Alongside the human health and economic impacts of COVID-19, this has also been a period of rapidly shifting government policy. For those of us involved in the policy and advocacy world, the pace has been unrelenting. Announcements are made about the headline changes, details trickle out, unintended consequences become known, and then it is back to step one with changes being made.

Although many Canadian companies are hearing about domestic policy measures, such as the wage subsidy or Canada Emergency Response Benefit, the shifting sands of policy equally applies to international trade issues.

The Canadian Chamber of Commerce has been grappling with these international trade issues from a supply chain perspective. In very practical terms this means:

• How do we enable the movement of critical goods into and within the country that support the welfare of Canadians?
• What is needed to keep Canadian companies plugged into international supply chains to meet the needs of their customers?
• How do companies that interact with their customers through the provision of services continue to undertake activities? This includes everything from business travel to after-sales servicing on critical equipment.

To keep a regular check on the pulse of businesses, the Canadian Chamber has formed an ad hoc supply chain group as the vehicle for sharing intelligence and informing the advocacy positions we undertake. Here are some of the takeaways we have heard and what they mean for Canadian companies involved in international trade.

Essential Services

It might seem odd to start talking about domestic essential services issues in the context of a blog on international trade, but what we hear from businesses has underscored that things start close to home.

Presently, each province has acted within their jurisdiction to determine which businesses can stay open (those deemed “essential”) and those that need to close (“non-essential”).

Provinces have taken different approaches to determining what falls under each side of the essential business ledger. We have received anecdotes about issues that have limited the ability of companies to move products across provincial borders, get products moved through warehousing, and third-party providers being closed and unable to provide services to their clients who are still open because they are operating an essential business.

As the pandemic conditions change, the provinces could still make further shifts in stating which companies are essential.

In terms of what this means for companies involved in international trade, it is absolutely critical to avoid thinking of due diligence as a “one and done” activity.

Some examples include:

• Even if your logistics provider is running, they may not have all their affairs in order with any third parties they use. Can they ensure they can keep providing service to you?
• How are your warehousing arrangements looking? Are there any backlogs of goods in the warehouse that are caused by non-essential business closures? Are cargo containers going to be ready for your products?
• Are there any provincial essential business closures that will cause problems for your goods moving across a border? Are there business closures that will cause problems for your goods being received at their destination?

Border Issues

Border issues are a massive topic on their own. This includes the movements across the U.S. border and other countries where Canadians do business. Similar to the issues surrounding essential services, the enactment of border measures is an evolving situation.

We have thus far seen a rolling enactment of measures that include travel bans for non-Americans travelling via the air mode, as well as restrictions on non-business travel across the Canada-U.S. border.

Overlay the officially announced rules with border officers retaining discretion at points of entry to assess admissibility and it can be difficult to keep up.

Some of the key considerations for Canadian companies include:

• When engaging in cross-border travel, the message has been loud and clear from the Canada Border Services Agency (CBSA) that business travellers need to make it as easy as possible for border officers when arriving at a point of entry. This could include really basic things like printing off an email trail, being able to quickly identify where your business is and with whom, a note on company letterhead clearly verifying the purpose of your visit, and arriving in uniform (if applicable to your industry).
• If in doubt, call ahead. The CBSA has significantly increased its staffing levels and expanded its Border Information Service line to operate 24/7. The last thing a company wants is to be held-up at the border. It is stressful when it occurs and being proactive is always the better approach.
• For importers, you should start a proactive conversation with your customs broker about the remittance of duties to the government. Last month, the government announced a deferral through to the end of June on the payment of duties/taxes on imports. For brokers, this means carrying a significant accumulation of liability on their bonds. Given this risk, some brokers are asking their clients to continue to pay the amounts owed to mitigate the risk of importers being unable to pay the amounts owed at the end of the deferral period. Companies should clarify these arrangements with their broker in addition to service fees.
• Keeping up to date with customs announcements is critical. The CBSA is evolving its requirements for the submission of certain customs documents and changing allowable submission methods. These could provide new flexibilities for companies in light of office closures. However, we have seen this to be a moving target, so businesses need to stay on top of all announcements.

Canadian Business Resilience Network

Given the breadth of the Canadian Chamber’s membership, representing businesses of all sizes and sectors of the economy, the Canadian Chamber has taken the lead in convening resources from the business community through our Canadian Business Resilience Network. We encourage companies to check it out and sign-up to our newsletter to keep updated on new material as it becomes available.

