Welcome to the CBRM (Sort Of) Free Trade Zone

Welcome to the Cape Breton Regional Municipality, Nova Scotia’s second largest municipality with a population of 98,722 and home to the Port of Sydney. The Port of Sydney is the first port-of-call on mainland North America for vessels transiting the Suez Canal and acts as a gateway to the Great Lakes. With sea, road and air transportation, the port’s multimodal options allow for shipping and receiving flexibility. (CBRMFTZ website)

That is the Port of Sydney that greets you when you visit Business Cape Breton’s (BCB) newly launched Cape Breton Regional Municipality Foreign Trade Zone (CBRMFTZ) website and what a bustling port it is: vessels cruising in from Suez while others chug back and forth to the Great Lakes; trucks plying the highways while overhead, airplanes fat with freight head for points west.

There’s no mention of rail, which would mark Sydney out as an oddity among the world’s “multimodal” ports, but presumably readers who believe there are vessels from Suez making Sydney, NS, their first North American port of call will also believe it is possible to operate such a port without trains. Of course, such readers know nothing about international shipping and are a strange demographic to target with a “Foreign Trade Zone” website.

I figured there had to be a big reveal in which BCB admitted this version of the Port of Sydney was a dream, not a working reality, but it never came:

To complement the municipality’s major port development and international logistics park projects, the Government of Canada designated the region as one of Canada’s strategic locations for international trade. In May of 2016, the Government of Canada created a Foreign Trade Zone (FTZ) Point in the Cape Breton Regional Municipality (CBRM).

Source: CBRMFTZ http://cbrm-ftz.ca/

Is it just me, or does that read like those major projects have become realities, or at least, are much closer to becoming realities than they actually are?  The website certainly plays fast and loose with the truth (it features the artist’s rendering of the Port of Sydney including the second berth without noting that this is an artist’s rendering) although I’d be the first to admit that telling the truth about the Port of Sydney would make for far less jazzy copy:

Welcome to the Cape Breton Regional Municipality, home to the Port of Sydney, which has a functioning wharf and cruise ship terminal and will begin construction of a second berth as soon as it secures the property on which to do so. Across the harbor is an empty expanse of land created from material dredged from the harbor bottom on which we’re hoping the Chinese will build a container terminal. In the meantime, you could dock at the adjacent marine industrial park, where most available berths are occupied by decommissioned vessels (hence the park’s local nickname, “The Scrapyard’s Doorstep”) and the docks are in such a parlous state they may be used only at your own risk. We have roads, but we don’t always like trucks driving on them. We have an airport.

 

FTZ Point

The website, designed by Vibe Communications, tries valiantly to a) fill space and b) avoid mentioning that all the programs and benefits described apply everywhere in Canada.

All the text is taken from either the Canada Border Services website or the Canada Revenue website and all the links take you to one or the other, although a link to the “Foreign Trade Zone” page on the Department of Finance website might have been more helpful. There, after explaining that there is “no precise definition” of what constitutes a foreign trade zone, the Finance Department says:

Canada as a Foreign Trade Zone

There are important complementary programs that – together with the broad macroeconomic policies – greatly enhance the appeal of Canada as a unique FTZ. These programs, available across Canada [emphasis mine] offer benefits found in locally-oriented FTZs (e.g., in the United States). Thus, Canada’s FTZ-type programs offer investors the vitally important advantage of geographic flexibility.  Canada’s programs do not restrict investors to a handful of locations that may be distant from their best markets or may have inadequate infrastructure and poor logistics. [emphasis mine] In effect, programs such as the Duty Deferral Program, the Export Distribution Centre Program and Exporters of Processing Services Program make it possible to create an FTZ environment exactly where the business needs it, while offering all the benefits of a traditional FTZ.

That promise — that Canada is one big FTZ and investors need not be restricted to “a handful of locations” — makes the designation of a handful of locations (Calgary, Winnipeg, Edmonton, Halifax , the CBRM and Niagara) as FTZ Points seem kind of…pointless. Here’s how the Department of Finance defines the concept, which seems to be a remnant of the Harper government’s 2013 Economic Action Plan (note the reference to “Foreign Affairs and Trade Development”):

An FTZ Point refers to one of Canada’s strategic locations for international trade, where an organization with a mandate to promote local trade and foreign direct investment is uniquely supported by a single-point of access to information on relevant government policies and programs. This information is provided through a designated FTZ Task Force coordinated by the regional development agency responsible for the area, and may be comprised of representatives from the following federal departments:

Canada Border Services Agency
Canada Revenue Agency
Transport Canada
Foreign Affairs and Trade Development
Industry Canada
Export Development Canada

If you’re wondering what an FTZ Point looks like, it looks like this:

Source: Department of Finance Canada

The CBRM FTZ website makes no mention of an “FTZ Task Force,” but ACOA spokesperson Lori Selig assures me it has been established, is coordinated by ACOA and includes “the Canada Border Services Agency, the Canada Revenue Agency, Transport Canada and Global Affairs Canada.”

 

Designated body

I also asked about BCB’s status as the “organization” overseeing the CBRM’s FTZ Point. This implies that BCB is mandated to “promote local trade and foreign direct investment,” a mandate not actually mentioned on BCB’s own website where, in addition to describing itself as “poised for continued success,” it says:

Business Cape Breton delivers specific priorities that include programs and initiatives that will work to move the mandate of the Cape Breton Regional Municipality forward and will be tied into CBRM’s economic strategic direction for the region.  This website will continue to be updated with information on what it is that Business Cape Breton does and how it works in partnerships to accomplish the results that are impacting our region.

Nowhere in that word salad do I see anything that sounds quite like “promote local trade and foreign direct investment,” but since I don’t really understand what it does say, I can’t be sure. I do know, however, that BCB does not sound like a:

Dedicated governance body (through legislation/incorporation)

This, according to the Department of Finance, is a “consideration” for establishing an FTZ Point in a community, but not, according to Selig, a requirement:

The Government of Canada requires that a non-profit organization be placed in charge of an FTZ point. Business Cape Breton was put forward by the Cape Breton Regional Municipality and the Sydney Port Authority as the most appropriate organization.

(I am going to assume the “Sydney Port Authority” is the Port of Sydney Development Corporation.)

 

Follow the money…

The organization responsible for the FTZ Point can apply for FTZ marketing money under a program called (naturally) FTZ-Marketing Program (FTZ-MP):

Non-repayable contributions range from $10,000 to $150,000 for activities spanning a 12 month period. FTZ-MP provides matching funds of up to 50 percent of eligible expenses.

To date, BCB has not received any such funding, but the program runs until March 2018, so there may be time yet, provided some level of government can be talked into providing matching funds.

Watch that space.

 

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