Current Trade News

Federal Budget eliminates many import duties

(CBSA)

Budget 2009 eliminated tariffs on imports of machinery and equipment in order to help Canadian manufacturers maintain and enhance their competitiveness during the economic downturn. This measure saved companies $88 million annually and was widely supported by manufacturers and economic experts. Stakeholders expressed an interest in further tariff relief, including the concept of establishing tariff-free zones.

After extensive public consultations with Canadian industry, Budget 2010 responds by making all of Canada a tariff-free zone for industrial manufacturers by eliminating remaining tariffs on machinery and equipment, as well as goods imported for further manufacturing in Canada.

This means that tariffs will be eliminated on 1,541 tariff items with most of the reductions taking place immediately, on March 5. The remainder will be gradually eliminated by no later than 2015.

Once fully implemented, this measure will save Canadian manufacturers $300 million in annual duties and eliminate the need for burdensome customs paperwork.

This measure will have wide ranging benefits for the economy and for manufacturers in terms of their ability to improve their competiveness in domestic and international markets, maintain and increase jobs, raise productivity, and improve product quality and innovation.

Small and medium-sized enterprises that must source goods for production from global supply chains will be key beneficiaries.

Canadian exports to all regions are expected to grow as a result of this measure. This will help diversify Canadian trade and build on the Government's Global Commerce Strategy which includes opening new markets through bilateral and multilateral (i.e. Doha Round) trade negotiations. The Government is currently negotiating a Comprehensive Economic and Trade Agreement with the EU, undergoing exploratory work with India, and it has recently concluded FTAs with Peru, Colombia, Panama, EFTA and Jordan.

It will compliment Canada's Tax Advantage and stable financial sector, making Canada a destination of choice for foreign investors. This measure also demonstrates Canadian leadership as the host and co-host of the G8 and G20. These countries have committed to maintaining open markets and making further progress on trade liberalization in order to promote global economic recovery.

The 2010 budget documents are available at www.budget.gc.ca. The list of affected tariff items is included in the Notice of Ways and Means Motion at the end of the budget at pages 431 to 447. The corresponding descriptions for the tariff items may be cross-referenced with the Customs Tariff which is available online at: http://www.cbsa.gc.ca/trade-commerce/tariff-tarif/2010/01-99/tblmod-eng.html