In this new age of online shopping, shipping to the U.S. from Canada presents an excellent opportunity for many businesses. By shipping southbound and having their goods cleared by Customs and Border Protection (CBP), businesses of all sizes are able to capture a large number of additional customers who live in the U.S. These customers have similar demographics to their Canadian counterparts and can take advantage of the favourable exchange rate. This lets Canadian businesses stay competitive, increasing their growth as they tap into new markets across the border.
While shipping across the border has its benefits, it also comes with its own unique challenges. These can include successfully clearing your shipment through customs, as well as the regulations and paperwork that are part of the process. However, with Section 321, these roadblocks can be more easily overcome.
In this article, we’ll cover the basics of Section 321, so you’ll better understand what it is, whether your shipments qualify and how your business can benefit from it.
What is Section 321?
Section 321 is a provision of the Trade Facilitation and Trade Enforcement Act that allows U.S.-bound qualified shipments, that are valued at $800 USD or less, to benefit from the duty-free entry of goods. The de minimis amount, which was raised from $200 USD to $800 USD in 2016, is based on the fair retail value in the country of shipment. Additionally, customs forms are not required for qualifying shipments. Note that only one U.S.-bound import per day from a single shipper can qualify for Section 321. Therefore, Section 321 is applicable based on the number of shipments from one shipper to one receiver on the same day, rather than the total value of the shipments.
Businesses can take advantage of Section 321 for a wide range of products, but certain goods are restricted. The restricted or regulated list of goods includes: Cigarettes, cigars, alcoholic beverages, harsh chemicals, products under government regulation, products that require inspection and goods that are subject to countervailing or anti-dumping duties.
What does de minimis mean?
The de minimis is a threshold value set by Section 321. Currently, it’s set at $800 USD. This means that goods (with some exceptions) imported into the U.S. qualify for Section 321. As long as they are under the de minimis threshold and are not one of several lots, they can fall under a single order or contract.
Claiming Type 86 shipments
In September 2019, the CBP rolled out a test for a new informal entry type under Section 321. Known as Type 86, it provides a faster entry process for low-value Section 321 shipments. Take note that, because Type 86 is still in its testing phase, only the importer of record or the customs broker acting on their behalf can file for this new entry type. This is more limited when compared to Section 321 shipments, which can be filed by multiple parties (importer, consignee, broker and carrier).
While many of the benefits of Type 86 aim to make the CBP’s job easier, there are a few benefits that apply to shippers:
- Type 86 shipments may use any type of transport, compared to Section 321 shipments which can only be transported via ground or air vehicles.
- While the goal of Type 86 shipments is to identify and prevent illicit goods, it also accelerates the processing of legitimate goods into the marketplace—allowing your customers to receive their shipments faster.
From NAFTA to USMCA. What exporters need to know.
In July 2020, the USMCA, also known as CUSMA or T-MEC, was instituted. The USMCA replaced the previous trade agreement, NAFTA (North American Free Trade Agreement), making it easier to ship cross-border with simplified paperwork and provisions—like Section 321—that provide greater access to all North American supply chains. With the USMCA in place, there are other significant changes that exporters must be aware of, including Certification of Origin procedures and specific rules for sectors such as agricultural and automotive. Make sure you understand how the changes impact your business and what it means to be compliant.
The benefits of Section 321
Besides the financial savings from avoiding taxes and duties, there are other benefits to Section 321 as well. There’s less paperwork and imports are processed faster, which speeds up the shipping process and eliminates delays from shipments held up at customs. For many B2B businesses, this can make a big difference when shipping to the U.S. from Canada, allowing them to compete in the market more successfully.
To summarize, businesses that use Section 321 can gain benefits such as:
Exemption from duties and taxes
Faster clearance process allows shipments to reach customers quicker
Money saved can lead to more competitive pricing for customers
A clearer understanding of regulations
Eliminating delays at the border
Reduced customs paperwork
Entering new markets at a more affordable cost
The process of declaring a Section 321 shipment
What should businesses do to prepare a Section 321 shipment? Shippers should work with their carriers or customs brokers to submit the required information before the shipment arrives at the border. This is to ensure compliance with U.S. safety and security requirements. Carriers will need to identify the shipper’s name and address, a description of the type of goods, weight, quantity and the consignee’s name and address. Our southbound shipping experts at Purolator will be happy to provide more information and guide you on your Section 321 shipments.
Who can claim Section 321 for their shipments?
Although the Section 321 provision states that it can only be claimed for “one person on one day”, the legal definition of what qualifies as a person is actually quite broad. Other than an individual person, CBP also defines the following as persons:
- Fulfillment centres
- Domestic warehouses
- Foreign sellers
How Section 321 can streamline your e-commerce shipments
E-commerce shipments can claim Section 321 if they comply with the entry requirements, shipping limitations and de minimis amount. E-commerce businesses can leverage Section 321 to:
- Manufacture products outside of the states at a lower cost before exporting them to the U.S.
- Speed up the shipping process with less paperwork and customs requirements.
- Save on international shipping costs to expand your business into the U.S. with more resources at your disposal.
What are the entry requirements for Section 321?
While formal entry filing isn’t necessary for Section 321 qualifying shipments, you still have to provide information about the goods you’re exporting to meet entry requirements. The following information should be included on your shipment’s bill of lading or shipping manifest:
- Country of origin
- Shipper name and address
- Consignee name and address
- Importer of Record (IOR) and IOR Number
- Specific descriptions of quantity, shipping weight and value
- A declaration for goods regulated by the Food and Drug Administration (FDA) or the U.S. Department of Agriculture (USDA)
Checklist: Practical Tips for Shipping From Canada to the U.S. Learn how to expand your business across the border. Grow into the U.S. market, which is 10x bigger than Canada’s, by following our tips.
Making U.S. cross-border shipping easier with a reliable shipping partner
If you’re not sure whether you’re ready to ship from Canada to the U.S., take a look at our checklist to help you decide. And if you’re ready to save your business time and money on southbound shipping with Section 321, ensure you find a shipper that’s on top of the latest regulations. Companies like TTI and The Orthotic Group rely on Purolator’s cross-border shipping solutions to cut shipping times. Purolator offers wide-ranging international shipping services, and our southbound shipping expertise and capabilities have helped many Canadian businesses expand their reach to U.S. customers.