A Practical Guide to Doing Business in Canada's Aerospace Industry

Presentation for U.S. Firms Participating in AeroMontreal's Aerospace Innovation Forum 2013

Gina Rebelo Bento CS Canada – Aerospace Specialist

About Canada Prime Minister: Stephen Harper Conservative Party of Canada Population: 35 Million 2nd Largest Country in the World • 10 provinces & 3 territories • 6 time zones • 2 official languages Rich in Natural Resources 2nd Largest Oil Reserves in the World Common border with the U.S. Longest land border in the world

U.S.-Canada Partnership • World’s largest trading relationship

• $1.3 Trillion Economic Relationship

• U.S. Exports to Canada surpassed $355B in 2012 (16% of total U.S. exports)

• Our Largest Trading Partner

• Canada and the United States trade $1.9B in goods and services daily.

• Investment Partners • Canada is the U.S.' 4th largest foreign

investor.

“No two nations match up more closely together, or are woven together more deeply, economically, and culturally than the United States and Canada.” President Barack Obama

Where are the Opportunities? • Aerospace • Automotive • Energy & Environment • Government Procurement

– Defense Products and Services – Safety & Security Equipment

• Information and Communications Technology • Mining • Travel and Tourism

Moving Goods Across the Border Two important documents required by U.S. Customs and Canadian Customs alike for all shipments are:

1. Commercial Invoice 2. Certificate of Origin

A signed statement of origin on the invoice is sufficient for goods valued at less than $2,500 when imported under NAFTA provisions.

Moving People Across the Border

• Options for Business Travel Between the USA & Canada 1. Business Visitor 2. Trade Agreements (NAFTA & TN Visas) 3. Intra-company Transfer

• Points of Inadmissibility

1. Criminal Record 2. Medical Condition

Product Certification In aerospace, Transport Canada and the FAA work very closely together. In general: • Contact the Standards Council of Canada www.scc.ca.

• CSA International – A complete list of products that CSA certifies for Canada;

http://www.csa.ca • ULC – A complete list of products that ULC certifies for Canada; http://www.ulc.ca/

Underwriters Laboratories (UL) in the United States and CSA have a memorandum to accept each other's test results. However, each issues its own certification marks.

• CGSB – A complete list of products that CGSB certifies for Canada; http://www.ihs.com/products/industry-standards/organizations/cgsb/index.aspx

• BNQ – A complete list of products and services that BNQ certifies for Canada;

http://www.bnq.qc.ca/

Export Finance Tools

• Small Business Administration SBA Export Express offers financing up to $500,000. • Export Import (Ex-IM) Bank The official export credit agency of the United States.

Upcoming:

• Selling Security Products to the Government of Canada, November 2, 2013 • Temporarily Moving Technicians and other Service Exporters Across the Border, January 30, 2014 • Temporarily Moving Capital Equipment & Tools Across the Border, February 30, 2014 • Handling Duties and Taxes – NAFTA, HST & other Considerations, February 13, 2014 • U.S. Export-Import Bank Financing Recorded Webinars Available: • Temporarily Moving “Tools of the Trade” Across the Border • Advantages of the Non-Resident Importer Program • Sending your Employees to Canada: Requirements for Temporary Workers • The Basics of Selling to the Government of Canada – Using the New GETS

Webinar Series

Canada and U.S. Aerospace & Defense Trade

Defense Production & Development Sharing Agreements Since WW1 & WW2

The Canadian ITAR Exemption

U.S. companies can bid on Canadian government military tenders

Selling into Canada's Aerospace Industry: A Few Market Characteristics

General Overview • In 2012, it generated approximately $22 billion •19 largest aerospace companies generate 87% of sales5

•Key clusters are Montreal, Quebec (approx. 60% of the Canadian market) and Ontario (approx. 27%)6

Civil Aircraft Sector •84 % of output is from civil aircraft manufacturing; military is 16% 7

• In the U.S., military is 52% of output, civil is 48% output 8

International Trade •Over 82% of production is exported •Canada buys 5% of the U.S aerospace exports, accounting for 50% of our imports •Canada is the 2nd largest aerospace supplier to the U.S with 17% of their imports

Key Facts about Canada’s Aerospace Industry

The Canadian aerospace market is uniquely well positioned to capture a significant portion of the next generation aircraft’s production

Global Aerospace Growth Markets: Canada is a Major Player

Global Aerospace Growth Markets – The Next Five Fears…..

Canada is Home to Leading Aerospace Players

Canadian American European

Characteristic #1 – Supply Chain Integration / Top Down Pressure from OEM

Characteristic #2 – Cluster Grouping in Quebec and Ontario

Montreal is the only place in the world where all of the components to build an aircraft can be found within a 30 mile radius. Montreal, along with Seattle and Toulouse, is one of the world’s top 3 aerospace hubs.

Characteristic #3 – Wide Array of Sub-Sectors Dominated by Aircraft/Aircraft Parts & MRO

Tailoring Your Sales Pitch….A Few Tips

Generally, Canadian Companies Are Looking For:

• Certifications (ISO 9000, NADCAP, etc..) • Quality Control & Reliability • Engineering / R&D Capacity • Financial Soundness & Management Vision • Risk Management & Capacity to Take On Risk • Presence in Low Cost Centers (i.e. Mexico) • Export Controls / ITAR Compliance Programs For smaller Canadian aerospace companies, geographic proximity also plays a role.

Market Entry Strategies

Importance of a local partner

Seek partners/reps in more than one region

Sensitivity to French business climate in Quebec

Leverage the knowledge and network of the U.S. Commercial Service in Canada

Access the supply chain through systems integrators, in addition to contacting the OEMs

Risk-sharing partners > Suppliers

Sign up with OEM supplier programs

A few things to keep in mind…

Contact Information Ottawa • Richard Steffens, Minister-Counselor; Richard.Steffens@trade.gov • Enrique (Rick) Ortiz, Deputy Minister-Counselor; Rick.Ortiz@trade.gov • Lucy Cicero Latka, Sr. Commercial Specialist; Lucy.Latka@trade.gov • Tracey Ford, Commercial Specialist; Tracey.Ford@trade.gov • Luz Betancur, Commercial Specialist; Luz.Betancur@trade.gov • Louise Doré, Commercial Assistant; Louise.Dore@trade.gov Montreal • Enrique (Rick) Ortiz, Principal Commercial Officer; Rick.Ortiz@trade.gov • Connie Irrera, Commercial Specialist; connie.irrera@trade.gov • Gina Bento, Commercial Specialist; gina.bento@trade.gov • Sue Bissi, Commercial Assistant; sue.bissi@trade.gov

Toronto • Frank Carrico, Principal Commercial Officer; Frank.Carrico@trade.gov • Doug Jacobson, D/Principal Commercial Officer; Doug.Jacobson@trade.gov • Ruth Williamson, Commercial Specialist, Ruth.Williamson@trade.gov • Stefan Popescu, Commercial Specialist, Stefan.Popescu@trade.gov • Pixie Irving, Commercial Assistant, Pixie.Irving@trade.gov

Calgary/Western Canada (Alberta, Saskatchewan, Manitoba, British Columbia) • Cindy Biggs, Principal Commercial Officer; Cindy.Biggs@trade.gov • Crystal Roberts, Commercial Specialist; Crystal.Roberts@trade.gov • Connie Smith, Commercial Assistant; Connie.Smith@trade.gov • Jared Byrne, Commercial Assistant; Jared.Byrne@trade.gov

Contact Information

Questions & Answers ???

Thank You!