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7/29/2019 Retail Council Report
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Retail Council of Canada1255 Bay Street, Suite 800Toronto, Ontario M5R 2A9Telephone (416) 922-6678 Fax (416) 922-8011www.retailcouncil.org
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Submission to:
Senate Committee on National Finance (NFF)
April 24th
, 2012
Study on the potential reasons for price discrepancies
Between
Canada and the United States
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Table of Content
About Retail Council of Canada: ................................................................................................................... 3
Vision Statement: ...................................................................................................................................... 3
Mission Statement: ................................................................................................................................... 3
The Retail Industry in Canada: ...................................................................................................................... 3
Study on the potential reasons for price discrepancies between Canada and the United States: .............. 5
Four Areas for Government Action: .............................................................................................................. 6
Country Pricing: ......................................................................................................................................... 7
Duty Remission on Imported Consumer Goods: ...................................................................................... 8
Supply Management: .............................................................................................................................. 12
Regulatory Harmonization/Red Tape Reduction .................................................................................... 13
Conclusion ................................................................................................................................................... 16
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About Retail Council of Canada:The Retail Council of Canada (RCC) has been the Voice of Retail in Canada since 1963. We speakfor an industry that touches the daily lives of Canadians in every corner of the country by
providing jobs, career opportunities, and by investing in the community they serve.
RCC is a not-for-profit, industry-funded association representing more than 45,000 store
fronts of all retail formats across Canada, including department, specialty, discount, and
independent stores, and online merchants.
RCC is a strong advocate for retailing in Canada and works with all levels of government and
other stakeholders to support employment growth and career opportunities in retail, to
promote and sustain retail investments in communities from coast-to-coast, and to enhanceconsumer choice and industry competitiveness.
RCC also provides its members with a full range of services and programs including education
and training, benchmarking and best practices, networking, advocacy, and industry
information.
Vision Statement:Retail Council of Canada (RCC) is the leader in advancing and protecting the interests
of the retail industry in Canada.
Mission Statement:Retail Council of Canadas (RCC) mission is to be the Voice of Retail in Canada by
providing advocacy, research, education and services that enhance opportunities for
retail success, and increase awareness of retails contribution to the communities and
customers it serves.
The Retail Industry in Canada:
Collectively, the retail sector is the largest employer in Canada, providing jobs for more
than 2 million Canadians generating sales in excess of $300 billion dollars a year. The
retail sector continues to be a critical component in Canadas economic wellbeing.
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The retail sector plays a key role in bridging production and consumption, and as a result has
significant direct and indirect effects on the Canadian economy. While directly contributing
$74.2B to Canadas gross domestic product (GDP) in 2009, the retail sector affects otherindustries as well through its pioneering of innovative practices. In 2009, The retail sector
invested:
$5.9B in machinery and equipment, of which $1.6B was in information and communicationtechnologies (ICT) in 2008, greater than both the Canadian manufacturing sector and the
U.S. retail sector in terms of dollars invested in ICT per GDP.
$5.5B in infrastructure and led to a further $2.7B invested by other industries in thedevelopment of shopping centres, plazas, malls and stores in 2007.
$1.0B in logistics and transportation services in 2008.After an unexpectedly soft Fall and holiday sales season in 2011, retailers anticipate a
continuation of slow demand growth over the course of 2012. Research done with a significant
sample of RCCs large and mid-sized members indicates that a substantial majority (61 per cent)
expect sales growth in 2012 between one and five percent. Most of these respondents expect
growth in the two to three per cent range. With inflation expected to be in the two per cent
range, the growth in the actual volume of sales would be minimal. About one quarter expect
growth in excess of five per cent, but many of these sell luxury products, and this part of the
market has consistently been the strongest segment for some time. A minority, 13 per cent
expect sales to be flat or to fall.
