Devised almost 200 years ago by a practical German baron, the bicycle has evolved into an urban staple. Beloved of children, prized by inner-city commuters, it can be a lifesaver when summer smog chokes the nation. So it was a huge relief last week when the Conservative government rejected a federal trade tribunal's call for a 30-per-cent surtax on cheaper imported bicycles. As Industry Minister Maxime Bernier sensibly told the House of Commons, "We do not want Canadian buyers to pay an additional $67 for a bicycle."
It is a victory for common sense. In 2004, the Canadian Bicycle Manufacturers Association complained to the Canadian International Trade Tribunal that bicycles and bicycle parts imported from Asia were eroding its members' market share. To its dismay, imports from developing nations had more than doubled between 2000 and 2004. In May, 2005, the tribunal launched an in-depth "safeguard" probe of those allegations, contacting domestic and foreign bicycle producers as well as importers and purchasers.
This was no routine event. Safeguard probes are exceptional, sparked by requests for an emergency response to perceived threats to a domestic industry from a sudden surge in imports. This was the third safeguard hearing in the tribunal's history. The fourth -- into the importing of barbecues from China -- also concluded with a stern call for a surtax. Ottawa wisely rejected that recommendation last week as well.
But it was the proposed bicycle surtax that aroused strong emotions, if only because so many riders are so attached to their efficient vehicles. The mere prospect of this added financial burden triggered an outcry. It even pitted many retailers against larger domestic manufacturers. As the tribunal noted, although it sent questions to only 26 retailers, it received replies from 155.
Such consumer activism did not sway the tribunal. Last September, in a 70-page report, it concluded that there had been a "recent, sharp, sudden and significant" increase in imports, and that domestic bicycle producers had suffered "serious injury." As a result, it recommended the imposition of a surtax on bicycles from China, the Philippines, Thailand and Vietnam. The surtax would have applied only to bicycles with a retail cost of less than $400 and with a wheel diameter of more than 38.1 centimetres. (Certain specialty bikes were exempted.) The tax would have decreased from 30 per cent in the first year to 25 per cent in the second, diminishing to 20 per cent in the third.
Before the former Liberal government could respond to those recommendations, it fell. With last week's rejection, the Conservative government tartly noted that there is already a high tariff of 8.5 per cent on bicycles from those developing nations and that surtaxes would not provide a competitive long-term solution for domestic manufacturers. Such surtaxes would, however, increase the costs of bicycles for retailers and consumers. The government's decision is a welcome reprieve.
This is not the first time that domestic bicycle manufacturers have sought extra federal protection. In 1992, Ottawa slapped anti-dumping duties on imports of certain bicycles from China, renewing those duties after reviews in 1997 and 2002. In 2004, those duties were finally removed. Since then, as the tribunal itself acknowledged, some domestic manufacturers have increased their own imports of finished painted bicycle frames. In other words, savvy domestic manufacturers are tapping foreign producers for key components in their bicycles, sensibly creating a global supply chain.
That is the way the world is heading. Last week's federal decision was a suitably tough lesson in how the global economy should work. Domestic manufacturers have to adapt to their determined competition or face the consequences. If Canada wants to foster bicycle use for environmental reasons, it cannot saddle its plucky riders with the price of protectionism.