Tariffs

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January 26, 2017

RCC is pleased to announce that the Government of Canada recently announced the elimination of $48M annually in customs duties on a number of goods used mainly in the production of food. The move is expected to reduce costs for members in two ways – first, by lowering the cost of imported food ingredients for members who make food, second by lowering the cost of other foods made in Canada that use imported ingredients.

This follows RCC advocacy efforts to reduce tariffs for all consumer goods and manufacturing inputs, including food ingredients June 21, 2015 and July 7, 2015.

Next Steps:

RCC will continue to advocate for tariff relief for retailers, including but not limited to food, apparel and footwear. We will continue to work with members and provide updates as required.

If you have any questions or concerns, please don’t hesitate to contact: Jason McLinton, Vice President, Grocery Division and Regulatory Affairs at: jmclinton@retailcouncil.org or 613-656-7903

PRESS RELEASE
FLAWED NEILSEN TARIFF STUDY MISSES THE MARK

TORONTO, April 20, 2015: The results of Nielsen’s study on the impact of tariff elimination on baby clothes and sporting goods do not accurately reflect the benefits of tariff elimination to Canadian consumers, Retail Council of Canada announced today.

The study was intended to analyze the impact on consumer prices of tariff eliminations introduced in the 2013 federal budget. The approach taken by Nielsen meant that the study never had a chance of meeting its stated objective. Nielsen only began monitoring prices in Fall 2013, a full six months after tariffs were eliminated and in most cases, consumer pricing had already been adjusted to take into account these lower input costs.

“A before-and-after study was called for,” says Retail Council of Canada President & CEO, Diane J. Brisebois. “What Nielsen should have done was to capture prices before the tariff elimination and then again well after the change. Instead, we got a start point after the initiative had already come into effect and then an arbitrary end-point,” adds Ms. Brisebois.

Nielsen researchers themselves recognized this shortcoming and several other factors that call into question the soundness of the report’s methodology and its’ conclusions. Nielsen admits that all data used in price comparisons was collected after tariff cuts were implemented, notes the contemporaneous decline in the value of the Canadian dollar, its inability to measure a full year of data for seasonal products and the exclusion of sale pricing.

RCC undertook its own analysis and compared prices before the tariff elimination and again following the April 2013 cuts. “When the analysis is done properly, it demonstrates that Canadians did see substantial savings,” says Ms. Brisebois. For example, Canadian families saved some $44 million to outfit children less than 24 months of age and over $33 million in savings were passed along to equip young hockey players. Visit retailcouncil.org/tariffs.

RCC will continue the fight to eliminate tariffs on products that Canadian families use every day and press the government to negotiate free trade agreements with major trading partners. RCC has called on the government to eliminate tariffs in apparel, footwear and linen categories as part of the 2015 federal budget which will be introduced on April 21.

Retail Council of Canada (RCC) is the Voice of Retail in Canada representing more than 45,000 store fronts of all retail formats, including department, specialty, discount, and independent stores, and online merchants in general merchandise, grocery and drugs.  Its membership represents over 75% of all retail sales in Canada.  RCC is a strong advocate for retailing in Canada and works with all levels of government and other stakeholders to support employment growth and career opportunities in retail, to promote and sustain retail investments in communities from coast-to-coast, and to enhance consumer choice and industry competitiveness. RCC also provides its members with a full range of services and programs including education and training, benchmarking and best practices, networking, advocacy, and industry information. @retailcouncil @RCCMySTORE

For further information:
Lori Goncalves
Retail Council of Canada
lbgoncalves@retailcouncil.org


Eliminating Tariffs on Sporting Goods and Baby Clothes

Tariff Cuts Will Result in a Boost to the Economy

What Should the Government Eliminate Next?

Impact of Changing Tax Status for 72 Countries


Overview

A tariff is simply a tax by another name. This is especially true when a tariff is being applied on a product that is no longer manufactured in Canada, and therefore is in no need of protection.

