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Exporting to Canada, conditions and prospects

Exporting to Canada, conditions and prospects

In summary
  • Since September 21, 2017, the CETA between the European Union and Canada has eliminated almost all tariffs, and since then trade has grown by about 60%.
  • In 2023, Canadian imports of Italian goods reached 12.9 billion Canadian dollars, an increase of 6.2%, and Italy is the eighth supplier.
  • The most interesting sectors for Italian exports are machinery, mineral products, furniture and food; Italy is the fourth largest food supplier with an 11.5% growth in 2022.
  • For the agri-food sector, the SFCR, in force since 2019 and controlled by the CFIA, is important: licenses, a Preventive Control Plan, traceability, and labels in English and French are required.
  • For customs clearance, Business Number, Form B3, commercial invoice and, if requested, Certificate of Origin are required; the GST on imports is 5%.
Index

Exporting to Canada offers a significant opportunity for Italian companies, thanks to the country's historic openness to international trade and strong demand for Made in Italy branded products. The Canada, with its political stability, robust economy and well-regulated labor market, offers advantageous conditions for production costs and access to credit, factors that make it a highly attractive market for Italian companies.

As of September 21, 2017, it is provisionally in effect the CETA (Comprehensive Economic and Trade Agreement) between the European Union and Canada. This agreement facilitates market access to this country by almost entirely eliminating tariffs, opening government procurement to European companies, protecting geographical indications and facilitating labor mobility, as well as offering favorable terms for investment.

Over the past four years, trade between Italy and Canada has grown significantly and steadily, with the value of Italian exports increasing by 27.7% from 2019 to 2022 (Foreign Markets Info). Since the year of the introduction of CETA, trade interchange has grown by about 60%.

Let's take a closer look at this market, the sectors of greatest interest and export requirements.

Exporting to Canada

Focus on opportunities and requirements for exporting to Canada

In 2023, according to Canadian statistics, the imports of Italian goods into Canada reached C$12.9 billion, registering an increase of 6.2% over the previous year.

Comparing the first quarter of 2024 with that of 2023, there was a 12% decrease in imports from Italy, particularly in the manufacturing sector. However, the pharmaceutical and wine sectors showed growth of 16% and 10%, respectively. Despite these declines, Italy continues to maintain its position as the eighth largest exporter to Canada.

The four sectors of greatest interest for Italian exports in 2024

There are several export sectors of particular interest to Italian companies wishing to embark on a path of internationalization in Canada. Let's look at the main ones.

1. Machinery and Equipment

The sector of food production equipment and packaging and packaging systems, one of the 15 key sectors of the “Machines Italy“, represents a significant opportunity for the expansion of Italian advanced technologies in Canada. This is due to the dynamic characteristics of the local market and promising growth prospects in the short and medium term.

2. Products from Mines and Quarries

Canada's mining industry, with more than 60 metals and minerals in its territory, is a key pillar of the country's economy. Italy ranks as Canada's eighth largest supplier of machinery and technology to the mining sector, with an export value of CAD 55.49 million in 2022, up from CAD 52.7 million in the previous year.

3. Furniture

Canada is a significant market in the furniture sector, of which it is the world's 11th largest producer. In 2022, Canada imported furniture totaling CAD 7.29 billion. Italy, renowned for the quality and design of its products, ranked fifth with exports of CAD 291 million, up from the previous year.

4. Food products

In 2022, Italy was ranked fourth for the’export of food products to Canada, registering an increase of 11.5% over the previous year. The Canadian market continues to grow for Italian agri-food products, with particularly high demand for olive oil, cheese, pasta and cured meats. Thanks to the elimination of customs duties under CETA, 41 Italian names are protected, accounting for over 90% of Italian food exports to Canada.

Exporting agribusiness to Canada: what to watch out for

The Canadian Food Inspection Agency (CFIA), the Canadian equivalent of the U.S. FDA, is the federal agency responsible for food safety oversight in Canada.

It is responsible for ensuring compliance and enforcement of the SFCR - Safe Food for Canadians Regulation.s, which came into effect in 2019 repealing and replacing pre-existing regulations. The SFCR has been a major regulatory revolution in Canada, placing a greater emphasis on prevention and enabling faster removal of unsafe foods from the market.

CFIA inspectors are present at Canadian customs to check incoming food products, ensuring that safety standards are met.

SFCR requirements for importers and exporters

The main requirements under the SFCR for importers are as follows:

  • Preventive control planning: Canadian importers are required to create a Preventive Control Plan (PCP), which details import procedures, ensures that products meet safety and labeling standards, and ensures that suppliers take effective measures to prevent and manage potential food-related risks.
  • Licensing system: To import food products into Canada, importers must obtain a specific license. Licenses vary depending on the type of product handled, and each importer must ensure that he or she has the appropriate license for the products he or she wishes to import.
  • Traceability: Importers must collect and keep documentation to track the entire production cycle of the food product, from its origin to the final point of sale. This is essential to ensure product transparency and safety.

