Have you ever wondered how and where the process of customs was developed? What caused the need for the concept of tariffs, and why is this practice universal among every country in the world?
Canada and the United States share a trading relationship that crosses all industries and is of vital importance to the success of both nations. Cross-border trade between the United States and Canada in 2016 totaled over $620 billion in goods and services. Trade across the Ambassador Bridge between Windsor, Ontario and Detroit, Michigan alone is equal to all trade between the United States and Japan. As goods streams through the various ports of entry, Canada and the United States Customs administer the classification of goods and collection of any applicable duties.
Customs duties are among the oldest and most important sources of revenue known to governments. The earliest written record of systematic customs tariffs dates to over 2000 years ago in ancient Palmyra, in what is present-day Syria. Duties were initially used to pay for the right to do business in particular territory though sometimes tariffs were applied on specific commodities as well.
Almost as soon as borders are defined, governments begin collecting duties and the collection of those duties can establish and strengthen sovereignty. The United States Customs Service, for example, began operations mere four months after the ratification of the American Constitution with the collection of duties on imported goods. For the next 124 years, until the implementation of income taxes, customs duties formed a significant source of revenue for the United States government.
With the advent of the industrial revolution, nations began promoting export as a powerful way to increase national wealth. Trade and competition increased, so too did the reams of legislation applying to import and export of goods. Governments subsidized products and governments introduced countervailing duties, new forms of economic manipulation and naked attempts to interfere in economic systems led to antidumping duties. Eventually, this contributed to economic turmoil, protectionism, and even trade wars. As a result, the many various laws around the collection of duties on imports and exports became more and more complex, and reams of legislation were required to monitor and control the flow of goods. Importers and exporters face an increasing array of challenges.
Over time economic alliances and trade agreements began to take shape.
Canada is an original member of the WTO and has developed a complex web of trade agreements. Roughly 75% of Canada’s trade is with countries that are partners in trade agreements with Canada; cross-border trade with United States makes up the largest portion of this. Canada continues to negotiate and presently has concluded preferential trade agreements with over 40 countries. Even as these alliances and trade agreements strive to promote freer trade, they also introduce ever-increasing levels of complexity.
It is a challenge for exporters and importers to wade through the different trade agreements, and a qualified customs broker is your best partner to help navigate these changing complexities. Customs brokers strive to meet the needs of importers and exporters, ensuring proper documentation to expeditiously clear customs, with minimal delays and proper classification of goods to prevent unnecessary payment of duties. Customs brokers help their clients navigate the maze.
Border Brokers specializes in eliminating barriers and creating personal solutions for your cross-border logistics!