On the Network’s website you will also find some resources from various international groups that the Canadian Chamber works with, including the International Chamber of Commerce, Global Business Coalition, and Business at OECD. These are key platforms that we use to advance our members’ from the international perspective.

From a business perspective, and global economic perspective, we are dealing with unprecedented and unpredictable times. It has never been more crucial to ensure we are all staying informed through credible sources. FITT has collected COVID-19 global business resources from world-leading organizations collected in one place. 

The post How rapidly changing Canadian policy shifts are affecting your supply chain – and what to do about it appeared first on Trade Ready.

International trade transactions involve considerable negotiation between sellers and buyers to determine which party will pay for transportation, cargo insurance and other costs associated with shipping goods, as well as who is responsible for the goods at any given time during shipping. Given differences in culture, language and government regulations, negotiations have the potential for confusion and misunderstandings, which could result in irresolvable disputes.

In 1936, as part of their work towards rules-based trade, the International Chamber of Commerce (ICC) created a system of standardized international trade terms, known as the Incoterms® system, that represents different methods of transportation and assumption of risk and cost between sellers and buyers.

The use of the Incoterms® system is for domestic and international trade and refers to the parties as gender-neutral buyers and sellers.

New Incoterms® 2020 rules come into effect soon

Since their inception, Incoterms® rules have undergone seven revisions in order to reflect the development of international trade. At the time of this publication, Incoterms® rules 2010 are in use, but new Incoterms® 2020 rules have been introduced and will come into effect on January 1, 2020.

Contracts made under Incoterms® 2010 rules remain valid even after 2019. It is recommended that you use Incoterms® 2020 rules after 2019, however, parties to a contract for the sale of goods can agree to choose any version of the Incoterms® rules. It is important however, to clearly specify the chosen version of Incoterms® rules, either 2020 or 2010. If using Incoterms® 2010 in the contract of sale, be sure to understand what the older terms mean.

What are Incoterms® rules?

Incoterms® rules are used in negotiations to resolve specific terms and conditions of sales contracts by addressing the following:

• Costs: Who is responsible for the expenses associated with a shipment at a specific point in the shipment’s journey, such as export packing costs, the main transport costs and custom duties?
• Risks: Who bears the risk of loss or damage to the shipment, i.e. who is responsible for the goods during transit?

Incoterms® 2020 rules clearly define the obligations and responsibilities related to the transport of goods for both the seller and buyer. Incoterms® 2020 rules should not be considered a contract of sales. They do not:

• Provide specific details of transfer points, transport, and delivery (must be defined in sales contract)
• Determine ownership or title transfer of the goods
• Determine payment terms
• Apply to intangible services
• Define contract rights or dispute processes
• Relate to goods before or after delivery
• Specify the types of document to be issued or what their content should be
• Provide default Incoterms® rule

It is worth noting that Incoterms® rules include the use of electronic data information systems for customs purposes and other documentation and information exchange. The terms also include customs requirements for security for specific types of goods including chain of custody documentation.

Although many reference tables suggest that buyers must buy cargo insurance, the Incoterms® rules do not specify insurance as a requirement, except for two Incoterms® rules: CIF and CIP require the seller to purchase cargo insurance for the benefit of the buyer, i.e. the buyer can make a claim for loss or damage directly to the insurance company. The rest of the terms do not require the seller to obtain cargo insurance, nor do the terms require the buyer to obtain insurance.

The decision to purchase cargo insurance is the responsibility of buyers. However, given the cost of replacement and the loss of profit should cargo be lost or damaged, it is generally in buyers’ interest to obtain cargo insurance. Organizations should consider the cost of insurance in a per-transaction basis versus the utilization of an umbrella insurance that can cover all of their shipments.

Each of the Incoterms® rules represents a different situation involving the domestic or international movement of goods. Incoterms® rules also deal with the documentation that is required for international trade because they specify which parties are responsible for producing each document. Because documentary requirements vary so much between countries, this specification is very helpful in facilitating trade transactions.

What are the different categories of Incoterms® rules?

