Thank you, Mr. Chairman.
I would like to thank the committee members for inviting me to testify today.
First, I will tell you a little about the Retail Council of Canada, the RCC.
The Retail Council of Canada has been the voice of retail in Canada since 1963. Retail employs over two million Canadians, making retail the largest private sector employer in the country.
RCC is a not-for-profit industry association representing over 45,000 storefronts of all retail formats, including department, specialty, discount, independent stores, grocers, and online merchants.
In general, RCC and its retail members are very supportive of the trans-Pacific partnership agreement. Retailers over the past few decades have built strong relationships with manufacturers and suppliers around the world, and are increasingly becoming importers of products into Canada. This agreement facilitates this, allowing retailers in Canada to provide a great assortment of goods at competitive prices for Canadian consumers.
RCC has been an active participant in consultations on the agreement for the past many years. We have publicly stated our support for the TPP as it was signed in principle by negotiators last October, as well as when International Trade Minister Chrystia Freeland affixed Canada's signature on the agreement in February of this year as a first step towards formal ratification. In relation to the retail sector, there are just a few points that I would like to raise as to why this agreement is important to retailers in Canada.
First, the agreement will eliminate tariffs on a wide variety of products. It provides duty-free access to approximately $5 billion in retail consumer goods from the seven TPP countries with which Canada does not currently have free trade agreements. Most of these tariffs will be eliminated immediately upon formal ratification. The more tariff elimination there is, the more products are available to Canadian consumers at competitive prices.
Second, RCC and its retail members are supportive of the text on regulatory coherence, transparency, and harmonization. Regulatory barriers unnecessarily impact trade, impede product availability and consumer choice, and have negative impacts on competitive pricing. That said, in an ideal world, the text would contain some teeth, requiring TPP countries to have specific mechanisms in place to ensure that systems and processes are there to ensure transparency and predictability. The agreement encourages regulatory coherence and transparency, but does not require it.
I also want to go on record with regard to the agreement's yarn forward, or country-of-origin provisions. Yarn forward means that fabric used in clothing produced in a TPP nation must also come from a TPP nation in order to qualify for tariff relief under the agreement. The vast majority of textiles come from non-TPP nations, such as China and India, so a pair of jeans made in Vietnam under the agreement, for example, would now have to be made from cotton from the United States in order to qualify for tariff relief. This would actually have the effect of lengthening supply chains and go against the spirit of the agreement.
I would also like to raise a point specific to online sales. As you know, Canadian consumers can buy products from anywhere in the world. Currently, imported online shipments above Canada's de minimis threshold of $20 are treated in the same way as goods sold in Canada. All merchants, foreign and domestic, have to pay duties on sales taxes above that $20 threshold so the playing field is level. While you may have been told that the U.S. de minimis level is $800 and that Canada is far behind, this in fact is not the case. We are much more comparable to the EU and the U.K. that have limits similar to ours. Changes to the de minimis level would create an incentive for Canadians to shop anywhere but in Canada, and could be devastating to retail merchants in Canada and to our two million-plus employees. The TPP agreement recognizes this, and treats online imported shipments into Canada the same way as goods that are sold here.
To conclude, RCC and its members support the agreement and urge the government to ratify it. It's good for retailers in Canada. It's good for consumers in Canada, and it's good for Canada.
Thank you.