“Hockey pants that are brought into Canada, manufactured in China, have an 18 per cent tariff. In the U.S., it’s 2.9 per cent. Why the difference? Maybe we were trying to protect a Canadian manufacturer years ago. But they’re all gone now. That one shocked us,” said Senator Joseph Day, who chaired the senate committee.
“We’ve been looking at our tariff situation carefully, particularly with respect to consumer goods in Canada to see what we could do,” he said after giving a speech to the Economic Club of Canada at noon.
“We’re hopeful the government will act on the senate recommendations. They have an opportunity in the upcoming budget which we understand will be in March,” said David Wilkes, the association’s senior vice-president.
Canadian consumers feel “ripped off,” the committee said in its report, called The Canada U.S. Price Gap. The report blamed everything from “country pricing” — the practice of some large multinational suppliers of charging Canadian retailers more than U.S. merchants — to higher fuel prices in Canada.
But the senators also put the onus on Canadian consumers to become more price conscious and get better at negotiating with retailers, noting smart phone applications and Internet sites are making that easier.
“It’s important for us to understand what the market will bear. The vendor is going to sell at the highest possible price he or she can get,” Day told a press conference after the report was released.
The study, which found no single factor explains all price discrepancies, made three other recommendations. They include:
<bullet>Eliminating the 10 per cent markup that exclusive Canadian distributors can add to U.S. books imported into Canada.
Canadian consumers have been complaining about the price gap since 2007 when the once lowly Canadian dollar soared above parity with the U.S. greenback.
Goods in Canada were 24 per cent more expensive, on average, in 2007 and still 14 per cent higher last spring, said Doug Porter, deputy chief economist at BMO Capital Markets, who has been informally tracking a basket of goods over the years.
Flaherty responded last September by asking the senate committee to investigate the causes of the price gap.
A Toyota Rav4 made in Cambridge is cheaper in Hawaii than in Ontario, the report noted.
When the Canadian dollar is at par, consumers naturally wonder: “Are we being gouged?” the report asked.