GHY Tradelines

(CBSA)

Spring brings increased numbers of travellers crossing the border. The Canada Border Services Agency (CBSA) is committed to providing the best possible service, which includes reducing wait times by helping you know what to expect when you arrive at the Canadian border. Read more about required documentation, applicable personal exemption limits, etc. here.
 

(Hollie Shaw – Financial Post)

Target Canada president Tony Fisher addressed Tuesday the sticker shock gripping some consumers who expected the retailer’s prices would be on par with its U.S. stores when it opened outlets across the country this month.

The hot-button issue of Canada-vs.-U.S. retail pricing was the subject of a Senate committee report this year and resurfaced in last week’s federal budget when the government announced it would drop tariffs on hockey gear and baby clothing.

Fisher told a Canadian Club of Toronto luncheon that Target, which has opened 20 stores in Ontario since the beginning of the month, knew it would have to open stores that would be competitive with other retailers operating in the Canadian market, whether they be U.S.- or Canadian-owned. Read more here.
 

The 2013 Federal budget announced on Thursday eliminates import tariffs on baby clothes and various sports equipment, in an attempt to bring down prices that are visibly higher in Canada than in the U.S., giving up $76 million a year in tax revenue. The Government also proposes to withdraw General Preferential Tariff (GPT) eligibility from 72 higher-income and export competitive countries, including all G-20 countries.

Tariff Relief for Canadian Consumers

Economic Action Plan 2013 proposes $76 million of tariff relief on baby clothing and sports and athletic equipment to benefit Canadian families and retailers.

Some products consistently cost more in Canada compared to the exact same products sold in the United States. These price discrepancies persist despite the considerable appreciation of the Canadian dollar relative to the United States dollar over the past several years.

The Government shares Canadians’ concerns about the Canada-U.S. price gap and wants to see lower prices for consumers. At the Government’s request, the Standing Senate Committee on National Finance examined this issue in detail, identifying a number of possible factors including Canada’s tariffs.

In order to lower prices for Canadian families, Economic Action Plan 2013 proposes to eliminate all tariffs on baby clothing and sports and athletic equipment. The latter includes products such as ice skates, hockey equipment, skis and snowboards, golf clubs and other equipment to promote physical fitness and healthy living, consistent with past initiatives such as the Children’s Fitness Tax Credit. Click here to see a complete list of tariff items covered.

Altogether, this represents $76 million in annual tariff relief, and comes with an expectation that wholesalers, distributors and retailers will pass these savings on to consumers.

The Government, in consultation with the Retail Council of Canada and consumer groups, will monitor the impact of these tariff reductions on Canadian retail prices. This initiative will allow the Government to assess whether tariff elimination can help narrow the price gap for consumers in Canada, and will help guide future decisions.

The Government will continue working with Canadians, including consumers, retailers and manufacturers, to identify areas where further tariff liberalization can benefit Canadians.

Modernizing Canada’s General Preferential Tariff Regime for Developing Countries

Budget 2013 proposes changes to Canada’s General Preferential Tariff (GPT) regime under the Customs Tariff to ensure that this form of development assistance is appropriately aligned with the global economic landscape.

These changes also align Canada’s GPT system with other major tariff-preference granting countries, and target the benefits to countries most in need.

The Department of Finance consulted extensively with stakeholders in preparing this measure, including through the publication of a notice in the Canada Gazette on December 22, 2012. As announced in the Canada Gazette notice, the Government will withdraw GPT eligibility from 72 higher-income and export competitive countries, including all G-20 countries.

The economic criteria used to determine country eligibility for the GPT will be applied every two years on a forward basis to determine beneficiary country eligibility, similar to the process that exists in many major industrialized nations.

The Government will also ensure that graduating countries from the GPT regime does not reduce the benefits of the Least Developed County Tariff (LDCT) regime.

The General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations will be amended in order to continue allowing the duty-free importation of textiles and apparel from least developed countries that are produced using textile inputs from current GPT beneficiaries. The changes to the GPT, to be given effect by amendments to the Customs Tariff and related regulations, are effective in respect of goods imported into Canada on or after January 1, 2015, and will be extended for ten years, until December 31, 2024.
 

(CTV News)

A new study shows Canadians are heading south of the border at a pace that hasn’t been seen in more than a decade, while some Surrey businesses are feeling left behind.

The study out of Washington state shows the number of border crossers has hit a 15-year high, with more than 15-million Canadians passing through major border crossings last year.

Lower prices on staple items like gas and groceries might explain the numbers. Read more here.
 

(Marc Weisblott — Canada.com)

Much of the growing attention in Canada to Black Friday sales that traditionally follow American Thanksgiving can be linked to the belief that there are better bargains to be had by crossing the border.

The increase in duty-free limits in June — which allowed anyone who travelled to the U.S. for 24 hours to be waved back home with $200 in declared merchandise, and $800 after 48 hours — raised the appeal of a shopping excursion now that the different dollars are worth about the same. But there is still no exemption to match the $200 that Americans can spend in Canada if their voyage lasts under a day.

