Originally published in Blakes Bulletin on
International Trade, September 2008
On August 30, 2008, the Canadian government invited
submissions from the public on its proposal to eliminate the
Most-Favoured-Nation (MFN) tariff on certain types of machinery
and equipment. This initiative is in response to a report that
was produced by the House of Commons Standing Committee on
International Trade in April 2007, entitled Ten Steps To a
Better Trade Policy. The report recommended that the
feasibility and consequences of unilaterally eliminating
industrial tariffs should be studied. Shortly after the report
was released, the government began reviewing Canadian tariff
policy with a view to enhancing the competitiveness of Canadian
exporters in the global economy.
The government has since identified several opportunities
for Canadian manufacturers to maintain or improve their
competitiveness, including the proposed elimination of MFN
tariffs. The government has worked alongside a number of
stakeholders to create a list of proposed machinery and
equipment for tariff elimination.
The particular tariff items were selected based on several
criteria, such as whether the goods covered by these tariff
items are used in the production of other goods, whether tariff
elimination could reduce the cost of imported machinery and
equipment as well as the impact on Canadian businesses
producing similar or substitute goods.
The proposed tariff elimination will affect some 239 tariff
items found among more than 50 tariff headings in Chapters 84
and 85 of Canada's List of Tariff Provisions. These items
include: steam and other vapour boilers and turbines; industry
or lab furnaces and ovens; weighing machines; fork lifts;
mechanical appliances; printing machinery; electrical
transformers, static converters and inductors; electric, laser
or photon beams; electrical apparatus for circuits; and
insulated wire or cable and other insulated electrical
conductors. The current tariff rates on these items range from
2% to 11%. The average rate is 5.2%.
This government initiative is a positive step for Canadian
manufacturers. Even so, the manufacturers of similar or
competing goods may have some concerns about the potential loss
of a protective tariff barrier. The government is welcoming the
comments and concerns of interested parties. In addition, the
government will consider new proposals for further tariff
elimination initiatives that may assist Canadian industry.
Interested parties should act quickly as written submissions
are requested by September 30, 2008. The tariff elimination
initiative should be welcome by manufacturers in Canada, whose
costs of production will be reduced by the elimination of the
tariffs thereby allowing such manufacturers to become more
competitive, both within Canada as well as in export markets.
On the other hand, machinery and equipment companies in Canada
who produce identical or similar goods should review the
detailed list carefully with a view to determining whether the
protection afforded by the existing tariff barriers should be
continued despite the tariff elimination initiative.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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