Tariffs may be partly to blame for price gap: Flaherty
OTTAWA - Finance Minister Jim Flaherty concedes that government policies regarding tariffs on imports may be one of the reasons consumer goods cost less in the United States than in Canada.
A day after calling for the Senate finance committee to investigate the price gap, which one survey puts at 20 per cent on average, the minister said Thursday that high tariffs may be a problem.
But he stopped short of saying they would be removed or reduced. He said that's what the Senate probe will help determine.
"I'm responsible for tariffs and sometimes people in the retail business blame tariffs and so on, so I want to see and I want to know what the facts are," he told reporters after a meeting of the Conservative caucus.
"I'm looking forward to the Senate committee getting to the facts ... and we'll take whatever steps we need to take."
Tariffs on most goods between Canada, the United States and Mexico were phased out under bilateral and continental trade deals signed in the late 1980s and early 1990s.
However, there are still duties paid on some goods not covered by the trade agreements as well as a range of clothing, consumer electronics and other products that come to Canada from Asia, Europe, South America and other countries.
In his letter to the Senate committee heads, Flaherty cites "tariffs on consumer goods" as one of the factors their probe should examine.
The Retail Council of Canada said tariffs are a major factor and that Flaherty already knows that. Spokeswoman Anne Kothawala said Wednesday tariffs can account for as much as 18 per cent on some items.
"Lots of sporting equipment, hockey skates, running shoes, track suits, pillows, cotton clothing and other items carry an 18 per cent tariff on them, so as a Canadian retailer it is 18 per cent more expensive to sell that product to a consumer," she said.
"That's a big one the government can do something about."
She added that Canadian retailers are also disadvantaged by the small size of the domestic market, spread out over a vast area, and that some global suppliers give discounts to U.S. merchants but not their counterparts in Canada.
Flaherty says all the factors that go into pricing in Canada should be examined.
"Part of it is just making sure that the participants in the retail economy come clean about how they price," he said.
The minister said Canadians are irritated and that he shares their "irritation" that the parity of the Canadian dollar versus the U.S. is often not reflected in prices for consumer goods.
An informal Bank of Montreal survey in April found the disparity averages about 20 per cent.