The country of origin can mean two things for international shipping: From where were to goods shipped and from where were the goods created or manufactured. Both concepts can have a great impact on the importation of goods to and from Canada.
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Shipping From versus Country of Origin
Many shippers - and especially when sending a single package - simply assign the country of origin as being from where the goods are being sent. While this is generally accepted for most shipments.
Does it matter from where goods are shipping from?
In general, from where the goods are shipped does not affect the import clearance. But, in some cases the country from where the goods are shipped can make a difference, including:
- Goods are shipped from the USA or Mexico to Canada benefit from a higher value duty free threshold.This benefit is part the North American Free Trade Agreement (USMCA/CUSMA/T-MEC). Read more about Canadian import fees.
- Some countries of have import quotas on goods shipped from a specific country
- Goods originating from non WTA countries (such as North Korea) may not benefit from the "most favoured nation" rate of duty.
What is the Difference Between Country of Origin and From where Goods Where Sent?
The "from where the goods were shipped" refers to the country from which the goods were physically sent or dispatched. The "country of origin" refers to the country where the goods were produced, manufactured, grown, raised or extracted.
Most often from where goods are shipped does not affect import clearance (see section above). On other hand, in the context of Canada's free trade agreements, the country of origin determines if the goods are eligible for preferential duty free treatment ( or otherwise benefit for reduced tariffs).
Examples of Shipped from Versus Country of Origin
- A supplier in Canada sells goods online were originally sourced from China to a customer in Germany. In this case, the country of origin of the goods is China even though they were sold and shipped from Canada. As such, the goods would not qualify for duty free import under the Canadian European Free Trade Agreement.
- Goods purchased online from an American retailer selling goods made in China. The goods do not qualify as USA origin under the USMCA/CUSMA free trade agreement.
What are the Rules of Origin under Canada's Free Agreements (FTA's)
The rules of origin are the criteria that determine whether a product qualifies for duty-free treatment under a free trade agreement (FTA) between Canada and its trading partners. In general, the rules of origin establish the minimum percentage of a product's value that must originate from the territory of a party to the agreement in order for the product to be eligible for duty-free treatment.
In general, the rules of origin under Canada's FTA fall into two categories
General Rules of Origin of Canada's Free Trade Agreements
The general rules of origin require that a product be wholly obtained or produced in the territories covered by the FTA. Goods that were simply assembling - rather than being transformed or manufactured - generally do not quality under the rules of origin. The rules of generally refer to the origin of materials, the processes of production, and the percentage of the product's value from the originating country.
Sector Specific Rules of Canada's Free Trade Agreements
Sector-specific rules of origin are specific provisions in Canada's free trade agreements that apply to particular goods or industries. These rules are more specific and demanding than the general rules. Examples of sector-specific rules of origin include:
- Textiles and Apparel: This sector often has strict rules of origin that require a minimum percentage of the value of the product to be produced using yarns and fabrics that originate from the territory of a party to the agreement.
- Automobiles: Automobiles often have complex rules of origin that specify the origin of various parts and components, as well as the processes that must be performed in order for the final product to be considered originating.
- Chemicals: The rules of origin for chemicals may specify the origin of raw materials, intermediate products, and final products, as well as the specific processes that must be performed in order for the product to be considered originating.
- Agricultural Products: Agricultural products may have specific provisions on the origin of seeds, fertilizers, and other inputs used in production, as well as the location of the primary production and processing of the product.
How can I benefit from one of Canada's Free Trade Agreement?
In order to claim duty-free treatment under Canadian FTA, businesses must provide evidence that their products meet the rules of origin specified in the agreement. This can be done by providing documentation such as invoices, bills of lading, and certificates of origin.
It's important to note that rules of origin can becomplex and can be subject to interpretation. It's recommended that businesses seek the advice of regulatory authorities prior as early as possible and always prior to shipping.
Shipping from a Most Favoured Nation (MFN)
The one instance of where the goods are shipped matters is if the shipped from a non most favoured nation. Only a very few countries (such as North Korea) do not benefit from MFN status.
Options For Shipping Between Canada's Free Trade Partners
There are a few options for shipping freight between Canada's Free Trade Partners:
- Air freight: This is the fastest option with economy air options
- Ocean: Best for large commercial orders
- Local post options are generally best for individuals shipping small packages but not possible to include a certification of origin
- When shipping with FedEX , DHL, UPS make sure the certification of origin is clearly indicated.
- Jet Worldwide: Using most of the above the above options!
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