WHY INTERNATIONAL

Did you know that small and medium-sized businesses account for 38% of the total value of goods exported from BC? In 2010, this amounted to $29.3 billion of merchandise.

As Canada's only province that borders the Pacific Ocean, BC is strategically placed to be the global hub for trade between Asia, Europe and North America.  And the trade market is only set to get bigger; with container traffic forecasted to quadruple by 2020 across all west coast ports.

Why Export?

This is the first question most small businesses ask, and it is a valid question given the costs, time and commitment required to be successful internationally. But the benefits of exporting can be substantial.
 

1. Increase your sales and revenue.
   There are many rapidly growing economies in the world that are ready to buy your goods and services, and therefore expand your revenue.
    
2. Increase your ability to compete domestically.
   The experience you will gain of working in different markets, such as an increased awareness of other products and services and exposure of new ways to market, will enhance your business.
    
3. Diversify your markets.
   You will no longer be dependent on any one market for your success. By using your domestic sales to cover the fixed costs of exporting you can also increase your profitability. For example, if you have excess capacity domestically, international markets can use that capacity, to lower your per unit costs; therefore helping your bottom line. 

And the good news is if your business is succeeding at home, there's a good chance it will have appeal abroad.

CANADA - COLOMBIA FREE TRADE AGREEMENT

The free trade agreement, which passed in June 2010 between Canada and Colombia, will come into effect this summer on August 15, 2011.  So what does this mean for Canadian businesses?

Canada and Colombia’s History

Colombia is a dynamic and emerging market with 44 million people and an economy with high growth potential.  With trade between Canada and Colombia totalling more than $1.4 million in 2010; the agreement is expected to develop the relationship between the two countries further and improve market access for Canadian businesses.  

 

Although the agreement has been met with an outcry from human rights groups who are concerned about Colombia’s history of poor labour standards, it is hoped that Canada's increased involvement with the country will ensure that progress is made in the area of workers' rights and environmental protection. 

The Definition of Free Trade

The term “free trade” refers to the tariffs applied to products as they are imported.  These tariffs are often considered a barrier to international trade, for big and small businesses alike.  Through the agreement businesses will benefit from the removal of these tariffs as well as the protection from any tax increases, laws or expropriate properties by the Columbian government.

What does this mean for Canadian Businesses?

The free trade agreement will provide greater market access for Canadian exporters of products such as wheat, pulses, barley, paper products, and heavy equipment.  In addition, the agreement will provide greater stability and protection for Canadian businesses involved in oil and gas, mining, manufacturing, and financial services.  

 

Prior to the agreement, Canadian exporters applied tariffs on agricultural products averaged at 16.6% with industrial goods averaging at 11.8%. The abolition of these tariffs will help enhance the competitive position of Canadian exporters in the Colombian markets, and create opportunities for Canadian exporters.

The Rules of Origin

The Rules of Origin

The Rules of Origin are identified as: 

1. Goods wholly obtained or produced in a NAFTA country e.g. minerals extracted, livestock, fish and shellfish, and vegetable goods.
    
2. Goods made from materials that did not originate from a NAFTA country but have undergone a tariff classification change as specified in Originating Goods (Article 401).
    
3. Goods produced entirely in a NAFTA country exclusively from materials originating from that country. For example a wine press made of parts originating in the US but made of metals sourced from countries outside the NAFTA agreement.
    
4. Goods that are imported disassembled but are classified as assembled; or goods where the heading and subheading of the HS classification describes both the goods and its parts and providing that the regional value content of the good is not less than 60% of the transaction value. .

Refer to the CBSA’s Custom’s Guide to NAFTA for more information. 

 

To benefit from the preferential tax tariffs, Canadian goods exported to another North American country, must satisfy at least one of the Rules of Origin. NAFTA certificates of origin are available at any Canada Customs office and via Revenue Canada’s website (form number is B232).

 

In order to obtain a certificate for your goods you will need to understand their tariff classification and the classification of all of the materials or components that it includes. For help understanding these classifications contact the CBSA, a Customs Broker or make an appointment with a Small Business BC Trade Advisor.

How to Apply for an Advanced Ruling from US Customs

To save time at the US border you can ask for an advance ruling from the US Customs officials. There are two ways to get this advanced ruling: the first, directly through US Customs and the second, through a licensed Customs Broker.

 

Requests for advanced rulings must be written in English and contain a complete statement of all relevant facts relating to the NAFTA transaction, including:
 

• Names, addresses and other identifying information of receiving parties (if known);
• Names and details of any port or place which the product, or components of the product, has come into contact with and the jurisdiction of that port or place; 
• Photographs, drawings, or other pictorial representations of the products;
• Technical information about the product or even a product sample.

US Customs will issue an advance ruling letter within 120 days of receipt of your application, outlining their position on your products and the reasoning behind its decision.

