“The trade and investment strengths of South Florida as a gateway to Latin America and the Caribbean are significant, with major opportunities including expanding Latin American trade and a thriving IT industry,” says Matthew Waldron, trade commissioner of the Consulate General of Canada in Miami.

Service, Cultural and other Strengths

South Florida possesses a high level of industrial and economic talent, including a bilingual (Spanish/English) work-force and qualified experts in Latin American and Caribbean (LAC) trade. It also benefits from excellent support from LAC-focused services such as legal, consulting, accounting, headhunting, etc. It has a strong cultural and linguistic affinity with LAC as well as cultural and regional neutrality. The Latin American population offers extended personal networks of contacts in LAC region supplemented by ease of travel to Latin America and the Caribbean.

South Florida also boasts the largest cargo airport in the United States, and large, efficient ports undergoing constant investment. And its pro-business government and tax structure is extremely beneficial to companies seeking to do business in this thriving market.

Opportunities (for Canadian companies)

Miami’s trade with Latin America is growing at 10.3 percent per year. Its fastest-growing industries include mobile phones and components, computers and parts, other high-tech goods, and medical instruments. Rising consumption and urbanization in Latin America will also translate to increasing demand for better ICT and energy infrastructure, waste management systems, and transportation logistics in the region.

Gateway strategies for Canadian Business

The role of Miami as a gateway hub

Exporters of both goods and services consider Miami to be superior to any other city as a regional hub. Canadian exporters find it beneficial to launch a sales office from Miami because it is easy to recruit well-connected sales staff to service LAC markets. As well, salespeople can easily and inexpensively fly in and out of LAC markets, and buyers, particularly from the Caribbean basin, often come to Miami to source products. The bureaucracy and costs of setting up a sales office connected virtually to HQ in Canada is minimal, and for small and medium exporters who cannot afford to fund a full Latin American sales team, Miami is an ideal place to find regional agents and representatives.

Tier I markets – Brazil and Mexico

Brazil and Mexico represent approximately 70 to 80 percent of LAC demand, depending upon specific products. The two countries also represent huge markets with big internal regional differences that warrant multiple local distributors or points of sale.

“You should, however, keep in mind that local customers expect international suppliers to establish a supporting office in the country at a minimum,” adds Matthew.

Tier II markets – Colombia, Argentina, Chile, Peru, Venezuela

These Tier II markets represent 15 to 20 percent of LAC demand, again depending upon specific products. All of these countries (except Colombia) can be serviced from either a single administration office in the capital city or a strong national distributor in the capital. Colombia may need up to three distributors. Tier II markets usually report to a Miami-based LAC office, but sometimes to sub-regional offices in Mexico City, Bogota, Sao Paulo, Buenos Aires or Santiago de Chile.

Caribbean and Central American markets

These markets represent 3 to 5 percent of LAC demand. They can be serviced by a sales team or regional distributor based in South Florida. Many companies keep inventory stocked in South Florida and ship directly to large customers or local dealers, bypassing a national distributor in these markets. These markets usually report to a sub-regional division office in Miami.

ROSA markets (Rest of South America) – Uruguay, Paraguay, Bolivia, Ecuador, Guyana, Suriname, French Guiana

These countries represent 4 to 6 percent of LAC demand, and are often structured as sub-regions of a neighbouring market (e.g. Ecuador reports to Lima, Peru office). A sales team in Miami can service customers for high-value export strategies (e.g. aerospace equipment).

Key and emerging industries

Growing Latin American purchasing power is fueling demand for high-added-value imports.

Cellular phones and equipment

This sector experienced 17 percent export growth in 2011-2012. The Latin American middle-class purchasing power grew 50 percent in the last decade, increasing people’s access to mobile phones, and by 2020, mobile subscriptions in Latin America will increase from its current penetration of 810 per 1,000 people to 1,170 per 1,000 people. Also, by 2020, the largest mobile markets in Latin America will be Brazil, with 259 million subscriptions, Mexico with 135 million and Colombia with 61 million.

