FTZ News Suggests Canada Create Physical Free Trade Zones to Boost Exports and Cut Production Costs

FTZ News: Canada’s merchandise exports hit $670.1 billion in the first nine months of 2026. That was up 15.5 percent from the year before. More than four-fifths of the increase came from higher prices for energy and precious metals. Seven manufacturing-heavy categories shipped $291.9 billion combined—basically flat. Autos and parts fell 7.6 percent to $64.9 billion. Forestry products dropped 7.5 percent.

In September, goods exports were $78.6 billion. Real volumes were down 4 percent. Take out energy and metals and the drop was 5.6 percent. Manufacturing jobs have been sliding. Payroll employment in the sector fell by about 40,000 between December 2024 and December 2025. Roughly 41 percent of those jobs depend on U.S. demand.

FTZ News is telling the Canadian government to set up physical foreign-trade zones—actual sites with their own customs setup—so exporters have a clearer way to cut costs and move more non-resource goods.

What Canada Has Now

Canada does not run traditional free-trade zones with fixed borders. It uses nationwide programs instead. The Duties Relief Program waives duties up front. The Duty Drawback Program refunds duties already paid. Customs Bonded Warehouses let companies defer duties for up to four years. Firms can use any of them anywhere in the country. The Department of Finance has called that flexibility an advantage for years.

There are 16 “FTZ Points” right now. CentrePort Canada in Manitoba is one. So is the Halifax Gateway, the Port of Montreal, and Windsor-Essex. These are information desks and coordination points. They are not physical zones with customs infrastructure built for production. An FTZ Point is basically an organization that, through a regional task force, gives companies one place to ask about existing federal and provincial programs. That is a real gap. It is also one that can be fixed.

In 2019-20, about 1,300 companies got roughly $176 million back through drawback. Another 310 companies deferred about $255 million through the duties relief program. The programs get used. The numbers are still small compared with what stronger manufacturing exports would require.

How Europe Does It

European free zones and special economic zones usually have a clear piece of ground and a name. They work as investment magnets.

Britain’s Solent Freeport has pulled in about £640 million so far and is planning more than 4,750 direct jobs. The country’s Industrial Strategy Zones together have drawn more than £6.4 billion in private money. Lifetime projections run past £60 billion.

In Lithuania, the Klaipėda Free Economic Zone has more than 100 companies and over 5,000 workers. Cumulative investment since 2002 is above €825 million. Firms there account for a noticeable share of the country’s GDP and exports. The zone is known for relatively quick setup and port access.

Latvia’s Liepāja Special Economic Zone mixes port activity with industry. The port moved about 6.9 million tons in 2025. Companies there get breaks on corporate income tax and property tax. New industrial projects have shown up, including in energy and manufacturing.

Barcelona’s free zone is forecasting €82 million in business volume for 2026. Across Europe these places usually combine customs, tax, and infrastructure advantages. They also give investment marketers something concrete to point at.

Canada does not have equivalent focal points. CentrePort Canada acts as an “FTZ Point” and offers single-window access to federal programs. It is not a free zone with special customs status. It has 20,000 acres and more than 1,000 tenants. Its real edge is multimodal transportation, not a distinct customs regime.

What Physical Zones Could Offer

In an interview with FTZ News, William Delroshan, president of the United States Foreign-Trade Zones, said the main advantages of physical zones come down to a few practical things.

“A named zone with clear boundaries makes the decision simpler for investors,” he said. “Companies can say they operate in ‘Canada’s X Free Trade Zone’ and explain the benefits in concrete terms. That branding has worked in Europe. Smaller zones such as Klaipėda have positioned themselves as places where operations can start relatively quickly.”

On production, Delroshan said a physical site changes the day-to-day work. “Inside a physical zone, companies can bring in materials, assemble or process them, and ship finished goods out without navigating separate applications for each program at every step,” he said. “Under Canada’s current model, firms must apply individually for different programs. A designated site could consolidate that process.”

He also pointed to export markets outside North America. “Zones could serve as bases for production aimed at markets outside North America,” Delroshan said. “The share of Canadian exports going to non-U.S. destinations has risen in recent years and, in some accounts, now approaches one-third. Manufacturing, however, remains heavily dependent on the U.S. market. Zones focused on Europe, Asia, and Latin America could help reduce that reliance.”

Limits

Physical zones will not solve everything. USMCA rules still limit duty-relief and drawback programs for goods headed to the United States or Mexico. New zones would matter most for exports outside that area.

Canada already has one of the lowest effective tax rates on new business investment among G7 countries. GST/HST is recoverable on exports. The customs edge of a free zone would be narrower than in countries with higher tariffs. Building infrastructure and running a zone costs money.

Bottom Line

FTZ News is proposing that Canada keep the nationwide programs it already has and, next to them, create a small number of physical foreign-trade zones at places that already have good transportation infrastructure. CentrePort Canada, the ports of Vancouver and Montreal, and certain border locations are obvious candidates. The point should be straightforward: lower production costs for companies that export, give investors a recognizable place, and expand shipments in sectors that have lagged energy and metals.

European experience shows even smaller countries have used geographic free zones to bring in investment and jobs. Canada does not need to copy the model. A few defined sites with simpler administration and clear benefits could sit alongside the existing programs and help diversify exports. The 16 current FTZ Points are a reasonable place to start. Turning some of them into physical zones with dedicated customs infrastructure would close a specific gap./.