The golden rules for exporting to the US
The golden rules for exporting to the US
Conquering international markets can be a confusing adventure. Laws and regulations vary from one country to another, and the economic risks of not knowing what to do are real.
The vast majority of Canadian agri-food exports are destined for the United States. For over 25 years, Canada, the U.S. and Mexico have been linked by a highly integrated economic agreement that facilitates this trade. Although Canada and the U.S. have the largest bilateral trade relationship in the world, exports to the U.S. are highly regulated.
Even before you negotiate your first contract and prepare to ship your first sample, all of the following steps should be completed.
Obtaining or activating a business number for an import-export account
Simple but important step.
To export a product, you must first obtain a Business Number (BN) for an import/export (RM) account from the Canada Revenue Agency. This simple process usually takes a few minutes and is free of charge.
If you already have your BN, you must still ensure that the RM account identifier is added to your number before you begin any export activity. If not, you will need to apply to the Agency for one.
The BN is also required for all export declarations (B13). This form is not usually required for exporting to the U.S., except for prohibited or controlled goods.
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Find an agent to represent you with the FDA
Before you register with the FDA, you will need to find a U.S. resident agent to represent you before the FDA. This agent must be available at all times (24 hours a day, 7 days a week) in case the FDA has any questions. Most customs brokers offer this service for a fee. Once this step is completed, you will only need to identify this agent when you register with the FDA.
Registration of your company with the FDA and Prior Notice
The U.S. Health and Bioterrorism Risk Prevention and Management Act, issued in 2002, is designed to protect the American public from potential health risks related to the threat of terrorism. To this end, it devotes a chapter to food safety, establishes the FDA as the agency responsible for food regulation and provides for various control measures to protect the public against terrorist attacks or threats to the U.S. food supply and other food-related emergencies.
In implementing some of the provisions of the U.S. Bioterrorism Act, FDA has implemented regulations that require:
- agri-food establishments are registered with FDA and that
- FDA receives advance notice of imported food shipments (Prior notice)
Prior to each export you will be required to complete and provide a Prior Notice of Food Importation to the Food and Drug Administration, commonly known as a Prior Notice. This notice must be completed BEFORE the carrier loads your goods.
There are two ways to complete and send a Prior Notice to the FDA. Either you mandate your customs broker to do it for a fee, or you send it yourself, free of charge, online, via the Prior Notice System Interface (PNSI).
This regulation went into effect on December 12, 2003 and applies to both sample shipments and shipments resulting from a sale.
FSVP
The FSVP program is part of the Food Safety Modernization Act (FSMA) signed in 2011 and is a major reform. This program is administered by the FDA (Food & Drug Administration) and concerns the importation of agri-food products into the US. The FSVP was implemented to ensure the safety of the food chain for both humans and animals.
What is the FSVP? Basically, the American customer must vouch for the products they import. They must keep records of their suppliers and each product and ensure that the products meet U.S. food safety and security standards.
To do so, the exporter must communicate with his American customers and sign a letter of consent in which the customer accepts to be identified as an FSVP importer and in return, the exporter declares that his products comply with American standards.
Please note! This simplified procedure applies to products of Canadian origin. If the products are manufactured elsewhere, the responsibility is increased and the written exchange of consent is not sufficient. The complete procedure will have to be put in place
Very important, the following information must always be included on your commercial invoice: FSVP importer’s name, email, phone number and DUNS number.
By their nature, some products are exempted. Examples include: fish and seafood (HACCP); juices and ingredients (HACCP); alcoholic beverages; USDA meat and poultry; low acid canned goods; food sent for research or evaluation, or for personal consumption, or transshipped, or that will be processed for export, or U.S. products returning without having received any foreign value added.
https://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm361902.htm
Labels that comply with American regulations (by Julie Langlois, Labelling and Regulation Director)
There is a common misconception that because we are on the same continent, we can send our Canadian packaging without having to comply with the labeling requirements of our American neighbors. As is the case in Canada, packaging must comply with the regulations of the country where the product is sold. Since these are different regulations, there are many differences between the requirements of the 2 countries, whether it be in the declaration of the Nutrition Facts table, the net quantity or the country of origin. These differences require companies wishing to export to the United States to have, in most cases, a package for each country.
Determination of your sh codes and the origin of your products
These are the rules of origin that establish if your products are eligible for the Free Trade Agreement with the United States and Mexico (MEFTA). These are associated with HS codes, so in order to establish if your products are originating and therefore eligible for duty free treatment, you must first find the HS codes for all your products. To do this, you can consult the Canadian customs tariff or work with a customs consultant who will help you establish the tariffs for your products.
Canadian Customs Tariff : https://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/current-actuel-fra.html
Find a customs broker
Many U.S. customers do not want to have to deal with customs clearance of goods and will ask the exporter to clear the goods themselves and thus avoid the liability of customs clearance. In order to do this, the exporting company will have to find and mandate a U.S. customs broker to represent it before U.S. Customs. The exporter thus becomes the non-resident importer of record for the purposes of customs clearance and the detailed declaration of its own products.
Bonding
Important! In order to deal with U.S. Customs, you will need a bond, at a cost of approximately $500 per year, with a minimum of $50,000. The customs broker will charge this annual fee, but it must be understood that the bond is settled between the non-resident importer of record and U.S. Customs.
Even though trade with the United States is a “natural” trade because of its proximity and similar sanitary regulations, exports to our southern neighbors are highly regulated. Failure to comply could result in substantial monetary fines and could even result in your products being banned from entry. Good preparation and agreements with the right partners can save you all these headaches!