Aviation

Export growth in the aviation sector in LAC grew 11.7 percent in 2011-2012. Miami is home to over 400 aircraft parts manufacturing and maintenance, repair and operations (MRO) companies. As well, analysts predict airline traffic to, from and within Latin America and the Caribbean to grow by more than 6 percent annually for the next 20 years. To meet this demand, Latin America will need more than 2,000 new passenger aircrafts in the next 20 years, fueling demand for Miami-based MRO companies.

Healthcare

Medical equipment export demand rose by 7.6 percent in 2011-2012, and 20 percent in pharmaceuticals. In the last 10 years, 73 million people have joined the middle class in Latin America, and are now able to afford private medical services for the first time. By 2020, Latin America’s population of seniors is expected to double to 83 million, increasing the demand for treatment of chronic diseases.

Physical infrastructure

Boasting the largest cargo airport in the United States and a combined 3,000+ annual ship-calls make South Florida an undisputed logistics hub.

South Florida as an advantage is indisputable

According to experts, Miami beats out all others. Consider the following, approximately 650 multi-nationals have established their Latin American headquarters in South Florida, more than any other city in the Americas. Miami is an extension of Latin America in terms of its demographics. Approximately 1,300,000 Latin Americans call Miami home, more than 50 percent of the city’s total population. Latin American professionals in Miami cross the cultural bridge between North and Latin America, are bilingual, and have experience working in the region.

In terms of logistics connectivity and trade, Miami has the greatest number of flights to LAC and flies directly to more LAC cities than any other regional city. Miami International Airport is the largest cargo airport in the US. Trade with LAC represents 72 percent of Miami air freight and 62 percent of all Miami port freight.

Local resources help companies succeed in South Florida, including the fact that Miami has a wealth of professionals — lawyers, accountants, consultants, etc. — who are experts in Latin America. Miami is also home to 26 Latin American consulates. Finally, Florida provides a business-friendly and low-cost environment with tax incentives for investors, no state income tax, employer protections, and an infrastructure to help companies thrive.

On December 2, 2013,  Greg Rickford, Minister of State (Science and Technology) launched the Government of Canada’s new Concierge Service, a guide to innovation.

This new customized service delivered by the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP) gives small- and medium-sized enterprises (SMEs) in Canada access to the most relevant programs and services to help them grow through innovation.

“The Concierge Service brings together comprehensive, up-to-date information under a single umbrella to help Canadian businesses innovate with new products, services and markets – whether they’re looking for access to funding, equipment, expertise or new global networks,” says Anet Greenley, Concierge Advisor, NRC-IRAP.  

What does the Concierge Service provide – and not provide?

The Concierge Service is intended to help SMEs grow through innovation.

“Following a needs assessment, ‘funding sources’ have been identified as the most pressing concern for entrepreneurs, and is our initial priority in developing the Service,” adds Greenley.

However, if a small business contacts the Concierge Service for help with other issues, such as writing a business plan, they will be directed to the appropriate place.

The Concierge Service was able to help a digital media firm in developing three diverse streams of products utilizing their specific technology solution. The firm needed help with developing their online presence, branding, marketing, etc. The Concierge Advisor was able to link the firm to the Haltech Regional Innovation Ctr. at Sheridan College. Haltech has since provided access to an Executive in Residence and helped the firm utilize the digital media expertise at Sheridan College. – Trish Barrow, Ontario Region Concierge Advisor

How Does It Work?

When you contact the Concierge Service, staff will first work with you to define and understand your specific business needs. Then Concierge staff will direct you to the most appropriate support to help you develop new products, services or markets – pointing out innovation programs and services you might not have otherwise identified. When required, a business may also access the Service’s expert advisors located across Canada.

The Concierge Service will also expedite your dealings with many partner-organizations by ensuring your query is directed to the right organization, and providing that organization with details of your searches to help them better answer your needs.

What types of businesses are eligible?

Small- to medium-sized businesses with a new idea, market, product, or service that require assistance to commercialize it and grow through innovation are eligible. If your business has fewer than 500 employees then you are eligible for the Concierge Service.

