The basics of exporting: a step-by-step guide

The idea of exporting can be bewildering.

For a step-by-step how-to guide, ExportWise attended Invest Ottawa’s “The Basics of the Exporting Process” delivered by Christian Sivière, a trade expert with Solimpex Montréal & Ottawa.

Christian SivièreChristian Sivière
In 2010, following a 30-year career in international freight-forwarding, Christian Sivière founded Solimpex, an import-export consultancy. He helps SMEs grow internationally and provides training on international trade, supply-chain management, importing, exporting, logistics and customs compliance. He lectures at Champlain College Montréal, for the Canadian International Freight Forwarders Association in Toronto, and gives seminars and webinars for various trade organizations and personalized training for companies. He also writes articles for Materials Management & Distribution magazine.

Here is Christian’s advice:

Step 1: Activate your business number for export

If you’re an entrepreneur, you likely have a GST/HST number. To start exporting, call the Canada Revenue Agency and adjust your business number for this purpose. This becomes your exporter number.

Step 2: Investigate the applicable laws in the countries you’re targeting

“Looking at exporting laws is a complex issue, and I’m not a lawyer, but I want to point that out that you have to investigate it,” Sivière said. “If you’re selling to Germany or Brazil or China, see which laws apply.” The Vienna Convention, ratified by 84 countries, states the obvious — the seller transfers ownership with relevant documentation; the buyer pays — but this isn’t a global solution because it doesn’t establish ownership during the transfer, leaving that to each country’s national laws. Ownership could stay with the seller, or could be transferred to the buyer as soon as the contract is formed.

Step 3: Understand what the “Incoterm” is

“Incoterms” are rules defining the obligations for the delivery of merchandise. Short for “international commercial terms,” they outline who pays for what costs and where risks shift from buyer to seller. Incoterms are updated every 10 years; the current terms were updated in 2010. EXW, FCA, FAS and FOB are acronyms for Incoterms that state that the buyer pays the shipping costs. Under CFR, CPT, CIF and CIP Incoterms, the exporter pays for shipping costs, but if something happens during shipping, it’s the buyer’s loss. For the last three, DAT, DAP and DDP, the exporter pays to ship and bears all the risk. When you state a price, attach an Incoterm so terms for each party are clear. Sivière says many exporters aren’t well-versed in Incoterms.

Step 4: Getting paid and letters of credit

A letter of credit acts as a guarantee of payment for the seller. The payment is set aside at an issuing bank and the letter of credit is sent to an advising bank in the exporter’s country. For the buyer, it’s a guarantee the seller won’t get paid until the goods have been shipped. It’s an irrevocable instrument, governed by international rules. It protects both parties for payment, but doesn’t protect either on quality of goods. Letters of credit also expire, so ship the goods before the expiration date and be sure your documents follow instructions “to the letter.”

“If you have a transaction, for example, with a country such as Venezuela, which has a shortage of hard currency, you’ll want your buyer to get a letter of credit and, for a price, you have the option to get a Canadian bank to confirm it,” Siviere said.

Step 4B: Consider credit insurance

If your buyer refuses a letter of credit, consider credit insurance, “a great way to manage risk if your partner defaults on payment or goes bankrupt,” Sivière said. He recommended Export Development Canada (EDC), which sells account receivable insurance through an easy-to-use online portal.

Step 5: Beware of exchange rate fluctuations

Exchange rates can fluctuate during negotiations and the amount you’re promised may change due to this. Some got caught in this with the British pound’s plunge after Brexit. Sivière recommends opening a U.S. and/or euro account at your bank to minimize exchange losses.

Step 6: Cargo insurance

You’ll want this if cargo is damaged in transit. Every insurance company will have different rates, but they share the same internationally established rules. The cheapest options won’t cover loss due to theft and will apply only if there is total loss (for example, if the ship sinks; if it capsizes and only half the load is lost, the insurance won’t apply.) The most expensive options will cover total and partial loss. If you don’t buy insurance, read the fine print — carriers have limits of liability. Many have contractual obligations of, say $2/lb for your goods — but that’s usually not enough. In addition, there are time limits on these claims, so note the expiration date. The Canadian International Freight Forwarders’ Association is a good reference.

