RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/238
31 October 2000
(00-4552)
Council for Trade in Goods Original:  English
TRADE FACILITATION
Canada’s national experience
The following communication, dated 26 October 2000, has been received from the Permanent
Mission of Canada.
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Introduction
Over the past several decades, the world has seen a massive expansion of international trade,
investment, and information technology.  This expansion accelerated in the 1990’s.  The reduction
and/or elimination of tariffs as a result of various multilateral and regional trade initiatives has helped
further to stimulate trade and enhance the productive forces of the world’s economies.  These changes
in the global economy have been accompanied by new factors that are transforming the way businessis done in the four corners of the world.
The modern business of just-in-time production and delivery is representative of just one of
many changing business needs.  These and other changes in basic business practices posit ever-
changing demands for fast and predictable release of goods and measures to facilitate the flow of
services and travellers across national borders.  But while growth in trade, and new international trade
agreements, have contributed to ever rising volumes of goods and services as well as travellerscrossing borders, governments face other collective demands and requirements.  These include
enforcing more and increasingly complex customs laws and trade administration policies at a time
when many governments, both developed and developing, face various fiscal and resource constraints.
In view of these various challenges, many governme nts have turned to technology in an effort to put
technological efficiencies of scale to work to meet the demands of the changing trade environment.The economic consequence of this growth in innovation in new technologies has also revolutionized
the way governments communicate with their publics.  It allows and, in fact, promotes new interactive
features of the new economy, including electr onic commerce (e-commerce) and Electronic Data
Interchange (EDI), to facilitate the movement of trade.
In view of these many changes, a variety of different business and intergovernmental
organizations and fora have turned to the subject of trade facilitation and initiated efforts aimed at
reaching solutions to the many challenges posed by transborder trade.  Earlier work undertaken by
various intergovernmental organizations, including the United Nations Committee on Trade and
Development (UNCTAD), the United Nations Eco nomic Commission for Eur ope (UN/ECE), and the
World Customs Organization (WCO), has now been followed by the more recent work of various
business organizations, including ground work undertaken by the International Chamber of
Commerce (ICC).  Sectorally, several organizations, including the International Maritime
Organization (IMO) and the International Civil Aviation Organization (ICAO), among others, have
tackled more specific issues of concern to their membership.  Regional fora such as the Asia-PacificG/C/W/238
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Economic Cooperation (APEC) have chosen to pursue both research work 1 as well as more specific
work undertaken in the course of dedicated sub-fora such as the Sub-Committee on Customs
Procedures.
In the case of Canada, the challenges of the past decade in particular have had a tremendous
impact on the way our Customs administration, th e Canada Customs and Re venue Agency (CCRA),
does business.  Trade agreements with our neighbours to the south, beginning with the Canada-United
States Free Trade Agreement in 1989 and the No rth American Free Trade Agreement (NAFTA) of
1994, have created a huge market of more than 380 million people.  This new market alone now
generates over $500 billion (Cdn) a year of cross border trade as well as more than 100 million
travellers crossing our border each year, posing enormous demands on our customs infrastructure.  By
way of example, in 1999 CCRA handled half a million more commercial releases of shipments at theborder than the previous year and processed more than 11 million commercial entries of trade data.
The dynamism of these markets and Canada’s links to the global economy have acted to
exacerbate the significant challenges already posed  by changing business needs, growing volumes of
trade and travel, advances in technology and continuing government restraint.  To meet these ongoingchallenges, CCRA has undertaken efforts to pursue a new perspective and vision for border
management and trade administration.  This vision recognizes the continuing need to undertake
modernization and redesign of Canada’s border management process and customs practices in order
to meet the demands of the 21
st century global market.
In tackling this vision, we have found that, while automation is a critical element in enhancing
the trade facilitation process, it is not sufficient merely to automate outdated procedures and
requirements. A vital first step must be a major reform of import and export procedures, including the
identification and elimination of unnecessary processing steps, simplification and elimination of
certain forms, streamlining of the document processing flow and adoption of international codes.  Wehave learned that we need to strike the proper balance between our trade interests and public safety.
