Budget 2013 Stays the Course on Trade

sad Christmas

By Stefania Bartucci

Receiving this year’s budget, I felt like a kid at Christmas who was really hoping that Santa would pony up for a Nintendo Wii, and instead discovered some new socks and pajamas under the tree.  You know you need them, but socks and PJs won’t entertain you for hours on end.

No matter. Although this budget didn’t introduce anything revolutionary for the Canadian trade community, there are a few stocking stuffers worth mentioning.

A Super-Department

Faster than a speeding bullet, more powerful than a locomotive…well, that might be overstating its powers, but this budget does fold the Canadian International Development Agency (CIDA) into the Department of Foreign Affairs and International Trade, creating a new super-department: the Department of Foreign Affairs, Trade and Development. The new department’s mandate will include “advancing Canadian interests and values on the international stage,” suggesting that development and trade objectives will continue to be closely linked. Canada’s international development community has had mixed reactions. On the upside, it’ll be a strong quarter for some lucky stationary suppliers.

A Shiny New Trade Strategy

Yes folks, the long-awaited Global Commerce Strategy, announced in Budget 2012 will be released in (drumroll, please)…the coming months. This is government-speak for “No kids, we’re not there yet and if you don’t stop complaining, I will turn this car right around.”

New (Old) Friends

This budget reaffirms the government’s commitment to achieving bilateral trade agreements with the European Union, India, and Japan, and to opening new markets in Asia via the Trans-Pacific Partnership. More on this in Budget 2012.

Tariff Regime 2.0

Canada’s General Preferential Tariff Regime provides duty-free or preferential market access to imports of most products from 175 designated countries. Long overdue for an update (it was implemented in 1974 and hasn’t been modified since), the government is following through on its commitment to remove 72 countries from the current list, and renew the GPT for a 10-year period. Although many less-developed countries remain on the list, this change will make imports from countries such as Brazil, China and India more expensive for Canadian manufacturers. And, since Canada does not have trade agreements with many of these countries, there is no quick remedy to receive tariff-free access. According to the budget, these changes will result in savings of $1.1 billion over the next five years.

Better Borders

As part of the commitments made in the Beyond the Border Action Plan, the government will upgrade border infrastructure at select ports, implement a single-window system for submitting data electronically to expedite cross-border shipments, harmonize Canadian and US trusted trader and traveler programs, and enhance customs facilities at the port of Vancouver and pilot projects at the ports of Prince Rupert and Montreal.

Wait, Canada has Foreign Trade Zones?

Well, they’re not exactly Foreign Trade Zones, but the government does offer exporters some tax and duty advantages that resemble the privileges of one. Foreign trade zones are globally recognized programs that provide financial incentives for value-added manufacturing of low-cost material and processing of goods prior to export. FTZs allow firms to defer duties or taxes thereby lowering their operating costs. (Free time on a Sunday afternoon? Read more here). Canada does not have designated foreign trade zones, but it does have FTZ-like programs. This year’s budget committed to simplify the application process to these programs and eliminate the annual registration fee for the Customs Bonded Warehouse Program.

With a possible conclusion to the Canada-EU negotiations this year, and the government’s ongoing emphasis on the international trade agenda, this budget won’t be the last word on trade for 2013. There’s hope for that Wii yet…

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