These soft demand conditions will, combined with a number of other elements, change the
competitive dynamic in Canadas retail industry. Growing consumer use of the internet has
greatly increased price transparency. Parity with the U.S. currency has encouraged consumers
to compare prices across the border, and indeed to shop in the U.S.. New foreign competitors
continue to enter the Canadian market, bringing world-class competitive capabilities. Slightly
more than half of the members that participated in RCCs research expect their retail prices
overall will be lower than in 2011. Only one-third expect their retail prices will rise. For the
latter group, commodity costs are sighted as the reason for higher prices (e.g., food, building
materials, etc.). Many of the respondents have planned further initiatives to reduce costs and
improve efficiencies which should help retailers keep prices competitive. Retailers will be
helped further by a manageable pace of inflation in other operating costs such astransportation, occupancy, and labour costs.
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Study on the potential reasons for price discrepancies
between Canada and the United States:
At the request of Minister Flaherty, on October 19th
, 2011 the
Senate Committee on National Finance commenced its study into
the reasons for price discrepancies between Canada and the
United States. The study has focused primarily at the retail level
with the Committee members looking to academics, government
officials and others to try to explain the potential reasons for price
differences. What the committee has heard to-date is a mix of
solid evidence and facts on the part of some witnesses as well as
conjecture and speculation on the part of others, with very few
concrete recommendations proposed to assist the Federalgovernment in taking actions that would benefit Canadians and all
affected industry sectors.
According to Statistics Canada1, in 2009, operating profit margins
in the retail sector were just above 3.4%. When compared to
profit margins in
the Unites States
(Fortune 500
report on topindustry
performers
2009) which were
reported to be on
average at 3.5%,
one can see that
retailer profit
margins in Canada are the same or similar to those in the United
States. As such, it becomes clear that retailers play a very small
part in determining final prices of the goods they sell and that
there are significant external factors at play that contribute to the
often vast differences in pricing of Canadian products versus
identical products sold in the Unites States. In fact, as the
1Source: Statistics Canada, Retail Trade, sales by trade group based on North American Industry Classification System
Proceedings of the Standing
Senate Committee on
National Finance
Issue 6 Evidence October
25, 2011
In summary, there were four
main interrelated reasons that
retail shelf prices were different
in Canada compared to the U.S.
The first is scale; Canadian
wholesalers and retailers had a
smaller scale compared to their
U.S. counterparts. Second, the
structure of the Canadian
distribution channel included an
extra participant, an importer or
subsidiary operation, compared
to many U.S. distribution channel
structures.
Third was the input price to the
channel. Prices charged bymanufacturers for goods
destined to be sold in Canada
were frequently higher than in
the United States. The fourth and
final reason was the cost of
doing business. Factors such as
occupancy costs principally
rents and corporate taxes
were higher in Canada at the
time.
Ian Gordon, President,Convergence Management
Consultants Ltd.
The Chair:The frustration we have is that
we keep hearing from witnesses saying it
could be any of a number of factors. We
would like to try to reduce that number of
factors so that we can understand the
significant ones in different industries.
That is what we are working on. (Senator
Day)
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Committee heard, the 1992 study conducted by Ernst and Young concluded that: most of the
reason for retail price differences traced to manufacturers, who accounted for 37 per cent of
the total retail shelf price difference for all the goods considered in the non-automotive
category. Retailers accounted for just 9 per cent here. Channel companies other than retailers
accounted for 27 per cent, and the remaining 27 per cent was accounted for by transportation
tariffs and duties and other costs.2
In conducting such a broad study, which touches on virtually all consumer goods (both general
merchandise and food), it is important for the Committee to understand that there cannot be a
one size fits all solution that would impact all goods sold in Canada. In this brief RCC will
highlight a number of key issues and recommend a series of solutions that, if implemented in
combination, could assist in leveling the playing field between Canada and the U.S. and change
the competitive dynamic as we know it.
