Good morning. Mr. Chair, members of the Standing Committee on Finance, we would like to thank you for inviting us to talk about the retail sector's concerns and recommendations regarding Bill C-38.
You have in front of you today a copy of the brief that was recently presented to the Standing Senate Committee on National Finance relating to the study on the potential reasons for price discrepancies in respect of certain goods between Canada and the United States, given the value of the Canadian dollar and the effect of cross border shopping on the Canadian economy.
Because we only have five minutes to present our comments and recommendations, I will get to the point immediately. I hope you will have time to carefully review our submission, which includes more details.
Of course, we will be very pleased to answer all of your questions after our presentation.
Our comments are timely considering that Bill C-38 will significantly change the personal exemption limits for Canadians bringing goods back into Canada, making it even harder for Canadian retailers to compete with their U.S. counterparts. We will focus on three significant areas that we believe need to be addressed by this committee. They include import duties on finished goods, supply management affecting prices of food products such as dairy and poultry, and regulatory harmonization. You'll also note that the submission before you speaks to vendor pricing, which is a matter we discussed at length with the Senate committee.
Let me quickly address import duties. One of the main areas where the federal government has a role to play in levelling the playing field for Canadian retailers and importers is in eliminating the outdated tariffs on finished goods entering into Canada. While Finance officials often note that these tariffs are only applied to 10% of all products entering Canada, they unfortunately are overly represented in the retail sector. For some retailers they represent close to 100% of the items they import into the country.
As an example, on page 9 of our submission, which we circulated
—it is on page 8 in the French—
we have listed the tariffs applied to sports equipment. For the most part, there are no duties applied in the United States for retailers importing those goods, yet the same products entering into Canada carry tariffs as high as 18%.
On page 10 of both the French and English versions of our brief, we provide another sample list of some of the tariffs we believe should be eliminated.
We thus urge the government to support the elimination of tariffs, as the minister had noted in the budget that he would be looking at this issue seriously.
The second matter relates to supply management, which we all agree is not always a very popular issue to discuss. One area that has not been discussed in full is the effect of the difference in pricing of dairy and poultry products between Canada and the United States. I draw your attention to page 12 of the report and the table that shows the difference in prices between both jurisdictions for supply managed food products. I think you will find it as shocking as we have.
While retailers fully respect and support Canada's agricultural community, we do know from our members that these products are the most popular products purchased by consumers during the great majority of the same-day cross-border shopping trips. In fact, dairy products, poultry, gas, alcohol, and cigarettes are the five top items that are brought in on same-day trips. There is a trend.
At the very least, should the current system continue to be sustained, the government must acknowledge its role in supporting marketing boards and higher prices in Canada for those popular grocery products. If the government wanted to provide retailers in Canada with a level playing field, it should have exempted or restricted these supply managed products from the personal exemption limits that have been increased by this bill, as it has done with tobacco and alcohol, and actively enforce those rules at the border.
The final point is regulatory harmonization. I would like to speak briefly about the need for better harmonization of regulations and policy.
Lack of harmonization and different standards and requirements contribute to increased prices of products in Canada and decreased productivity.
We applaud the government's creation of the Canada-U.S. Regulatory Cooperation Council. However, even after this was announced in February 2011, as our submission outlines, a new car seat testing regulation came into force, which was not at all harmonized with that of the United States.
Because of time, I will immediately conclude my remarks and thank the committee for its consideration of issues of concern to our sector.
Thank you, Mr. Chairman.