Frequently Asked Questions

1. What does value-added mean?
2. What is Canada’s Value-Added Gateway?
3. Across the Government of Canada, what has the Value Added Gateway Initiative done so far?
4. What is a Foreign Trade Zone (FTZ)?
5. Does Canada have designated Foreign Trade Zones (FTZs)?
6. What is CentrePort Canada?
7. What are the CentrePort Canada Pilot Projects?
8. Why was CentrePort Canada selected as the test site for the federally-led pilot projects?
9. Is the Federal Government considering expanding the CentrePort Canada pilot projects to other inland port initiatives?
10. What are the qualities of a successful inland port initiative?
11. How much is the federal government investing in CentrePort Canada infrastructure?
12. What are the Benefits of the CentrePort Canada Pilot Projects for Business?

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1.  What does value-added mean?

Value-added means increasing the value of a product/service at every link in a value chain: from the idea stage to its design, production, marketing, distribution, sales and even end user support. Examples include:

• Logistics services that create value in the distribution and circulation stages of the supply chain. These services include packaging, labelling, warehousing, distributing, tracking and tracing products; and
• Supporting services such as access to credit, legal and brokerage services, as well as communications and marketing expertise. These trade supporting services are of strategic value to the economy because lower-level tiers of the economy depend on them for their trade to happen in the first place.

2.  What is Canada’s Value-Added Gateway?

This is a term that describes an approach for building on the success of the Asia Pacific Gateway and Corridor Initiative (APGCI). Its goal is to find ways to help create more jobs and generate more wealth that will contribute to sustained long term economic growth. It goes beyond traditional bricks and mortar to finding ways to benefit from the economic value associated with gateway investments and emerging trade patterns. It also focuses on how to allow Canadian companies to exploit more global opportunities by identifying key policy barriers and conducting awareness programs and strategic research on key issues, e.g., the Foreign Trade Zone concept and how it applies to Canada. Work on such issues involves collaboration among many federal departments and agencies.

Value-Added Gateway measures may include:

• aligning policies;
• streamlining federal regulations;
• understanding and addressing the logistics needs of small/medium-sized enterprises;
• increasing international outreach and engagement activities (especially with United States and China);
• developing better tools to measure system wide gateway performance; and
• building skills and technology capacities.

These measures will apply to the APGCI, and may apply to the two emerging gateway strategies (Continental Gateway and Atlantic Gateway) in the future as well. To learn more about Canada’s gateway strategies, please refer to Canada's National Policy Framework on Strategic Gateways and Corridors: http://www.canadasgateways.gc.ca/
NationalPolicyFramework/nationalpolicy.html.

3.  Across the Government of Canada, what has the Value Added Gateway Initiative done so far?

We have provided greater flexibility for shippers

In December 2009, Parliament passed amendments to the Customs Tariff regulations that will:

• Increase how long temporarily imported international marine containers can remain in Canada free of the duties and GST/HST from 30 to 365 days; and
• Allow these temporarily imported containers to be used to transport goods between more than two points in Canada if that transportation is incidental to the international traffic of goods.

These changes are designed to advance Canada’s Gateways objectives. How? They should:

• increase the capacity of Canada’s transportation system for trade in goods;
• promote more efficient movement of international marine containers;
• improve the efficiency of logistics services;
• harmonize the treatment of international marine containers with those of the United States; and
• facilitate trade.

You can read the latest version of the Customs Tariff online at www.cbsa.gc.ca/trade-commerce/tariff-tarif/2009/01-99/tblmod-1-eng.html.

We have proposed tax relief to help renew Canada’s marine fleet

Importing ferries, tankers and cargo vessels that are 129 metres long or more, is currently subject to customs duty rates of up to 25 per cent. Following consultations it held in 2009, the Department of Finance proposed removing customs tax on these ships. This tax relief will advance Canada’s Gateway objectives by stimulating the renewal of Canada’s marine fleet with modernized vessels; which will:

• improve marine safety, efficiency and environmental performance;
• increase the overall efficiency and capacity of Canada’s transportation system; and
• enhance the competitiveness of key sectors of the economy.