We have also learned that better and more appropriately applied enforcement tools lead to better
border service and increased trade facilitation for low risk shippers.  This approach has enabled our
customs administration to combine its traditional role as an enforcement agency based on risk
assessment with that of being a modern service provider for a wide range of stakeholders (traders,
other government departments and agencies and other clients) to serve the trading community better
without compromising compliance and protection.
In addition to these various efforts, Canada is continuing to work on customs simplification
and harmonization procedures that will reduce customs clearance burdens on shippers as well as on its
own customs administration.  These efforts have in cluded working with our largest trading partner,
the United States, in various trade facilitation initiatives to modernize our shared border and toaddress common concerns including security and border protection.  We will continue to support
border cooperation through joint agreements such as the Canada-U.S. Accord on Our Shared Border
and the Canada-U.S. Partnership.  More broadly, Canada also continues to encourage cooperative
efforts in various fora, including the WCO and AP EC, to advance cooperation in streamlining and
modernizing the customs process to enhance efficiency.  We need to be proactive in our thinking, andthis includes working closely at the international level on the future of border management.
In this context, Canada is interested in looking at developing WTO rules, where appropriate,
to foster better coordination of trade facilitation activity and measures.  We have recognized that
                                                     
1 Canada’s decision to place an increased emphasis on trad e facilitative measures also took into consideration an
Asia-Pacific Economic Cooperation (APEC) study, done some five years ago on the impact of trade liberalization within
APEC.  This study found that the impact of trade fac ilitation, such as streamlining of customs procedures, ex ceeded that of
trade liberalization; i.e., tariff reduction.G/C/W/238
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engaging in trade facilitation requires greater coordination between ministries of trade, customs,
agriculture, industry, health, national standards bodies, and bilateral aid and development agencies,
etc., to ensure that trade facilitation initiatives are transparent, efficient and effective.
For the above reasons and as a consequence of the positive benefits we have experienced
from our own efforts to facilitate trade, Canada supports the WTO work on exploring and analyzing
the scope for WTO rules on trade facilitation.
Trade Facilitation – Efficiencies and Transaction Costs
Trade facilitation is all about efficiencies and reducing transaction costs in cross-border trade,
without compromising the need for consumer protection, health and safety and public security.  Inorder to be effective, trade facilitation initiatives ne ed also to be cost efficient in the context of GATT
Article VIII, that is, they should minimize the incidence and complexity of border formalities and
procedures.
The “new” trade facilitation agenda – which aims at simplifying and harmonizing trade
procedures – highlights not only the opportunities available to countries from the international trading
system but also the constraints they face in taking advantage of these opportunities.
We recognize that there can be significant costs associated with the implementation of
modern trade facilitative measures, both in terms of fiscal and human resources and the infrastructurenecessary to support such activities.  This would include, but would not be limited to, creating the
institutional, human and knowledge infrastructures needed, developing, implementing and making
publicly available requisite legislation and regulations, undertaking legislative and regulatory reforms
where required, developing appropriate training and, ultimately, introducing automation and
establishing the attendant technological base.  We must also recognize, that all countries need, at aminimum level, a customs clearance system and a tax collection function, as well as requisite
compliance agencies and the like.
We acknowledge that trade facilitative efforts may require distinct human, financial and
capital resources aside from normal operating costs and that these costs may represent an “up-front
cost”, at least in the short term.  We would argue that these costs should be viewed more as an
investment.  We should also acknowledge that there are significant costs associated with a failure toimplement efficient trade facilitation measures.
Improving the predictability of procedures affects costs and timing and influences traders as
to whether they choose to enter individual markets.  Improved market access may also influence
investment decisions including those related to EDI.  Trade facilitative efforts may also have animpact on various transaction costs normally associated with storage and related transportation costs
(e.g., air and container) and influence the decision whether to employ just-in-time strategies to
minimize inventory costs.  Transaction costs are also  affected by delays in cargo processing or red
tape documentation costs that add unnecessarily to the burden placed on both business and, in the end,
government.
