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How will the Foreign Trade Zone designation affect Niagara?

Posted by Greg Chew on Jul 19, 2016 2:04:54 PM

foreign trade zone affect on niagara economy

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In April, Niagara was officially designated as a foreign trade zone by the federal government. This designation effectively allows businesses who import goods and raw materials for assemblage and storage the opportunity to participate in government programs that defer taxes and duties and free up cash flow.

The designation positions Niagara as a more favourable destination for both foreign and domestic investment. Niagara is already positively positioned in respect to proximity to the US market, readily available skilled workforce and serviced industrial development land. What this designation does then, is improve Niagara’s ability to compete as an industrial destination worth investing in on a global scale.

What is a foreign trade zone?

A foreign trade zone (FTZ) is a region designated for tariff and tax exemption. Eligibility applies to the “purchase or importation of raw materials, components or finished goods. Such materials and goods can generally be stored, processed or assembled in the FTZ for re-export (in which case taxes and duties generally would not apply) or for entry into the domestic market (in which case taxes and duties would be deferred until the time of entry).”

Canadian trade advantages: How they work

Canadian regions designated as FTZs allow companies involved in international commerce to enjoy a number of benefits through nationally established programs. The programs round out Canada’s Gateway strategy, an advanced set of incentives that allow for cheap and efficient access to global markets.  The three programs are:

How other FTZ’s across Canada have benefited

While the FTZ designation is a key decision maker for foreign investors, FTZ’s across Canada have only experienced moderate success. Winnipeg, the first FTZ established has benefited with establishment of three customs bonded warehouses. Other locations have not seen the same level of success yet. Many of Canada’s FTZ’s (5) are newly established and the decision to invest millions of dollars into a new location is heavily weighed lengthy process. 


Niagara's ability to attract industrial investment strengthened

That said, Niagara has recently been able to successfully attract domestic and foreign industrial investment on a similarly marketed incentive program, the Niagara Gateway Economic Zone CIP. This incentive programs existence was one of many deciding factors for both the Northern Gold Foods and General Electric's decision to build in Welland. Communities across Niagara now have the advantage of both investment attracting tools.  

 To learn more about the Niagara foreign trade zone click here. To source your industrial investment connect with me below. 

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Topics: Niagara, Niagara Economic Development

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