The committee has heard that the differences in the cost of labour, gasoline, transportation,
taxation rates and labeling requirements are all factors that affect the price of retail goods in
Canada. RCC has canvassed its members regarding these elements, and while they are
considered to be the cost of doing business in Canada, they do contribute to potential
differences in prices between Canada and the US depending on the type of store and types of
goods being sold. However, they do not, even collectively, represent the main contributors to
the difference in retail prices in Canada.
Four Areas for Government Action:The Committee has been seeking to understand the real reasons for the differences in retail
prices between Canada and the United States as well as to find areas where the Federal
Government can influence or take action. RCC believes that there are four key areas where the
Committee should focus its attention.
2Testimony before the Standing Senate Committee on National Finance by: Ian Gordon, President, Convergence Management Consultants Ltd.
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Country Pricing:It has been discussed at the Committee hearings that large, multinational, retailers should be
able to negotiate with their suppliers for a single international or North American price for theproducts that they are purchasing for sale in Canada. However, the reality is that many
multinational vendors and suppliers who sell to Canadian retailers do so by way of contracts
that are negotiated specifically for the
Canadian market. While retailers in Canada
strive hard to provide Canadians with the
largest variety of products at the best
available prices, they are at the mercy of the
suppliers who demand certain prices for their
products. RCC has canvassed its members
and has found that, for retailers who havestores in both Canada and the United States,
they are charged anywhere between 10% and 50% more for identical products by some
suppliers. Retailers have been told by those suppliers that the reason for this discrepancy is (a)
that Canadians are used to paying more for products in Canada e.g. we charge what the
market can bear, and/or (b) the higher prices charged to retailers in Canada subsidize the costs
of maintaining supplier offices and operations in Canada, and/or (c) that higher prices are
necessary to compensate our Canadian distributors/wholesalers. While this is not the case for
all suppliers and all products, it does account for the largest contributing factor to the
difference in prices between Canada and the United States in situations where it occurs. Some
examples of every-day consumer items where this occurs have been provided by RCC members
as follows:
Item Description US Cost Canadian Cost Difference
Soap 16 pk $6.99 $8.98 43%
Shampoo 1.5L $9.33 $12.46 34%
Conditioner 1.18L $6.23 $10.00 61%
Automobile Tires $128.21 $169.69 32%
46in LED TV $888.75 $1,001.00 13%
Printer $116.65 $171.99 47%
Water Filters 6 pk $22.77 $26.76 18%
Coffee Maker $127.76 $167.19 31%
Electric Toothbrush $91.29 $100.99 11%
Ibuprophen 200mg 250ct $10.76 18.29 70%
Aspirin 81mg low dose 350ct $10.16 $21.78 114%
Ketchup 2.5 L $3.92 $6.90 76%
Freezer bags 150 pk $6.10 $9.24 51%
Laundry Detergent 5L $11.27 $13.94 24%
Orange Juice 7.56L $10.01 $12.66 26%
Multi-national suppliers often charge
Canadian retailers more than U.S. merchants
This is because of volume discounts that large
U.S. retailers can obtain due to economies of
scale. (Professor Tom Vassos, University of
Toronto)
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While RCC acknowledges that the Federal Government does not, and should not, have a role to
play in dictating how businesses negotiate contractual agreements between each other, the
government does have a role to play in ensuring that they do not perpetuate the ongoingmisinformation to the Canadian public regarding the reasons for price differences in Canada
versus the United States. Suggesting that Canadian retailers are to blame for the difference is
pricing is not only misleading and misinformed, it only acts to undermine the critically
important relationships between Canadian retailers and their customers.
We would encourage the Committee to call on some of these suppliers to explain their pricing
practices that result in an over inflation of prices for Canadians. The Committees final report
must set the record straight about the real cause of price differences in Canada.
