Vancouver International Airport is North America's best choice for logistics and supply chain management, with easy reach to global markets. Built on a strategic location as the closest major port between Asia and the Americas, its competitive cost structure and flexible Airport Authority management provides an attractive gateway for moving freight. In addition, new export distribution centre legislation provides companies with an environment conducive to re-exports with no duties or taxes.

Throughout the opening of new air services around the world and into the Americas, YVR's world class reputation has been solidified through the introduction of new infrastructure, facilities and an orientation towards customer-service. Its success is measured in rapid growth to 16 million passengers and over 250,000 tonnes of cargo annually (2000 statistics).

North America's Supply-Chain Airport

• Market Reach
  Vancouver International Airport has significant market reach to destinations around the world. Greater reach into Asia versus Los Angeles (LAX), San Francisco (SFO) and Portland (PDX) - Vancouver (YVR) is also accessible to major destinations throughout South America and Europe.
• Market Access
  YVR is a major hub for Global Air Connections, being the closest and fastest major North American city to Asia, and is in easy reach to markets in Europe. There is excellent ground transportation connectivity to major east-west and north-south routes, with only a 25-minute drive to the US border. There are 5 major border crossings between the Greater Vancouver Region and the USA, while bilateral agreements between Canada and the USA provide easy access to all major North American markets. New expedited border crossing systems are currently being planned through a "Smart Border Action Plan" between the Canadian and US Governments. New funds appropriated include vigilance between the two countries to ensure and improve the easy flow of legitimate goods across the borders.
• Center for Logistics and Distribution
  A strong logistics community is already in place and available at YVR. The top global freight forwarders already operate at YVR and are supported by numerous carriers serving air-to-truck movements. Together they provide clients with a compliment of competitive services. A UPS Regional Hub, and major FedEx, DHL and Purolator operations are also available for rapid integrator shipments throughout an extensive air and ground network.

Economic Advantages of YVR

• A Smart Airport
  YVR possesses numerous advantages including an available high speed, broadband network and an abundance of airside and non-airside related lands for lease.
  YVR is also an efficient and growing ground transportation hub, which includes trucking and public transit. Furthermore, there are on-airport education facilities, such as the BC Institute of Technology (BCIT). YVR is in operation 24-hours a day, 7 days a week, including round-the-clock customs and runway operations.
  
• Strong Development Potential
  YVR offers a 'flexible' approval process for land development on its site, as a means to stimulate economic and business development. To meet this objective, careful planning has taken place to generate maximum value for developers and provides the essential infrastructure to facilitate logistics and distribution functions.

New Export Distribution Center (EDC) Legislation

• Why is EDC's important for Global Logistics?
  Until now, Canada was the only G-8 nation without effective provisions for free trade zone (FTZ) capabilities. The inability to bring goods into Canada, and add value to them in a tax and duty free environment, meant that Canada generally was not viewed as an attractive location for modern North American distribution centres -despite its geographic and operating cost advantages.
  
  With the recent changes to Canada's tax laws, firms now have the opportunity to operate EDC's in Canada and to be a part of the world-wide growth in such activities. This new opportunity allows Canada to provide a flexible tax and duty free environment for serving as a distribution centre to the US and world markets.
  
  Firms operating within an EDC can purchase Canadian goods on a tax-free basis and import foreign goods on a tax and duty-free basis if the goods are primarily intended for export/re-export. Value-added opportunities are provided for, as long as the goods are not manufactured or substantially changed in the EDC environment.
  
  Canada's new program eliminates the key limitations with past regulatory provisions. EDC's now provide the same relief from duties and taxes that US FTZs provide, but in a much more flexible format. In Canada, you can choose where you wish to locate your EDC operations - you are not confined behind barbed wire fences on a pre-defined and limited piece of land that cannot grow or move with your business as your needs change.
  
  Lowered bonding requirements (from 100% of duties and taxes payable to 0% for low risk goods and 60% for high-risk goods) as well as the tax and duty-free status eliminates up-front financing requirements.
  
  The administrative element is also being simplified by the introduction of a "single window" approach. Verification of compliance is being harmonized, so that instead of potentially facing separate audits related to each Canada Customs and Revenue Agency program participated in, audits will be co-ordinated.
  