For more information, please consult the Canada Gazette: http://www.gazette.gc.ca/rp-pr/p1/2009/2009-10-24/pdf/g1-14343.pdf

We have created greater flexibility for Canadian workers

The Government of Canada has allocated $3 million for selected Skills Table projects under the Asia-Pacific Gateway and Corridor Initiative. The Asia Pacific Gateway Skills Table brings together industry, labour, governments and Aboriginal interests to address human resources and skills development pressures associated with investments in the Asia-Pacific Gateway. The Skills Table:

• establishes priority projects;
• leverages investments in skills and human resource development projects;
• supports partnerships among industry stakeholders; and
• advance solutions and strategies to meet industry needs.

Current Skills Table projects include the:

• British Columbia Security Labour Market Roundtable (May 4, 2009 – December 31, 2009; $83,079 in federal funding);
• Business of Shipping – Training Pilot Project (June 15, 2009 – January 15, 2011; $147,047 in federal funding); and
• Asia-Pacific Gateway Labour Market Information and Clearinghouse Project ($388,000 in federal funding).

You can learn more about the Asia Pacific Gateway Skills Table at: http://www.apgst.ca/.

We have helped Canadian companies exploit global opportunities

The Value Added Gateway Initiative identifies key policy barriers and conducts awareness programs and strategic research on key issues, such as the Foreign Trade Zone (FTZ) concept and how it applies to Canada. Some results to date include:

• A Canada-U.S. FTZ comparison study that confirms that Canada offers comparable treatment and benefits for businesses involved in export-oriented activities as are currently available under the United States' FTZ program. You can read the full report online at: http://www.canadasgateways.gc.ca/docs/TC-Canada-US%20Comparison%20of%20FTZ-Related%20Programs%20_FINAL.pdf; and
  
  
• The booklet: Canada's Tax and Duty Advantages: Enjoy the Benefits of Foreign Trade Zones... Anywhere in Canada! Based on Canada-U.S. FTZ comparison study, the booklet will help raise awareness of Canada’s advantages such as our business-friendly tax and duty deferral regimes – for companies involved in international trade. You can read the brochure online at: http://www.canadasgateways.gc.ca/docs/ftz-web-booklet.pdf.

To learn more about FTZs, please read Questions 4 and 5 below.

4.  What is a Foreign Trade Zone (FTZ)?

According to the 2005 United Nations report Free Trade Zone and Port Hinterland Development, most Foreign Trade Zones (FTZs) are areas designated specifically for export activities. They may also be known as Free Trade Zones, Export Processing Zones, Free Export Zones and Special Economic Zones. FTZs around the world are generally located at or near a port of entry (i.e., a border crossing, marine port or air port), and typically feature:

• Advanced Infrastructure: including high quality and high capacity links to transportation and communications networks, serviced land for development, office space, utilities, logistics services and other business services;
• Flexible Regulations: streamlined customs processes, often involving a single window service provider for getting necessary permits and applications;
• Beneficial Location/Pricing: FTZs are often used during outsourcing away from the "higher cost" final market to a "lower cost" offshore processing location; and
• Incentives: to attract jobs and investment to an FTZ through:
  • exemption and/or deferral of customs duties;
  • grants for developing and employing local human resources;
  • exemption and/or deferral of sales and value-added taxes; and
  • other tax incentives (e.g., lower corporate income taxes than are levied by the host country outside of the FTZ).
    
    

5.  Does Canada have designated Foreign Trade Zones (FTZs)?

No, because businesses can enjoy FTZ benefits anywhere in Canada. For companies involved in international trade, Canada has three of the most business friendly incentive programs available anywhere in the world:

• The Duty Deferral Program (DDO) is administered by the Canada Border Services Agency (CBSA) and entitles qualified companies to postpone or refund duties and taxes normally paid on imported goods. To learn more about the DDO, please refer to CBSA: http://www.cbsa-asfc.gc.ca/import/ddr-red/menu-eng.html;
  
  
• The Export Distribution Centre Program (EDCP) is administered by the Canada Revenue Agency (CRA) and allows qualified companies to import goods and/or acquire goods in Canada, process them to add limited value and then export them without paying GST/HST on most imported goods, or on domestic purchases of goods worth $1,000 or more. To learn more about the EDCP, please refer to CRA: www.cra-arc.gc.ca; and
  
  
• The Exporters of Processing Services Programs (EOPS) is also administered by CRA, and relieves participants of the obligation to pay GST/HST on imports of goods belonging to non-residents, provided that these goods are imported for processing, distribution or storage and then exported. Taken together, the duty and tax benefits of these programs broadly compare to the advantages provided by FTZs in other countries. But unlike traditional FTZs, which tie businesses to a location that may not be ideal for them, Canada’s programs offer companies the vitally important advantage of geographic flexibility. Because they can be accessed anywhere in Canada, these programs make it possible to create FTZ environments exactly where they are needed. To learn more about the EOPS, please refer to CRA: www.cra-arc.gc.ca.