In our experience, trade facilitative measures bring real and tangible benefits to the trading
community and to government.  Trade facilitation is an  investment with real returns in terms of faster
release times, more effective enforcement, more efficient revenue collection, etc., with positive
returns for all stakeholders, including traders, both large and small, and government.G/C/W/238
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Trade Facilitation Principles
In our September 1998 paper (G/C/W/126), we supported as an initial step, the development
of WTO principles for trade facilitation.  Since 1998, we have continued to advance the notion of
principles as part of border cooperation efforts and we have also pursued trade facilitation disciplinesin the context of a number of trade agreement negotiations.
In Canada’s view, trade facilitation principles  provide a framework for developing specific
measures or rules related to customs administration and other border procedures.  Accordingly, we
have continued to take note of the basic framework of trade facilitation principles and these underlie
the more specific trade facilitation measures we have developed in the period since 1998.  These
principles are:
• efficiency and simplification (streamlined requirements and operations that reduce the cost burden
placed on our trading community);
• harmonization and consistency (implementing to the greatest extent possible, new or revised
procedures/obligations based on existing international trade instruments and standards);
• transparency (procedural clarity through mechanisms for information dissemination, publication
of clearance requirements, procedures for advance rulings, appeals and redress mechanisms, etc.);
• protection and compliance (measures that provide an appropriate balance between facilitation and
enforcement and also strike a balance with public safety);
• integrity (effective management of operations and personnel, including recruitment, appropriate
training and internal staff controls);
• cooperation (technical assistance and exchanges of information on best practices critical to the
implementation of trade facilitation obligations in addition to cooperation among the customs and
other border authorities which includes the exchange of information as appropriate);
• consultations (consultation and engagement of all the players involved in international movement
of goods, including customs brokers, express consignment industry, insurance providers, freight
forwarders, shippers, warehouse operators, etc.)
An Up-date of Canada’s Experience with Trade Facilitation Initiatives
In the past decade in particular, much has been done in Canada to respond to globalization,
changing business practices and advancing technology.  Although we are in good shape today with a
range of innovative customs processes and enforcement initiatives to support business
competitiveness and to protect Canadians, it is becoming increasingly clear that the processes and
technology we have today may not be sufficient to meet the challenges of tomorrow.
As mentioned in our earlier paper, these changing and increasing demands have prompted
Canadian efforts to become more innovative in so lving real-world problems faced by our trading
community.  That Canada has endeavoured to put forward measures that respond to this call, is
reflected in the trade facilitative initiatives implem ented to date and being planned for the future.  A
sampling of these recent efforts is noted here.
Examples of Canadian Progress in Trade Fa cilitation Initiatives/Links to WTO Trade
Facilitation Principles
In September 1998, we said that Canada is constantly modernizing its border procedures to
serve traders better by employing modern business practices to match the pace of increased
international trade and to make the most efficient use of scarce resources.G/C/W/238
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Since the early 1990s, the use of innovative cust oms line release systems such as PARS (Pre-
Arrival Review System)2 and FIRST (Frequent Importer Release System)3, which are essentially pre-
arrival processing systems, have enabled Canada to keep pace with continually increasing
international trade.  Customs line release systems were introduced to deal with traffic congestion at
border locations and to expedite the movement of goods on arrival in Canada.
Nearly 70 per cent of shipments arriving at border offices are cleared using the line release
process.  This process, in conjunction with EDI, has greatly changed the way the importing
community and the Customs administration do business.  For example:
• importers/brokers are able to present their PARS information before the truck arrives, thereby
allowing better workload management;
• customs broker after hour service charges can be eliminated since a broker can present the
necessary information prior to the arrival of the goods.  The Customs administration provides 24-
hour service, seven days a week.  Release of the goods can take place without the broker being
present (as long as the information was presented and processed before the goods arrived);
• driver waiting/downtime is reduced from hours to minutes since goods can be released at the
primary inspection point without the driver even leaving the truck (thereby saving Canadianbusiness the driver costs previously identified as an issue); and
• in view of  the increase of imports into Canada, if not for the line release system, most of our
border locations would not be able to operate efficiently.
