Global business and communications

At the Heart of Free Trade

Here’s what the exchange of goods between the U.S. and Canada can teach us about the state of trade today – and its future prospects.

Christoph Atz | UPS

With free trade under relentless attack in certain political circles, it’s time for a reality check. We shouldn’t shut down borders. The U.S.-Canada trade lane, for example, is proof of the transformative power of the global movement of goods.

The U.S.-Canada story is a story of opportunity, one of neighbors innovating together to tackle challenges requiring collaborative solutions. As goes the United States, so goes Canada – and vice versa.

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It’s time for a reality check. We shouldn’t shut down borders.

There are a number of reasons that Canada and the United States rely on one another for future growth.

Canada and the United States share the longest international border in the world. Roughly 90 percent of the Canadian population lives within 100 miles of the U.S. border, and for 35 U.S. states, Canada is the No. 1 export destination.

Many people point to the so-called American Dream, but the entrepreneurial spirit on display in Canada is similar in many ways. As the president of UPS Canada, I can attest to this nation’s diversity. Canada is an ideal melting pot, inviting people of all backgrounds here to not only chase their business dreams, but to celebrate their ethnicity and continue ties with the nations from which they came.

And trade is often the vehicle that puts the Canadian entrepreneur on the path to global expansion. Here’s why that journey so frequently runs through the United States.

[Also on Longitudes: What Does it Mean to Trade in the 21st Century?]

O Canada and Uncle Sam

If you conduct business in multiple locations, you’re less at the mercy of your own domestic market. You effectively minimize risk and give yourself greater opportunities to create wealth and additional jobs.

For U.S. businesses, there’s tremendous consumer opportunity in Canada with its 36 million people. And in the age of e-commerce, businesses have even more incentive to take the plunge into new markets, especially Canada.

In 2014, retail e-commerce sales in Canada amounted to more than $25 billion, with e-commerce outpacing brick-and-mortar stores.

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Trade expands opportunity. Trade levels the playing field. And trade lays the foundation for innovation. 

By 2019, retail e-commerce sales will reach nearly $50 billion, thanks largely to goods crossing the U.S.-Canadian border. In fact, Canada is ranked fifth in e-commerce sales growth – ahead of the United Kingdom and the United States.

Last year, Canadian e-commerce grew 17 percent, and 43 percent of Canadian e-commerce purchases originated in the United States. Canada remains an importing nation despite the weaker Canadian dollar.

As for further growth, the United States recently increased the de minimis level – the minimum dollar value of qualifying goods below which no formal customs procedures are required and no duties or taxes are collected – from $200 to $800 per inbound shipment. Canada is already a country where U.S. businesses source raw materials required for their product or service, and now that has become less costly.

The Canadian consumer

We’re learning more and more about Canadian consumers every day and as an importing nation, there is great opportunity for U.S. businesses.

A UPS commissioned survey of online shoppers in Canada shows that:

  • Six out of 10 online shoppers prefer to shop with their favorite retailers online.
  • 73 percent of shoppers review a return policy before making a purchase.
  • 76 percent want e-mail notifications with a tracking number.
  • 65 percent of consumers will shop more with a retailer if they offer a hassle-free returns policy.

The most successful companies in this export movement are those that strengthen their supply chains to give their clientele greater value. For this symbiotic relationship to prosper, however, it must get even easier to move goods across the U.S-Canada border.

Customs proceedings, risks, delays and shipment tracking are just some of the challenges that exporters need to see resolved in their foreign trade activities. Knowledge about how to select materials, how to break into new markets and how to analyze export laws and regulations is a growing requirement for all companies.

Single window release, for example, would allow the release of goods without forcing exporters to wait on multiple agencies for clearance. And extending NAFTA certification beyond one year would also reduce bureaucratic red tape creating bottlenecks at the border.

Consumers also want to track their shipment and re-route the package if needed. This is where UPS, which operates in 220 countries and territories, can help.

The UPS Access Point Network gives your customer the option to pick up their order at a location near their home or work, ensuring they don’t miss a delivery or risk having the package left at their doorstep. UPS My Choice also gives consumers total control over their deliveries, allowing them to re-route packages as necessary.

Logistics companies like UPS can also help in the following ways:

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Ensure compliance by controlling speed and cost of inbound shipments.

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Minimize mistaken return shipments to the wrong warehouses or repair centers.

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Create and deliver commercial invoices with return labels to international customers.

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Forecast volume and adjust staffing around inbound returns.

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Link shipment information directly into your customer service or warehouse operations.

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Maximize fast recovery of high-value goods, before they become obsolete.

[Also on Longitudes: Reason, Reality and the Future of Trade]

Don’t take trade for granted

Early in his first term, U.S. President Barack Obama traveled to Canada and succinctly described the importance of the American-Canadian partnership:

As neighbors, we are so closely linked that sometimes we may have a tendency to take our relationship for granted, but the very success of our friendship throughout history demands that we renew and deepen our cooperation here in the 21st century. We’re joined together by the world’s largest trading relationship and countless daily interactions that keep our borders open and secure. 

Being European myself, I’ve seen first-hand how trade can transform entire regions of the world. Throughout my career at UPS, I have lived in seven countries and have witnessed the power of free trade. 

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The evidence is too overwhelming to suggest otherwise. 

Some of those countries were located in Europe, and the European Union has dramatically broken down borders and red tape, facilitating the seamless movement of goods – the EU has opened doors to future growth.

As we have seen with so-called Brexit, there is opposition to this viewpoint. But as financial markets continue to react negatively to that vote, such sentiment might be revisited.

Ultimately, the important thing to remember is that trade expands opportunity, trade levels the playing field and trade lays the foundation for innovation.

The evidence is too overwhelming to suggest otherwise.goldbrown2

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Christoph Atz is the president of UPS Canada. As president, Atz is responsible for the performance and growth of operations across the country, which includes overseeing more than 12,000 employees.

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2 Comments

  1. William Laraque

    The thesis of this post is well taken with one exception. mIn Canada EDC empowers SMEs to engage in cross-border trade. In the US, the Ex-Im Bank is handcuffed by one Seantor, Shelby of Alabama. Is the US a dictatorship as well as an oligarchy? The answer is important for the global trade prospects of the US.

    1. Josh Taylor

      Good point. The problems at the Export-Import Bank are definitely costing the U.S. jobs and some high-dollar sales (nothing over $10M is getting funded, I believe). But how about a little reciprocity on the Canadian de minimis for the individual consumer? It’s so low in Canada ($20 vs. $800 in the U.S.) that it not only hamstrings northbound e-commerce, it costs the Canadian government more money than it generates. According to eBay’s Canada managing director, Andrea Stairs, the federal government spends roughly $160 million to collect only about $40 million in revenue on goods valued between $20 and $80.
      But, to Mr. Atz’ point, the value of the US/CA relationship is well worth the effort it requires from both sides. Hopefully we can keep it little less lopsided than the curling Olympic medal count…
      Thanks for the informative article and the informed comment!

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