In the early 1970s, the United Nations Conference on Trade and Development (UNCTAD) recommended that developed economies grant autonomous and non-reciprocal tariff preferences to developing countries.
This was done in order to increase these countries’ export earnings, promote their industrialization and promote their economic growth.
Canada’s General Preferential Tariff (GPT) for developing countries was implemented in 1974.
Under the GPT, Canada currently offers duty-free or preferential market access to imports of most products from 175 designated beneficiaries, including countries like China, India, Brazil and South Korea.
To give you an idea of what that means in dollar terms, in 2011 imports under the GPT treatment totalled $15.2 billion.
The global economic landscape has changed considerably since 1974, including significant shifts in the income levels and trade competitiveness of certain developing countries.
China, one of the current recipients of the GPT, now has an economy over four times larger than our economy, with a value of $7,318 billion compared to Canada’s $1,736 billion.
With the program due to expire on June 30, 2014 and in an effort to respond to these changes, Economic Action Plan 2012 announced that the government was undertaking a comprehensive review of the GPT to ensure that this form of development assistance aligned with Canada’s development policy objectives.
As such, the government sought consultation on its intention to modify the list of beneficiary countries by withdrawing GPT treatment from countries that:
• are classified for two consecutive years as high income or upper-middle income economies according to the latest World Bank income classifications; or
• have a share of world exports that is equal to or greater than one per cent for two consecutive years according to the latest World Trade Organization trade statistics.
Despite the partisan outrage that amending the list of countries which receive the GPT is a tax grab, our government has been clear that it is not prepared to support outdated special tax treatments that gives our competitors a distinct advantage over Canadian manufacturers.
The remedy, in fact, is for these countries to pursue free trade agreements with Canada, which would provide better tariff treatment than the GPT.
As a member of the Standing Committee on International Trade for the past seven years, I can attest to the fact that, through the hard work of our International Trade Minister Ed Fast, Canada remains fully committed to the successful completion of all ongoing free trade agreement negotiations and the active pursuit of new and deeper trading relationships.
As for you the consumer, our government has cut tariffs by almost $600 million in an effort to bring prices of goods down. In addition, our government has cut taxes over 150 times, saving the average family $3,200 per year.
The Opposition can continue to be critical of changes to the GPT, but in doing so they need to explain to local manufacturers in Kelowna-Lake Country and across the country why any government worth its salt would continue to give our major competitors special access to the Canadian market, putting our own Canadian companies and workers at a clear disadvantage.