Concierge Advisors will be able to “crystalize” the SMEs path to effectively accessing innovation resources and services within their region. The advisors come from industry, they understand the path that will lead to successful transformation of ideas into marketable products. – Ron Matheson, West Region Concierge Advisor

What do you mean by “innovate”?

Since “innovate” can mean many different things in the business world, we mean: “The ability to conjure up new products and services, to find novel uses for existing products and to develop new markets.”

In short,

Innovation = New Idea + Commercialization.

How do I get started?

Start by doing a search on the website (www.concierge.portal.gc.ca) or by calling the toll-free number (1-855-53-GUIDE / 1-855-534-8433). Information officers take calls Mondays to Fridays from 9:00 a.m. to 4:30 p.m. local time.

The Concierge Advisors use their specific know how and experience to see the bigger picture and help direct SMEs to the most relevant programs at specific points in their development. We offer information on a whole suite of programs and work with a number of partner organizations to understand the types of clients most suited to their program or service. – Jo Van Betsbrugge, Quebec Region Concierge Advisor

When will the Concierge Service be fully complete?

The Service will be continually updating its databank of program and service information, and supporting the evolving needs of business innovation. For more information please refer to the website or refer to this list of advisors.

Do you know of any companies that could use this service? Spread the word!

Business has gone global. That’s hardly news anymore. But for the first time in history, the world marketplace is open all day, every day, unrestricted by distance, technological barriers or country of origin. But as with any business venture, entering the arena of global trade and investment presents both opportunities and challenges. The solution? … do your homework … be prepared.

Doing business in the EU– four basic questions

This of course applies to many areas of international trade and investment, one of which is becoming familiar with a region’s taxation regulations. A somewhat simple solution that relates to the European Union (EU) can be summarized in four basic questions:

1.  Do you need to set up a branch office or a separate legal entity in Europe when importing/selling there?
   Answer: No, this is not required but at the same time it also could be beneficial.
2. Does importing and distributing in Europe result in a corporate income tax liability in a European country?
   Answer: Again, this is not necessarily the case and we’ll look at this further later on.
3. Can a Canadian company import/customs-clear products into Europe?
   Answer: The simple answer is yes.
4. And finally, will Value Added Tax (VAT) be due/payable when importing into the EU?
   Answer: Not always, but it can in certain situations.

The European Union and trade legislation 

The European Union (EU) has 27 independent Member States. An important part of the EU legislation is in the form of “Directives”, which means that the Member States have to create their own national legislation, for example relating to VAT. Customs and trade legislation (including duty rates and quota regimes) are managed through EU Regulations, which are directly applicable and binding in the Member States. Corporate income tax is mainly regulated by the countries themselves.

Main customs principles in the EU

From a customs duty perspective, it makes no difference whether goods are imported via the Netherlands, Belgium or any other EU country. However, interpreting customs legislation can differ between countries. But after clearing customs in one EU country, you can distribute your goods to other EU locations without any customs interference, which is known as “free circulation within the EU”. So, in general, it is recommended to centralize import and customs compliance, and to seek out expert advice to ensure compliance.

Business Services Value Chains (BSVCs)

Certain countries, such as Belgium and the Netherlands have sophisticated “Business Services Value Chains”. BSVCs aren’t about doing business, but rather about setting up and operating a business. They are aimed at simplifying and facilitating goods imports and taxation. Key components of BSVCs are air, land and seaports, logistics hubs, legal, accounting and employment advisory services, government services and available labour pools.

Approach of the Member States’ customs authorities

Apart from the legislation, the attitude and focus of local customs and other authorities are also key for companies.

As well, all EU Member States apply the same classification legislation and duty rates. However, the interpretation of these rates can sometimes differ. For example, there are high customs duty-rates in the food and fish industry.

A further issue deals with supply chain security and Authorized Economic Operator (AEO) status. Without AEO certification, customs simplifications are not possible.

Basically there are three types of AEOs:

1. customs simplifications;
2. security and safety;
3. and a combination of the two, customs simplifications/security and safety.

EU VAT – VAT at import

In most countries, the VAT at import becomes due when goods are declared for importation at customs. You can reclaim this VAT-at-import payment, but the actual refund can take several months. However, various EU Member States have implemented regimes to avoid the VAT import payment. Avoiding these payments is a very important selling tool to attract international business.