Duty Remission on Imported Consumer Goods:
As recently as this year, the Federal government has taken steps to eliminate the duties on
manufacturing inputs. However, for reasons unknown to RCC, they have stopped short of
reducing or eliminating duties on finished goods entering into Canada. RCC members tell us
that they have no problems competing in areas
where they have control over pricing, but
cannot compete when they have to pay
considerably greater import duties than their
American counterparts for products importedfrom around the world.
Department of Finance officials have argued
that the average tariff into Canada is 3.9% and
thus does not represent a major contributor to
the differences in Canadian prices. RCC would
maintain that, while the averages may be
relatively low, it is the spikes in duty rates for
certain products that can contribute to
significantly elevated costs (see table below).
In addition to contributing to higher prices in
Canada, elevated costs for many of the products in question are in direct conflict with good
public policy. As an example, the Federal government provides tax relief in the way of family
tax credits to support childrens participation in athletic activities however, for hockey
equipment the level of duties on those products contribute significantly to their overall costs:
measures that make a North American
market so that shipping across the border into
Canada is exactly the same as selling, in the
North American sense, in Mexico or the United
States will get the benefit of economies of
scale, will increase the completion here in
Canada and will have the net benefit to
Canadian consumers. That runs the gamut
from tariffs to other regulations, which may
need to be kept for good reasons, but that is
part of the consideration. (Mark J. Carney,
Governor, Bank of Canada)
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Products Duty applied into Canada Duty applied into
US
Ice Hockey Pants 18.0% 2.9%UP/Pant 15.5% 0.0%
Gloves 16.5% 0.0%
Hockey Helmet TH 5.0% 0.0%
Hockey Helmet CN 8.5% 0.0%
Helmet Facial Protection TH 5.0% 0.0%
Helmet Facial Protection CN 7.5% 0.0%
The Committee has heard from a number of witnesses regarding the merits of reducing or
eliminating outdated tariffs that are imposed on finished goods entering into Canada. RCCsupports these views and believes that eliminating tariff rates on goods that must be sourced
from outside of Canada is an important, and necessary, action that could lead to lower prices,
for those products, in Canada. While the Committee has heard that only ten per cent of all
products imported into Canada carry tariffs, RCC has heard from its members that the
percentage of those products sold at retail represents more than ten percent of their total
business. The range is anywhere between ten to one hundred per cent of a retail business
depending on the products being sold. As an example, the Committee heard from The
Canadian Apparel Federation that More than any other issue, tariffs have been identified as a
major determinate of retail prices. While duties on many other consumer products are low, the
average most-favored-nation (MFN) rate of duty for apparel is 18 per cent. Theyrecommended that The government should
consider tariff reductions on finished apparel in
situations where there are clear benefits to
Canadian consumers and minimal negative
impact on any domestic producers. RCC
supports this position more generally and urges
the Committee to recommend that the
Government review its tariff regime in this light
for all general merchandise products imported
into Canada.
Duty relief on certain or most finished goods would not be detrimental to Canadian production
as the proposed elimination of duty on finished goods would only relate to those goods
that are not available or are in short supply from domestic manufacturers. This measure
would also mirror actions recently taken by some of our largest trading partners,
including the U.S., where it has been acknowledged that the elimination of unnecessary
and outdated tariffs would provide immediate and direct relief to hard working families.
We must be concerned with the removal of
potential barriers to competition or consider
more hands-on measures, including changes to
tariffs or duties payable, in the hope of jump-
starting Canadian retailer commerce that is
more price friendly to consumers. (Michael
Janigan, Executive Director and General
Counsel, Public Interest Advocacy Centre)
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On most items imported to Canada, retailers pay significantly more by way of import
taxes to bring goods to market. Canadian retailers have identified a number of
mainstream consumer products that are subject to import duties for no reason otherthan they have never been challenged or captured by free trade negotiations.
Pursuant to section 19 of the Canadian International Trade Tribunal Act, the Minister of
Finance has the ability to mandate the Tribunal to provide advice on the availability, or
lack thereof, of certain retail products from Canadian manufacturers and where the
applicable Canadian customs tariff rate of certain retail products is higher than the
United States MFN general customs tariff rate.