Nonetheless, there are plenty of items that aren’t worth the energy of border guards to scrutinize. Purchases that have tags or packaging removed are less likely to raise suspicion, after all.

But just because shoppers can work around paying a premium to buy things in U.S. stores doesn’t mean they should make a run for the border at each available opportunity. Retailers are increasingly implying that, even if there isn’t an economic incentive to spend holiday dollars at home, people should at least consider the ethical consequences. Read more here.
 

(CTV Winnipeg)

New duty-free limits took effect on June 1, but some travellers may not know how the rules function.

With Labour Day approaching, thousands of Manitobans are heading to the U.S. for back-to-school shopping.

The new duty exemptions, announced in this year’s federal budget, mean Canadians can now buy up to $200 worth of goods for a 24-hour trip across the border without having to pay duty. The previous limit was $50. The exemption for a 48-hour to seven-day trip has increased to $800, up from the previous amount of $400.

Border officials are offering up a clarification for travellers.

“That exemption is a little bit different than the other ones in that if you go over the $200 Canadian then the whole amount that you are bringing back (is) subject to the applicable taxes,” said Terry Kreitz from Canada Border Services Agency.

People can also be taxed on all of their purchases if they return short of the allotted time frame, such as someone staying only 23 hours in the U.S., said the CBSA. Read more here.
 

(Alexandra Posadzki – The Canadian Press)

Higher duty-free exemptions for cross-border shoppers helped attract Canadians stateside in record numbers in June, analysts and retail groups said Tuesday as Statistics Canada reported 1.9 million overnight trips to the U.S. that month.

Paul Ferley, an economist at RBC, said the new exemptions — which let those on an overnight trip to the U.S. declare $200 worth of purchased goods, up from $50 — combined with a strong Canadian dollar have upped the incentives to shop south of the border.

“There was concern with the higher exemptions that it could prompt increased shopping trips into the U.S.,” said Ferley.

“Certainly the recent data suggests that’s what played out.” Read more here.
 

(The Canadian Press)

Canadians are in a U.S. shopping state of mind this summer thanks to changes in regulations that allow them to buy more without paying duty, a new survey suggests.

The Canadian Press-Harris Decima poll on relaxed cross-border shopping limits that went into effect June 1 found a large majority in favour of the changes — and 54 per cent of those planning a trip stateside said they intended to spend more. Additionally, four in 10 said they were likely to purchase more duty-free goods. [...]

As outlined in the March budget, the duty-free threshold on stays longer than 24 hours rose to $200 from $50 beginning this month. The limit on stays longer than 48 hours increased to $800 from the current two-tiered levels of $400 and $750, depending on the length of stay. Read more here.
 

(CBC via Huffington Post)

Automakers are breaking U.S. law in order to prevent Canadians from buying cheaper cars there, according to an Ottawa trade lawyer and anti-trust expert, by ordering their American licensed dealerships not to sell new cars to Canadians.

The big five automakers — Ford, GM, Chrysler, Honda and Toyota — fear they could lose their Canadian franchises if people were crossing the border to buy their vehicles, says Michael Hart, who holds the Simon Reisman chair in trade policy at Carleton University.

This forces Canadians to buy from dealerships north of the border, where prices tend to be thousands of dollars higher. Read more here.
 

(Janet Davison – CBC News)

With new duty-free limits for cross-border shoppers kicking in Friday, Canadians may decide they will want to make even more trips south for all those cheaper consumer goods.

For Canadian retailers, though, those trips would represent more money lost from their cash registers, and magnify the problems they are having with the noticeable price gaps between the two countries on everything from ketchup to running shoes.

“The increased [duty-free] exemptions, the currency equivalency and the challenges from a cost perspective … are a perfect storm of conditions that are going to be challenging from a Canadian retailer perspective,” says David Wilkes, senior vice-president of the Retail Council of Canada.

Under changes introduced in the 2012 federal budget, the duty-free limit on visits of more than 24 hours quadruples, rising from $50 to $200, effective June 1. Read more here.
 

(Tracy Sherlock – Postmedia News)

The stakes in the battle over cross-border shopping, already a multi-billion-dollar business, are about to be raised when duty-free limits go up June 1.

After years of watching Canadians line up to cross the border seeking cheaper prices, particularly with the dollar near parity, local retailers now face the prospect of even higher duty-free thresholds.

Canadian retailers are starting to fight back, pushing the federal government to investigate why businesses on this side of the border face higher wholesale prices that they’re forced to pass on to consumers to stay in business. Read more here.
 

(Globe & Mail)

Canadians are spending far more on goods in the U.S. than federal data suggest, raising the stakes for domestic retailers trying to find ways to draw customers back into their stores.

As much as 8 to 10 per cent of consumer spending on a raft of products is flowing to retailers outside the border, according to estimates in a report being released today by BMO Nesbitt Burns. That compares to Statistics Canada data that say 4 per cent of retail spending is shifting outside the country. Read more here.
 

(Andrea Macpherson — News1130)

The situation will likely get worse once new regulations go into effect June 1st, which increases the amount of goods you’re permitted to bring back

Retailers are worried your cross-border shopping this weekend will hurt their bottom line. They’re also bracing for the situation to get worse once the amount you’re permitted to bring back is upped in June.

