Canada: Budget 2009 Highlights: Canada´s Economic Action Plan Proposes Measures To Strengthen Canadian Businesses

Last Updated: March 10 2009
Article by Milos Barutciski, Jesse Goldman and Darrel Pearson

On January 27, 2009, the Minister of Finance presented his budget titled Canada's Economic Action Plan: Budget 2009. The Budget outlines measures aimed at encouraging economic recovery and growth. Amongst these measures, several are specifically aimed at strengthening the position of Canadian businesses and will have an impact on international trade. Most notable are tariff reductions on machinery and equipment, measures relating to improving cross-border movement of goods, short-term support for "key sectors", and investment in infrastructure.

Tariff Reductions on Machinery and Equipment

The Budget proposes to permanently eliminate tariffs on a range of machinery and equipment. The measure is aimed at assisting Canadian producers to purchase specialized equipment, modernize their operations, and increase their competitiveness. It is expected that this measure will allow Canadian industry to save $440 million over the next five years.

Movement of Goods

The Budget provides for steps to be taken to facilitate the movement of goods by modifying the Customs Tariff rules respecting the treatment of temporarily imported cargo containers. Further, it pledges to begin consultations with respect to further liberalization of the use of these containers in Canada. It also intends to carry out modifi-cations to the Customs Tariff rules announced in September 2008 to implement the results of GATT Article XXVIII negotiations regarding milk protein concentrates.

Investment in Infrastructure

The Budget outlines several initiatives aimed at improving Canada's border infrastructure. These include an $80-million investment to modernize and expand border service facilities with the express goal of reducing processing time of commercial shipments. Specific projects include $14.5 million for bridges at two of the busiest U.S.-Canada border crossings (Blue Water Bridge in Sarnia and Peace Bridge in Fort Erie) as well as funds for border facilities at Prescott in Ontario and at Huntingdon, Kingsgate, and the Pacific Highway in British Columbia.

Short-Term Support for "Key Sectors"

The Budget promises to assist sectors, which it identifies as "key sectors", by taking steps to support them until the economy improves.

The forestry sector will receive a total of $170 million over the next two years: $80 million will be provided for the Transformative Technologies program; $40 million to develop pilot-scale demonstration projects of new products that can be used in commercial applications; $40 million for the Canada Wood, Value to Wood, and North America Wood First programs to help forestry companies market innovative products internationally; and $10 million to support large-scale demonstrations of Canadian-style use of wood for construction in targeted off-shore markets and non-traditional uses of wood in domestic markets.

As to the automotive industry, the Budget recognizes that Canada is part of a highly integrated and increasingly global market. The Budget references the agreement reached between the federal and Ontario governments whereby GM and Chrysler would receive up to $4 billion in short-term repayable loans. Further, it pledges to create a $12- billion Canadian Secured Credit Facility in order to improve credit availability for consumers to purchase and lease new vehicles.

Trade Negotiations

Harper Willing to Include Labour and Environment in NAFTA

The most surprising policy revelation to come out of President Barack Obama's first foreign visit was Prime Minister Stephen Harper's expressed willingness to include labour and environment provisions in the text of NAFTA, provided it does not require a renegotiation of the whole agreement. Harper's statement was a volte face from his position a year ago when he stated in the House of Commons on February 28, 2008, that it would be a "mistake" for the U.S. to reopen NAFTA. At that time, it was reported that presidential hopefuls Hillary Clinton and Obama had threatened to pull the U.S. out of NAFTA unless it was renegotiated. During his visit to Canada, Obama seemed to be taking a distinctly cautious approach on free trade by restricting himself to a suggestion that the NAFTA labour and environment side accords "might as well be incorporated into the main body of the agreement, so that they can be effectively enforced". At the same time, Obama stated that the U.S. must show "leadership in the belief that trade ultimately is beneficial to all countries."

Trade and Climate Change

U.S. Climate Change Plans Do Not Address Imports

The legislative outline for battling climate change unveiled by Senate Environment and Public Works Committee Chairperson Barbara Boxer does not address how exactly such a bill would deal with imports of carbon intensive goods from countries that do not take any action to reduce or curb the emissions of greenhouse gases comparable to the U.S.

One of the main principles of the bill is to ensure that there is "a level playing field, by providing incentives for emissions trading reductions and eff ective deterrents so that the countries contribute their fair share to the international effort to combat global warming." Under the broad principles of the bill, the United States would establish a national "cap and trade" system, under which energy companies and makers of carbon intensive goods would buy and trade the right to emit greenhouse gases. There is a fear among U.S. domestic firms that the higher costs of compliance will give a trade advantage to foreign firms who do not face similar regimes.