  Canada's new environment allows:
  
  • Duties/ tax relief
  • A single application for eligibility to the whole array of Canada Customs and Revenue Agency programs (including EDC, duty relief, warehouse, bonded warehouse, exporters of processing services, warranty and repair, drop shipment, and export trading house programs)
  • Firms can take advantage of Vancouver's geographic location to access the US, Mexican and world markets. Vancouver is the closest NAFTA port to Asia.
  • Firms can take advantage of Canada's low business operating costs.
  • EDC's allow exporters to avoid the US inverted tariff and enjoy the benefits of US FTZs without having to enter the high-cost US environment.
  • Firms can take advantage of Vancouver International Airport Authority support (including having available land at reasonable lease rates, and assistance with government dealings)
  • There are a number of other financial and non-financial support programs related to export activities, investment and employment, that are available from the federal, provincial, and local governments.
  
  
• Who should be looking at establishing operations within an EDC?
  
  There are a large number of potential clients of an EDC, this including:
  
  • Canadian distributors primarily exporting to the US and other foreign markets (firms must derive 90% or more of their revenues from exports).
  • Foreign manufacturing firms that are looking for cost-effective gateways into the US/Mexican marketplace.
  • Firms that transport goods in bulk and then undertake repackaging, labelling, product customisation pick and pack operations, or other value-added activities that fall short of manufacturing, just prior to delivery to the customer.
  • Order fulfilment centres.
  • Firms engaged in warranty repair activities.
  Essentially, any firm that is primarily involved in export distribution of goods would benefit from EDC operations and is a potential client for an EDC.
  
  
• Why are EDC's important to global distributors?
  
  In modern supply-chain management, producers can achieve cost savings by transporting standard unfinished products close to the market, and postponing customization of the final product until the point of sale. This allows a high level of customer service at a cost-competitive price. Such activity can be done very effectively in the EDC environment, particularly if the product faces an inverted tariff in the US.



• Is this restricted to Canadian operators?
  
  No, the programs are open to Canadians and to foreign operators wishing to establish an EDC in Canada. The same rules apply to each.



• What paperwork is required to operate in an EDC environment?
  
  As long as the EDC certificate remains valid, all that is required is to show the certificate number on the importation documents. This is sufficient to enable goods to enter tax-free - no additional forms are required. For domestic purchases, suppliers need to be shown the EDC certificate, and they can then provide the goods on a tax-free basis.
  
  Furthermore, no additional paperwork is required for any goods imported tax-free into an EDC that are not re-exported but are instead sold in the Canadian domestic market. Of course, to remain eligible for the EDC program, less than 10% of revenues can be derived from the domestic market.
  
  For goods imported into an EDC environment for repair work, GST exemption code 66 must be indicated in field 35 of the B3 Canada Customs Coding Form at the time the goods are accounted for at Customs.



• How do Canadian EDC's compare to US FTZs?
  
  
  • EDC's enjoy the same duty/tax advantages as US FTZ's
  • EDC's also allow exporters to the US to minimize US duties on goods subjected to the US inverted tariff
  • EDC's do not require operators to incur the high US costs of providing secure areas - EDC security is provided through modern accounting/audit systems (electronically)
  • EDC's are not confined to specific areas that are difficult to expand or move
  • Goods in EDC's may be moved to other locations, unlike US FTZ's
  • EDC's enjoy Canada's geographic advantages as gateways to the US market
  • EDC's enjoy Canada's lower business costs of operation
  
  
• Why should exporters be interested in EDC's?
  
  US FTZ's handle some $170 billion worth of merchandise annually and employ 340,000. Canadian EDC's offer the same benefits as US FTZs, and have a greater degree of flexibility. Moreover, Canada has a number of business locational advantages that complement EDC activity. This should prove a winning combination.

For further information concerning EDC at YVR please contact:
Raymond J. Segat
Director of Business and Land Development
Vancouver International Airport Authority
Phone: 1-(604) 276-6310
Fax: 1-(604) 232-6171
E-mail: Raymond_Segat@yvr.ca