Step 7: Documentation

The commercial invoice is a standard invoice issued by the exporter. A pro forma invoice is for customs purposes only, when items, such as product samples and goods for a trade show that will be coming back, aren’t to be sold.

Other documents are also required. If you’re exporting food or plant material, you’ll need certificates for them. On these forms, describe the product, quantity, unit price, and total price in the currency being paid. Be clear: If you’re sending a Samsung Galaxy 7, say it’s a phone; it may otherwise sound like a missile to a customs officer. Also include the Incoterms that apply and the terms of payment. Some countries will require a certificate of origin, particularly those in the Middle East and Latin America. This document is usually certified by a Chamber of Commerce.

Other items of note:

  • Canada has more than a dozen free-trade agreements. Many exporters don’t leverage them.
  • Wood packaging materials must be heat-treated or fumigated and noted by a seal.
  • Sometimes you need an export permit, as you do to export to North Korea. See Global Affairs Canada’s “area control list.” Also check the export control list, which deals with products. It mainly applies to military goods, but there are other provisions, including technology.
  • Be mindful of sanctions Canada has with certain countries — Iran, Russia, Belarus and Zimbabwe, for example. You might still be able to export, but make sure you comply with the sanctions and get an export permit. Also check American sanctions. Airbus sold 118 planes to Iran in Jan. 2016, but needed clearance from the U.S. because more than 10 per cent of the planes’ parts were of U.S. origin. Canadian products often have U.S. parts and components, so be mindful of that.
  • Complete an export declaration if you’re shipping goods at a value of $2,000 or more, keeping in mind we have an exemption with the U.S.

CETA: Canada’s Free Trade Agreement with the European Union

Prime Minister Trudeau inked Canada’s Free Trade Agreement (FTA)—known as CETA—with the European Union in Brussels in October 2016

Businessmen Shaking Hands with Canadian Flag

Prime Minister Trudeau inked Canada’s Free Trade Agreement (FTA) with the European Union in Brussels on October 30, 2016. It is often referred to as CETA (Comprehensive Economic and Trade Agreement).

CETA was several years in the making, as negotiations were launched in May 2009. The next steps now are approval by the European Parliament in Strasbourg, followed by ratification by the 28 national parliaments of EU member countries and some regional parliaments as well.

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EU and Canada signed CETA

After the Belgian government managed successfully to get Wallonia on board, the Comprehensive Economic and Trade Agreement (CETA) sets high standards for global trade.
Prime Minister Justin Trudeau, European Commission President Jean-Claude Juncker, and European Council President Donald Tusk signed two landmark agreements: the Comprehensive Economic and Trade Agreement (CETA) and the Strategic Partnership Agreement (SPA) during the European Union-Canada Leaders’ Summit in Brussels, Belgium.
The Comprehensive Economic and Trade Agreement will generate economic growth and jobs on both sides of the Atlantic and reflects both sides’ commitment to free, fair and progressive trade, for the benefit of nearly 550 million EU and Canadian citizens. A Joint interpretative instrument, which further explains and clarifies the provisions of CETA was also adopted by the leaders, and an agreement was reached to work jointly towards the establishment of an independent and impartial multilateral investment court.
The signature of the Strategic Partnership Agreement (SPA) lays the foundations for the further strengthening of political dialogue and cooperation between the European Union and Canada. The Agreement will institutionalise and enrich the partnership across a wide range of areas, from foreign and security policy to research and innovation; and from tackling climate change and terrorism to working together in the fields of development cooperation and consular protection.

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BWB – Business with Belgium Dec 6, 2016

To open the information session at Toronto’s Alliance Française Theatre on December 6, André van der Heyden, VP & COO, Belgian Canadian Business Chamber delivered a brief welcoming statement from H.E. Raoul Delcorde, Ambassador of Belgium to Canada. Click here to see the full statement: message-from-he-delcorde-docx.

Click here for the Agenda: 2016-12-06-bwb-draft-agenda.

