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Greater Niagara Chamber of Commerce

FTZ designation ‘a game changer’

Every time a product crosses the border taxes and tariffs are charged.

If it’s a value-added product, Niagara Centre MP Vance Badawey said it’s not uncommon for that product to cross the border three or four times, accumulating charges for “tax and tariff, administration, policy and regulation” with each trip.

That has changed for Niagara businesses.

On Friday, Badawey teamed up with St. Catharines MP Chris Bittle at WP Warehousing in St. Catharines to announce Niagara has now been designated as a Foreign Trade Zone (FTZ) point, a status that allows companies to take advantage of incentives designed to make it easier and less expensive to import and export products.

Canadian FTZ programs

Duties relief program: Allows companies to import products duty free for storage or manufacturing, as long as the products are again exported within four years;

Drawback program: Allows companies to apply for a refund for duties paid on imported products, that were later exported within four years;

Customs bonded warehouses: Allow companies to important and store products without paying duty or taxes until the products enter the Canadian market. If the products are instead exported, the company is not required to pay duties and taxes;

Export Distribution Centre: Allows companies to purchase products in Canada without paying HST upfront on transactions of $1,000 or more, if the products are to be exported.

Exporters of processing services program: Allows businesses to import goods tax free, if those goods are foreign-owned and are exported within four years.

The initiative that Badawey said will “energize Niagara’s economy” has taken more than a decade to develop through the team work of federal, provincial and local governments, Niagara economic and industrial organizations and individual businesses to name a few.

A foreign trade zone designation will encourage private-sector investment in the region and create jobs by providing easy access to government programs that defer or eliminate duties and taxes from products destined for export.

“This is a game-changer,” said Kevin Jacobi, the owner of WP Warehousing, one of the local businesses that will be taking advantage of Niagara’s FTZ designstion.

Although the designation is important for large industries, such as General Motors, Jacobi said “it will be an even bigger game-changer for small- and medium-size businesses.” He said it will allow companies to bring in resources, raw materials, not only from local producers, but from producers throughout the world.

Badawey, who began working toward establishing the foreign trade zone for the region while mayor of Port Colborne, called the designation “an economic enabler.”

“It essentially brings Niagara up to a higher level in line with other foreign trade zones across the world,” he said. “We’re going to be able to compete against these areas globally now. It is a game-changer because it elevates us to that level now.”

With FTZ designation, Niagara will become a “soft landing point” for companies importing products throughout the region as well as businesses throughout southern Ontario.

“It’s quite exciting for everyone we’re working with,” Jacobi said. “This is going to allow for better access to FTZ programs for smaller companies, less registration and less paperwork for it to come across.”

Welland’s economic development officer, Dan Degazio ,said the FTZ designation has already helped the city bring an industry to town.

“We’re working on one right now,” Degazio said, referring to a company he’s working with that has chosen to set up shop in Welland in expectation of the announcement.”

Degazio said he cannot provide any additional details at this time.

He said the FTZ designation “is another tool in our chest for attracting investment.”

When combined with the low Canadian dollar and provincial Economic Gateway Centre and Gateway Zone incentives, Degazio said it will allow Niagara communities to “compete with any state in the U.S.”

St. Catharines Mayor Walter Sendzik said the designation is “one of those transformative, critical pieces of the puzzle that is now in place.”

“The success and the impact will be felt for a lot of years moving forward,” he said. “This is that calling card I think we’ve wanted for a long time.”

Although developing an FTZ might not be realistic in other jurisdictions, Sendzik said it is a perfect fit for Niagara because of its other assets, such as transportation, provincial incentives, development land and a knowledgeable workforce.

“We’ve got it all there, but we’ve never been able to wrap it around something,” he said. “Now, we can wrap it around the foreign trade zone.”

Welland Mayor Frank Campion described the designation “opens another door for us.”

“It’s a perfect fit for what we need to do here.”

Niagara is the seventh area in Canada to be designated as an FTZ, and the first in Ontario. It’s also the first to be located on an international border, directly across the Niagara River from a foreign trade zone in Buffalo.

The designation now allows Niagara communities to compete with the Buffalo free trade zone for attracting investment from companies.

Greater Niagara Chamber of Commerce president Mishka Balsom stressed the impact the designation can have on businesses throughout the region.

“The importance of this designation to Niagara cannot be overstated,” she said. “With its world-class attractions, agriculture, research institutions, wineries and breweries, and its advantageous geographical situation between two of the Great Lakes and on a major border crossing, Niagara can become a major site of international trade and commerce. The FTZ Point brings that status a huge step closer.”

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