There are two categories of Incoterms® rules:

• Rules for any mode or modes of transportation
• Rules for sea and inland waterway transportation

Each Incoterms® rule is referred to by three letter abbreviations, and are usually listed by category of transport. It is important to note that there are several charts with images for Incoterms® rules online, and they tend to have significant differences. The key to learning Incoterms® rules is not to memorize, but to interpret each of the rules. Depending on the shipment’s point of departure and point of arrival, and the modes of transportations used, rules might or might not apply.

The first letter of the abbreviation provides information on the focus of that group of terms:

• Terms beginning with the letter E indicate that the seller’s responsibilities are fulfilled when the goods are made available for shipping by the buyer’s chosen carrier. There is only one rule under the E term: EXW.
• Terms beginning with the letter F refer to shipments where the primary cost of shipping, or main carriage, is not paid for by the seller.
• Terms beginning with the letter C refer to shipments where the seller pays for a portion of the shipping, usually the pre-carriage and main carriage, but the seller’s responsibility ends when the goods are delivered to the carrier somewhere on the seller’s side.
• Terms beginning with the letter D are destination contract terms because the seller delivers somewhere on the buyer’s side. The shipper or seller’s responsibility ends when the goods arrive at a predefined point. Delivery on the buyer’s side means that recognition of payment is deferred. With these terms, the seller pays the pre-carriage, main carriage and onward carriage.

The post Read this Incoterms® overview to start preparing for the new Incoterms® 2020 updates appeared first on Trade Ready.

August 29, 2019 – The Canadian Chamber of Commerce and the Forum for International Trade Training (FITT) are proud to announce their partnership to deliver Incoterms® 2020 in-person training to Canadian businesses in advance of the new standards coming into effect January 2020.

Revised by the International Chamber of Commerce every 10 years, the latest version of Incoterms® will be released in early September before going live in 2020. Incoterms® are an essential part of the language used by buyers and sellers in international trade. These trade terms have been incorporated in contracts for the sale of goods worldwide and define the costs, risks and obligations in international trade transactions to importers, exporters, transporters, customs brokers, lawyers and students of international trade. An improper use of Incoterms® can be costly to businesses.

To help Canadian businesses get up to speed on the Incoterms® 2020 changes and what they mean for their involvement in international trade, the Canadian Chamber and FITT are working with local chambers of commerce, World Trade Centres, economic development agencies and other associations to deliver face-to-face training across Canada.

The Incoterms® 2020 course offered by the Canadian Chamber and FITT will be the only in-class training in Canada that is officially recognized by the International Chamber of Commerce.

Stay tuned for further information from FITT in September 2019 on where you’ll be able to access this training.

If you are interested in working with us to host training sessions in your region, please contact Mark Agnew at magnew@chamber.ca or 613.238.4000 (2230).

About Us:

The Canadian Chamber of Commerce is Canada’s largest business association representing over 200,000 businesses across the country. The Canadian Chamber is also Canada’s national committee for the International Chamber of Commerce.

The Forum for International Trade Training (FITT) is Canada’s national standards, certification and training body for international trade practitioners.

The post The Canadian Chamber of Commerce and the Forum for International Trade Training establish partnership to train Canadian businesses on Incoterms® 2020 appeared first on Trade Ready.

“Personally I´ve been associated with FITT for 20 years, starting from the time I was an instructor and program designer,” says David Robillard, President of the Canadian Chamber of Commerce in Mexico. “Since that time, FITT has become Canada´s premiere institute for international trade training. CanChammx is pleased to be associated with FITT, and I am sure many of our members will benefit from the opportunity to participate in the FITTskills program.”

CanChammx announced the partnership yesterday in Mexico City at its first major event of the year, “Economic Perspectives”. The event looked at the overall economic outlook for North America and Mexico for 2014, and gave attendees tips and advice for how to be successful entrepreneurs. Export Development Canada’s (EDC) Vice-President and Chief Economist, Peter G. Hall attended the event as an expert speaker.

CanChammx members who are interested in taking advantage of our new partnership by registering for FITTskills international trade courses can contact FITTskills@canchammx.com for details on how to get started.

“We’re looking forward to working with CanChammx to offer its Members this opportunity to build on their international trade knowledge and skills,” says Caroline Tompkins, CITP, President of FITT. “We’re thrilled to continue expanding our network of global business professionals into Latin America, as we’re currently already offering training through institutions in Colombia in addition to our online program. We hope Canchammx Members will use this opportunity to begin working toward the elite Certified International Trade Professional (CITP) designation.”

