Niagara Duty Free on the Canadian side of the Rainbow Bridge, Ontario.

The Frontier Duty Free Association (FDFA) is asking the Canadian government to take targeted regulatory action to support the country’s land border duty-free shop owners who are facing a collapse in travel amid a wider decline.

Executive Director of the FDFA Barbara Barrett, President Tania Lee (Blue Water Bridge Duty Free), Vice President Eastern Region Philippe Bachand (Philipsburg Duty Free), and Chris Foster (Queenston-Lewiston Duty Free) made their appeal by video on Wednesday.

The FDFA represents 31 land-border duty-free stores along the US border, where every sale is treated as an export. However, Barrett said: “We are seeing a sharp and sustained decline in cross-border travel by Canadians.” Some estimates cited by the FDFA point to declines of over -40% year-over-year, and even steeper drops in key travel corridors.

This has put once viable border businesses “under severe stress” due to the lack of customers. The FDFA argues that its members need a fairer regulatory framework to achieve a level playing field with U.S. competitors to survive.

FDFA points to “policy imbalance”

The drop in cross-border travel is “not just a tourism trend,” argues the FDFA, but a “disruption that is being felt in real time by businesses and communities along the border”. Barrett said: “These businesses have operated successfully for more than 40 years and were built to compete directly with the United States. This drop in travel is real, but it is not permanent. The issue is the policy imbalance that is making it harder for Canadian operators to compete.”

Land border duty-free stores are federally licensed export businesses that sell exclusively to travellers leaving Canada. They therefore capture spending that would otherwise occur in the US and are often a critical part of the economic fabric of border communities.

The travel decline has led to a significant reduction in sales, particularly in smaller and more remote locations. “Our stores are designed to keep Canadian dollars in Canada, but some have already closed down, and some are on the brink – they are just holding on,” said Lee. “What we are asking does not cost the government anything; we want adjustments that make us more competitive with the US.”

She added: “The current environment is a moment in time, but the imbalance is ongoing. If it is not addressed, the loss of sales and economic activity will continue to shift outside of Canada, even as travel recovers.”

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