There's still a lot of work to do by the federal government before a foreign trade zone is established.
That's essentially the conclusion of a consultant's report for the provincial government given to MLAs last week.
The Ministry of Transportation and Infrastructure and Ministry of Jobs, Tourism and Innovation made the report by InterVISTAS Consulting Inc. available after commissioning the study earlier this year to look into the feasibility of establishing a special trade zone in B.C.
The study, which didn't specifically mention South Delta or the Tsawwassen First Nation, looked at a number of issues and potential benefits of having a foreign trade zone, aimed at attracting economic activity that would otherwise take place elsewhere.
The report explains the basic concept of the zone is that goods in them are considered to be outside the customs territory of the country. Certain types of merchandise can be imported into a zone without going through formal customs entry procedures or paying import duties.
Customs duties and excise taxes are due only at the time of transfer from the zones for domestic consumption. If the merchandise never enters domestic commerce, and it's exported to another country, for example, then no duties or taxes are paid on those items.
Some of the goods can be merely stored, awaiting reexport or entry into the domestic economy, the report explains, noting other goods are processed, using local labour, to add value to the products.
The report notes that concerns raised include the loss of government tax revenues as well as an overseas manufacturer's activity in an a zone resulting in Canadian firms losing existing sales to U.S. or other foreign customers.
The report says it's dubious there will be any significant displacement of existing economic activity by foreign operations attracted to a Canadian foreign trade zone, while the impact on government revenues would be positive.
The report also looked at potential incentives the government might consider within a foreign trade zone, including property taxes.
The study notes it would be important to consult with local governments to ensure foreign trade zone activity is truly incremental to the local economy, and not displacing a use of the land that would otherwise pay taxes.
Canada already offers duty and tax relief programs that enable Canadian and international firms to engage in foreign trade zone-like activities. The consultant's report notes the federal government, however, is marketing trade zone activity as part of its Gateway initiative, announcing in its 2011 budget that it will reexamine existing policies and programs.
The report notes the next step is to develop a policy that keeps the best features of the existing federal programs, while expanding the range of activities that can be done within the zones.
"The policy then would need to be implemented through a specific federal program, including marketing and application processes. This is clearly a federal responsibility but B.C. and interested local stakeholders need to provide input and guidance in the development of the policy."
There is also a municipal role, should they support such an initiative, the report adds.
In an interview with the Optimist earlier this year, Eric Waltz, president of Global Container Terminals Canada, said land adjacent to Deltaport, which is eyed for a major expansion in the next few years, could be an ideal candidate for a foreign trade zone.
Responding to concerns raised by Delta council, Michael Moore, CEO of Global Container Terminals, wrote a letter offering assurances local governance and taxation wouldn't be bypassed.
The company operates four container terminals through several principal businesses, including TSI Terminal Systems Inc. at Deltaport.
The TFN has also been mentioned as a potential site, which could result in Delta not receiving property taxes regardless.