VAT onward distribution and export

After customs clearance, no VAT is due when goods are sold and shipped to another EU Member State or a non-EU destination (the VAT zero rate applies). When a foreign company sells goods to a company within the country of customs clearance, in some countries, no VAT should be charged. There are also no VAT charges when selling to non-EU destinations.

In sum, the onward sale/distribution of goods from the country of customs clearance does not normally have to result in VAT payments.

Conclusions and ideas

When doing business in Europe, tax, trade, customs and VAT are key topics both from a planning and potential risk point of view. It is important to ensure compliance, as non-compliance could result in assessments, fines and criminal sanctions. Finally, to lower the tax, customs duty and VAT burden, careful planning and some (limited) investments are recommended.

Do you think that you will seek out expert advice when it comes to taxation, customs, VAT regulations and practices in the EU? Do you have anything to add to the above?

The Netherlands Matters To Canada

“Canada’s relationship with the Netherlands is much bigger than most people think. It is a big, mature, multi-faceted relationship with extensive investment, innovation, trade and political engagement,” says William Pound, Senior Trade Commissioner, The Hague.

In 2012, it was the sixth largest goods exports destination globally for Canada and the hub of over 100 Canadian companies in Europe, employing over 15,000 people.

In terms of export growth, the Netherlands is now the second most important market in Europe.

The Netherlands was Canada’s second largest export destination in the European Union [EU] after the United Kingdom, outpacing Germany, France and Italy. That surprises people,” adds Pound.

The Netherlands: Business Matters

Often overlooked as a target market, the Netherlands embraces a global business environment and seeks to originate or integrate into global supply chains.

As well, the Netherlands is:

• the eighteenth largest economy in the world
• home to numerous major multinationals
• a key player in the global business scene
• like-minded with Canada and Canadians

The Netherlands is also the major source of foreign direct investment (FDI) into Canada. From 2008 to 2011, the average stock of FDI in Canada was $55.6 billion (Cdn), making it Canada’s second largest source of FDI in the world.

According to Pound,

 some countries pretend to be the centre of the world; whereas the Netherlands centres itself in Europe and the world, fostered by an incredible business services value chain that facilitates international business. 

It’s three-pillar economic strategy of seaports, airports and brain ports wrapped in a stable, innovative economy where global linkages and international perspective create the ideal business ecosystem for Canadian companies.

It is also one of the more stable European economies based on the global enterprise of its population, gas wealth in the north, favourable business taxes and central location and role in Europe.

Ideal Entry Point For Strategic Expansion Throughout Europe

As a strategic entry point to the rest of Europe the Netherlands is poised to become even more significant with the forthcoming introduction of the historic Canada and European Union (EU) Comprehensive Economic and Trade Agreement (CETA).  The CETA is by far Canada’s most ambitious trade initiative, broader in scope and deeper in ambition than the North American Free Trade Agreement (NAFTA). It will open new markets to Canadian exporters throughout the EU and generate significant benefits for all Canadians.

CETA’s most visible benefit is the ambitious obligation undertaken by Canada and the EU to eliminate tariffs. Some of these tariffs can be very high (for example, the EU tariff on frozen mackerel is 20 percent and the EU tariff on oats is around 51.7 percent), making imported goods uncompetitive in the market. Of the EU’s more than 9,000 tariff lines, approximately 98 percent will be duty-free for Canadian goods when CETA comes into force. This includes nearly 100 percent of non-agricultural tariff lines and close to 94 percent of agricultural tariff lines.

EU investment in Canada will increase

The stock of known Canadian direct investment in the EU was valued at almost $181 billion in 2012, representing over 28 percent of Canadian direct investment abroad. The same year, the stock of known EU direct investment in Canada was valued at more than $171 billion, representing over 24 percent of total foreign investment in Canada. CETA will help further promote Canada as a place to invest.

Do you think Canadian companies are doing enough to use the Netherlands as a launching pad to the rest of the European Union? Post your comments below.