Canada Market
Canadian Foreign Trade Structure
In 2005, exports of goods and services made up 38% of GDP and supported an estimated one-third of all Canadian jobs. Foreign direct investment in Canada has more than doubled since 1990.
Market Accessibility
Canada is the top-ranked country in the OECD for both the lowest number of procedures (2) and the shortest duration for completion (3 days) to establish an industrial or commercial business, according to the World Bank Group.
Trade System
Under the North American Free-Trade Agreement (NAFTA), Canada has direct access to the North American market, including Mexico —over 440 million people with a combined GDP of over US$16 trillion.
In addition to eliminating tariffs, NAFTA provides procedures for:
- border facilitation;
- movement of personnel;
- investment and intellectual property protection;
- product certification.
Canada has adopted the international Harmonized Coding System to classify goods. Two programs help importers recover duties paid in certain circumstances: the Duty-Drawbacks Program and the Duty-Relief Program. Importers may choose to use customs brokers as agents to handle imports and to deal with the CBSA
Tariffs
Canada has a harmonized tariff system. The mean tariff rate for all goods was set at 1.1% in 2002. Products traded with the US and Mexico fall under the terms of NAFTA and most tariffs were eliminated in 2004. Goods subject to quotas or restrictions that require an import permit include: textiles and clothing; raw steel; farm products such as poultry, eggs, beef and veal, dairy products and some grains.
Canada-US Border Issues
The North American market is serviced through a well-integrated transportation system that is among the best in the world. Automated permit ports, transponder identification systems and joint processing centres are being tested and deployed for easy movements of goods. FAST and NEXUS programs, developed under the 2001 Canada-US Smart Border Declaration, ensure that trade and investment continue to flow quickly between the two countries. Border wait times average less than 10 minutes, one of the most efficient systems in the world.
Commercial and Banking Services
Rising employment and lower taxes have supported growth in consumer purchases. Statistics Canada reported in June 2004 that real consumer spending grew by an average of 3.1% from 2000 through 2003, faster than average GDP growth of 2.3%. Total retail sales in 2005 amounted to $368B, a 4.7% increase over 2004.
The Bank of Canada is the central bank. According to Moody's Financial Strength Ratings, Canadian banks stand 1st among G7 countries in credit worthiness. The financial services sector is dominated by six large domestic banks: Bank of Montreal, National Bank of Canada, Royal Bank, ScotiaBank, TD Bank, CIBC. All have offshore branches or affiliates. In addition to domestic banks, 70 foreign banks operate in Canada .
Investment System
The chartered banks own the largest investment dealers, which are also the largest underwriters of new securities. Canada has three specialized securities-trading markets. The largest is the Toronto Stock Exchange (TSX). The Montréal Exchange specializes solely in trading derivatives. Shares of mining companies and other junior or speculative issues trade on the TSX Venture Exchange. Canada 's Export Development Corporation (EDC) provides trade finance and risk management services to Canadian exporters and foreign investors, including loans to foreign buyers, accounts receivable insurance to protect against non-payment, as well as other types of financing products.