On January 1, 2015, the federal government eliminated preferential duty rates charged on imports from 72 countries. It is a move that is likely to create $333 million in additional revenue for the government. It is also a topic that hasn’t been widely discussed beyond the trade community. So, how will it affect your business? Let’s start off by discussing what it is and why these countries have been removed.
What is the General Preferential Tariff?
The General Preferential Tariff (GPT) was established in the 1970s to help stimulate growth in 175 developing nations. Developed by the United Nations (UN), it was adopted by most major economies. Beneficiaries of the tariff have included Argentina, Hong Kong, Malaysia and Russia, all of whom received lower-than-normal, and sometimes 0 percent, duty on many goods when imported into Canada.
Why Have 72 Countries Been Removed from the List?
Based on a 2013 federal review process, 72 countries were removed from the GPT list because their economies have elevated to the same point as “higher-income and trade-competitive countries”. The GPT Tariff Withdrawal order removes the special rates for international trade powerhouses including Brazil, China, India and South Africa. A complete list of tariff treatments by country can be found at the Canada Border Services website here.
What Will the New Rates be for these Countries?
The 72 countries that have been removed from the list will now be assessed under the Most Favoured Nation (MFN) tariff rate or under existing trade agreements, such as the one recently implemented with South Korea or Canada’s various trade agreements including Peru, Colombia, Jordan and 18 Caribbean nations under the Commonwealth Caribbean Countries Tariff.
New Trade Agreements on the Horizon
One of the next big trade deals coming up is the Comprehensive Economic and Trade Agreement (CETA) with the European Union (EU) – the world’s largest economy with 500 million people and annual economic activity of almost $18 trillion.
How Will This Affect Your Importing and Exporting Business, or Entrepreneurs Thinking About Expanding Globally?
The changes to these tariffs have big implications if you are already importing or exporting goods to or from the countries that have been removed. Landed costs of goods and supply chains are all likely to be affected while each country comes to term with where they now sit in the competitive trade market.
Whether you are new to trade or have an existing business, it’s probably time to start your market research to compare the costs and services you receive from these countries and their competitors and how it will impact your business.
This is where Small Business BC can help. Our dedicated trade advisors are on hand to help you navigate the world of international business. Trade seminars this semester include:
- Friday, January 23: Sourcing Suppliers: International Product Procurement
Covers the basics of international sourcing – how to find, qualify and build a relationship with global suppliers, including due diligence and contracts, as well as how to re-structure your supply chain to take advantage of trade agreements.
– with Richard Schwartz, President, Certain Supply Inc. - Tuesday, January 27: Are You Thinking of Importing?
Seminar for people considering importing into Canada and want a broad overview of the process, regulatory framework, special duty rates and regulations to be met before selling the product in the Canadian marketplace.
– with Allison Boulton, International Trade Advisor, Small Business BC - Tuesday, March 3: Are You Thinking of Exporting?
A great introduction to the idea of selling Canadian made or processed products into international markets. Learn about permits required for some exported goods, freight and shipping terminology, potential funding to develop an export market and how to ensure payment from global buyers.
– with Allison Boulton, International Trade Advisor, Small Business BC
Here to Help
No matter what stage of business, or what problem you face, Small Business BC offers a range of seminars and one-on-one advisory sessions to suit any business.