Our proposal for a remission of import duties on finished goods that retailers must source
outside of Canada, because they are, by-and-large, unavailable from domesticproduction, is beneficial to Canadians. Further, in view of our desire to ensure the
competitiveness of our retail industry vis--vis that of our largest trading partner, we
suggest that products which carry a lower MFN duty rate in the U.S. than in Canada
also be considered. A sample of the proposed tariffs to be eliminated is as follows:
Sample of Tariffs3
Tariff # Product Tariff
6104.42.00 Dresses (Girls and Womens) Of cotton 18%
6105.10.00 Cotton Men's or boys' shirts, knitted or crocheted 18%
6109.10.00 Cotton T-shirt 18%
6103.41.00 Cotton trousers and shorts 18%
6212.10.00 Cotton Brassires 18%
6201.92.10 Cotton winter jacket 18%
6115.10.10 Panty hose and tights 18%
6101.90.00 Women's or girls' overcoats, wind-jackets and similar articles 18%
6106.10.00 Cotton blouses, shirts and shirt-blouses 18%
6207.21.00 Nightshirts and pyjamas Of cotton 17%
9401.61.10 Upholstered chair with wooden frames for domestic purposes 9.5%
9403.50.00 Wooden furniture of a kind used in the bedroom 9.5%
9403.60.10 Desk - for domestic purposes 9.5%4203.10.00 Leather or patent leather overcoat 13%
6302.10.00 Bed linen, knitted or crocheted 18%
6302.60.00 Towels and linens of cotton 17%
9404.90.10 Pillows, cushions and similar furnishings, of cotton; Quilts, 14%
3Source: Canadian Boarder Service Agency: Custom Tariffs (T2011-2). Issued 2011-08-17
http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2011/01-99/tblmod-t2011-02-eng.html
http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2011/01-99/tblmod-t2011-02-eng.htmlhttp://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2011/01-99/tblmod-t2011-02-eng.htmlhttp://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2011/01-99/tblmod-t2011-02-eng.html7/29/2019 Retail Council Report
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eiderdowns, comforters and similar articles of textile material
9608.10.00 Ball point pens 7%
9608.20.00 Felt tipped and other porous-tipped pens and markers 7%
3926.10.00 School supplies - Looseleaf binders and covers 6.5%
9506.70.11 Ice skates 18%
6404.11.00 Sports footwear; tennis shoes, basketball shoes, gym shoes,
training shoes and the like
18%
6402.19.10 Soccer footwear cleats 17.5%
4203.21.10 Leather Gloves for golf, baseball, hockey 15.5%
6112.11.00 Track suits 18%
9506.99.50 Elbow or shoulder pads excluding those for football; Waist,
thigh and hip protective equipment
15.5%
Finally, the discussion on duties and tariffs would not be complete
without addressing personal exemption limits. Despite the fact
that this study is ongoing, in the Federal Budget 2012 the
government moved to increase these limits significantly. RCC
maintains that changing personal exemption limits, without
addressing other factors outlined in this submission, will have very
negative results on Canadian retailers and ultimately the Canadian
economy, because retailers are unable to compete with U.S pricing
on many products. The suggestion that the Committee has heardfrom some witnesses that increasing personal exemptions would
increase pressure on retailers in Canada to match U.S. prices4
is
only valid if there was a level playing field. Clearly this is not the
case and expecting that retailers would be able to simply match
U.S. pricing without other interventions is unrealistic and highly
detrimental to an industry sector that contributes so significantly
to Canadas economic stability.
It should also be noted that Canadian retailers respect the laws of
Canada as they relate to the Consumer Packaging & Labelling Act,the Textile Labelling Act and other regulations relating to the sale
of products, which regulations are in place to safeguard consumers
and help them make informed purchasing decisions. (Other regulations which carry additional
costs also include provincially legislated waste diversion programs).
