Canada

Originally published: Sep-23-2004

Legal System

Based on English common law, except in Quebec, where the civil law system is based on the codified principles of the Napoleonic code. Accepts compulsory ICJ (International Court of Justice) jurisdiction, with reservations.

Economy

Currency: dollar (CAN)

Canadian dollars per US dollar: 1.2817 (9/22/04), 1.4011 (2003), 1.5693 (2002), 1.5488 (2001), 1.4851 (2000), 1.4857 (1999)

Inflation: 1.8 (2005 forecast), 1.5 (2004 est.), 2.8 (2003), 2.2 (2002), 2.5 (2001), 2.7 (2000)

Real GDP Growth Rate: 3.1% (2004-2005 projected), 1.71% (2003), 3.28% (2002), 1.92% (2001), 5.26% (2000)

GDP Per Capita ($ at PPP): $31,410 (2003), $30,740 (2002), $29,764 (2001), $28,822 (2000)

Leading Markets (2003): US 86.6%, Japan 2.1%, UK 1.4% (2003 est.)

Leading Suppliers (2003): US 60.6%, China 5.6%, Japan 4.1% (2003 est.)

Top Industries: transportation equipment, chemicals, processed and unprocessed minerals, food products; wood and paper products; fish products, petroleum and natural gas

General Economic Situation

Canada is an urban services-dependent economy with a large manufacturing base. As an affluent, high-tech industrial society, Canada today closely resembles the U.S. in its market-oriented economic system, pattern of production, and high living standard.

The 1989 US-Canada Free Trade Agreement (FTA), superseded by the 1994 North American Free Trade Agreement (NAFTA), which includes Mexico, touched off a dramatic increase in trade and economic integration with the U.S. Today, the United States and Canada have the world’s largest bilateral trading relationship, reaching $394 billion in merchandise trade (2003) between the two countries.

As a result of the close relationship between Canada and the United States, the sluggish U.S. economy has had a negative impact on the Canadian economy. Real growth averaged around 3% during 1993-2000, declined in 2001, with a moderate recovery in 2002. Growth slowed markedly again last year due to a series of negative shocks (SARS, fires, power failure) and the strengthening of the Canadian dollar. However, this downturn was shortlived as dynamic economic conditions in the U.S. benefited Canadian exporters.

For the future, Canada enjoys solid economic prospects due to its skilled labor force, modern capital plant and abundant natural resources. Two shadows do, however, loom on the horizon: (1) the constitutional impasse between English- and French-speaking areas which raises the possibility of a split in the federation; and (2) the flow of professionals into the United States lured by higher pay, lower taxes, and the United States’ immense high-tech infrastructure.

Business Climate

Canada has an attractive investment climate providing access to sizeable markets, a well qualified labor force, well developed and efficient transportation infrastructure and plenty of natural resources. The Economist Intelligence Unit ranks Canada 5^th in terms of its overall business climate, following Hong Kong, Britain, the Netherlands and the United States.

Credit and Collections

• Collection Experience: Good-Fair
• Exchange Delays: 2 months
• Preferred Credit Terms: 30 Day/Sight Draft
• Minimum Credit Terms: Open Account

Payments: Bills of exchange, checks and promissory notes are governed by a single law throughout Canada. In nine of the ten provinces this law is interpreted according to common law precedents; however, in Quebec, civil law principles are utilized. Therefore, Coface, a leading export credit insurer, advises sellers to accept these instruments only where long-term commercial relations and mutual trust have been established with the buyer. According to Coface, SWIFT transfers are the most widely used means of payment for international transactions with Canada. However, sellers should bear in mind that settlement by SWIFT transfer is dependent entirely upon the buyer’s good faith as he decides whether or not to order payment.

Risk Assessment

Country Risk Rating: A1 - The steady political and economic environment has positive effects on an already good payment record of companies. Very weak default probability.

Sources for further information on doing business in Canada

Canadian Economy Online: Government guide to the Canadian economy including economic indicators and statistics.

Doing Business with Canada: Canadian government portal on importing, exporting, partnering, investing, and establishing a business.

Invest in Canada: Another Canadian government-sponsored site providing a one-stop center for investment services.

Strategis, Canada’s Business and Consumer Site: Extensive site covering a variety of business, economic and legislative topics, along with business guides, economic statistics and "for a fee" services such as a bankruptcy search.

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Bangladesh. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, COFACE Country Ratings, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.

Historical Exchange Rates: OANDA.com The Currency Site.