Canada-Selling and buying

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Published: 06 Oct 2008 17:36:28 PST

Distributing a product

Distribution network

The size of the country, some 10 million km2, complicates distribution on a national scale. Big companies have set up nerve centers for warehousing and redistribution of goods all over Canada. Most of these redistribution centers are located in Halifax, Montreal, Toronto and Vancouver.
The difficulty involved in getting to the various regions, the distinctive features of each of them, make marketing a product complex. The Office of Consumer Affairs is the national authority for monitoring and regulating consumption in Canada.

Reaching the consumers

In the 1990s, the Canadian distribution market underwent changes after the arrival of American distributors like Costco (cash & carry reserved for professionals), Wal-Mart (hypermarkets) and Home-Dépot (DIY-hardware-decoration).
The food trade sector is very concentrated and dominated by a few big groups especially the national names Sobey and Loblaw with the American Wal-mart.

Selling to the firms

Imported products are generally brought into the country by importer-distributors, agents or directly by specialized retailers. Canadian importers are very demanding, especially regarding on-time delivery of goods and quality of service. As in the USA, contractual procedure is of great importance in Canada. It plays a greater role than even statutory framework. It is preferable to deal with wholesale importers. It is important for those who want to do business in Canada to hire the services of a lawyer to get legal advice as per the laws of the country so as to avoid problems one may face at the time of the execution of the contract.

The franchise system of distribution is very much operational in Canada and employs 3% of the country’s population. In the year 2004, there were 1,350 franchise systems with 76,000 outlets in the country. Franchises are regulated by the provincial laws.

Market access procedures

Commercial policy: The Canada Customs Act which regulates the Canadian import system, corresponds to a free trade model in which most imports do not need any authorization. There are however what are known as tariff quotas, especially for wheat, barley, beef and cheese. To be granted this quota you must request a General Import Permit, for which you must produce a pro forma invoice at the Export and Import Controls Bureau of the Ministry of Foreign Trade.
Some goods are prohibited, especially importing second hand motorized vehicles, except for vehicles coming from the USA (the rules are becoming more flexible for Mexico)
The rules of origin allowing reduction of duties, especially for textiles, have been draconian since the agreements within the NAFTA (annexe 401 on the original rules, incorporated afterwards in national legislation). These rules are considerably favorable to products which have proof of their origin in the USA.
Moreover, Canada is one of the big users of anti-dumping measures, with more than 85 products concerned (SIMA, Special Import Measures Act). These measures affect 35 countries or Customs areas (including the EU, for example). More than 50% of the products concerned are metallurgical.
For further information about import regulations and procedures in Canada, please consult the article Importing Goods into Canada produced by the Canada Border Services Agency.
Import procedures and custom duties: Canada has signed a certain number of Customs agreements, especially the NAFTA with the USA (removal of almost all Customs duties) and Mexico (transition period until 2009), or bilateral agreements with Chile and Israel granting preferential tariffs.

Most favored nation status (MFN) is given to all the countries Canada has trade relations with that are signatories to the General agreement on tariffs and trade (GATT). The General preference tariff (GPT), the Commonwealth Caribbean country tariff (CCCT) and the Least developed country tariff (LDCT) are reduced Customs tariffs granted unilaterally to countries chosen by Canada because of their special geopolitical and economic situation. The Australia Tariff and the New Zealand Tariff reflect Canada's particular trading relationship with these Commonwealth countries.
Import taxes (excluding consumer taxes): All imported products are subject to the goods and services tax (GST), 7% recoverable in input tax credits. Each province or territory also levies provincial taxes, on products sold to consumers, but this tax is not generally applied when the products are imported.

Identifying a supplier

Business directories: White and Yellow Pages Canada Business Directory Quebec Manufacturers and Wholesalers
Domestic Trade Agencies and their representations abroad: The Canadian Chamber of Commerce
Industry Canada
Quebec Association of Local Development Centers
Ressources Entreprises
Business Development Bank of Canada

Organizing goods transport

By sea: Transport by inland waterway is dominated by the Saint Laurent river running from the big lakes to the Atlantic coast. The great lakes are navigable round the year.
The main seaports are Halifax, Toronto (The Great Lakes being connected to the ocean by the Sea route of Saint Laurent), and Montreal and Vancouver on the Pacific coast.
By air: Daily flights are numerous and usually punctual, except when weather conditions are bad. In Quebec, several companies ensure domestic connections between the most important cities.
By road: The road network consists in 290,000 km of roads out of which 7,820 km of highways cross the country from east to west and connect all the big cities of the country. It handles more than 50% of the commercial freight. The number of vehicles on roads is 3,700,000 lorries and buses.
By rail: The rail network is 91,000 km. It is controlled by two big transcontinental companies: the Canadian National Railway and the Canadian Pacific Railway (two private companies). Toronto and Montreal are at four hours journey distance by train.
Useful resources: Port of Montreal