Foreign trade zones in Canada vs. the United States: Which one to use?

This article is Part 5 of a 5-part series on foreign trade zonesWe explore what they are, where they exist, what advantages they provide and how businesses can benefit. 

 

Over the past year many business have asked us the question: What are the differences between foreign trade zones (FTZ) in Canada and the United States?

It’s a great question and we understand why it’s an important comparison to make.

Both FTZs offer similar benefits including promises of duty/tax deferrals and business incentives to move or relocate to a specific region.

However, there are differences to consider.

Knowing these differences between Canadian and American FTZs can help your business make the best decision and lower your total landed costs.

It’s a situation of two countries using their regulatory processes for business, agrees Yvon Pellerin, Canadian foreign trade zones (FTZ) program advisor for Drawback Experts Canada.

This article explains the differences and advantages of both FTZ's so you can decide which is best for your organization.

Read More

Secret foreign trade zone benefits every shipper must know

This article is Part 4 of a 5-part series on foreign trade zones. We explore what they are, where they exist, what advantages they provide and how businesses can benefit.

 

Read Part 3: How to set up a customs bonded warehouse in Canada (and reap the benefits!)

 

There are many foreign trade zones (FTZ) benefits such as providing accounting and immediate cash flow advantages through tax and duty deferrals.

But there are other advantages for businesses, including benefits to logistical and inventory controls.

“Primary among those advantages is the importation and then FTZ storage of goods when shipping rates are off peak season,” says Jim Brown of Calgary-based JRSB Logistics Consulting Ltd.

“Avoid peak season so you can reduce total landed costs,” Brown says. “Your freight costs are less.”

Both Brown and Yvon Pellerin, Canadian foreign trade zones program advisor for Drawback Experts Canada, say FTZs are good for merchandise not being immediately moved to market.

FTZ programs are highly effective for inventory control of seasonal goods.

But, warns Pellerin, supply chain and logistics professionals must keep accurate inventory control so as to avoid problems.


Read More

How to set up a customs bonded warehouse in Canada (and reap the benefits!)

 

This article is Part 3 of a 5-part series on foreign trade zones. We explore what they are, where they exist, what advantages they provide and how businesses can benefit.

Read Part 2: A review of Canada's foreign trade zones

 

What is a customs bonded warehouse?

The Customs Bonded Warehouse Program (CWB) is an option for businesses looking to lower their total landed costs through duty and tax-free storage of imported goods in Canada.

“The purpose is the same for all FTZ-like (foreign trade zone) programs – importing without paying,” says Yvon Pellerin, Canadian foreign trade zones program advisor for Drawback Experts Canada.

“As soon as the goods exit the warehouse, taxes are applicable. “If things are re-exported, there are no duties or taxes. It’s a good cash-flow benefit.”

Read More

A review of Canada's foreign trade zones

This article is Part 2 of a 5-part series on foreign trade zones. We explore what they are, where they exist, what advantages they provide and how businesses can benefit.

Read Part 1: What is a foreign trade zone and how your business can benefit. 

 

While Canada has a simple application process for its current foreign trade zone (FTZ) program, those familiar with the program say the marketing could have been better.

That doesn’t make it a failure, though.

Rather, it means regional FTZs have an opportunity to boost the benefits in their locales.

Yvon Pellerin, Canadian foreign trade zones program advisor for Drawback Experts Canada, says the government was right in handing off marketing to local areas.

They can better promote their FTZs so businesses can realize greater benefits.

Read More

What is a foreign trade zone and how your business can benefit

This article is Part 1 of a 5-part series on foreign trade zones. We explore what they are, where they exist, what advantages they provide and how businesses can benefit. 

 

Many countries, including Canada, find foreign trade zones (FTZ) an effective tool for transforming international trade, promoting their own goods while boosting the bottom line.

According to a U.S.-based Aberdeen Group October 2013 report, Strategic Inbound Optimization: Foreign Trade Zones and Reshoring Increase, 57 percent of companies surveyed showed decreasing import fees since using FTZs leading to cost reductions in their total landed cost.

 

Definition of a foreign trade zone

An FTZ is an area in or near a customs port of entry, where foreign and domestic merchandise is considered outside the customs territory.

As a result, certain types of merchandise can be imported into the FTZ without going through formal customs entry procedures or paying import duties.

Often, duties and taxes are due only at the time of transfer from the FTZ for domestic consumption. And, if the goods never enter the domestic commerce market – as in exported, no duties or taxes are paid on those items.

"It’s part of a territory where you can introduce imported goods and not pay duties or taxes," explains Yvon Pellerin, Canadian foreign trade zones program advisor for Drawback Experts Canada.

"What you can do with the imported goods depends on legislation each individual country," he says. "The importer is the one who benefits."

Read More