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19 September 2008
On August 30 2008 the Canadian government invited submissions from the public on its proposal to eliminate the most-favoured nation tariff on certain types of machinery and equipment. This initiative is in response to the April 2007 House of Commons Standing Committee on International Trade report entitled “Ten Steps To a Better Trade Policy”. The report recommended that the feasibility and consequences of unilaterally eliminating industrial tariffs 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 most-favoured nation 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, including:
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:
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; however, manufacturers of similar or competing goods may have concerns about the potential loss of a protective tariff barrier. 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 welcomed by manufacturers in Canada, as their production costs will be reduced, allowing them to become more competitive in the Canadian and export markets. On the other hand, machinery and equipment companies in Canada that 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.
For further information on this topic please contact Greg Kanargelidis at Blake Cassels & Graydon LLP's Toronto's office by telephone (+1 416 863 24 00) or by fax (+1 416 863 2653) or by email (email@example.com). Alternatively, contact Elysia Van Zeyl or Courtney Fitzpatrick at Blake Cassels & Graydon LLP's Ottawa office by telephone (+1 613 788 2200) or by fax (+1 613 788 2247) or by email (firstname.lastname@example.org or email@example.com).
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Elysia Van Zeyl