4Ambarish Chandra, University of Toronto, Rotman School of Management Proceedings of the Standing Senate
Committee on National Finance, Issue 7 Evidence November 1, 2001.
Organization for Economic
Cooperation and Development
Liberalization of product markets
is the first place governments
should look at. Reducing barriers
to entry in the retail trade and
liberal professions would deliver
quick income and job gains. Easing
administrative burdens on business
and removing barriers on foreign
direct investment could also have a
quick impact. (OECD, Going for
Growth, 2011)
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Unless these regulations are uniformly enforced, such as for products purchased by consumers
via the Internet or via cross-border shopping, retailers and indeed manufacturers legitimatelyselling goods in Canada will continue to bear greater costs than their American counterparts.
It is for these reasons that RCC recommends that the Committee urge the Government in its
report to expedite its review of the tariff system in Canada in order to minimize the impact of
the June 1st
, 2012 exemption limit changes.
Supply Management:One area that has not come up in the Committees discussions to-date relates to the large
difference in pricing between Canada and the United States for Canadas supply managed
products. However, this issue plays a pivotal role when media reports cite price differences
between both countries. It is also often, once again, retailers who are seen as the culprits. It is
important that the Committee understand how Canadas system of supply management affects
the price of some food products in Canada in order to make informed decisions regarding any
recommendations to the government on this issue. It is also important that Canadians
understand that it is government policy that is at the root of this issue and not retailers.
While retailers respect and support Canadas farming community and agro-food industry, it
should be noted that the most popular products purchased by consumers during a cross-border
same-day trip include: dairy products, poultry, beer, cigarettes and gasoline. Some examples
as of February 2012 are as follows:
Product Average Canadian Retail Price5
US Price6
Eggs (per dozen) $3.22 $1.79
Chicken (Kg) (boneless breast) $6.92 $3.00
Butter (4.54g) $4.43 $3.46
Milk (1L) $2.40 $0.92
The complex system of marketing boards in Canada was put in place at a time when our
understanding of markets was much less sophisticated. Price fixing and quotas produce
negative consequences. Production quotas have left Canadian industry with a large number ofsmaller high cost producers. The system's rigidity discourages innovations in processing that
adds value and creates jobs. In order to control prices, marketing boards restrict imports. In
retaliation, foreign governments often restrict exports from Canada. Abandoning these failed
5http://www40.statcan.ca/l01/cst01/econ155a-eng.htm
6http://www.bls.gov/ro3/apmw.htm
http://www40.statcan.ca/l01/cst01/econ155a-eng.htmhttp://www40.statcan.ca/l01/cst01/econ155a-eng.htmhttp://www40.statcan.ca/l01/cst01/econ155a-eng.htmhttp://www.bls.gov/ro3/apmw.htmhttp://www.bls.gov/ro3/apmw.htmhttp://www.bls.gov/ro3/apmw.htmhttp://www.bls.gov/ro3/apmw.htmhttp://www40.statcan.ca/l01/cst01/econ155a-eng.htm7/29/2019 Retail Council Report
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methods through an equitable transition program is the best way to ensure a vibrant and
sustainable farm economy.
The strongest marketing powers held by boards are those to determine prices, when enforced
by the power to apply supply-controlling quotas. These limit entry of new producers and
restrict the amount of the product produced or marketed. The use of these pricing- and supply-
control mechanisms by provincial and national boards, backed up by tariff-rate import quotas
for poultry and dairy products, has been criticized. Advocates note that these programs have
reduced variability in farm prices and increased producers' incomes; critics say the programs
have contributed to increased food prices, high quota values, and economic inefficiencies in
production and marketing. Boards which do not possess or exercise supply-control powers have
created less controversy.
