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.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Sure. While he's looking, Mr. Beyea, did you want to comment about how important free trade agreements are? I don't want to take up your time, so....
Director, International Trade Policy Division, Department of Finance
Sure.
I think free trade agreements are another means for Canadian manufacturers and business to get improved access to foreign markets, as the United States has kind of slowed down over time. An overwhelming majority of Canadian exports have gone to the U.S. market, and I think the government has made a priority of seeking access offshore through the negotiation of free trade agreements. A significant one—
Conservative
Shelly Glover Conservative Saint Boniface, MB
As long as they're getting the special tax break, the chances of their signing a free trade agreement that actually gives us some leverage is pretty much nil, right?
Director, International Trade Policy Division, Department of Finance
I think when you weigh the benefits of a free trade agreement versus the general preferential tariff, it's a decision a developing country certainly has to consider.
Conservative
The Chair Conservative James Rajotte
Okay, thank you.
Mr. Halley, can you just provide those figures?
Chief, Tariffs and Market Acess, International Trade and Finance, Department of Finance
Canada is about $1.7 trillion, in terms of their economy; China is at $7.3 trillion; Brazil is at $2.5 trillion; and India is at $1.8 trillion.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you, colleagues.
Are there any further questions on division 1?
Mr. Rankin.
NDP
Murray Rankin NDP Victoria, BC
Thank you.
The Library of Parliament has helped us as parliamentarians prepare for this, and they've written the following, and I want to see if you agree with it. It says, “Section 34 of the Customs Tariff authorizes the Governor in Council”, the cabinet, “to amend the list of countries to which the GPT regime applies. By removing them from the GPT regime, imports from those countries will face higher tariff rates.”
Is that accurate?
Director, International Trade Policy Division, Department of Finance
If they don't receive the benefits of the general preferential tariff, imports from those countries...?
Director, International Trade Policy Division, Department of Finance
Well, it depends. If there's a free trade agreement with the country, they also have that. For example, Mexico will be taken off the GPT list, but they can import duty free under the Mexico tariff. So it depends on the country.
NDP
Murray Rankin NDP Victoria, BC
But there are 72 countries affected, not simply China, South Korea, and the like. There are 72 countries affected by this change. Is that correct?
Director, International Trade Policy Division, Department of Finance
That's correct.
NDP
Murray Rankin NDP Victoria, BC
For those imports from those countries, if the tariff rates go up, will Canadian consumers have to pay more, in principle, for those goods?
Director, International Trade Policy Division, Department of Finance
If goods are imported from those countries, they'll pay the most favoured nation tariff and not the general preferential tariff.
NDP
Murray Rankin NDP Victoria, BC
The cost to Canadian consumers, as a consequence, will be higher for those goods.
Director, International Trade Policy Division, Department of Finance
I don't want to say the cost to Canadians would be higher; it depends on whether the goods continue to be imported from those countries.
NDP
Murray Rankin NDP Victoria, BC
Right. If there are imports continuing from those countries, as the Library of Parliament itself says, the imports from those countries will face higher tariff rates. You don't disagree with that sentence?
NDP
Murray Rankin NDP Victoria, BC
Okay.
Were there economic criteria used by the Department of Finance in determining the eligibility for a particular country for Canada's GPT regime? And what are those criteria?
Director, International Trade Policy Division, Department of Finance
As Mr. Halley said earlier, we use the World Bank designation for high income and upper middle income and then a trade competitiveness factor of 1% of global access.
Conservative
The Chair Conservative James Rajotte
Thank you.
I just want to clarify with one question,
Mr. Beyea, if I'm a manufacturer in Canada and I'm sourcing from a country that now receives a general preferential tariff that now, as a result of this legislation, will change, as a manufacturer I have the option, then, to go to another country to provide the same source of whatever I'm making and to get that right. That's why you're saying it depends. Can you just clarify that for me?
Director, International Trade Policy Division, Department of Finance
Sure. It can be two points. I think budget 2009 and budget 2010 eliminated all tariffs on machinery, equipment, and manufacturing input, so there are no tariffs for a manufacturer to pay, but as a retailer-wholesaler importing, say, certain finished goods that would be subject to tariff, there is the opportunity to shift. That's what we heard from the retail community and the wholesale community. They needed a couple of years to adjust sources of supply. Our presumption is that they will shift sources of supply, minimum.
Conservative
The Chair Conservative James Rajotte
When are those tariffs in the two previous budget measures fully implemented? Is it 2015? Am I correct in that?