A robust economic recovery from the COVID-19 pandemic will require that all levels of government use the full range of tools at their disposal for stimulating economic activity, increasing domestic production capacity and leveraging Vancouver's role as a gateway to the world.
Establishing a free-trade zone in Greater Vancouver, coupled with key policy changes, presents us with the opportunity to build resilience in our economy and support local jobs.
This time last year, we were still learning about SARS-CoV-2, how it spreads and who was being impacted. Few among us had any understanding of how many "waves" we were about to experience.
Although case counts remained relatively low, we still witnessed unprecedented economic impacts. Last June, unemployment was a whopping 13%, a quarter-million jobs had been lost and there were 5,500 fewer businesses open in Metro Vancouver. We were also experiencing shortages of necessities like personal protective equipment, disinfectants and toilet paper, and a disruption in supply chains.
With vaccinations increasing rapidly, we are well on our way to defeating the virus here in Canada. However, the pandemic has laid bare our lack of local production capacity for essential items and the need for a new industrial strategy. The last year has left a significant economic scar that will take every effort to remedy.
A free-trade zone – a designated geographical area where goods can be imported and stored without paying certain taxes or import duties – could play a significant role in economic recovery and resilience.
Business leaders and economists often lament the fact that we ship our resources and products overseas to have others refine them and sell those products back to us. An operational free-trade zone would give us the opportunity to build on our strengths as an international transportation and logistics gateway and increase our domestic capacity to manufacture and add value to specialized products here at home.
Nearly a decade has passed since the initial push to establish a robust trade-zone policy in Canada, and we've been losing ground ever since. The Port of Bellingham's free-trade zone has had success attracting Canadian companies by offering significant benefits that could be available in Canada, but currently are not, and as a result, we are losing jobs and economic growth.
Important policy changes are required as the program in its current form seems to work against its stated intent. The regulations in place limit the amount of domestic value added to the product to just 20%.
In essence, the more jobs and local work that are created, the more potential benefits are lost. As we look to build resilience into our supply chains, this is simply the wrong approach. It puts Canadian manufacturers and exporters at a significant disadvantage relative to their American and international counterparts, who face no such restrictions.
Our region is home to several trade clusters where we have significant expertise and a distinct competitive advantage. Thanks to our airport and port, and our strategic location as a gateway to the Asia-Pacific region, we are leaders in high-tech manufacturing and transportation. In recent years, these two sectors employed around 100,000 in the region and contributed to outsized economic gains, showing that we have the talent and expertise here. These jobs are a result of us being a nexus of trade that provides access to international markets through land border crossings, air travel and marine cargo.
There is much at stake as we look to support economic recovery. It is estimated that a successful free-trade zone implementation could support over 44,000 new jobs, $2.6 billion in wages and $3.6 billion in new GDP across Canada. Here in B.C., nearly 8,000 new goods-producing and associated jobs would be created and nearly three-quarters of a billion dollars in GDP.
The modernization of the policy framework for free-trade zones, and the establishment of a zone in Greater Vancouver, would help Canada align its economic, trade, industrial and border security policies, while building resilience in our supply chains and providing family-supporting jobs.
Bridgitte Anderson is president and CEO of the Greater Vancouver Board of Trade, this article was first published in the June 14 edition of Business in Vancouver.