Market Overview - DID YOU KNOW???

• The United States and Canada share the world’s longest open border. Ninety percent of
  Canada’s 33 million people, a population one-tenth that of the United States, live within
  100 miles of the U.S. border. 
• The United States and Canada are each other’s largest trading partner, and United States is the largest foreign investor in Canada and the most popular destination for Canadian investment. According to official Canadian statistics, in 2006, the two-way trade in goods amounted to approximately US $509 billion, representing US $1.4 billion of goods crossing the border each day.
• U.S. exports to Canada exceed U.S. exports to the entire European Union, even though the EU has 15 times Canada’s population. The two-way trade that crosses the Ambassador Bridge between Michigan and Ontario equals all U.S. exports to Japan. 
• A prime reason for the strength of the Canadian dollar is the strength of the Canadian
  economy. Canada’s Gross Domestic Product in 2007 was estimated at US $1.1 trillion
  (Official Exchange Rate GDP), and it is forecasted to expand by 1.8 percent in 2008.
• As is evident from these statistics, Canada is the most receptive market in the world for
  U.S. goods and services. U.S. companies that are new to exporting or interested in
  expanding their international business activities should contact the U.S. Commercial Service and take advantage of the many programs and services available to them under the new "Trade North America" and “Canada First – Building Bridges to Prosperity” initiatives.

Market Challenges

• Due to the North American Free Trade Agreement (NAFTA), American-made products enter Canada almost entirely duty free.
• The NAFTA came into force on January 1, 1994 and replaced the U.S.-Canada free trade agreement, which was implemented in 1989.
• Recent studies show that 99 percent of all trade passes across the border without incident or without controversial trade restrictions. Many Canadian standards are harmonized with U.S. standards.
• Doing business in Canada is not, however, exactly the same as in the United States,
  and U.S. companies should beware of the discrepancies.
• While customs documentation, bilingual labeling and packaging requirements and Canadian
  federal and provincial sales tax accounting may seem onerous at first compared to
  domestic shipments, most exporters find that, with a little experience, they can master
  the requirements.
• There are also many international trade professionals such as customs brokers, freight forwarders and consultants that can, for a fee, handle much of
  the research and paperwork for smaller exporters without international sales
  departments.

The key to achieving market penetration for export sales to Canada is making the
transaction resemble as much as possible a Canadian domestic transaction for the
Canadian customer. One good way to do that is for the U.S. exporter to become a
non-resident importer and take the entire importing burden off the shoulders of the
Canadian importer.

Market Opportunities

The best prospect sectors over the 2008-2009 period are expected to be:

1. Security/Safety Equipment (SEC)
2. General Industrial Machinery (GIE)
3. Aerospace and Defense (DFN)
4. Electrical Power Systems (EPS)
5. Telecommunications Equipment (TEL)
6. Building Products (BLD)
7. Medical Devices (MED)
8. Travel and tourism (TRA)
9. Computer Software (CSF)
10. Computer Hardware and Peripherals (CPT)
11. Oil and Gas Field Machinery (OGM)
12. Automotive Parts and Service Equipment (APS)

The fastest growing commercial sectors in Canada are medical devices, security/safety
equipment, general industrial machinery, aerospace and defense and electrical power
systems.

For Canadian companies upgrading their plants and equipment, as well as for
those constructing new facilities, the United States is a principal source of new
machinery and technology. This is especially true given the strength of the Canadian
dollar. U.S. companies will continue to find Canada an extremely attractive and
accessible place to do business.

Major project opportunities recently reported by U.S. Commercial Service Canada in the
Market Research Library on the U.S. Export Portal website include:

- Alberta oil sands development
- Atlantic Canada renewable energy projects
- Ontario energy sector and Canada power projects
- British Columbia construction and port development projects
- Security projects for maritime and ports
- Ontario highway infrastructure projects
- Canada’s strong defense budget

Market Entry Strategy

• Making direct shipments to Canadian customers may not require a visit to Canada
  unless pre-sales presentations or post-sales installation are required.
• However, to expand sales in Canada, it is essential to have a presence in the country, either by setting up an office or by appointing an agent or distributor.
• It is highly advisable to visit Canada as part of doing due diligence to meet and screen potential agents and distributors, and to establish a trusting business relationship. One of the best ways to meet potential business partners is to visit Canada by participating in U.S. Commercial Service Canada programs to bring American companies together with Canadian firms.