It is RCCs position that the government should not favour one industry over another, in this
case farmers over retailers, to the detriment of the latter. If marketing boards are to remain
part of the Canadian landscape, the Committee must acknowledge the role they play in setting
prices in Canada, which are substantially higher than in the United States. That said, RCC
believes that a thorough review of Canadas supply management system and its down-stream
impacts needs to be undertaken and measures need to be put in place to protect retailers
should government choose not to change the existing system. Such measures could include
exempting or limiting supply managed products from personal exemption limits at the border
(similar to exemptions for tobacco and alcohol) and more strict enforcement of those limits at
the border.
Regulatory Harmonization/Red Tape ReductionThe Committee heard compelling testimony from a wide range of organizations involved in the
business of selling books in Canada which illustrates clearly how poorly thought-out and
outdated regulation can affect consumer prices in Canada. With regards to books, which have
unfortunately been used as the poster children of the so-called egregious price differences in
Canada versus the Unites States, the Committee heard testimony regarding the Federal
governments own Copyright Regulations that allow for a 10% markup on U.S. sourced books
(15% on UKsources books) and that this tax has been collected, to the detriment ofCanadian consumers and booksellers, by the multinational book distributors since the
regulations came into force in 1999. RCC sees this is a perfect example of how Canadian
regulation, developed in isolation, can negatively affect Canadian consumers and Canadian
prices.
RCC is encouraged by the fact that, on February 4, 2011, Prime Minister Stephen Harper and
President Barack Obama announced the creation of the Canada-United States Regulatory
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Cooperation Council (RCC) with a goal to increase regulatory transparency and coordination
between Canada and the United States.
In the governments own words:
Unnecessary regulatory differences and duplicative actions hinder cross-border trade and
investment and ultimately impose a cost on our citizens, businesses and economies. Given the
integrated nature of our economies, greater alignment and better mutual reliance in our
regulatory approaches would lead to lower costs for consumers and businesses, create more
efficient supply chains, increase trade and investment, generate new export opportunities, and
create jobs on both sides of the border.7
RCC and our members are supportive of this initiative as inconsistencies betweenregulatory/policy regimes can add to price differentials between the two countries. This is due
to the fact that the Canadian and U.S markets are highly integrated and any regulatory
misalignment will ultimately affect pricing and availability of a variety of products in Canada. A
recent example of the lack of harmonization between Canada and the United States is with
regards to the recent development of new Canadian regulations regarding child car seats.
The regulations came into force in Canada on the 1st
of January, 2012 and at the time Transport
Canada explained that the regulations were rewritten to align with the United States on many
issues and to incorporate some new and unique Canadian testing requirements. However, it is
precisely these new and unique made in Canada requirements that perpetuate the
misalignment of standards between Canada and the United States.8
The differences between the Canadian and U.S. regulations include:
The need for labels, information, and instructions to be provided in both of Canadas
official languages;
The minimum weight requirement to use a booster seat remains at 18kg (versus 13.6 kg
in the US);
The mandatory use of a tether strap for front-facing child seats;
A mandatory inversion test for both infant and child seats;
A unique booster deflection test;The lap/shoulder seat belt testing requirement for all types of car seats;
The extension of the limitation on rebound to all rear facing child seats; and
7Regulatory Cooperation Council, Joint Action Plan for the Canada-United States Regulatory Cooperation Council
8Transport Canada: Frequently Asked Questions: New Child Seat Regulations
http://www.tc.gc.ca/eng/roadsafety/safedrivers-childsafety-faq-1131.htm
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Energy absorbing material requirements.
However, despite the above differences in regimes, Transport Canada maintains that car seatssold under the previous standards continue to provide a high level of safety and do not have to
be replaced. This begs the question as to
why it would be necessary for Canada to
have unique regulations that result in
differences in pricing and availability in
Canada when full harmonization with U.S
standards would avoid this.
