronic method for reporting exports
- Form B13A, Export Declaration – A paper-based
reporting method in which you complete Form B13A and submit a copy
to customs prior to exporting each shipment
- Summary reporting – Reserved for exporters
of low-risk goods who export on a regular basis and who have met specific
You have to report your goods by filing an export declaration prior to
- The goods are valued at CAN $2,000 or more
- The final destination of the goods is a country other than the United
States, Puerto Rico, or the US Virgin Islands
- The goods are controlled, prohibited or regulated
Get a Certificate of Origin
According to the Customs Act, every exporter of goods for which a preferential
tariff treatment under a free trade agreement applies, must certify in
writing that the goods exported to a NAFTA (Mexico, United States), CIFTA
(Israel), CCRFTA (Costa Rica) or CCFTA (Chile) country meet the rules of
origin as set out in the related free trade agreement. Even if your destination
country is not a signatory to these agreements, you should fill out a Certificate
of Origin in case your goods fall under other preferential treatment agreements.
Copies of the Certificates of Origin can be downloaded from the Canada
Border Services Agency’s website at www.cbsa-asfc.gc.ca/import/accountingintro-e.html#P305_26310,
or you can contact the CBSA’s Automated Customs Information Service
Obtain all required export permits from Canada
Export shipments must be accompanied by certain documents to leave Canada
and to enter the destination country. Canada Border Services Agency helps
other federal government departments by administering and enforcing regulations
on their behalf. If you are exporting goods that are controlled or regulated,
you have to submit the appropriate permit, certificate or license before you
export them, regardless of the destination or value of the goods. Animals
(live), cultural products, firearms, some food products, hazardous wastes,
narcotics and controlled drugs, nuclear materials, ozone depleting substances
and products, plants and wildlife, and rough diamonds are all examples
of controlled goods. For a full listing and the respective government departments
that administer the issuance of certificates and permits, visit www.cbsa-asfc.gc.ca/export/ogd-e.html.
If you wish to export other controlled goods, including portable
personal computers and associated software, you should contact
the Export and Import Controls Bureau (EICB) at the International Trade
Canada at (613) 996-2387. You can also visit their website at www.dfait-maeci.gc.ca/eicb/menu-en.asp.
Please note that goods manufactured in the US (regardless of whether
they are controlled or not) require an export permit (GEP12) to be exported
to non-NAFTA countries. Contact the Export Import Controls Bureau at the
number mentioned above for more information.
Goods are not the only products that are controlled, however. In some
cases, non-regulated goods still require an export permit if they are being
sold to a country on Canada’s Area Control List ( ACL). In most cases,
these are countries that Canada has trade sanctions with. Right now they
include Cuba, Iran, Myanmar and North Korea, but this list changes so make
sure to check if you’re unsure about the country you’re dealing
If you aren’t sure whether your goods are controlled in Canada or
whether you are dealing with a country on the ACL list, you can apply for
an export permit just in case. The permit will be sent back stamped “permit
not required” and this can be used to help ease the goods through
Obtain other documents required by foreign customs
You should also investigate trade regulations in foreign countries (i.e.
required licenses, permits, and/or certificates) prior to shipping any
goods. Visit the World Customs Organization’s website at http://www.wcoomd.org to
access customs administration websites worldwide, or the MIGRA database
available at your local Canada Business Service Centre.
Maintain accurate books and records
In Canada you have to keep accurate books and records of your exporting
activities for six years after the end of the calendar year in which you
export the goods. You can keep these records on paper or electronically.
By now it’s probably apparent that exporting can be complicated, involving
a sea of paperwork, codes, export regulations and import regulations. Fortunately
there are third-party service providers that can assist you with every step
of the process. A customs broker can help you fill out the necessary paperwork,
find your HS code, and make sense of all the export and import regulations
that affect your product. They can also assist with the process of clearing
customs. You must remember, however, that you, the exporter, shoulders all
the responsibility, so it’s important to understand the requirements.
Preferably, you should select a customs broker that specializes in your product
and has a thorough understanding of the country you wish to export to. You
can consult the member directory of the Canadian Society of Customs Brokers
to find a suitable customs broker for you at www.cscb.ca.
When mailing a commercial package to another country, your package will go
through many steps before it finally arrives at your customer’s doorstep.
Depending on where it’s going, your package may travel by multiple modes
of transportation (ship, air, train or truck) and across a number of countries
before it finally reaches its destination. Arranging these details and ensuring
the required documentation accompanies the shipment is sometimes difficult.
Therefore, it is a good idea to hire a freight forwarder to help you ship the
goods. A freight forwarder will arrange the most appropriate modes of transportation
based on your needs (cost and timing), and offer insurance on the shipment.
In your terms of sale, make sure you identify which Incoterm ™ your price
is based on. Incoterms ™ are used to identify which costs and risks the
buyer is responsible for, and when these costs and risks are transferred to
the seller (such as shipping, customs, duties, insurance). More information
about Incoterms ™ can be found on the International Chamber of Commerce
website at www.iccwbo.org/index_incoterms.asp.
You also need to be aware of packaging and labeling requirements for export
shipments. For example, all goods going to the US must be permanently marked “Made
in Canada.” A freight forwarder can help you find this type of information.
