Briefing note raises question on Canadas regulations on cross-border shoppers

It is seen as an echo of retailers` belief that the Canada Border Services Agency is too lenient with cross-border shoppers, costing the economy millions of USD in domestic sales.

The briefing note was prepared on June 25, 2013, when CAD 1was worth USD 0.95 and the Harper government was concerned about a so-called Canada-US price-gap that may have been encouraging cross-border shopping.

The border agency waives duties and taxes when the value is below a certain threshold, an amount which is simply omitted in the released document. The threshold was established in consideration of the cost to CBSA of processing a traveller through the collection process, according to the note which is cited by The Canadian Press under the Access to Information Act.

Canadians made 55 million trips to the US in 2012, out of which 33 million were completed on the same day, as a near-par dollar and newly raised limits on duty-free goods encouraged stateside bargain-hunting. Border guards collect about USD 150 million in taxes and duties from travellers each year. But the note also says the agency doesn’t track the amounts it waives.

Canadian retailers have raised concerns that CBSA has been too lenient and, as such, have provided an additional incentive to purchase goods in the US, the note informs.

Vice-president Karl Littler says the council has no objection to the agency waiving amounts on goods valued below a USD 20 threshold as established by the federal government, but is worried that higher-value items are being waived as well.

The Harper government in 2012 raised duty-free limits for travellers coming back from a foreign country, to USD 200 worth of goods for trips of between one and two days, and USD 800 for longer trips. Same-day trips enjoy no exemptions and those travelers, three out of every five US-bound Canadians, get closer scrutiny at the border.

CAD has recently fallen below US 90 cents, a level that BMO Capital Markets economist Doug Porter predicts will fight against cross-border development.

Check out our Cross-border Ecommerce Research section here for more info on specific ecommerce facts & figures, preferred payment methods, risk and fraud, as well as ecommerce legislation & regulation in Canada.