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Cabotage – Domestic point to point movements for international commercial transportation of goods

( Disponible en anglais seulement )

23 novembre 2021 | Daniel Kiselbach, MBA, Satinder Bains

When importing goods into Canada via trucks, trailers, semi-trailers, and containers, businesses may be presented with opportunities to pick up and deliver domestic goods within Canada during their trip. While these additional domestic deliveries may make sense logistically, they are governed by Canadian cabotage laws that are technical and often misunderstood.

Penalties for violating cabotage laws can be serious – potentially including monetary fines, forfeiture of goods, and deportation. With growing concerns surrounding the enforcement of these laws, this article will be of assistance to establish whether transport companies and importers should seek further advice and information.

Cabotage laws affecting the trucking industry can be divided into those affecting the equipment used (which is treated as an import) and those affecting the driver (who is only permitted to move goods directly in and out of the country). Their purpose is to protect domestic trade and the Canadian labour market.

Foreign-Based Trucks and Trailers

The Canada Border Services Agency (“CBSA”) states that only Canadian operators driving Canadian vehicles are permitted to make point-to-point deliveries of domestic goods in Canada. Foreign-based trucks and trailers used for international commercial transportation in Canada may enter Canada duty-free. However, these foreign-based vehicles may not be used in domestic movements except in specified circumstances.[i]

Foreign-based trucks and trailers may be imported into Canada duty-free to engage in the transportation of goods from one point in Canada to another point in Canada where:

  • that transportation is incidental to the international traffic of the imported or exported goods;
  • the transportation does not occur outside of Canada; and
  • the conveyance has not entered Canada for the purpose of an in-transit movement through Canada to a point outside of Canada.[ii]

Moves Incidental To International Traffic

This narrow exception allowing foreign-based trucks and trailers to transport goods from one point in Canada to another point in Canada is subject to the following limitations:

  • only one incidental move is permitted per international trip;
  • only “minor deviations” may be made from the international route or itinerary; and
  • the incidental domestic move must occur immediately before or after the international move.

CBSA policy indicates that a domestic move is an “incidental move” if it takes place entirely within Canada and generally follows the route of the international move.

No Transportation Outside Canada

A foreign-based truck and trailer does not qualify for duty-free entry into Canada if it will be used to pick up domestic goods and then leave Canada at any point prior to the delivery of those domestic goods.

In-Transit Movements

A foreign-based truck or trailer that has entered Canada duty-free with goods destined for a point outside Canada, is not permitted to carry domestic goods within Canada. No incidental domestic use is allowed from a foreign-based conveyance, container or trailer that transports goods from a point outside Canada in-transit through Canada, to another point outside Canada or in situations where the goods are transported from a point in Canada, in-transit through a foreign territory to another point in Canada.

For example, a US-owned truck carrying goods into Canada for the purpose of delivering them to Alaska would not qualify for duty-free entry into Canada if it planned to transport domestic goods between two Canadian points along the way.

Repositioning Moves

Foreign-based vehicles may also move domestic goods between two Canadian points following delivery of a load of imported goods if the vehicle is en route to pick up a scheduled load of goods for export from Canada. CBSA policy sets out the following conditions:

  • the export load must be scheduled for pick-up when the contract for the movement of the domestic load is issued;
  • the drop-off point for the repositioning load must be in direct line for the pick-up of the export load; and
  • only one repositioning move is permitted per international trip.

Foreign-Based Containers

Foreign-based shipping containers may also transport domestic goods within Canada after being imported into Canada duty-free so long as:

  • the transportation does not occur outside Canada; and
  • the container has not entered Canada for the purpose of an in-transit movement through Canada to a point outside of Canada.

Specified containers must be exported within 365 days of the date of their importation (or for an additional period not exceeding 24 months where a customs officer is satisfied that the exportation of the containers is delayed for prescribed reasons).

Truck Drivers

While the Canada Customs Act and Customs Tariff regulate the use of equipment in international moves, the Immigration and Refugee Protection Act (Canada) regulates the truck drivers.

Foreign drivers generally require immigration status to make domestic moves within Canada during an international trip.

The Canada-United States-Mexico Agreement (“CUSMA”) permits truck drivers to enter Canada as “business visitors” for the purpose of transporting goods or passengers (i) to Canada from a CUSMA territory, or (ii) from Canada to a CUSMA territory. However, the driver cannot load and unload domestic goods within Canada under CUSMA.

A foreign truck driver must demonstrate additional conditions in order to qualify as a business visitor under CUSMA, including:

  • that they are a citizen of Mexico or the US;
  • that the purpose of the proposed trip is international;
  • that they are not seeking to enter the local labour market; and
  • that the primary source of remuneration, and the principal place of business, are both outside Canada.[iii]

If you have any questions about imports, transporting goods in Canada, or other customs concerns, please contact a member of Miller Thomson’s Global Trade and Customs Group or Transportation & Logistics Group.

[i] CBSA Memorandum D3-1-5 – International Commercial Transportation.

[ii] Vehicles, trailers and semi-trailers must be exported within 30 days of the date of their importation (or for an additional period not exceeding 24 months where a customs officer is satisfied that the exportation is delayed for prescribed reasons). Customs memorandum D3-1-5 International commercial transportation.

[iii] Appendix 1 to Annex 16-A of CUSMA.

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