The Canadian Foreign Trade Zone (FTZ) program has been a much discussed topic for the last three decades. It is now quickly being considered as the newest and most popular economic development initiative for some strategically located Canadian cities and communities.
Some economic development organizations, chambers of commerce, airport authorities and port authorities located in these Canadian communities are expressing interest in the Canadian FTZ program.
THE CANADIAN FTZ PROGRAM
The Canadian FTZ program is a Department of Finance initiative administered by both the Canada Revenue Agency (CRA) and the Canada Border Services Agency (CBSA). The FTZ program is composed of many sub-programs, each created to cater to the needs of specific trade related industries who desire to enhance their bottom line competitiveness.
The program offers participating businesses such as manufacturers or processors, a deferral from the payment of most duties and taxes on the imported goods until such time when the goods actually enter the manufacturing process. Refunds may be granted to finished goods that are exported.
In the case of distributors or retailers, the imported goods can be stored in their own secured bonded area or bonded distribution center without paying duties and taxes until the goods leave the bonded facility and enter the commerce of Canada.
In all cases, including in the case of a distribution center that ships goods throughout North America and overseas, if the imported goods are re-exported, no duties or taxes are ever payable.
In the case where duties and/or taxes have been paid but the goods are re-exported afterwards, a refund is granted if the goods are re-exported within four (4) years from the date of importation. The goods can be exported by a company other than the original importer and still be entitled to a refund as long as one of the parties waives his rights to the said refund.
And finally, in the case of imported goods that are found to be obsolete or surplus, a refund can also be granted if the goods are destroyed under supervision within four (4) years from the date of importation.
The program as we know it today, began to take shape with the federal budget of 1985, where it was announced that the federal government would introduce legislation to consolidate customs and tariff provisions that would provide relief to the business community as well as provide an overall framework which all levels of government and the private sector can more readily use to attract new investment.
Since that announcement, the FTZ program has seen some improvements with the coming into effect of the North American Free Trade Agreement (NAFTA) in 1996. The program has also seen further improvements in 2001 and then in 2013.
CURRENT PROGRAM PARTICIPATION IN CANADA
It is estimated that approximately 500 businesses are participating in the Canadian FTZ program across the country. Unfortunately for marketing purposes, unlike in the United-States for example, the two Canadian agencies responsible for the program are bound by the Access to Information Act, and therefore, are not allowed to release the names of participating businesses who are currently benefiting from the FTZ program.
WHY SHOULD CANADIAN COMMUNITIES PROMOTE THE CANADIAN FTZ PROGRAM?
Municipal authorities, economic development agencies and/or chambers of commerce can retain and expand activities of businesses located in their locally defined service area, by helping them to understand and access the Canadian Foreign Trade Zone program.
These organizations can also help attract new businesses that wish to locate in their service area by effectively marketing the Canadian FTZ program on their websites, in their publications, at trade shows or by providing information sessions and workshops and connecting businesses with Canadian customs specialists.
FEDERAL FUNDING SOON AVAILABLE
Although the FTZ program has been around for decades, it is still very much unknown to the majority of the 135,000 Canadian importers.
Recognizing this FACT, the federal government is in a certain way seeking the assistance of local “marketing experts” to help promote the FTZ program by announcing last August 29, 2013, that it will provide $5 million over five years to market Canada’s Foreign Trade Zone advantage and attract foreign direct investment to strategic locations across Canada.
The FTZ marketing program is set to start on April 1, 2014 and will be administered by Foreign Affairs, Trade and Development Canada.
About Dilas International Customs Brokers
Dilas International Customs Brokers is Canada’s first Customs Brokerage firm to offer municipal, regional, provincial and federal government officials and organizations, assistance with the implementation and marketing of Foreign Trade Zones in locally defined industrial and commercial as well as transportation & logistics hubs across Canada.
As a subject matter expert, Dilas International can be an active and valuable member of any local economic development team that wishes to attract foreign investment in manufacturing, processing and distribution hubs.
Yes, Dilas International can truly help “Global Businesses connect with Canadian communities”
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