On April 15th, 2016, Niagara Centre Member of Parliament Vance Badawey announced on behalf of the Government of Canada that Niagara is now designated a Foreign Trade Zone Point.
Niagara has several comparative advantages that won us this federal designation. Companies already located here are relying on these for their growth opportunities, and so will incoming businesses:
- Good transportation infrastructure in many modes (railways, freeways, and waterways);
- Canada-US border proximity, with a number of road and rail crossings right here;
- A central location, within one trucking shift of half the combined Canadian and American population;
- A diverse and fertile mix of industries (and the skilled workforce that comes with them) including manufacturing, agri-food production, higher education, transportation & logistics; and increasingly, technology-based ones like information/communications and life sciences;
- Post-secondary institutions that are increasingly aligned with industry needs and that attract students from across Canada and around the world.
So what does this mean?
It means that Niagara businesses have easier access to federal Foreign Trade Zone (FTZ) programs that relieve taxes and duties for traders in certain situations. This matches Free Trade Zones everywhere, including 14 on the US side of the Great Lakes alone. The term generally refers to a specific location within a country that is officially designated for eligibility for tariff and tax exemptions, with the FTZ designation companies can sign up from anywhere in Canada, so long as their business is qualified. From anywhere in Niagara, there will be quick access to support and assistance from the new FTZ Single Window Task Force, a group of business and government representatives.
Overview of 5 FTZ Programs (Source: http://www.fin.gc.ca/ftz-zf/index-eng.asp)
|Program||Main Benefit||Main Qualifications|
|Duties Relief Program||Upfront relief of duties||Goods must be exported within four years|
|Drawback Program||Refunds duties for exported goods||Goods must have been exported within four years|
|Customs Bonded Warehouse||Defers/relieves duties and taxes||Goods must not be substantially altered|
|Export Distribution Centre Program||Upfront relief of GST/HST on certain imports and domestic purchases||Must be export-oriented commercial entity that adds only limited value to goods|
|The Exporters of Processing Services Program||Upfront relief of GST/HST on certain imports||Goods must belong to non-resident and be re-exported after being processed|
No taxes or duties on certain transactions… Does that make much of a difference?
Niagara’s FTZ Point can make an increasing difference, in two ways:
- Qualifying businesses enrolled in FTZ programs no longer incur 13% HST and/or duties at the front end, which may or may not be refunded later, on goods imported and then exported again. FTZ programs save time, effort and working capital for an international trading business, just like any Free Trade Zone in the world. The effect adds up as your business grows.
- The Task Force will help with more than just these five programs. The Task Force represents all government programs that help firms export more (and also grow jobs and investment). Research, finance, insurance, training, expertise, mentorship – we hope Niagara’s FTZ will soon help firms get all of these – and then grow their exports!
Large multinationals often locate operations in FTZs, so these businesses can make, process or assemble things wherever it makes sense to do so, and not just where they are pushed by taxes, duties and regulations. We believe it very often makes sense to make, process and assemble things right here in Niagara.
It already does make sense to hundreds of businesses now benefitting from Niagara’s natural advantages, and the FTZ Point will serve their needs first of all. For instance, these federal tax- and duty-relief programs are under-used, and we want to ensure no Niagara business pays HST or duties unnecessarily. It’s crucial to raise awareness of the support available at all levels to strengthen growth from exports.
Niagara’s FTZ Single Window Task Force will be convening for the first time in early- to mid-June. If you have, or know of, a business that is currently importing or exporting, or even thinking about it, Niagara’s FTZ Point is poised to help them. Call 905-980-6000 and say “Foreign Trade Zone”, or email email@example.com, and you’ll be connected.
Economic Research & Analysis Manager
Headquarters Campbell East