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06 February 2009
Investing in B order Infrastructure
Strengthening Export Development Canada
Proposed Amendments to Customs Tariff
Support for Key Sectors
Enhanced Intra-provincial and International Labour Mobility
On January 27 2009 the federal government presented its Budget 2009, which, as expected, contained a broad array of measures designed to stimulate economic activity and assist individuals and businesses in weathering the difficulties of the current economic climate. To this aim, the Budget 2009 includes a number of proposals that may increase the ability of Canadian industries and manufacturers to become and remain competitive in the international marketplace, including:
In the Budget 2009 the government signalled its intention to invest in several infrastructure projects intended to increase border security and facilitate cross-border trade. In particular, the Budget 2009 provides for up to C$14.5 million to alleviate traffic congestion and facilitate border crossing at two of the busiest US-Canada border crossings: the Blue Water Bridge in Sarnia and the Peace Bridge in Fort Erie. The budget also allocates C$80 million to ensure that Canada’s shared border with the United States remains secure and efficient. In this respect, funding will be used to modernize and expand border service facilities at Prescott, Ontario, as well as at Huntingdon, Kingsgate and the Pacific Highway in British Columbia. These investments are intended to reduce the processing time for the inspection of commercial shipments and will also enable the Canada Border Services Agency to improve its infrastructure in northern British Columbia and the Yukon.
The government also indicated that it will expedite priority projects, which include two projects announced in the Budget 2007 to strengthen Canada’s trade-related infrastructure: the Gateways and Border Crossings Fund and the Asia-Pacific Gateway and Corridor Initiative.
In the Budget 2009 the government announced plans to provide C$13 billion to allow Export Development Canada (EDC) and other financial crown corporations to extend additional financing to Canadian businesses facing credit shortages. These funds will be used to:
These actions follow the C$350 million in capital committed to EDC and other financial crown corporations in the November 2008 Economic and Fiscal Statement.
The Budget 2009 also promises significant changes to the Customs Tariff that would eliminate duties on 214 different tariff classifications of imported machinery and equipment. This measure, which is designed to affect a wide range of industry sectors, would result in a savings to Canadian industry of C$440 million over the next five years. Moreover, the government indicated that it intends to facilitate further the movement of goods across Canada’s border by amending rules in respect of the temporary importation of cargo containers and through the initiation of a consultation process to consider further liberalizing the use of cargo containers.
The government is also pursuing changes to the Customs Tariff in respect of milk protein concentrations, thereby implementing the results of negotiations pursuant to Article XXVIII of the General Agreement on Tariffs and Trade.
In Budget 2009 the government pledged to take “significant action” to assist key sectors in responding to economic circumstances. With respect to Canada’s forestry sector, Budget 2009 provides a total of C$170 million over two years to Natural Resources Canada for a variety of projects, as follows:
Regarding the agricultural sector, the budget restated the Budget 2008 commitment of C$1.3 billion over five years for Growing Forward, a new agricultural policy that emphasizes:
The Budget 2009 proposed C$500 million for a five-year flexibility programme to facilitate the implementation of new initiatives by providing funds for:
“non-business risk-management measures such as those that will reduce costs of production, improve environmental sustainability, promote innovation and respond to market challenges.”
Of this C$500 million, C$190 million is allocated by the Budget 2009 over the next two years and the balance of this will be funded by existing unallocated Agriculture and Agri-Food Canada resources. The government also committed to providing C$50 million over three years to strengthen slaughterhouse capacity and proposed amendments to the Farm Improvement and Marketing Cooperatives Loans Act to make credit available to new farmers, support inter-generational farm transfers and modify eligibility criteria for agricultural cooperatives.
The Budget 2009 also recognizes Canada’s automotive industry. Noting the December 20 2008 agreement between the federal and Ontario governments to provide General Motors and Chrysler with up to C$4 billion in short-term repayable loans managed by EDC, the Budget 2009 proposes to: (i) support automotive parts manufacturers by improving their access to credit through accounts receivable insurance offered by EDC; and (ii) create the C$12 billion Canadian Secured Credit Facility to improve credit availability for consumers to purchase and lease new vehicles.
In the Budget 2009 the government announced plans to amend the Agreement on Internal Trade by implementing provisions respecting labour mobility to enable workers who have been qualified to practice a particular occupation in one province to practice that same occupation in all jurisdictions across Canada. In this connection, the government has indicated its intention to “cut the red tape” on infrastructure projects, thus enabling the funds to flow as quickly as possible, which ideally will increase opportunities for intra-provincial employment in a timely fashion. In addition to labour mobility concerns under the Agreement on Internal Trade, the government signalled its intention to address barriers to foreign credential recognition in Canada.
At present, international travellers have access to Canadian duty and tax-free goods only upon their departure from Canada. As a means of increasing the competitiveness of Canada’s major airports, the government has proposed and will initiate consultations in respect of the sale of duty and tax-free goods to international passengers upon arrival.
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 (firstname.lastname@example.org). Alternatively, contact Cliff Sosnow or Elysia Van Zeyl at Blake Cassels & Graydon LLP's Ottawa office by telephone (+1 613 788 2200) or by fax (+1 613 788 2247) or by email (email@example.com or firstname.lastname@example.org).
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Elysia Van Zeyl