Thank you.
Mr. Chairman, thank you for today's opportunity to provide the retail sector's perspective on the comprehensive economic and trade agreement. We are delighted to even be at this stage of consideration, given some of the uncertainties that first Brexit and then Wallonia have created for CETA along the way. Retailers are deeply concerned about the emergence of anti-free trade sentiment worldwide and about recent pronouncements regarding the trans-Pacific partnership south of the border.
In that increasingly challenging context, the attainment of an agreement between 28 member states is a remarkable achievement. Successive Canadian governments deserve a great deal of credit for envisioning, negotiating, and delivering on the CETA deal.
Retail Council of Canada is a strong supporter of freer trade, whether through bilateral agreements or multilateral agreements like this one. The reason is straightforward. Free trade agreements remove the customs duties charged on the goods we import. That allows us, in turn, to offer lower prices for consumers and also, ideally, to increase sales volumes and the associated level of economic activity and employment.
These customs duties are not at all minor. Shoes are one of the major retail items sourced from Europe, and most of them face duties of between 18% and 20%. Similarly, most apparel is dutiable at a rate of 18%. Of course, these duties are themselves subject to sales tax. Once all of that is totted up, exclusive of the later sales tax, duty has typically increased the price paid by Canadian consumers by more than one-fifth.
Tariff elimination not only reduces prices, but it increases consumer choice, as goods that would otherwise remain uncompetitive become marketable.
Beyond retailers' support for reduction in tariffs, our grocery members are also very supportive of the CETA provisions for increased importation of 16,000 metric tonnes of European cheeses. I should note that the distinction from what my friend from Dairy Farmers of Canada said is that we're excluding the industrial portion from that number.
RCC is recommending that 100% of this new cheese quota be directly allocated to retailers. This would provide significant benefits, we believe, both to Canadian farmers and to Canadian consumers.
First, with regard to farmers, there's an allocation process that needs to be completed, but RCC is proposing that each retailer's share of the cheese allocation be based on its previous year's combined sales level of imported and domestic cheese. Linking future retailer allocations to sales within the entire cheese category provides a strong motivation to grow sales of both domestic and imported cheeses. This would prove a direct benefit to Canadian farmers.
Second, Canadian consumers' appetite for cheese has grown substantially. Allocation of cheese quota directly to grocers will allow retailers to ensure that the right product is provided to consumers, at the right price.
Retailers will be able not only to ensure that quota is used to bring in cheeses that are being sought after by consumers but, importantly, to eliminate inflationary components inherent in the current third-party quota system and take out, based on our members' estimates, some 20% to 40% in extra costs that are currently built into the system.
Mr. Chair, the CETA agreement will bring tangible benefits on some of the core necessities purchased by consumers; namely, food and clothing. The deal will diversify choice, and it will see a lowering of prices paid by Canadians.
We strongly encourage support and ratification for this agreement and, indeed, for further bilateral and multilateral trade deals, whether with a post-Brexit U.K. or with willing Asia-Pacific countries now that the TPP deal appears to have unravelled.
Thank you, Mr. Chair.