Doing business in the United States

Trade compliance is the process by which goods enter a country in conformity with its import laws and regulations. In the United States, the U.S. Bureau of Customs and Border Protection (CBP) is responsible for checking all incoming cargo to make sure the products conform as required.

In Canada, the equivalent body is the Canadian Border Services Agency (CBSA), which also oversees exports from Canada to the rest of the world. The CBSA publishes a useful general guide to export compliance, which you can refer to on the CBSA web site.

Under U.S. law, the importer (that is, your U.S. buyer) must use reasonable care to ensure that the imported goods do not violate any U.S. rules or regulations, and that they have been classified and valued correctly. If you make sure your goods comply with all U.S. customs requirements before you ship them, your customers will appreciate it.

The following sections outline some of the most important compliance areas. These are far from exhaustive, so you should seek expert guidance when determining whether your goods comply with all the rules that affect them.

U.S. Customs uses Harmonized Tariff Schedule (HTS) codes to determine the duties, tariffs and taxes on imported goods. These standardized numeric codes provide a precise way of classifying products for customs purposes and are used by customs authorities throughout the world. Note that HTS is the U.S. name for these codes. In Canada and elsewhere, they are called Harmonized System or HS codes.

Your goods cannot enter the United States without an HTS code. Determining HTS classifications can be very complex, however, so you should verify yours with your customs broker before shipping a new product to the United States. If you get the classification wrong, your product may be stopped at the border until you correct the problem. If you’re at all unsure as to whether your classification complies with U.S. requirements, you can obtain an Advance Ruling from the CBP. The ruling will verify that your HTS code is compliant (assuming it is) before you actually ship the goods. For more information, refer to the Advance Ruling Procedures section of the CBP web site.

The Interactive Tariff and Trade DataWeb of the U.S. International Trade Commission’s web site has extensive information on the U.S. version of the Harmonized System. For a Canadian reference, consult Statistics Canada’s Canadian Export Classification web site or the CBSA’s Customs Tariff page.

The NAFTA Rules of Origin have been used for the past 24 years to determine whether an exported product receives preferential tariff treatment when moving between Canada, the U.S. and Mexico. The rules will be adapted to meet new requirements laid out under the Canada-United States-Mexico Agreement (CUSMA) that is due to replace NAFTA, once it’s ratified by the three countries. These rules are based on the HS/HTS tariff classification codes discussed earlier. The rules are complex, but in general, a product qualifies for NAFTA originating status if:

• It is wholly obtained or produced in one or more of the NAFTA member countries.
  
• It is made up entirely of components and materials that qualify in their own right as goods that originate in one or more of the NAFTA countries.
  
• It meets the requirements of a specific rule of origin for that product.

4.3.1 U.S. agency compliance

Many U.S. government agencies have strict compliance rules for imported goods and raw materials. Some of the major ones are:

• Customs and Border Protection

As well as enforcing border security, the CBP enforces U.S. trade laws. The Trade section of the web site has information about importing, cargo security, U.S. priority trade issues and trade programs.

• Food and Drug Administration
  

The FDA regulates the labelling of food, drugs, medical devices, vaccines, cosmetics, radiation-emitting products and tobacco products.

• Department of Agriculture
  

The USDA operates the Food Safety and Inspection Service (FSIS), which is responsible for ensuring that the U.S. commercial food supply is safe, wholesome and correctly packaged and labelled.

• Alcohol and Tobacco Tax and Trade Bureau
  

The TTB ensures that the import, export and sale of alcoholic beverages, tobacco and firearms comply with U.S. regulations.

• Environmental Protection Agency
  

The EPA supervises the protection of the U.S. environment.

4.3.2 Testing products for compliance

If your product is subject to a U.S. compliance requirement, you will need to have it tested for conformity by a testing agency accredited by the United States. The major agencies in Canada, CSA Group and Underwriters Laboratories, can provide compliance certifications that U.S. Customs will recognize.

4.3.3 Agri-food exports

There is also a special class of international standards governing agricultural and other natural-resource products. These standards are defined by the World Trade Organization’s Agreement on Sanitary and Phytosanitary (SPS) Measures, which set out the basic international rules for food safety and animal and plant health standards. The WTO web site has an SPS Measures section that provides details and links to other SPS resources.

For more information about exporting Canadian agri-food products, you can refer to Agriculture and Agri-Food Canada’s Trade services for exporters pages and the Canadian Food Inspection Agency’s Food exports section.

4.4.1 Basic entry documents

The basic documents required for entry to the United States are as follows:

• To enter the United States from Canada by land or water, you must present one of the following documents: a passport; a Trusted Traveler program card (NEXUS or FAST); or an enhanced driver’s licence (EDL) or enhanced identification card (EIC) from a province or territory where a U.S.-approved EDL/EIC program has been implemented.
  
• To enter the United States from Canada by air, you must present either a passport or a NEXUS card.
  

4.4.2 Temporary entry for business purposes

The documents described above are sufficient for non-business travel to the United States. To temporarily enter the country for business purposes, however, you’ll need to qualify as a NAFTA Business Visitor. This is eventually expected to be part of the new trade deal, the USMCA. You may fall into this category if you are going to the United States to:

• Investigate business opportunities
  
• Attend business meetings and business conferences or conventions
  
• Consult with associates and negotiate contracts
  
• Make sales and take orders
  
• Provide after-sales service
  
• Purchase property in the United States
  
• Carry out research
  

You may apply for entry as a business visitor at a land border port of entry or at an international airport pre-flight inspection station. No advance written application is required, but you must provide documentation to establish that:

• You’re a Canadian citizen.
  
• You’re seeking entry for one of the business purposes described above.
  
• The proposed business activity is international in scope and you do not intend to enter the U.S. labour market (that is, take employment there).
  
• Your primary source of remuneration is outside the United States.
  
• Your principal place of business, and the accrual of profits, are outside the United States.
  
• You meet the United States’ immigration requirements for temporary entry.
  
• Carry out research
  

You must present proof of Canadian citizenship (ideally, your Canadian passport) and a letter outlining the purpose of your business trip. The letter should include your U.S. itinerary, a list of business contacts you plan to visit and a statement that your primary source of remuneration is outside the United States. For more information, refer to Global Affairs Canada’s pages on Cross Border Movement of Business Persons and the United States section of the Canada.ca web site.

4.4.3 Travel issues for service companies

If you are a service company and want to send personnel into the United States to work with U.S. clients, you will have to deal with U.S. immigration laws. These are very strict and are often open to interpretation, so you should obtain qualified legal advice to ensure you don’t violate them. If you do, even accidentally, your personnel could be barred from entering the United States for several years.

4.4.4 Temporary import of goods

You may occasionally need to bring commercial samples, exhibits, promotional materials or business equipment into the United States for a limited time. The most convenient way to do this is to obtain an ATA Carnet for the goods. A Carnet substitutes for the usual customs documents needed for entry and guarantees the payment of duties if the merchandise is not re-exported within one year.

Carnets are available, for a fee, to business and sales executives, exhibitors at trade fairs and travelling professionals. You can obtain one by applying to the Canadian Chamber of Commerce.