Ideally your freight forwarder and customs broker is the same company. This
can help prevent any miscommunication that may otherwise occur. On the website
of the Canadian International Freight Forwarders Association, www.ciffa.com,
you can find a listing of freight forwarders.
Now that you are familiar with some of the steps involved in exporting, you
may have come to conclusion that your initial profit margin has shrunk significantly.
To make exporting a viable business option for you, you will need to seriously
consider your pricing strategy. Shipping, duties, insurance, customs brokers
and freight forwarders will all increase your costs. Understand that in some
countries a quotation represents a legal commitment to sell your goods at the
quoted price. To protect yourself, you should be prepared to receive international
orders and develop a process in advance that will help you reasonably estimate
an accurate price.
On your website you should consider customizing your pricing policy for different
markets. To avoid confusion, clearly mark the currency used in your prices.
To serve your clients better, you may decide to use several currencies; however,
don’t use exchange rates. You should set a fixed exchange rate on your
website and update that regularly to reflect market changes. Exchange rates
are prone to sudden fluctuations, and you may run the risk of not recovering
all your costs, let alone making a profit.
Receiving payment is perhaps the most important, and challenging, part of
your exporting activity. Ideally you want to receive payment before you ship
the goods, although it can be difficult to negotiate such terms. There are
different payment options you can consider, such as online payment, letter
of credit, open account, staggered payments, documentary collections, and consignment.
Before you select the best method for you, carefully assess the risk you are
willing to bear and the amount of time you want wait to receive your payments.
The most common methods of receiving payment are discussed next. For a complete
To avoid having to collect payment after the goods have been shipped, online
transactions can process payments in real time. Be aware of the risk of credit
card fraud because the rate of credit card fraud is much higher with international
transactions than with domestic transactions. If a fraudulent transaction occurs,
you may be charged a chargeback fee by your Internet merchant account provider.
However, if your amount per transaction is relatively low, this may be a calculated
risk you are willing to take.
Another widely used online payment option is PayPal. PayPal is a secure and
low-cost way of processing online transactions. But keep in mind that PayPal
is not available in all countries.
Letters of Credit
For large transactions it is a good idea to arrange a letter of credit. A
letter of credit is a legal document to arrange payment between an importer
and exporter. It provides security for both parties, giving the exporter confidence
that the importer is able to pay for the goods, while assuring the importer
that payment will be made to the exporter only after the terms outlined in
the letter of credit have been met. For a letter of credit to be arranged,
the importer will need to contact his or her bank, who will then contact the
Before you complete a large order you should do a risk assessment of your
customer and the country of destination (assess both political and economic
stability). Especially when dealing with new customers, you may want to run
a credit check on your customer. It may also be a good idea for you to invest
in some insurance to protect yourself from fraudulent purchases. Export Development
(www.edc-see.gc.ca) can help you with
both. You may also decide that it is too risky to export to certain countries,
so it is a good idea to clearly display on your website which countries you
will and will not export to.
Through the web you can reach a huge number of potential customers from around
the globe. The web presents some great opportunities to facilitate business
across borders and to serve your international customers better. You are able
to promote your small business internationally without having a physical presence
in other countries.
Some of the other things that the Internet allows you to do include:
The Internet allows you to localize and personalize your website for different
markets. Part of this may include adapting your language, pricing, colour scheme,
product offering, and contact details for each foreign market.
Providing customer support to someone in Europe or Africa can be much more
efficient when done electronically. You may decide to have help files, a frequently
asked question (FAQ) section, or a product manual on your website. You can
also respond to client questions from around the world via email and auto-responders.
The web can be used to clearly communicate the features and benefits of your
product. You can display product photos, detailed product descriptions, videos,
and customer testimonials. For some products you can even offer a free trial
online to let your customers experience the product before they decide to buy
You can also employ your website to promote your company. You have an opportunity
to tell potential customers more about your company’s history, staff,
location, partners, and so on. This will help your customer gain a better understanding
of who it is they will be doing business.
E-mail is a convenient way to communicate with your international customers.
You can respond to questions instantly, notify your customers of their product
shipment status, and send them your latest news or info on special offerings.
Your website can also be used to let customers know which international standards
your product meets. Products such as medications and toys, for example, are
heavily regulated by industry standards in many countries. Make sure you make
it obvious which standards, and from which countries, your product meets. Some
organizations and government departments offer seals to signify that your products
meet their standard specifications and you can display these on your website.
Clearly mark your pricing, shipping, and return policies, as well as your
conflict. As mentioned before, a quotation can sometimes represent a legal
commitment. Therefore, make sure you carefully prepare your quote and ensure
that it accurately reflects transportation costs, duties, and so on for the
Creating an international market for your product or services might prove
to be lucrative for you business, so you may decide to develop this potential
market. There are several ways in which you can increase your international
presence; some may be more labour and cost intensive than others. Some options
to consider include:
- Form a relationship with a trading house in Canada who will buy your product
from you. They will then market, sell, and ship your product.
- Seek an agent, who will represent your product in the desired market.
- Form a strategic alliance or joint venture with a company currently serving,
or considering serving, the same target market
- Open an affiliate office in the desired market.
Before you decide to develop an international presence, however, you should
consult with an expert at Team Canada Inc.’s export information service
1-888-811-1119. Team Canada Inc. can help you identify the steps and issues
involved and recognize potential pitfalls.
Good luck with your e-export pursuits!