The Canada Customs and Revenue Agency (CCRA), as a service provider for its clients (e.g.,
traders, government departments and agencies), is increasingly using e-commerce to cope with
increased trading levels, to provide enhanced speed and certainty for clients and to enhance its
compliance and protection role.  With electronic interfaces, CCRA has the capability to target goodselectronically, thereby streamlining legitimate trade and allowing officers to concentrate on areas of
higher and unknown risk.  The bottom line is that the more CCRA is able to use electronic systems for
reporting and accounting for goods and making release decisions, the better the service that it
provides to its clients.
These systems enable many traders to use electronic systems to obtain release for each
shipment before it arrives at the border.  An important point to note is that geography and economics
dictate that much of Canada’s focus will be on th e Canada/United States border where most of our
trade occurs.  Today, use of the line release systems mentioned above means that two of three trucks
are “line-released” at the primary point of arrival with no requirement that they be referred to asecondary inspection point.  Of some 40,000 releases a day, 60 per cent are electronically released
before goods arrive at the border.  Today, 95 per cent of transactions are electronic.  The standard for
processing transactions is 45 minutes, but most processing is done within seconds.
                                                     
2  PARS allows importers or their agents (customs brokers) who have entered into an account security arrangement
with the Customs administration to transmit their release information through the Accelerated Customs Release Operations
Support System (ACROSS) to Customs before the goods arrive at the border.  Customs either recommends the goods bereleased on arrival or refers the goods for examination.  That is to say, when the goods arrive at the border, the carrier/driv er
presents a carrier document containing a cargo control number.  That number is entered into ACROSS and the goods are
then either released or referred for examination at the primary inspection point.
2 FIRST allows frequent importers to have their low-risk goods pre-approved for an expedited release process.
The importer or its agent (customs broker) applies to the regiona l office where the majority of its imports will take place.  I f
the importer has a history of voluntary compliance with cust oms rules and regulations and the commodities to be imported
are considered low risk (i.e., no permits, examination or other government department requirements), the importer can be
approved to use this expedited release process.  A FIRST authorization is creat ed in ACROSS based on the commodities and
importer number and applicable customs offices.  When the goods arrive, the driver/carrier presents an “Importer FIRSTLead Sheet” containing the importer’s number and a transaction number for account security purposes.  The information isentered into ACROSS and the goods are either released or referred for examination at the primary inspection pointG/C/W/238
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Courier/LVS (Low-Value Shipment) Program
This program was developed as part of a Canadian government initiative to reduce the cost of
doing business, simplify procedures, improve efficiency and effectiveness and eliminate “red tape”.In conjunction with the courier and brokerage indus try, use of this program streamlines reporting,
release and accounting procedures for commercial imports valued at less than $1,600 (Cdn) by
changing the reporting requirements and eliminating the old transaction-by-transaction system.
The program benefits both the importing comm unity and CCRA.  Simplified reporting and
accounting procedures reduce the number of documents, records and transactions normally required.
Shipments are released more quickly because paperwork is completed following the release of thegoods.  Efficiency is improved for both business and government by reducing “red tape” and the
amount of paperwork required.  Accounting costs for business are lower with the reduction in the
number of entries.  The handling of cargo and warehouse space requirements for couriers are reduced.
A longer period has been provided for the accounting for low-value goods.
The goods eligible for this program are those low-value commercial goods that do not need
certificates, permits, licences or documentation from another government department.  For qualified
shipments arriving through an approved courier company, the Courier Low-Value Shipment Program
speeds up release times and reduces customs formalities to a minimum.
Under this program, couriers present a summary cargo/release list to CCRA, detailing
shipments going to individuals or businesses.  CCRA reviews this list and decides whether to examine
the goods or release them without examination, based on the declaration provided.
This program is an example of a simplified and streamlined procedure for low value shipment
transactions.  A conservative estimate indicates that 20 million shipments are processed through the
program annually.  This program simplifies and expedites the clearance procedures for these
shipments while maintaining appropriat e enforcement and targeting activities.
