moved that Bill C-5, an act to amend the customs tariff, be read the second time and referred to a committee.
Mr. Speaker, I am pleased to introduce for consideration by the House Bill C-5, an act to amend the customs tariff.
The legislation I am introducing today seeks to extend the general preferential tariff, commonly referred to as the GPT, for another 10 years. The GPT is a tariff preference granted to developing countries for goods originating in those countries.
Let me give some of the history of this preferential tariff. In the mid-1960s there was widespread recognition that special and differential tariff treatment for developing countries was a means of fostering growth and well-being of those nations. Consequently in 1968 it was agreed at the United Nations conference on trade and development that a system of trade preferences should be implemented for developing countries.
In June 1971 this decision was accepted by Canada and other signatories to the General Agreement on Tariffs and Trade. Members of the GATT agreed that developing countries would be permitted to award more favourable treatment to products imported from developing countries than to similar products from developed countries. It was also agreed that the preferential tariff would be generalized, non-discriminatory and non-reciprocal.
Canada introduced its general preferential tariff scheme on July 1, 1974 for a 10-year period. The GPT was subsequently extended for another 10 years until June 30, 1994.
With this history in mind I would like to outline for the benefit of the House some of the essential features of the GPT. The GPT provides for a reduction in tariffs of up to one-third of the most favoured nation rates on certain types of goods from developing countries.
In the case of the least developed developing countries, that is the poorest countries known as the LDDCs, the tariff reduction is even larger. These countries are entitled to duty free treatment on all of their GPT eligible exports to Canada.
In all, more than 180 countries and territories are entitled to zero or low tariffs on a wide range of products, primarily manufactured and semi-manufactured goods.
In order for particular items to qualify for GPT they must comply with the rules of origin and other regulations. More particularly goods would only qualify for the GPT if at least 60 per cent of the factory price of the goods exported to Canada originated from one or more GPT countries. In the case of the LDDCs, the poorest countries, the content requirement is 40 per cent.
In order to ensure that GPT products do not have an adverse impact on Canadian producers, a safeguard system is authorized by the Minister of Finance to withdraw GPT treatment for particular goods.
The question before us is simple: Should the GPT be extended? It is the government's view that the GPT should be continued. The legislation I have tabled proposes to extend the GPT for another 10 years to the year 2004. The government's decision to extend the GPT is being made at a time when most developed nations have already extended their preferential tariff schemes. In other words we are in the mainstream.
The reasons which justified the introduction of the GPT 20 years ago still remain. While the GPT has supported growth in the export sectors of many developing countries, they still have a long way to go. Indeed many developing countries still need preferential access to the markets of the developed world in order to improve their economic status. By allowing developing countries preferential access we continue Canada's tradition of assisting the developing world. Moreover, the massive weight of evidence from 50 years of trade liberalization supports the principle that export expansion contributes to general economic growth.
The GPT does not only benefit developing countries. As a result of lower tariffs on goods from the developing world, Canadian consumers enjoy access to imported goods at competitive prices. Also Canadian producers who rely on goods from GPT countries as inputs also benefit from the reduced tariff. Accordingly the GPT contributed to the economic development
of the beneficiary countries while allowing Canadians to benefit as well.
At the same time, and as noted earlier, in order to ensure that goods from GPT countries do not injure domestic producers, there exist legislative and quasi-judicial mechanisms for withdrawing GPT status to goods that are injurious to domestic producers. I wish to assure the House that where a reduced tariff injures Canadian producers, the government can move to disqualify such goods from the lower tariff. For example, rubber footwear and rubber inner tubes have for a number of years been excluded from the GPT scheme under temporary safeguard measures recommended by the Canadian International Trade Tribunal. The government has now decided to remove these products permanently from the scheme.
Finally, in recent years we have seen considerable change in the international economic and trade situation. Many developing countries are now enjoying significant economic growth while others need more assistance because their economic situation has deteriorated over the past several years. We have recently ratified NAFTA and the Uruguay round of the GATT has just recently concluded. These trade arrangements will result in reduced tariffs on many products. These changes have significant implications for the GPT.
I also wish to tell the House that the government is studying the ramifications of these developments with a view of making changes to the GPT tariff structure in the next year or so. The objective is to make the GPT an even better tool to assist the developing world. During this year consultations will be held with interested parties on possible expansion of GPT product coverage and reduction of GPT rates, particularly for the least developed countries. In addition, we will be examining the desirability of maintaining the GPT for those countries that have already achieved the high level of economic development.
To conclude I call on all members of the House to support this bill. Such support will show Canada continues to contribute to economic growth within the developing world.