To Grow Iowa’s Export Revenue, Think Canada First

Tom Hanson, Principal Commercial Service Officer, United States Foreign Commercial Service

Canada is the largest commercial partner for the United States, with $1.4 trillion dollars in bilateral trade in goods and services and investment exchanged in 2015 – that’s more than $2 billion in goods and services crossing our borders every day. Canada is Iowa’s #1 trading partner and our #1 export market, as it is for 36 other U.S. states.The bilateral investment relationship is equally powerful, with the United States being Canada’s top investment partner; while Canada is the United States’ 4th largest investor.

Canadian firms invested more than $550 million in research and development at U.S. facilities, too. All in all, Canada’s contributions added $12.5 billion to the value of U.S. exports.

The State of Iowa International Trade Office’s most recent statistics report that Canada is Iowa’s 5th largest source of foreign investment, based on the number of Iowans employed by Canadian interests. Today, more than 100,000 jobs in Iowa depend on trade and investment with Canada.

The state works closely with the U.S. Commercial Service, through its office in Des Moines and at embassies and consulates in over 80 countries.

The majority of Iowa’s leading exports to Canada fall within Canada’s three Best Prospects, as defined by the U.S. Commercial Service. Iowa’s Equipment and Machinery manufacturers generate 30% of Iowa’s northbound exports, with systems for industrial, agricultural and construction sectors.

Agriculture exports capture 21% of the total. Meanwhile, Transportation (Aerospace and Automotive) accounts for 19% of Iowa’s exports.

Iowa companies can prevent delays or complications when exporting to Canada by knowing about the country’s unique customs documentation, bilingual labeling, packaging requirements, ITAR (International Traffic in Arms Regulations), and federal and provincial sales tax standards that vary widely from province to province.

As with any top-ranked export market, competitive pricing and favorable margins are key to success in Canada, as are innovative marketing and partner channel support such as specialized training and flexible contracts terms.

For many companies (particularly in the manufacturing and construction sectors), frequent visits to Canada and establishing a local presence will be crucial to long-term market success.

Federal government cooperation with Canada bolsters North America’s competitive stance worldwide and ensures greater ease and convenience for U.S. companies exporting to Canada. The United States and Canada partner on “Beyond the Border”, a program that enables smoother and safer border crossings.Canada_flag

The Regulatory Cooperation Council (RCC) fosters cooperation on industry regulations for Iowa exporters of agriculture and food products, health and consumer products, transportation systems, and environmental technologies. And on June 29 in Ottawa, Prime Minister Trudeau will host President Obama along with Mexico President Peña Nieto at the North American Leaders Summit.

Canada is an excellent market for Iowa exporters due to geographic proximity, cultural similarities, and compatible economies that support exports of equipment, technologies and professional services for aerospace, agriculture, IT, and other leading areas of expertise for Iowa companies.

Canada is the source of many export successes for Iowa’s multinational companies as well as an ideal launching pad for new exporters.

Tom Hanson is Principal Commercial Officer for the U.S. Commercial Service, based in Calgary, Alberta. Through its network of 106 U.S. Export Assistance Centers and posts at embassies and consulates in 80 countries, FCS advocates on behalf of U.S. businesses, expands U.S. exports, particularly from small and medium sized companies; and attracts foreign direct investment.

Please contact our Des Moines office for global assistance with export solutions. For assistance in Western Canada, contact Tom.