Canada’s trade advantages are further increased by a business-friendly tax regime, where:

• Canada will have the lowest corporate income tax rate among G7 countries by 2012, and the lowest overall tax rate on new business investment by 2010;
  
  
• Canada’s network of income tax treaties with over 80 countries facilitates cross-border trade and investment by removing tax barriers  – e.g., by eliminating double taxation and lowering withholding taxes;
  
  
• The value-added consumption tax – the GST/HST – is fully recoverable for businesses engaged in commercial activities and does not apply to exports; and
  
  
• Budget 2010 will eliminate all remaining tariffs on manufacturing inputs and machinery and equipment.

Taken together, Canada’s highly competitive tax and duty deferral regimes (particularly the FTZ type programs) allow export oriented companies to “enjoy the benefits of foreign trade zones anywhere in Canada”. To learn more about Canada’s tax and tariff policies, please refer to Finance Canada: http://www.fin.gc.ca/.

6.  What is CentrePort Canada?

CentrePort Canada is a 20,000-acre inland port and trade area surrounding J.A. Richardson International Airport in Winnipeg, Manitoba. The CentrePort Canada initiative is focused on leveraging Manitoba’s role as a hub for international transportation, manufacturing, distribution and warehousing, to attract investment and create jobs.

7.  What are the CentrePort Canada Pilot Projects?

Recognizing that Canada’s trade facilitation programs can be better understood and marketed, the Federal Government launched two pilot projects at CentrePort Canada on October 8, 2009, to help raise awareness of Canada’s business-friendly tax and duty deferral advantages, including enhanced promotion of Canada's FTZ type programs domestically and overseas. The projects are:

8.  Why was CentrePort Canada selected as the test site for the federally-led pilot projects?

CentrePort Canada was selected for the pilot projects because it presented a strong business case that aligns closely with Canada’s Gateway approach

You can learn about Canada’s Gateway approach in the National Policy Framework on Strategic Gateways and Corridors, at:
http://www.canadasgateways.gc.ca/NationalPolicyFramework/nationalpolicy.html.

• Multimodal transportation facilities that are connected by viable, bottleneck/congestion-free intermodal links
  The CentrePort Canada initiative uses Winnipeg’s J.A. Richardson International Airport and surrounding land as a hub for importing goods from Asia and Europe and then distributing them throughout North America by air, rail, road and sea.
  
  
• To improve highway access, the Governments of Canada and Manitoba have committed funding of up to $212.4 million for the CentrePort Canada Way project, an expressway that links Winnipeg’s Perimeter Highway to this site.
  
  
• Location on, or linkage to a strategic gateway, trade corridor and/or border crossing
  Winnipeg plays a unique role in both East-West and North-South trade. It is a key intermodal hub for the Asia-Pacific Gateway and Corridor, and is connected directly to Western Canada’s busiest Canada-US crossing at Emerson, Manitoba.
  
  
• Established international traffic and trade
  Nationally significant volumes and values of international trade and travel are carried each day on rail, highway and air routes converging on Winnipeg.
  
  
• Strong provincial and local support
  CentrePort Canada was nominated as a priority by the Province of Manitoba. Both provincial and local governments granted CentrePort Canada preferential taxes and regulations to support fast-tracking investments. Local business and chambers of commerce have endorsed and will participate in the project.
  
  
• Enacted legislation The province of Manitoba enacted the CentrePort Canada Act, creating CentrePort Canada Inc. and prescribing its governance structure, mandate and powers.
  
  
• A dedicated governance body
  CentrePort Canada Inc. is a non-share capital corporation with a private sector focus, and a mandate to operate and market the initiative and to attract and co-ordinate business investment
  
  
• Compliance with statutory requirements
  The CentrePort Canada initiative complies with statutory requirements such as environmental assessments, aboriginal consultations, transportation safety regulations, and governing legislation
  
  
• A skilled labour force
  Winnipeg offers available pool of skilled labour and complementary industries to support the initiative. In fact, CentrePort Canada has established links to post secondary institutions, existing logistics operations and information technology firms.
  