Accelerated Customs Release Operations Support System (ACROSS) Other Government
Departments (OGD) Single Window Interface
In 1998, we noted that Revenue Canada (CCRA),  as the government department responsible
for customs services, had developed a solid trade facilitation initiative in partnership with other
departments and agencies.  The main example cited was the action taken by Canada to implement a
Canadian Food Inspection Agency (CFIA)-Revenue Canada electronic interface.
This initiative has successfully removed the burdensome irritant of requiring traders to
provide import information and data on low risk shipments to more than one authority.  It is also
credited with increased usage of electronic technology on the part of the importing community,
decreased paperwork and cost savings for the CFIA and CCRA.  At present, the electronic interface
represents approximately four to six per cent of shipments of low risk food, plant and animalcommodities.  The CFIA is striving to include electronic transmissions for medium and higher risk
shipments, which currently necessitate a more hands-on approach in conjunction with CCRA.
In the matter of sanitary and phytosanitary (SPS) requirements and procedures, at present, the
CCRA/CFIA interface operates on the basis of receiving as much SPS information as possible inadvance of a shipment, including by facsimile, so that examinations can be carried out expeditiously
when the shipment arrives.  The CFIA plans to  incorporate the electronic transmission of SPS
certificates into the interface and to increase the frequency of electronic transmission of SPS or any
other certification requirements.G/C/W/238
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Full realization of these enhancements is poten tially three to five years away.  A further round
of consultations on the proposed enhancements will need to be undertaken with affected stakeholders.
Working committees need to be struck and mandated to develop the proposals, and agreement in
principle on the process needs to be negotiated, both internally and internationally.  The requisiteinfrastructure will have to be developed and costed, and funding will have to be sought and addressed
before the enhanced package can be implemented.
Although the CCRA/CFIA interface initiative is still being further developed, on the basis of
that original undertaking, sufficient efficiency gains and cost savings were identified to result in the
launch of similar initiatives under the ACROSS - OGD Single Window Interface program.  These
involve:
• Industry Canada - fair business practices (e.g., packaging and labelling of goods);
• Industry Canada - spectrum information technology and telecommunications (e.g., televisions,
telecommunications equipment, and satellite dishes);
• Natural Resources Canada - energy efficiency requirements (e.g., refrigerators, air conditioners,
motors); and
• Transport Canada - road safety requirements (e.g., road tires safety program on road tires and
retreads).
These objectives have assisted in increasing the use of e-commerce by re-engineering and
automating the processes of these other government departments and agencies and have standardized
and streamlined the import review and approval process for low-risk commodities administered by
these other government departments.  As well, these objectives benefit the importing and exporting
community through the expedited clearance of goods.
This approach, which we refer to as a “single-window” concept, is a step towards border
agency coordination.  It reflects the WTO trade facilitation principle of transparency by ensuring
predictability as to national requirements and procedures and builds on the provisions of GATT
Article X.
Binding Advance Rulings
Canada implemented a mechanism to issue advance rulings to determine if a good qualifies as
originating in Canada.  It is now considering the extension of these advance rulings to tariffclassification matters.  This mechanism is being included in the various trade agreements Canada is
negotiating with other countries.  Advance rulings allow the customs administration to provide a
binding ruling prior to the importation of a good based on the facts and circumstances presented by an
importer, exporter or its representative.  An advan ce ruling facilitates trade by providing certainty and
predictability in the importation process.  It allo ws business to obtain accurate figures on duty rates
for the specific goods it wants to import.  Providing binding rulings also promotes transparency and
consistency for business and is important to the business community considering the large sums of
money that may be involved.
Appeals
CCRA has in place a comprehensive program to allow appeals of decisions on customs-
related issues.  This gives the trading commun ity an opportunity to challenge customs decisions
through mechanisms for transparent, independent and timely appeals.G/C/W/238
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In order to improve its appeals program, in 1998 CCRA amended its Customs Act , the
legislative authority for the appeal provisions. The time limits for filing requests were extended with
the view to make the appeal process more open and accessible.  These improvements to the appeal
provisions of customs legislation provide the trading community with the assurance that it will be
treated in a fair and equitable manner.