However, several senators have made legislative proposals to level the global playing field by requiring companies that import goods from countries that do not adopt a comparable system to the U.S. to reduce emissions to purchase allowances. The critical question is whether this allowance system passes muster as a bona fi de conservation measure that is consistent with WTO rules or whether it amounts to unlawful protection for domestic industry. Enacting legislation that meets WTO rules could present a challenge as some U.S. lawmakers and domestic industry sectors want to see greater focus on trade protection in the bill, which would undermine any arguments for its legitimate environmental purpose. Any legislation that imposes increased costs on foreign producers may be challenged by the producers' governments as being protectionist. Indeed many countries, including China and India, have forcefully made this point.

At the moment there are no bills that address this issue and this presents an interesting international trade law issue as it is clear that the U.S. is moving ahead with a "cap and trade" model but without firm indication of how obvious and less obvious trade and economic aspects will be addressed.

WTO Report on Trade Barriers

WTO Report: Broken Promises and Rising Trade Barriers

A report issued by the WTO reveals that certain countries have taken steps to erect new trade barriers and improve the export performance of domestic industries in their response to dealing with the global financial crisis. Report to the TPRB from the Director-General on the Financial and Economic Crisis and Trade Related Developments catalogues a range of measures undertaken by certain countries that either complicate or restrict trade. In doing so, some G-20, APEC and Asian nations have failed to abide by pledges made at international meetings at the end of 2008, where they agreed not to put in place new protectionist tariff and non-tariff barriers to trade when dealing with the impact of the global financial crisis. The WTO counts Argentina, Brazil, India, Indonesia, Russia and South Korea as already having broken this pledge. With the European Commission announcing intentions to reinstate subsidies for some dairy products, France, Germany, Italy and the United Kingdom could be added to the list. Moreover, the report does not discuss trade restricting or distorting measures that have been or are likely to be adopted in places like the United States, Brazil, Japan as well as other Asian countries.

Trade: New USTR

Kirk Named U.S. Trade Representative

President Obama has named pro-trade former Dallas mayor Ron Kirk as U.S. Trade Representative. Mr. Kirk will serve in the cabinet-level post with offices in Washington, Geneva and Brussels.

As a past supporter of NAFTA and China Permanent Normal Trade Relations (PNTR), Kirk will face close scrutiny as he assumes the responsibility for delivering on Obama's pledge to fix existing trade agreements and create a new trade policy that benefits more people. Kirk's opposition to Fast Track during his 2002 U.S. Senate race puts him in line with the majority view in Congress and positions him to deliver on Obama's campaign pledge to replace Fast Track with a process that provides a greater role for Congress to ensure that American trade agreements promote the public interest.

Among Kirk's challenges will be to strengthen labour and environmental standards in existing agreements and to remove numerous provisions that conflict with Obama's key policy goals in health care, climate change and energy independence. These changes may require renegotiation of aspects of the World Trade Organization agreements in important areas such as procurement policy, service-sector regulation (including financial services and health care) and food and product safety.

Kirk must tread a fine line between calling for key changes to trade agreements while avoiding repudiation of the WTO and the Doha Round in a way that could undermine the WTO and its dispute settlement mechanism at a time when the effective functioning of these institutions is critical to preventing a further slide to protectionism and a worsening of the global recession.

Product Regulation

Update on Bill C-6: Safety of Consumer Products

On January 29, 2009, the Government of Canada introduced Bill C-6, An Act Respecting the Safety of Consumer Products, which seeks to provide better oversight of consumer products by improving the government's ability to take timely compliance and enforcement actions when unsafe products are identified. This is the Government's second attempt at overhauling and expanding federal consumer product safety legislation. The previous attempt, Bill C-52, died on the Order Paper when Parliament was prorogued prior to the last federal election.

Bill C-6 is part of the Government's Food and Consumer Safety Action Plan to which it recently committed $113 million over two years. It is expected that Health Canada will work with the Canada Border Safety Agency to identify potentially unsafe products at the point of entry and double the number of product safety inspectors over the next five years.

Other key features of Bill C-6 include mandatory reporting by suppliers of serious product-related incidents or defects that could cause serious illness or injury and the prohibition of manufacturing, importing, advertising or selling of consumer products that pose an unreasonable danger to human health or safety.

WTO

Lamy to Governments: Rebuild Confidence and Fight Protectionism

In a speech on February 23, 2009, World Trade Organization Director-General Pascal Lamy outlined steps the international community needs to take in order to counter mounting isolationist tendencies.

First, WTO Doha Round negotiations should be completed as quickly as possible. He warned that tariff s applied on trade today could double if they were raised to existing bound ceilings. By contrast, proposals currently on the table in the Doha Round, would cut these same tariff ceilings by half again. Second, governments should resist the temptation of raising trade barriers in their less obvious forms such as "buy local" conditions, providing direct or indirect subsidy packages, or abusing trade remedies. Third, the international community must ensure the availability and affordability of import and export finance. The lack of financing has contributed to the decline in trade.

He also pointed to the next April G20 Summit in London as being a test of whether global mechanisms are capable of effectively dealing with global challenges.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Milos Barutciski
Jesse Goldman
Darrel Pearson
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions