Evidence of meeting #121 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was unions.
A video is available from Parliament.
9:50 a.m.
NDP
Murray Rankin NDP Victoria, BC
Is there a list you've prepared indicating the number of items that those countries sell to Canada that will be affected by this change in tariff?
9:50 a.m.
Director, International Trade Policy Division, Department of Finance
The tariff has in total 7,400 tariff items. Approximately 1,200 have a benefit under the general preferential tariff system.
9:50 a.m.
NDP
Murray Rankin NDP Victoria, BC
We've heard concerns from retailers regarding the cost this is going to impose on consumers. Industry sources say the price of affected imports could rise by 3% on average.
Does the finance department have any estimate of what the total cost to consumers would be of these changes in the GPT?
9:55 a.m.
Director, International Trade Policy Division, Department of Finance
If I could, when these changes were proposed in December 2012 there was a full consultation with Canadians, and we heard from retailers. One of the things they talked about was giving lead time for these changes. We were proposing an 18-month lead time from the time of consultation. Retailers in general had asked for a little more time. The changes will now be six months later.
9:55 a.m.
NDP
Murray Rankin NDP Victoria, BC
My question wasn't about consultation, sir. My question was about the Department of Finance. Did they do an estimate of the impact of the cost to consumers of these changes? That was my question.
9:55 a.m.
Director, International Trade Policy Division, Department of Finance
I'm saying that what we heard back from retailers was that they needed more time to shift sources of supply.
9:55 a.m.
Conservative
The Chair Conservative James Rajotte
First of all, the time is up.
Mr. Rankin, let's not put an answer in the official's....
9:55 a.m.
Conservative
The Chair Conservative James Rajotte
With all due respect, you can ask for the answer. The answer is given.
9:55 a.m.
NDP
Murray Rankin NDP Victoria, BC
I asked twice. I asked twice for the answer. That's all. I asked for an estimate.
9:55 a.m.
Conservative
The Chair Conservative James Rajotte
An answer was given. The member may not like the answer, but an answer was provided.
We'll move on to it in the next round.
I'll go to Mr. Jean, please.
9:55 a.m.
Conservative
9:55 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Excellent.
Thank you to Mr. Rankin, first of all, for asking more of my questions. I don't have to follow with this great lead-in about the oil sands and the economy and non-renewable resource revenues.
But I do want to talk about the manufacturing sector, because obviously long term that's the only way Canada is going to maintain its competitive advantage. It's the only way we're going to make sure Canadians have the quality of life we continue to have. I think that's why this government, in part, is doing what they're doing in relation to the GPT.
In particular, I'm interested in how 72 countries are coming off the list. I took a look at the list. The list includes countries like China, which is the number two economy in the world, and soon to be number one, if it's not today, and India, South Korea, and Brazil. We're talking about economies in the top 10 in the world, or close thereto.
My understanding of the original tariff and the preferential basis for it was to help developing economies bring their people up to the quality of life they can have, but not at the expense of our manufacturing sector. Would that be fair to say?
9:55 a.m.
Director, International Trade Policy Division, Department of Finance
Yes, that's fair to say. The original goal was to help economic growth in poorer developing countries, and to help export diversification, help them move to a manufacturing base.
9:55 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
I heard some explanation that in fact China was taking advantage of somewhere in the neighbourhood of 80% of this program. Is that true?
9:55 a.m.
Director, International Trade Policy Division, Department of Finance
That's correct. Most of the benefits of the program accrued to China—I think 75% to 80%.
9:55 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Then what our government was doing was giving China a very competitive edge in order to compete with Canadian manufacturers of bicycles and all those other things that Mr. Rankin was talking about.
Is that true, that they were given a competitive advantage over Canadian manufacturers?
9:55 a.m.
Director, International Trade Policy Division, Department of Finance
That's correct. On those 1,200 products, there was a preference over competing imports and Canadian manufacturers.
9:55 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
What you're telling me, in essence, is that we are punishing Canadian manufacturers by continuing with the GPT program. Is that fair to say?
9:55 a.m.
Director, International Trade Policy Division, Department of Finance
I think it's fair to say that China is a very competitive export economy and doesn't need this.
9:55 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
I was in the retail and wholesale business for a while, and during that time, my understanding was that usually when you imported goods from China or India or other developing economies, you would have a discount, which would be 50% off the retail, plus another 20%, 20%, and then 10%. In essence, for a $10 product, you would often pay about $3.40 to $3.60 on a wholesale to retail basis.
Are you aware of that?
9:55 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
But you've heard those numbers before? That's very common.
Somebody who has a $10 retail item shipped FOB to their retail store in Canada would pay $3.40 to $3.60.
I see that Patrick is nodding in agreement, and that's my understanding as well.
We shouldn't see a 3% increase on the input passed on to consumers. The reality is that they have already published those suggested list prices for years—in fact, usually they re-publish them every three to five years—and they're dispersed to all retailers and wholesalers across the country. The probability of a 3% increase is not going to hit consumers. That's been my experience.
Would you say that's fair?