The House proceeded to the consideration of Bill C-18, an act respecting equalization and authorizing the Minister of Finance to make certain payments related to health, as reported (without amendment) from the committee.
That Bill C-21, an act to amend the Customs Tariff, be referred forthwith to the Standing Committee on Finance.
Mr. Speaker, it is my pleasure to speak today about Bill C-21, an act to amend the Customs Tariff. I also welcome the opportunity to support the motion that this legislation be referred to committee.
Briefly, this bill provides for the continuation of a longstanding policy of providing preferential tariff treatment to developing and least developed countries.
The two tariff programs in question—the General Preferential Tariff (GPT) and the Least Developed Country Tariff (LDCT)—are implemented through the Customs Tariff Act and are set to expire on June 30, 2004.
This bill proposes that the programs be extended for another 10 years, from July 1, 2004, to June 30, 2014, as per past practice.
Before discussing the bill, I first want to provide some background, which will help to put these measures in context.
During the mid-1960s there was a growing recognition that preferential trade treatment for developing countries was a means of fostering growth and the well-being of poorer nations.
Following a recommendation by a United Nations conference on trade and development, developed countries implemented unilateral tariff preferences for goods originating from developing countries in order to help them increase their export earnings and stimulate their economic growth.
Canada's general preferential tariffs program, the GPT, was implemented on July 1, 1974, for a 10 year period and has been renewed twice since then, in 1984 and 1994. As indicated, it is now set to expire on June 30, 2004.
Under the GPT, more than 180 countries and territories are entitled to zero or low tariffs on a range of products that are covered under the customs tariff, with the exception of some agricultural products, refined sugar and most textiles, apparel and footwear.
In 2003, Canadian imports under the GPT were valued at $9.3 billion and accounted for 2.8% of total Canadian imports.
In 1983, Canada introduced the Least Developed Country Tariff—or LDCT—in an effort to provide even more generous preferential tariff treatment to goods from the world’s poorest countries, as designated by the United Nations based on a number of criteria such as national income, health and education. This program also expires on June 30, 2004, as I stated before.
Since January 2003, the government, acting on a commitment made at the 2002 G-8 Summit in Kananaskis, provides complete duty-free access under this program to all imports from 48 least developed countries, except for certain agricultural goods such as dairy, poultry and eggs.
In 2003, Canadian imports under the LDCT were valued at $408 million, accounting for 0.12% of total Canadian imports.
I have provided some background to these two programs. Now, I would like to explain why they should be extended.
To begin, extending the GPT and LDCT for another 10 years reaffirms the government’s commitment to promoting the export capability and economic growth of developing and least developed countries—the main reason these programs were initially established.
It also provides a predictable business environment to traders using these programs, both in the developing world and here in Canada.As well, an extension would be consistent with the practice of other developed countries, such as the United States, members of the European Union and Japan, who also continue to have similar programs.
Further, continuing these two longstanding unilateral preferential tariff programs sends a positive message to beneficiary countries who see such programs as an important factor in encouraging their development.
The decision on whether to extend the GPT and the LDCT affects a number of stakeholders.
First, it affects the exporters in developing and least developed countries that benefit from the preferential access provided by the two programs. The premise that originally led to the establishment of preferential tariff programs--that they would encourage and increase exports from developing and least developed countries and hence stimulate economic growth--still holds today.
Various studies by international organizations such as the International Monetary Fund and the World Bank support the principle that export expansion contributes to economic growth.
While these programs clearly benefit developing and least developed countries, Canadians also benefit from them. As a result of lower tariffs on goods from the developing world, Canadian consumers enjoy access to imported goods at competitive prices and will continue to do so if these programs are extended.
In addition, Canadian producers will continue to benefit from the reduced tariffs on inputs they import from the developing world and use in production of goods in Canada, which ultimately increases the competitiveness of Canadian industry.
If these programs were not extended, the increased duty costs incurred by Canadian importers and consumers would be approximately $272.8 million. Not continuing these programs would also raise questions about Canada's commitments to international development.
As noted earlier, all other major industrialized countries provide preferential access for developing and least developed countries, and some, such as the United States, Japan and the European Union, have extended similar programs in recent years. As such, not extending the GPT and LDCT would isolate Canada internationally.
Continuing these programs would also be consistent with our commitments to assist developing and least developed countries. These commitments have been reiterated on many occasions in fora such as the G-8, the World Trade Organization and the United Nations. Clearly, letting these programs expire could negatively affect Canada’s image internationally.
The reasons that justified the introduction of the GPT and the LDCT decades ago still remain.
The economies of many developing countries have still to make great strides if their citizens are to attain acceptable income levels. This bill constitutes one substantive measure Canada can take to continue to assist the developing world in achieving this goal, and continues Canada’s tradition of assisting the developing world.
In considering this bill, I encourage hon. members to keep in mind that Canada stands with all other major industrialized nations—the United States, Japan and the European Union—in supporting the developing world through such programs.
Before closing, let me review the advantages of extending the GPT and LDCT for an additional 10 years.
First, Canada would continue a longstanding international practice of providing preferential tariff treatment to goods from the world’s poorer nations.
Second, continuing the programs for a fixed period of 10 years will provide certainty and predictability to traders using them in Canada and in the developing and least developed countries.
Third, continuing the programs complements Canada’s foreign aid policies.
Finally, while these programs were mostly conceived as an economic assistance measure for developing and least developed countries, they also benefit Canadians by providing them with goods that are subject to lower rates of duty.
A 10 year extension of these programs is consistent with past practice, provides a predictable business environment to traders and reaffirms the government's long term commitment to international development.
In conclusion, the government is aware of the situation in the clothing and textile industry and is currently looking at additional measures to support the industry.
Madam Speaker, it is a pleasure to speak to Bill C-21, an act to amend the customs tariff.
The minister of state articulated the need to extend this program, which has been in existence for some time and will come to an end on June 30, 2004. He gave his Liberal spin on it, indicating that it would help everybody in the Third World developing countries. He said that we should continue with it.
We in the Conservative Party agree with the minister and will support the bill because of another aspect. If we do not support the bill, then there could be the possibility of no tariffs and this would result in our markets being flooded by uncontrolled goods coming into the country, which would impact Canadian jobs.
We need a regime of controlled access, giving preferential treatment to developing countries and the least developed countries as well as ensuring that our markets open up slowly to foreign goods, while at the same time taking advantage of it.
We are more in line with having what we call free trade agreements. In light of the fact that the WTO talks in Cancun collapsed, it becomes more important for the world trading regime to consider what to do about tariffs. That is critically important because, in globalization, all studies have indicated that a reduction of tariffs in foreign trade is beneficial to everybody, including Canada.
I will be splitting my time, Madam Speaker, with my colleague from Edmonton--Strathcona.
It is important to understand that a country like Canada, which is based on exports and has a GDP of 48%, now close to 45%, has a regime that regulates international trade. We would like to see this being done under the guise of free trade agreements or special agreements with other countries that would benefit our exporters, benefit other consumers and benefit other countries as well as, with lower tariffs thereby giving an advantage to everyone.
As things stand right now, due to the collapse of the WTO talks in Cancun, we do not know where the world trading regime will go. For that reason, we will support this bill because we need a regime that will control the flow of goods until we know the outcome of the WTO talks, should they carry on and what agreements will come into play.
We are talking about two tariffs, the GPT, or the general preferential tariff, and the least developed country tariff.
I think I have articulated the reasons why we will support the bill. In short, until the outcome of the WTO talks and other tariff regimes on controlling the flow of goods come into play, will support the bill.