 

When completed, your advanced ruling request should be delivered by registered mail to Trade Administration Services, Client Services Division, in the customs region in which your exports will be shipped. Letters should be marked "Attention: Advance Rulings Request."

Using Customs Brokers

“Canadian companies can make a huge mistake assuming that a product manufactured in Canada is automatically a NAFTA good, but it is not always the case,” comments A&A Contract Custom Broker. It is therefore recommended that you request an advanced ruling no matter what type of product you wish  to export to save you time and stress at the border. But applying for those rulings can be time consuming, challenging and at times confusing.

 

Customs Brokers can help ease this process, guiding you through your application, ensuring that you complete the form with the exact details required. Use of a third party ensures you have an objective view of your application and that the submittal process is as smooth as possible. A&A Contract Custom Broker estimates the fee for this type of service to be between $150 and $250, depending on the broker you use. 

UNDERSTANDING THE NORTH AMERICAN FREE TRADE AGREEMENT

The North American Free Trade Agreement (NAFTA) came into effect in 1994, creating one of the world’s largest free trade zones and laying the foundations for strong economic growth and rising prosperity for Canada, the United States, and Mexico. 

NAFTA and the Canadian Economy

Today NAFTA has a combined output of US$17.0 trillion across North America. The most popular exports to our US neighbours include: mineral oil, fuel, motor vehicles, machinery, wood, and electrical machinery.

 

The agreement helps provide Canadian businesses with better access to materials, technologies, investment capital, and talent available across the rest of North America. Helping to provide a real competitive advantage for Canadian businesses compared to Non-NAFTA suppliers. 

Qualifying for NAFTA’s Preferential Rules 

As part of the free trade agreement, Canada, the US and Mexico will receive favourable, if not duty free terms of trade. For the products to be classified as duty free by Customs, you will require a certificate of origin to confirm the product was made in a NAFTA country. This enables customs officials to quickly decide which goods qualify for these preferential tariffs and undergo only minimal processing.

In order to benefit from these rules it is important that you clearly outline the origin of the raw materials in your product.  If you fail to do this, you risk your business being charged a penalty and your goods being charged duty at a later time. These duties can be up to 20% of the value of the goods.

Where to Find Help

Where to Find Help

With the support of the Province and the Government of Canada, Small Business BC launched the new TRADESTART program to help provide small businesses with the tools and resources necessary to access new export markets.

 

The program offers specialized seminars and advisory services that can help you understand the advanced export essentials:
 

• Market viability and entry
• Export strategy
• Selling to foreign markets
• Finance
• Logistics
• Rules and Regulations
• Building International Relationships  

The program will also work with industry associations, community organizations, municipalities and educational institutions to deliver workshops and training throughout BC.  If your organization is interested in working with the TRADESTART team, contact them on 1.866.926.5545 or at feedback@tradestart.ca.

 

For more information visit: www.tradestart.ca

 

ABOUT THE AUTHOR

Doug Taylor

Doug has over 20 years of experience in international business and is now using that experience to help provide BC's small businesses with the advanced export essentails they need to succeed.

As Managing Director of Pacific Business Intelligence Ltd.he has undertaken assignements in over 25 countries in Europe, Asia, North America and the Middle East for private industry, governments and international organizations. He is currently a member of the TRADESTART team, as well as on the Board of Advisors of the Canada Export Centre and the Board of Directors of the Forum for International Trade Training. 

Small business owners

Small business owners understand the importance of a strong web-presence to market their products and services, and build a solid reputation. They also understand that their website is often their first point of contact with a new customer and can be a determining factor as to whether or not that customer decides to work with you or the competition. However what they often find difficult is to know where to start and build that online presence. 

 

With a lack of time, knowledge or funds, staying up to date on the latest online trends can be a challenge. We have therefore gathered together some of the affordable tools out there which are available to help small business owners build, maintain and manage a business website, and help new customers find you online.

WordPress

Getting a modern website that you can update on your own can be done easily and cost effectively using WordPress.

 

WordPress began as a blogging platform, but has since evolved into a powerful content management system that is widely used to build powerful and professional looking websites. 

 

Content management systems such as WordPress give you with the ability to easily update and manage the content of your website, meaning that you can constantly keep your website up-to-date. WordPress also provides you with access to thousands of plug-ins that have been created to enhance your website, including: calendars, galleries and ecommerce. An added incentive of the system is that it has been created to be liked by search engines, which will help your business get found online.

Search Engine Optimization 

There’s no point in having a website if nobody can find it.  With the ability to find anything and everything we want simply by doing a search, it’s crucial that your business stands out. Think about the last time you needed a plumber or a printer for your business cards; you probably used a search engine to find them. Using the keywords that your target audience will search for on your website’s homepage will go a long way in helping people find you, but there are so many other useful tools out there. One of which is video.