American companies are increasingly looking North to Canada with a huge opportunity created online purchases. The "new NAFTA" USMCA/ CUSMA contains the important provisions to facilitate e-commerce orders shipped from the US to Canada duty free.
Canadian duty free import is possible thanks to the USMCA Free Trade Agreement.
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Disclaimer: The information in all Jet Worldwide online content, including this post, is for general information only.
he Most Favoured Nation (MFN) tariff rates of Canada are generally applicable for imports from the USA to Canada valued over CA$150. Goods that meet CUSMA rules of origin can qualify for preferential duty free import to Canada. The MFN tariff rates of Canada apply to goods imported to Canada that do not meet the rules of origin (non-originating goods) under the CUSMA.
NAFTA / CUSMA/ USMCA
While the new NAFTA - and its potential successor CUSMA/ USMCA - languishes for approval by the relevant legislatures, it remains the most important free trade agreement for the USA. Despite all the political rhetoric, the likely successor to NAFTA is essentially a minor update to a decades old agreement.
READ MORE: CERTIFICATE OF ORIGIN AND WHY IS IT NEEDED
In this blog, we use the USMCA CUSMA wording interchangeably. The different names are a legacy of how much rancour there was in negotiating even the smallest elements of the new agreement. Read about USMCA/ CUSMA/T-MEC
UMSCA Rules of origin
Under CUSMA (USMCA), rules of origin are used to determine whether a product qualifies for duty-free or reduced-tariff treatment when traded between the United States and Canada. The rules specify the minimum percentage of the product that must originate from USA, Canada and Mexico in order to qualify for the preferential treatment. The rules of origin are divided into two main categories:
- General rules of origin: These apply to all products not covered by the sector-specific rules.
- Sector-specific rules: These apply to certain products that have additional requirements and includes such categories as textiles and and certain automotive goods.
Read More: Country from where goods were shipped versus country of origin
How does CUSMA help package clearance?
The CUSMA facilitates the movement, release and clearance of good via a simplified framework and standardized customs procedures. Trade facilitations includes fewer clearance formalities for “express shipments” valued under CA$3,000 (to Canada) and US$2,500 (to the USA and Canada).
The origin‑certification process (that is no longer a prescribed form) is to include a set of data on the shipping paperwork (most commonly including on the invoice).
View Video: Taking Advantage of North American Free Trade
The data elements required at a minimum to claim origin underCUSMA:
- Importer/exporter or producer (indicate which is certifier)
- Name and address of certifier or
- Name and address of exporter or
- Name and address of producer
- Name and address of importer (if known)
- Description and harmonized system (HS) tariff classification of the good
- Specific origin of criteria
- Blanket period (certification is valid up to 12months in the case of multiple shipments of identical goods)
- Authorized signature and date
Check out theCanadian Border Services Agency (CBSA) page that describes the new requirements for more information and an example of a valid CUSMA certification of origin
Certificate of origin via USMCA/ CUSMA
Shippers will benefit from new rules of CUSMA that replaces the need for a separate Certificate of Origin with a "Certification of Origin" that can be more easily implemented into existing shipping documents such as the commercial invoice. This easier administrative aspect is already available for US shippers sending goods to Canada valued under CA$3,300.
CUSMA for direct order parcel shipments
The benefit of duty free entry can be significant as Canadian import clearance costs can be substantial IS now more accessible for online orders shipped to Canada from the USA
READ MORE: IMPORT CUSTOMS DUTY EXPLAINED
At Jet Worldwide, we encourage our customers to consider taking advantage of the preferential duty free treatment when goods qualify as US origin.
CUSMA ADVANTAGES FOR SHIPPING E-COMMERCE ORDERS TO CANADA:
- Duty free and tax free entry for goods valued $40 CAD shipped courier to Canada
- Duty free entry for goods valued under $150 CAD shipped courier
- Simplified certification of origin statement for US origin goods valued under $3,300 CAD
For commercial goods valued at less than (CAN $3,300) the exporter may provide a statement certifying that the goods qualify as originating goods.
Different duty assessment for goods shipped via USPS versus Courier: For a shipments shipped via USPS for import via Canada Post, duty is assessed differently than for parcels shipped via parcel carriers/ courier:
- CA $20 (around US$14.75) and under: duty and tax free
- Above CA $20duties and taxes apply
Common Canadian Import Fees for Shipments from the USA
Common import fees for consignments shipped via air to Canada can include duty, tax, entry preparation and/or disbursement fees.
CUSMA COO process for parcels to Canada with low-value shipments
For low value shipments (mentioned above), a Certification of Origin/ COO a shorter certifying statement added to the commercial invoice (or any shipping document) can be included to request preferential duty free status.
“I hereby certify that the goods covered by this shipment qualifies as an originating good for the purposes of preferential tariff treatment under USMCA/ CUSMA.”
Note: US Origin goods does not mean shipped from the US
The country of origin in USMCA CUSMA refers to where the goods are grown, raised or manufactured. In other words, goods made in China and sold online from a US website to Canada does not qualify as being of US origin under USMCA CUSMA rules.
Shipping to Canada from the US via low cost express with customs entry included can be the best solution for US origin goods valued under $3,300 CAD with a CUSMA certification of origin statement.
Duty free for Shipments valued under $150 CAD from the USA to Canada!
As mentioned above, Canada has raised their low value duty threshold ( de minimus threshold) to $150 CAD (around $110 USD). Local sales taxes will still apply (but often times, businesses can claim this charge back). This higher duty free threshold helps businesses and e-commerce merchants in the United States ship to Canadian customers.
Getting quote for shipping between the USA and Canada
Jet Worldwide provides Canadian and American logistics. Our support refers to the various systems regarding North American movement of goods.