  
• Available land for development
  There is enough zoned and serviced land at the CentrePort Canada site to meet expected demand.

9.  Is the Federal Government considering expanding the CentrePort Canada pilot projects to other inland port initiatives?

No. Not before we evaluate the lessons learned from the CentrePort Canada pilot projects–and how they could apply to other emerging inland ports and multimodal hubs in Canada.

However, we do strongly encourage emerging inland ports and multimodal hubs to align their activities with federal policy objectives and:

• Consider the potential impacts on other nearby inland ports/multimodal hubs and/or transportation facilities, and on transportation services in the region;
  
  
• Base the justification for an inland port on current demand and/or substantiated intended customers and investors; and
  
  
• Identify and address the potential negative impacts of increased traffic on the community, such as increased noise, congestion and emissions.
  
  

10.  What are the qualities of a successful inland port initiative?

While there is no single model for inland port initiatives, some common success factors have been observed among established North American inland ports and FTZs, such as:

• Location, availability and control of land by the inland port entity, integrated logistics and transportation network(s), labour availability, private sector engagement, and support and collaboration of local and state/provincial governments to approve zoning, permits and development plans, as well as contribute funding to basic infrastructure (e.g., water, sewer, utilities, road access);
  
  
• Allowing the private sector to lead inland port development once governments have met basic infrastructure requirements and established a business-friendly framework for investment;
  
  
• Using FTZs as a marketing tool without depending on them as the main source of revenue;
  
  
• Engaging railways early in the development of business plans, since an efficient and competitive rail intermodal facility is key to attracting investors;
  
  
• Having a major multinational firm as an "anchor tenant" for the inland port; and
  
  
• Being willing and able to wait for returns on initial investment as developing a successful inland port can be a 20- to 30-year initiative.

11.  How much is the federal government investing in CentrePort Canada infrastructure?

The federal government is investing in five infrastructure projects supporting CentrePort Canada. The combined total cost is over $460 million, with the federal government contributing almost $190 million:

1. The CentrePort Canada Way, an expressway that links the Perimeter Highway to this site will cost $212.4 million. Canada will contribute $101.6 million – $68.35 million from Provincial Territorial Base Funding and $33.25 million from the Asia-Pacific Gateway and Corridor Initiative.
   
   
2. The Trans-Canada Highway and Yellowhead Highway Interchange will cost $96.5 million. Canada will contribute $21 million from the Gateways and Border Crossings Fund (GBCF).
   
   
3. Improvements to Highway 75 leading to the Emerson border crossing, Western Canada’s busiest crossing with the United States, will cost $90.2 million. Canada will contribute $42.5 million from the GBCF.
   
   
4. Hudson Bay Railway rehabilitation will improve access to the deepwater Port of Churchill, Manitoba at a cost of $60 million. Canada will contribute $20 million from the GBCF.
   
   
5. Port of Churchill improvements projects will cost $8 million. Canada will contribute up to $4 million through Western Economic Diversification.

CentrePort Canada received an additional $3.5 million (over $1.5 million from the federal government) as part of the renewed Canada Manitoba Economic Partnership Agreement. This funding will help CentrePort Canada Inc. with its start up and operating costs.

12.  What are the Benefits of the CentrePort Canada Pilot Projects for Business?

The Single Window Task Force will give businesses access to "one stop shopping" to learn about and apply to FTZ-type programs. The Task Force will provide CentrePort Canada and the business community with coordinated and pro-active assistance on federal trade and business facilitation programs that will:

• Save time for businesses;
• Help boost trade;
• Contribute to promoting direct foreign investment in Canada; and
• Allow businesses and economic development authorities to:
  • get quick, accurate information on regulations;
  • take full advantage of federal (and provincial and municipal) trade and economic support programs; and
  • market CentrePort Canada’s trade and investment advantages internationally.

The Pan-Western Outreach Program’s seminars will give companies in Western Canada access to information on Canada’s tax and duty relief advantages, as well as our government’s key reform initiatives such as:

• Lowering the GST from 7 to 5 percent;
• Progressively lowering corporate tax rates, to a combined federal-provincial rate of 25 percent by 2012 – the lowest rate in the G7 countries;
• A new tariff relief package that aims to eliminate the remaining tariffs on manufacturing inputs and machinery and equipment; and
• The elimination of the paper work burden on business as part of tariff elimination.