Canada China Trade Tariff Gap

Year: 
2017

Introduction

Canada’s trade deficit with China is widening amid a slowing of raw materials exports to China, while Canadians continue to import $50 billion a year of Chinese products. According to Industry Canada, the 2012 trade deficit with China was $31.7 billion, four times what the deficit was a decade ago.

Background

While China exports manufactured goods, like electrical machinery, furniture and footwear, to Canada, it imports mainly raw materials. Currently the top Canadian exports to China by value are wood pulp, oil seeds and grains, ores, mineral fuels and oil.

The Chinese market for many Canadian-made manufactured goods is being blocked by a high tariff wall, which makes the cost of these products prohibitive for Chinese consumers. For example, MO851, a Montreal-based maker of luxury leather goods, has opened a boutique in Beijing, hoping to cash in on the huge Chinese consumer market with a taste for luxury goods. A bag that retails for $465 in Montreal, costs 90 per cent more in Beijing due to tariffs, taxes and luxury taxes.[1]

Riversong Guitars in Kamloops, B.C. states that a guitar that retails for $1000.00 in Canada, has a landed cost of $1430 in China with tariffs, freight and agency fees. These guitars with exchange rate and luxury taxes would retail for approx. $1925 CAD or Yen $9867.

On the other side, Chinese products face no such tariffs as when they are imported to Canada, they are using similar production products and materials and have much lower labour costs.

Result

Canada and China have been trading partners for decades and even more so now with the globalization of the world economy.  In order for Canadian companies to be able to compete in the Chinese market fairly as Chinese companies compete in the Canadian market, then the playing field must be leveled.

THE CHAMBER RECOMMENDS

That the Federal Government work with the Canadian business community and the relevant stakeholders to develop a trade agreement with China.