Instead, the following rules apply to exporters:

  • Creation of the CFP: must contribute to the establishment of the CFP by providing information on biological, chemical and physical hazards associated with their food products.
  • Certifications: must present recognized certifications to demonstrate compliance with food safety standards.
  • Labels: Exporters must ensure that labels comply with Canadian regulations, including information in both English and French, details on the nutrition table, and list of ingredients.

Food import regulations in Canada are generally less restrictive, especially for long-life or “shelf-stabilized” products such as canned goods and sauces. However, it is important to note that there are specific provincial regulations in Canada that may require specific revisions and adjustments. Therefore, it is crucial to carefully check the regulations of the province where the importation and sale of products will take place.

Unlike the United States however, to import into Canada does not require corporate registration or the appointment of an FDA Agent equivalent.

Selling in Canada

Documents required for export to Canada

To import commercial goods into Canada, it is necessary to obtain a Business Number (BN) from the Canada Revenue Agency (CRA), which allows the free opening of an import/export account.

It is important to collect detailed information on the products to be exported to Canada, including descriptive documentation, composition details and, if possible, samples. This data is essential to determine the correct tariff classification of the goods, which is necessary to determine the applicable customs rate.

Next, it is necessary to identify the appropriate tariff treatment for the goods. In the Canadian Customs Tariff there are two columns: the “Most Favored Nation (MFN) Tariff,” applicable to all countries except North Korea, and the “Preferential Tariffs,” which indicate preferential tariffs under trade agreements.

It is necessary to check whether the goods are subject to Goods and Services Tax (GST), excise or other taxes. GST, amounting to 5%, applies on most goods at the time of importation.

Some products, such as medical devices, agricultural and fish products, are exempt from this tax. In such cases, the exemption code should be reported on the Canadian Customs Coding Form B3.

Finally, it is necessary to determine the value of the duty, which is usually the amount paid to the seller for the goods. The statement of value must be supported by a receipt or invoice from the supplier, containing the terms of the transaction, the selling price, and a detailed description of the product.

The documentation required for customs clearance

For customs clearance of goods, the following documents must be submitted in duplicate:

  • Canada Customs Coding Form (Form B3): Customs document describing goods imported for commercial use in Canada, complying with Sections 6 and 7 of the Accounting for Imported Goods and Payment of Duties Regulations.
  • Cargo control documents: receipt or invoice provided by the seller or manufacturer, showing the buyer, seller, country of origin, price and a detailed description of the goods.
  • Additional documents:if required, import permits, health certificates and other documents required by federal government departments, as well as the Certificate of Origin (Form A).

These documents can be submitted in hard copy or, with permission, via Electronic Data Interchange (EDI).

Goods from Italy, which is considered a favored nation, are subject to duties established by the Customs Tariff, Tax Act, Excise Act, Special Import Measures Act and other federal regulations.

Octagona, specializing in business internationalization consulting, supports Italian companies interested in exporting to Canada by providing customized solutions to overcome legal and logistical barriers and facilitate access to the Canadian market.

Contact us for any information.

Frequently Asked Questions

What does CETA provide for Italian companies that want to export to Canada?

CETA, the economic and trade agreement between the European Union and Canada, is in effect provisionally since September 21, 2017. It eliminates almost all customs duties, opens public procurement to European companies, protects geographical indications, facilitates the mobility of workers and offers favorable conditions for investments. Since then, trade has grown by about 60%.

Which are the Italian sectors with the greatest export opportunities in Canada in 2024?

The four main sectors are machinery and equipment, products from mines and quarries, furniture and food products. In 2022, Italy was the fifth supplier of furniture, with CAD 291 million, and the fourth in food products, with an 11.5% growth. In the mining sector, it is the eighth supplier of machinery, with CAD 55.49 million.

What requirements of the SFCR must be met to export food products to Canada?

The Safe Food for Canadians Regulations (SFCR), in effect since 2019 and enforced by the CFIA, require the Canadian importer to obtain a license, a Preventive Control Plan and traceability. The Italian exporter must collaborate with the plan by providing information on biological, chemical and physical risks, submitting recognized certifications and using labels in English and French with a nutrition table and ingredients list.

Is registration or an agent like the FDA Agent required to export food to Canada?

No, importing food into Canada does not require a business registration or the appointment of an agent equivalent to the FDA Agent required in the United States. However, the importer’s license and compliance with the SFCR remain mandatory. Provincial regulations in the territory of sale must also be verified, which may require specific adjustments.

What documents are required for the customs clearance of goods in Canada?

Two copies of the Canada Customs Coding Form (Form B3), the invoice or receipt from the seller with the buyer, seller, country of origin, price and description of the goods, and, if requested, permits, health certificates and the Certificate of Origin (Form A) are required. The importer must have a Business Number issued by the Canada Revenue Agency. Documents can be submitted via EDI upon authorization.

What taxes are paid on the importation of goods in Canada and which products are exempt?

Importation is subject to the duties of the Canadian Customs Tariff, which provides for the MFN tariff and preferential tariffs linked to agreements, and the 5% Goods and Services Tax (GST) on most goods. Exemptions include, among others, medical devices, agricultural and fishery products, with the exemption code to be indicated on Form B3.

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