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Confused by Ottawa's planned tariff changes? You're not alone. It seems even Ottawa itself isn't sure what it has done.
In last month's federal budget, Finance Minister Jim Flaherty announced an overhaul of the country's tariff regime on imports that would remove 72 emerging-market nations from the General Preferential Tariff (GPT) category – a classification that conferred lower tariffs on goods brought into Canada from those countries – as of Jan. 1, 2015. Included on that list, most notably, is China – Canada's second-biggest source for merchandise imports, after the United States.
This is, in effect, a tax change that will put (by the government's own reckoning) more than $300-million a year into in Ottawa's coffers. For that kind of money, you would expect officials to be well prepared to address questions about the implications for consumers. Yet efforts by the public and news media (including The Globe and Mail) to get straight answers on which specific consumer products will be hit by the higher tariffs, in what volumes, and to what degree, have been frustrating, befuddling and largely fruitless.
Take the latest political hot potato that got kicked around the tariff file over the past few days: The possibility that iPod digital-music players would face a new tariff of 5 to 6 per cent.
To anyone looking at the tariff codes and the proposed GPT revamp, it looks for all the world like iPods shipped from the countries affected could very well get caught in the tariff trap. Yet the Finance Minister's office, once made aware of this interpretation, took a closer look and assured us that iPods won't be hit; there's another special tariff code under which importers of iPods can apply for full exemption.
The Canadian Border Services Agency (CBSA), which administers the tariff system, agrees that importers can apply; yet the CBSA's own documents suggest that to successfully do so, under the letter of the law, retailers may have to start having every iPod buyer sign a certificate with name, contact information and a solemn pledge to only use the iPod for the intended purpose under the tariff exemption – which may make the whole proposition too invasive and administratively onerous to bother. Will customers and businesses definitely have to do this paperwork? We have asked; no one in Ottawa, at the time of this writing, has been able to tell us.
And this is just one example, out of a policy change that affects nearly 1,300 product categories. For what amounts to a sweeping change in treatment for imported goods that involves hundreds of millions of dollars a year of consumer money, Ottawa has been woefully underprepared to address the ramifications of its own announcement.
The government's inability to provide clear answers has left it wide open to charges from its critics that this was less a well-reasoned revision of trade and development policy than a back-door tax grab. If that's not the case, then the government has at very least looked haphazard and ill-informed on its new policy. If Ottawa is frustrated by all the media questions and conflicting reports, it has only itself to blame.
David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights , and follow David on Twitter at @ParkinsonGlobe .
David Parkinson