Despite recent news stories about the uncertain future of world trade, Joy Nott, President, Canadian Association of Importers and Exporters Inc. (IE Canada), stressed that Canadian exporters must continue developing their strategies to leverage the opportunities arising from CETA (Comprehensive Economic & Trade Agreement) with the European Union and its affluent consumers. Click here for Joy Nott’s presentation: belgium-joy-nott Continue reading

Thank you 2016

Dear Members and Friends,

As 2016 comes to a close, I have the pleasure to share with you the highlights of a very busy and successful year for the BCBC. For the second year in a row, we have held a significant number of high-caliber events, and have continued to build on new initiatives to serve you better.

We have added a partnership with CHOQ-FM/GrandToronto.ca and Aline Ayoub HR to those signed previously with the Alliance Française, CanCham BeLux, and MTFX, and we are exploring several others as well.

2016 has been a tumultuous year for Belgians worldwide, and in Toronto in particular. It began with some great news, as just before the New Year, Brussels Airlines announced that they would be launching a new direct flight between Brussels and Toronto; they further approached the BCBC to help with the promotion of this new flight, beginning with an Executive Luncheon in January. We continued to work closely with Brussels Airlines in anticipated March 27th launch of this new service.

Alas, as we all know, March 22nd was a dark day for Belgians as Brussels was the target of coordinated terrorist attacks striking Brussels Airport and the Maelbeek metro station in downtown Brussels. That evening, the BCBC organized a press conference and candlelight vigil at Nathan Phillips Square during which we shared statements from H.E. Raoul Delcorde and ourselves, followed by Mayor John Tory sharing a few words of his own; we are particularly grateful to Mayor Tory for having taken time away from the memorial for his predecessor, Rob Ford, which took place simultaneously at City Hall. The following week, our media partner, CHOQ-FM, provided members of our community with the opportunity to reflect on these atrocities and what it means for Belgians, both at home and abroad.

andre-tori Continue reading

Report on Invest Ottawa session on CETA Sept 12

Invest Ottawa held the third event of its new international trade program series last Monday Sept 12th and the topic this time was the upcoming Free Trade Agreement with the European Union (the Comprehensive Economic and Trade Agreement or CETA). This was a timely event as CETA is the main item on the agenda of the upcoming Canada-EU summit in Brussels Oct 27th and 28th. The session was well attended with participants from a variety of fields from business, academia, government, finance, logistics to NGO’s, all very interested in the development of exchanges and cooperation between Canada and the European Union. Continue reading

The European Union’s June 2016 international trade figures  

According to preliminary estimates just published by Eurostat, the Euro area recorded an international trade surplus in goods of €29.2 billion in June, while the surplus for the EU28 as a whole was €7.7 billion.

The first estimate for euro area (EA19) exports of goods to the rest of the world in June 2016 was €178.8 billion, a decrease of 2% compared to June 2015. Imports from the rest of the world stood at €149.5 billion, a fall of 5% compared to June 2015. Intra-euro area trade fell to €150.2 billion in June 2016, down by 1% compared with June 2015. Continue reading

Business with Belgium, April 29, 2016

Christian Frayssignes, Vice-President, Belgian Canadian Business Chamber set the overall tone for the Business with Belgium seminar by reminding attendees that as a small, stable and geographically strategic marketplace, Belgium is an ideal entry point for Canadian exporters to expand into the European Union.

In her brief comments on how the EU functions, Nadiya Nychay, Partner, Dentons Europe LLP, explained that the European Union consists of 28 member countries, 19 of which share a common currency, the Euro and is home to 500 million consumers. Unlike NAFTA, the EU is a customs union with an integrated system of trade and business regulations. However, individual member states still have their own legislation regarding areas over which they hold domestic competency.

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Regarding the topic of choosing a strategy for expanding into Europe, Xavier Van Overmeire, Regional Head of the International Trade Group, Dentons Canada LLP suggested three basic approaches  — direct representation through distributors or agents, licensing technology or formal partnerships. Each brings with it various legal challenges, which can be further complicated by the European civil law regime, similar to the one used in Quebec. It is different from the English common-law tradition found in the rest of Canada. Continue reading