CANADA. Today on Parliament Hill, the Frontier Duty Free Association (FDFA) presented a report highlighting how Canadian land border duty-free stores struggle to compete with US retailers due to excessive regulations and restrictive policies.
The association is urging the government to take immediate action to reduce regulatory burdens and help Canadian land border duty-free stores compete fairly.
FDFA President Tania Lee remarked: “The Canadian land border duty-free industry plays a pivotal role in supporting border communities, promoting Canadian-made goods and contributing to the national economy.
“However, our businesses are at a distinct disadvantage due to domestic policies that are not similarly applied to US duty-free stores and US retailers.
“By taking immediate action to eliminate red tape and adjust regulations, our businesses could compete with and thrive like our American counterparts.”
FDFA outlined three key challenges:
- Misapplication of domestic policies: Unlike US competitors, Canadian land border duty-free stores face excessive red tape and policies designed for domestic markets, making it harder to compete.
- Pandemic recovery and border restrictions: The 20-month Canada-US border closure led to a -95% drop in duty-free sales. While the border has reopened, reduced cross-border travel and restrictive policies continue to hinder recovery.
- Reduction in cross-border travel due to tariff threats: The potential for US tariffs is discouraging cross-border travel, adding to the hindrances faced by Canadian land border duty-free stores.
Canadian land border duty-free stores contribute to local economies, particularly in rural and border communities. These provide jobs, support local businesses and offer a final opportunity for spending to remain in Canada rather than going to the US.
These stores also sell Canadian-made products such as maple syrup and craft beer, helping sustain domestic industries.
“We are asking for our highly regulated businesses to be put in a position to compete with our only competitor – US retailers,” said FDFA Executive Director Barbara Barrett.
“Level the playing field by cutting the red tape. The government can take immediate, revenue-neutral steps to help us compete, especially as we continue recovering from the unprecedented border closure and current declines in cross-border travel.”
FDFA has highlighted steps to improve competitiveness for Canadian land border duty-free stores:
- Reaffirm export status: Canadian land border duty-free stores are classified as export businesses under the Customs Act and CBSA D-memos. A clear directive is needed across federal ministries to uphold the export status of these businesses and prevent misapplication of domestic policies.
- Cut red tape: Streamlining the regulatory environment and eliminating unnecessary compliance costs will help these stores compete with US retailers, which operate under fewer restrictions.
- Fair taxation policies: Tax rules should reflect the export status of Canadian land border duty-free stores. Reducing or removing excise taxes would improve competitiveness and retain economic activity in Canada.
- Align policies with economic growth: Federal policies should support a strong duty-free sector as part of Canada’s broader economic strategy. Coordinating with agencies such as Destination Canada can help border communities capitalise on cross-border tourism and trade.
Click here to read the full FDFA Land Border Duty Free Competitiveness Report. ✈
