Canadian Exporters Seeing Licensing Delays, Shifting Exports to US, Lawyer Says
More Canadian companies are shifting their supply chains to run through the U.S. so their products can be exported from America rather than Canada, said John Boscariol, a trade lawyer with McCarthy Tétrault. Boscariol, speaking during a virtual event this week hosted by the American Bar Association, said U.S. export rules are more flexible than Canadian ones, and companies are finding it easier to sell certain items to U.S. consignees rather than ship directly from Canada to another foreign country.
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Canadian exporters are increasingly seeing delays when applying for and receiving export permits, especially for shipments to Turkey, the United Arab Emirates and Saudi Arabia, Boscariol said. He said none of those countries are “prohibited destinations” under Canadian export regulations, but the government has still been taking “extra time” in evaluating permits.
The Canadian government is sometimes taking “a very long time, well beyond the published service standards for doing those things,” Boscariol said.
“That's raised the opportunity now for a number of companies that have found that they are facing difficulties in getting Canadian permits, or getting Canadian permits more importantly on a timely basis,” he said. “They will rearrange their supply chains to move those products to the United States, have them subject to the U.S. export control regime, and therefore find that process actually more efficient than exporting from Canada.” Boscariol said this arrangement is “all done with the blessing” of Canadian export control authorities as long as the product is sold to a U.S. consignee and isn’t simply moving “in transit” through the U.S.