The Government of Canada announced in
Budget 2010 the creation of a Red TapeReduction Commission tasked with the
following mandate:
Identify irritants to business that
stem from federal regulatory
requirements and review how those
requirements are administered in
order to reduce the compliance
burden on businesses, especially small businesses. The focus is on irritants that have a
clear detrimental effect on growth, competitiveness and innovation; and
Recommend options that address the irritants and that will control and reduce the
compliance burden on a long-term basis while ensuring that the environment and the
health and safety of Canadians are not compromised in the process.9
The then Minister of Industry, Tony Clement, responded to the initiative by implementing a
one-for one rule to control the administrative burden associated with regulation on
businesses. In theory, what this means is that regulators will be required to: remove at least
one regulation each time they introduce a new one that imposes administrative burden on
business. In addition, regulatory changes that increase administrative burden on business need
to be offset with equal administrative burden reductions.10
9What is the Red Tape Commission: http://www.reduceredtape.gc.ca/about-apropos/redtape-paperasse-eng.asp
10January 18, 2012 News Release: Minister Clement welcomes recommendations from Red Tape Reduction
Commission - Clearing the way for economic growth and job creation: http://www.tbs-sct.gc.ca/media/nr-
cp/2012/0118-eng.asp
"Red tape frustrates entrepreneurship,
raises prices and reduces choices for
consumers. By impeding growth, red tape
lowers people's incomes and standards of
living. It is a hidden tax on all Canadians. In
the words of the 2011 federal budget,
"businesses, especially small business
owners and entrepreneurs, have told the
Commission that the government must act
now to begin addressing these concerns
and to promote growth and
competitiveness," (Maxime Bernier)
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RCC supports this initiative wholeheartedly, however, we believe that it does not go far enough
and may result in the proliferation of government mandated industry voluntary initiatives (in
lieu of regulations) which often carry the same administrative burden on industry as regulationswould but would not necessarily be captured under the Treasury Boards one-for-one initiative.
Recent examples of voluntary measures that are being proposed in the food industry are:
proposed sodium targets; proposed nutrition labeling for food service; proposed new food
safety labeling for ground meat. While RCC encourages government to move to voluntary
measures where practical, they do impose burdens on industry which should be captured under
the Treasurys board one-for-one initiative.
ConclusionRetail is one of Canadas most important economic engines and its largest employer. It has
benefited from tremendous growth in the past several years and it has contributed to
Canadas economic growth and well-being.
As the Committee prepares to present its findings in relation to this study, RCC urges the
Committee to assist in setting the record straight about the real causes of price differences for
products sold at retail in Canada versus the United States and consider the recommendations
found in this submission; all of which have the potential to contribute to lower prices for
Canadians for products that they use in their daily lives.
Retailers in Canada play an important role in generating employment within the industry,
within other sectors such as advertising, technology, logistics and transportation, construction
and the likes. Retailers also contribute substantially to the community at large through
community giving and support.
While retailers of all sizes and shapes across Canada understand and respect consumers rights
to shop where and when they want, they are deeply concerned with the misinformation
propagated across Canada about the industry and a general lack of understanding about the
industrys competiveness despite the lack of a level playing field.
In light of the most recent Government 2012 figures on cross-border shopping, the Committee
cannot ignore the negative impact of the absence of a level playing field for retailers in Canada.
Canadian residents made 5.2 million trips abroad in February, a 3.9% increase from
January. The majority of these trips, 4.4 million, were to the United States, a 4.5%
increase.
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The main factor behind these gains was an 8.0% increase in same-day car travel by
Canadians to the United States, to 2.6 million trips. This was the highest monthly level
since December 1997.
RCC would like to thank the Senate Committee on National Finance for the opportunity to
submit its recommendations on behalf of an industry that employs 2 million Canadians from
coast to coast. It looks forward to collaborating with the Committee and Government to work
towards a level playing field, to ensure the growth and success of retail businesses in Canada
and to provide Canadian consumers with value, product selection and innovation.