To compete with our American neighbours, who are a mere 90 minutes drive south for the vast majority of Canadians, retailers need a level playing field. Retailers need to price their goods as competitively as possible to encourage Canadians to shop at home. By eliminating tariffs, the government would be helping to create a more competitve environment and a stronger Canadian economy. More importantly, Candian consumers would be paying a fair price for goods. Canadians need tariff elimination.

Eliminating Tariffs on Sporting Goods and Baby Clothes

In 2013, the government took an important step with the announcement of $79 million of tariff elimination on certain sporting goods equipment and baby clothes.

RCC has surveyed its members who carry these products and has been able to determine that millions of dollars worth of savings has been passed on to consumers since the tariff elimination came into effect. This number was generated by comparing pre-tariff elimination prices to post-tariff elimination prices on a yearly comparison for the same season.

Based upon the success with sporting goods and baby clothes, RCC is now calling on the government to eliminate more tariffs on select essential products where limited domestic manufacturing exists.

When a product is imported from a country that is not covered under a free trade agreement (and there are many), it is subject to a duty or tariff at the border. This added tax adds to the cost of the good, and translates into a higher retail price for consumers.

Tariff Cuts Will Result in a Boost to the Economy

The government collects $4 billion annually in tariffs. If all tariffs were eliminated, there would be a boost to the country’s GDP of $20 billion, according to the Canadian Council of Chief Executive’s study “Should Canada Unilaterally Adopt Free Trade” by Dan Ciuriak and Jingliang Xiao.

Not only will tariff elimination have a positive impact on the economy, it will also impact consumer prices. Consumers will go out of their way to find the best deal to ensure that their hard earned dollars are stretched as far as possible and retailers understand that.

An additional incentive for Canadian retail to keep costs low is the pressure to compete with cheaper prices in the United States. According to a recent Statistics Canada release, Canadians have increased their spending in the U.S. by 72% since 2006. This translates into $8 billion annually that is being spent in the U.S. by Canadians on retail.



What Should the Government Eliminate Next?

Tariffs should be eliminated on all products where domestic production is limited or non existent so that Canadian retailers can compete with lower prices in the U.S. Recognizing the reality of fiscal constraint, RCC has undertaken an analysis of tariffs applied to Canadian imports in order to determine which will have the most immediate benefit for consumers and move Canada towards price parity with the U.S.

Our analysis identified product categories based on the following criteria:

  1. limited domestic manufacturing;
  2. high Canadian tariff rates; and
  3. essential products for Canadian families.

RCC is recommending relief on the following product categories:
Gloves and Mitts 18% tariff
Footwear av 18% tariff
Children’s Clothing av 18% tariff
Linens 17-18% tariffs
*The tariffs apply when the products are sourced from countries who do not have a free trade agreement with Canada, and are not Least Developed Countries (LDC).

Impact of Changing Tax Status for 72 Countries

At the same time as the $79 million of tariff elimination on sporting goods equipment and baby clothes, the government also announced that effective January 1, 2015, 72 countries would be reclassified in the tariff system from General Preferential Tariff (GPT) status to Most Favoured Nation (MFN) status. This decision was made by the government in the Economic Action Plan 2013 to reflect the economic evolution of countries that were previously receiving a reduced tariff rate to stimulate exporting activity.

RCC understands that this reclassification is appropriate, but unfortunately the list of 72 countries includes many of Canada’s largest sourcing partners, like China and India. The result is that products coming into Canada from these countries will be subject to higher tariff rates, which will translate into higher prices for consumers. The government projects that it will collect an additional $333 million in revenue annually as a result of this change.



Since these administrative changes will drive up government revenue at the expense of retailers and consumers, there is now even further impetus for the government to eliminate more tariffs in the next federal budget. A reduction in tariffs will help lower consumer prices and allow Canadian retailers to compete with their American competitors.

For further information on tariff elimination in Canada, members should contact Dave Wilkes, SVP Government Relations at dwilkes@retailcouncil.org. Media are asked to contact Lori Goncalves, at lbgoncalves@retailcouncil.org.