Customs Action Plan
The Customs responsibility for administration and enforcement of border and trade legislation
and its dual mandate of trade facilitation and border protection have presented serious challenges as to
how Canada administers its customs program.  The emphasis on easing the movement of legitimate
trade and, at the same time, stopping the entry of illegal goods has made border management one ofthe biggest challenges faced by CCRA.
In April of this year, following a year long  consultation process, CCRA launched a new
action plan to enable it to deal effectively with the current growth of trade.  The Action Plan is a
critical investment in the future and represents proposals to modernize further Canada’s currentcustoms processes, to advance technology and to introduce risk based processes to meet business
needs.  The Action Plan includes a comprehensive risk management approach and incorporates the
concepts of self-assessment, advance information and pre-arrival documentation in order to streamline
the movement of legitimate, low risk goods and to focus resources and attention on areas of higher
and unknown risk.
The customs risk management system is supported by technology.  While automated systems
have been part of the customs process in Canada for some time, e-commerce will be the foundation of
the new customs program, allowing businesses, brokers and the importing/exporting community to
interact with CCRA through EDI and the Internet.
Using this new approach, as much information as possible is obtained before the goods arrive
at the border.  In this way, customs officials are able to make an informed decision prior to arrival of
the goods and to facilitate the movement of legitimate goods.  This approach uses the basic principle
that businesses with good track records benefit from their history of compliance.  Using links with
international enforcement agencies, data from carrier  reservations systems, as well as information
gathered through pre-approval programs, client profiles, customs audits and driver registration, CCRAwill be better able to identify and attend effectively to areas of higher and unknown risk.
Compliance is the key to the success of the Customs risk management system.  To support the
risk management approach, an effective sanctions regime is being implemented to impose penalties
according to the type and severity of the infraction.  Administrative penalties, ranging from warningsto monetary fines will provide consequences for those who do not co mply with the rules.
Modernization of programs, systems and services continues to be a Canadian government
priority.  Work in the customs area is carried out by CCRA in conjunction with the many departments
and agencies that work as partners to manage Canada’s borders.
Canada believes that accelerating the release of legitimate goods, targetting areas of unknown
and high risk, reducing the paper work burden, increasing the use of EDI, and reducing duplication of
information are key steps in the process to facilitate trade. CCRA is balancing its trade facilitation
initiatives with its responsibility for protecting Canadians from the entry of illegal and dangerousgoods.G/C/W/238
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Conclusion
The key themes and lessons learned from Canada’s national experience in the area of
developing and implementing trade facilitative measures is that there is a commonality in all the
programs described above.  The individual programs are designed to apply basic principles includingefficiency and simplification, harmonization and consistency, transparency, protection and
compliance, integrity, cooperation and consultations.
Canada’s experience in investing in trade facilitation has reinforced its view of the benefits
gained from its investment.  This is why we continue to support WTO work on examining the scope
of appropriate WTO rules that embody measures which disrupt trade as little as possible, and that are
based on WTO principles such as transparency, non-discrimination, predictability and due process -principles that underlie WTO Agreements such as GATT 1994 Articles VIII and X.  Canada has
gained from its experience and believes that the benefits of trade facilitation are available to all.  The
benefits are even greater for each Member individually and as a group if all Members are moving
simultaneously towards the same destination.  We believe trade facilitation offers clear and distinct
benefits for the developed and developing and large and small countries, small and large traders andgovernments.
Trade facilitation is an investment and our investment experience has given us an appreciation
of what is entailed in doing trade facilitation.  We recognize that countries at different stages of
development face problems, hence Canada’s support for an integrated approach on examining tradefacilitation rules, that is, rules plus technical assistance.
For all of these reasons, Canada continues to support fully and to participate in WTO work on
trade facilitation.  We believe that the advancement of WTO work on trade facilitation in the Council
for Trade in Goods (CTG), under the Singapore mandate, will benefit immensely from an exchange ofexperiences related to real-world problems that are being addressed by Members in a variety of ways.
It will also provide a solid basis for assessing the scope for WTO rules in the area of trade facilitation.
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