The post FITT and CanChammx working together to advance global trade competencies in Mexico appeared first on Trade Ready.

The country has developed from being a closed environment back in the 1980s, where industries were very highly protected by government, to a market that has one of the highest numbers of FTAs of any other country in the world. As a result Mexico has become a very open economy from an international trade perspective.

Starting to trade with Mexico

Although the country has opened up and it’s projects—particularly those related to automotive, electronics and infrastructure—are creating opportunities for global players, David’s sense is that Canadians aren’t looking closely enough at opportunities for trade with Mexico.

“For the longest time Canadian entry into Mexican markets was via U.S. intermediaries,” he says. “Today there’s no reason for that to continue. The rules of the game in terms of trade are much more transparent, and Canadian quality as a concept is top-of mind for Mexican consumers.”

In fact, the perceived value of Canadian products and services is not to be underestimated, says David.

“Canadian quality, in terms of the consumer mind in Mexico, is on the same level as German engineering.”

Apotex is a leading Canadian manufacturer of generic pharmaceuticals, which operates in Mexico in addition to many Canadian locations. It’s marketing slogan in Mexico for the past several years? ‘Canadian quality’.

First steps

So you’ve got a quality product or service, and you think you’re export ready. How do you start developing trade relationships in Mexico?

“Start by looking at your Canadian-based clients who are operating in Mexico,” says David. “In terms of a market entry strategy, this makes for a much softer landing.”

Talk to your clients in their Mexican base, and start to gain an understanding of what their needs are and how you could accommodate them.

“Secondly, it makes so much sense to come down on one of the many trade missions that are organized,” suggests David.

He cautions though that the attitude you take on trade missions needs to be educational.

You’re not going to do business and you’re not going to go home with orders from those missions. Coming to Mexico has to be considered a long-term affair, not just when there’s a downturn in other markets. It has to be looked at as a serious step.

The language and culture of business

Language and culture are factors that need to be considered if you’re planning to trade with companies in Mexico, or any country for that matter.

“While language is a barrier, it isn’t insurmountable,” says David. “So many Mexican companies today have English and French language capabilities.”

It’s also wise to start building and identifying Spanish language skills within your company. This will help not only in Mexico but also in a considerable part of the rest of Latin America.

In terms of trade culture, be aware that different regions of Mexico tend to have their own nuances. In Mexico City for example, getting to know your potential partner can take much longer than in other areas of the country.

Lengthen your time horizons, and expect that it may take a year before you get any business.

In Monterrey, business culture has become much more akin to that of Texas because of proximity.

“They’re less interested in the relationship than in Mexico City, so many issues of business can be accomplished in a shorter period of time.”

Some might consider it easier to do business in Monterrey as a result, but conversely you may find that your negotiating partner will be much more concerned with the bottom line and getting the best pricing and conditions possible.

In all parts of the country it’s important to make sure that your pricing is quoted in U.S. dollars as opposed to Canadian, and having your materials translated into Spanish will go a long way.

Meal time is also very important for getting to know someone. A lunch, and even more so, a supper, is a moment to get to know the other person. Breakfasts are used as a time to sort out the details, and they tend to be more business oriented.

Opportunities now

Near the end of 2013, Mexico passed an historic energy reform bill. This bill served to create an opening for private business in several areas of the energy sector, oil and gas, and petrochemical. It provided much greater certainty in terms of the role the private sector can play in fields that were once reserved solely for the state.

This is a great opportunity for Canadian companies in servicing global players who are looking at coming into the market.

“For the SMEs, this is an opportunity to follow their clients and support them.”

In June, Calgary, AB will play host to the Global Petroleum Show.

“There will be a record number of Mexican government officials and companies attending,” says David. “For any company in that sector it would be a great event to attend to get to know your Mexican counterparts.”

Final words of wisdom

As President at the Chamber of Commerce, David spends much of his time advising companies on reputational risk and helping them know with whom they’re doing business.

“I field inquiries for due diligence on mergers and acquisitions, and perform background checks on employee candidates,” he says.

As good business practice, whether you’re in Mexico or Canada, it’s really important to carry out a background check on companies and individuals with who you’re considering doing business, he says.

“Today, background checks in Mexico are considered best practice and just a normal course of business.”

The post High-quality perception of Canadian goods in Mexico a great trade opportunity appeared first on Trade Ready.