7 Steps to Start an Import and Export Business in Canada

Canada is a country with a strong economy and a diverse population, making it an attractive market for both importers and exporters. Whether you want to source products from abroad or sell your goods to other countries, you need to follow some basic steps to start an import and export business in Canada.

Step 1: Obtain a Business Number (BN) and an import-export account

Before you can import or export goods into or out of Canada, you need to register your business with the Canada Revenue Agency (CRA) and obtain a Business Number (BN). A BN is a unique identifier that allows you to interact with various government agencies, such as the Canada Border Services Agency (CBSA) and Statistics Canada. You also need to add an import-export account to your BN, which is a four-digit code that starts with RM. This account allows you to report and pay duties and taxes on your imported or exported goods. You can register for a BN and an import-export account online, by phone or by mail.

Step 2: Identify the goods you want to import or export

You should have a clear idea of what products you want to import or export, as well as their origin and destination countries. You should also research the market demand, competition, regulations and costs involved in importing or exporting those products. You can use various sources of information, such as trade shows, trade publications, online databases, industry associations and government agencies, to gather relevant data and insights.

Step 3: Determine the tariff classification, value and origin of your goods

One of the most important steps in importing or exporting goods is to determine their tariff classification, value and origin. The tariff classification is a 10-digit code that identifies the type of product and the applicable duty rate. The value is the amount that you paid or will receive for the product, which affects the amount of duty and tax you have to pay. The origin is the country where the product was made or substantially transformed, which affects the eligibility for preferential tariff treatment under various trade agreements. You can use the CBSA’s Automated Import Reference System (AIRS) or consult a customs broker to help you determine these factors.

Step 4: Find out if your goods are subject to any permits, restrictions or regulations

Depending on the type, quantity and value of your goods, you may need to obtain certain permits, licences or certificates from various government departments or agencies before you can import or export them. For example, some food products, plants, animals, firearms, drugs and chemicals are subject to specific requirements and controls. You should check the CBSA’s website or contact the relevant authorities to find out if your goods are subject to any restrictions or regulations.

Step 5: Choose a method of transportation and a service provider

You need to decide how you want to ship your goods, whether by air, sea, land or rail. You should consider factors such as cost, speed, reliability, safety and environmental impact when choosing a mode of transportation. You also need to find a reputable service provider who can handle the logistics of your shipment, such as packing, loading, unloading, storing and delivering your goods. You can use a freight forwarder, a courier service or a transportation company depending on your needs and budget.

Step 6: Prepare the required documents and declare your goods

You need to prepare and submit various documents when importing or exporting goods, such as invoices, bills of lading, certificates of origin, permits and licences. These documents provide information about your goods, such as their description, quantity, value, origin and destination. They also serve as proof of ownership and compliance with customs regulations. You need to declare your goods to the CBSA when they arrive in Canada or when they leave Canada. You can do this yourself or hire a customs broker to do it for you.

Step 7: Pay the applicable duties and taxes and keep records

You need to pay the applicable duties and taxes on your imported or exported goods based on their tariff classification, value and origin. Duties are fees levied on certain goods by the government to protect domestic industries or raise revenue. Taxes are charges levied on all goods by the federal and provincial governments to fund public services. You can pay these fees online, by mail or in person at a CBSA office. You also need to keep records of all your import and export transactions for at least six years in case of audits or disputes.

Import and export business in Canada: A statistical overview

Canada is one of the world’s largest trading nations, with a total trade value of over $990 billion in 2021. Canada’s trade activity reflects its diverse and competitive economy, its vast natural resources, and its extensive network of trade agreements. In this blog post, we will look at some key statistics on Canada’s import and export business, and how it has changed over time and across sectors.

Canada’s trade balance: A surplus in goods, a deficit in services

According to the World Bank, Canada had a positive trade balance of $10.1 billion in 2021, meaning that it exported more than it imported. However, this balance masks a significant difference between goods and services. Canada had a surplus of $37.3 billion in merchandise trade, but a deficit of $44.8 billion in services trade. This means that Canada sold more physical products than it bought from other countries, but paid more for intangible services such as transportation, travel, insurance, and intellectual property.

The merchandise trade surplus was mainly driven by exports of mineral fuels, ores, metals, machinery, vehicles, and wood products. These sectors accounted for over 60% of Canada’s total exports in 2021. The services trade deficit was largely due to travel and transportation services, which were severely affected by the COVID-19 pandemic and the resulting travel restrictions.

Canada’s trade partners: The United States dominates, but China and the European Union are growing

Canada’s main trading partner is the United States, which accounted for 74.5% of Canada’s exports and 51.4% of Canada’s imports in 2021. The two countries share the world’s longest border and have a long history of economic integration and cooperation. The United States-Canada-Mexico Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) in 2020, is the main framework for regulating trade between the three countries.

However, Canada has also diversified its trade relations with other regions and countries in recent years. China is Canada’s second-largest trading partner, with 4.9% of Canada’s exports and 12.6% of Canada’s imports in 2021. The European Union is Canada’s third-largest trading partner, with 7.5% of Canada’s exports and 10.4% of Canada’s imports in 2021. The Comprehensive Economic and Trade Agreement (CETA), which entered into force provisionally in 2017, is the main instrument for facilitating trade between Canada and the EU.

Canada’s trade outlook: A recovery from the pandemic, but challenges remain

Canada’s trade activity was severely disrupted by the COVID-19 pandemic in 2020, as lockdowns, border closures, and supply chain disruptions reduced both domestic and foreign demand for goods and services. According to Statistics Canada, Canada’s annual merchandise exports decreased 12.4% in 2020 to $524 billion, while annual imports fell 8.5% to $561 billion.

However, Canada’s trade has shown signs of recovery in 2021, as vaccination campaigns, fiscal stimulus, and reopening measures have boosted consumer and business confidence and spending. As of October 2021, Canada’s monthly exports had surpassed their pre-pandemic levels in February 2020, while imports were slightly below.

Nevertheless, Canada faces several challenges and uncertainties in its trade outlook. These include:

The ongoing impact of the pandemic and its variants on global health and economic conditions
The rising tensions and competition between the United States and China, which could affect Canada’s access to both markets
The environmental and social implications of trade, such as climate change, human rights, labor standards, and data privacy
The need to adapt to technological changes and innovation, such as digitalization, automation, artificial intelligence, and biotechnology

Canada will need to address these challenges and leverage its strengths to maintain and enhance its position as a global trading nation.

References:

http://www.bankofcanada.ca/wp-content/uploads/2015/07/mpr-2015-07-15.pdf

http://www.bankofcanada.ca/wp-content/uploads/2010/11/inflation_control_target.pdf

https://web.archive.org/web/20180428221657/https://www.trade.gov/steel/countries/pdfs/exports-Canada.pdf

https://www.international.gc.ca/gac-amc/assets/pdfs/publications/State-of-Trade-2019_eng.pdf

http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-salt.pdf

https://wits.worldbank.org/CountryProfile/en/CAN
https://www.statcan.gc.ca/en/subjects-start/international_trade

https://www.bdc.ca/en/articles-tools/marketing-sales-export/export/importing-goods-canada

https://web.archive.org/web/20101011091637/http://www.iea.org/textbase/nppdf/free/2010/key_stats_2010.pdf