Canadian retailers are stuck between a rock and a government unwilling—so far—to drop a proposed tariff increase on imported bicycles despite a shutdown of all major bicycle manufacturing in Canada.?
In a letter sent last week to James Flaherty, Canada's finance minister, the Bicycle Trade Association of Canada (BTAC), urged him to reconsider a tariff hike from 8.5 percent to 13 percent after a finding by the Canadian International Trade Tribunal (CITT) that bicycle manufacturing has essentially ceased in Canada.
The Tribunal noted in a Sept. 30 report that ". . .domestic production ceased in June 2013. In addition the Tribunal is not convinced that domestic production is likely to resume in the near future." That finding led Bill Yetman, BTAC's executive director, to strongly urge that the proposed increase be dropped in the 2014 federal budget.
"Our members and their customers are expecting a positive response to our request to add bicycles to the tariff elimination pilot," Yetman wrote. Driving the request was an initial round of tariff eliminations, part of a pilot program to end price discrepancies between Canada and the U.S. Tariffs were dropped on consumer goods ranging from baby clothes to skis and snowboards to golf and hockey equipment. Bicycles failed to make the list.
In August, the Finance Ministry sent a letter sent to BTAC's vice president, Garry Norkum, a British Columbia retailer, noting that some Canadians were still manufacturing bicycles and the higher import tariff would take effect. But with the CITT's September findings, BTAC is again asking that the tariff increase be dropped.
"This hike will increase the cost of purchasing a bicycle for Canadian families, seniors, commuters, athletes and everyone who enjoys cycling for recreation, travel, and for health and wellness," Yetman wrote. "These increases will also exacerbate Canadian bicycle independent retailers' already-thin margins and, as a result of increases in pricing, Canadian consumers will be driven to find better deals from vendors online or retailers in the U.S.," he added.
As projections for bicycle sales and bicycle mode-share continues to show growth, Canada's government needs to support its IBDs, Yetman said. "It is our hope that as you plan for the second part of the tariff pilot in your 2014 budget, that you and your government will recognize the cycling industry for its contributions to the economy, health, and the environment by including bicycles in the tariff elimination pilot. Our members are expecting it and our customers—your constituents are respectfully demanding it," he added.
Two years ago Flaherty asked for a study on price differences between Canada and the U.S. In February, when the findings were released, it recommended that the government review all tariffs with the goal of reducing price discrepancies for some products between Canada and the U.S.