The new regulations, which go into effect June 1st, allow Canadian travellers to bring back $200 worth of goods per 24 hours visit across the border.

Shafiq Jamal with the Retail Council of Canada says this will make it very difficult to compete with US retailers. Read more here.
 

(CBSA)

The warmer weather brings with it higher travel volumes. This Easter weekend is no exception and the Canada Border Services Agency (CBSA) would like to help you prepare for longer border wait times at some ports of entry.

For information, including entry requirements into Canada, visit the CBSA Web site at www.cbsa.gc.ca, go to Travel Tips and then I Declare. There, you’ll find a downloadable copy of I Declare, outlining what to expect when you arrive. If you plan to fly, view our video Arriving by Air: Welcome home. Welcome to Canada.

Prepare yourself and know what to expect before arriving at the border. Whether you travel by land or air, plan ahead with the following helpful tips…

Read more here.
 

(Ted Booker — Watertown Daily Times)

The state’s [New York] new sales-tax break that took effect April 1 has north country retail stores licking their chops as they anticipate shoppers spending more — especially Canadians traveling south of the border.

The new law eliminates the 4 percent state sales tax for all clothing items under $110; previously, the state collected taxes on items that cost more than $55. Customers will continue to pay county sales tax for all clothing purchases — 3.75 percent in Jefferson and Lewis counties and 3 percent in St. Lawrence County.

Crowds of Canadian customers who visited J.C. Penney at Salmon Run Mall last weekend were pleasantly surprised when they found out about the change while checking out, said Daniel B. Cotton, store manager. Given Canada’s burdensome 13 percent sales tax, Mr. Cotton said, the new policy should give Canadians an extra incentive to go on shopping sprees. Read more here.
 

(The Globe & Mail)

Canadian shoppers will have more freedom to take advantage of lower prices across the border, as Ottawa quadruples the limit on how much they can buy on a one-day U.S. trip without having to pay duties or taxes.

Thursday’s budget raises the limit to $200 from $50 for residents who been out of the country for 24 hours. The exemptions for longer trips are going up as well – doubling to $800 for those who have been away for 48 hours. Retailers anticipate a surge in cross-border shopping starting in June, when new rules are slated to take effect, a move they say will squeeze them hard unless the government also drops import taxes imposed on merchants. Read more here.
 

(Sean Silcoff — Globe & Mail)

Just because the loonie is trading near parity with its U.S. counterpart doesn’t mean Canadians should expect prices here to be similar to those south of the border, Statistics Canada says.

Rather, the “law of one price” across borders “is seldom supported in practice,” the agency said in new research published Wednesday.

“Prices in the two countries generally do not equate, nor do relative prices remain constant when there are movements in the exchange rate,” Statscan concluded. Read more here.

(The Ledger – Jim Fox)

Canadians have always paid more than Americans for most goods and services and the price “wedge” between the two countries might always be there.

Bank of Canada Governor Mark Carney made that prediction, saying even with efforts to create a uniform North American market with identical tariffs and regulations won’t fully close the gap.  While the Canadian dollar has been worth more than the U.S. currency for most of this year, shoppers paid an average of 11% more than Americans for the same goods in September, he said.  Testifying before a Senate committee looking into the price gap, Carney said the difference is down from 18% in April.

Among the factors despite currency fluctuations are higher sales taxes (in the double-digit range) and retail labor costs that are about 20% higher in Canada.  Canada has a smaller population, higher transportation costs and economies of scale that allow U.S. retailers to reduce costs, he said. Canadians living close to the border take advantage of price breaks but cross-border shopping is “quite modest” at about two percent of all retail sales, Carney said. Read more here.
 

(Ellen van Wageningen — Postmedia News)

Exempting Canadians who make same-day shopping trips to the United States from paying duties on their first $200 in purchases will push down prices on this side of the border and help consumers take advantage of the strong loonie, says a University of Toronto expert.

The exemption would be a consumer-friendly way of smoothing the flow of traffic across the border that won’t hurt retailers as much as they claim, said Ambarish Chandra, an assistant professor of business economics. “I don’t think this is something that would lead to a flood of people shopping across the border. All it would do is legitimize something that’s probably already going on.”

He made his case last week to the Senate committee on national finance, which is investigating why prices are often lower in the United States than Canada. Read more here.
 

(Mike Milke — Troy Media)

Despite 22 years of free trade with Americans, consumers in Canada regularly pay more compared to the U.S. price tag on similar items. That fact has finally come to the attention of Ottawa: “Canadians are irritated when they see large price discrepancies on the exact same products being sold on different sides of the border,” stated Finance Minister Jim Flaherty, this in his recent letter to the Senate’s Finance Committee.

“I share their irritation,” wrote Flaherty, as he requested the committee study the matter.

It was nice of the Finance Minister to publicly acknowledge the problem, though in Ottawa, sending an issue to a committee can be code for “make it go away.” But proceeding on the assumption the Minister was sincere and serious about allowing open markets to function, here are three suggestions for the federal and provincial governments on enacting consumer-friendly policy. Read more here.