Hamilton officials say trade zone will boost community's economy post-pandemic
Hamilton became the third municipality in Ontario to be designated a foreign trade zone in what officials say could prompt the area to rebound from the coronavirus pandemic slowdown.
Because of this designation this will actually attract investment and expand markets because of the advantage of doing business in this designation," said Hamilton West-Ancaster-Dundas Liberal MP and Labour Minister Filomena Tassi, during a virtual announcement Nov. 10.
The foreign trade zone, or FTZ, designation allows goods to flow into Canada, tax- and duty-free, where they can be used to manufacture products for export. If those products are sold to other countries and not in the Canadian market, no tax and duty are payable. The policy boosts export-oriented businesses by exempting them from tariffs and HST, which can be confounding for businesses.
Melanie Joly, federal minister of economic development who participated in the news conference, along with Hamilton East-Stoney Creek MP Bob Bratina, said that companies interested in accessing these programs must apply through Invest Hamilton, or the Federal Economic Development Agency for Southern Ontario, to receive the exemptions.
Canada's trading zones are not actually zones" as they are in other countries such as China and the United States, but a collection of programs, including the Duty Deferral Program, the Export Distribution Centre Program and the Exporters of Processing Services Program. They focus on the import, export and re-export of goods into Canadian territory which are then free from Canadian tax laws, stated a 2018 report called A Tale of Two FTZs: Reforming Canada's Foreign Trade Zone Program," by University of Windsor's Kyle Sousa.
A 2012 report from the McMaster Institute of Transportation and Logistics, called Maximizing the Potential of the Foreign Trade Zone Concept in Canada," argued that Canada's trade zones are inefficient and thus not as effective as FTZs found in other countries." This is because of the decentralized nature of the Canadian program, the report stated.
Hamilton's economic development executive director Norm Schleehahn said having the trade zone is another strategic advantage" the city can use to attract companies to locate in the area.
The program offers white-glove, front-of-the-line service to dedicated government agencies that specialize in foreign investment," he said.
Schleehahn said the city, along with airport and port officials, has been working toward the trade zone designation for at least two and a half years.
Catherine Puckering, president and chief executive officer for the Hamilton International Airport, said the designation will generate business activity, create employment and strengthen our future."
She said businesses located in a trade zone will benefit from reduced duties and taxes, access to custom-bonded warehouses, allowing businesses to quickly export their goods.
It does provide another tool to strengthen (Hamilton's) position," she said.
Ian Hamilton, president and chief executive officer for the Hamilton and Oshawa Port Authority, was equally effusive about the designation to assist the port and the city's transportations system.
It will give us an additional competitive edge making Hamilton the ideal location for export business," he said.
Niagara Region economic development officials boast that the trade zone, designated by the federal government in 2016, has resulted in $4.3 billion in total exports and spurred 13.5 per cent in employment growth among Niagara exporters.
But designating these trading zones does cost the federal government money. In 2011-12, foregone revenues from these zones amounted to about $885 million.
Joly said Hamilton joins Niagara and Windsor as trade zones in Ontario, along with 12 others across Canada, including Winnipeg, which was the first one created under the former Conservative government of Stephen Harper.
We lost one million jobs pretty much since the beginning of the pandemic," said Joly during the virtual announcement. We've pledged to create one million new jobs. To do that we have to do many, many things."