Bicycle Tariff

The following is an update on the bicycle tariff situation in Canada courtesy canadiancyclist.com. The tariff idea was presented as a way to protect Canadian bicycle manufacturers from foreign competition, specifically from Asia. In cycling circles nationwide there has been protest to the proposal. This article sums up the situation well and outlines some key points against the proposal. I think this is something we should all take seriously when considering who will get our vote for the federal election coming up. This issue is one that has exposed the underlying values and ultimate agenda of Canada's main political parties in the areas of economic sustainability, job creation, the environment and healthcare. Post your thoughts as comments.

CASBI (Canadian Association of Specialty Bicycle Importers) has released an update on the CITT (Canadian International Trade Tribunal) Global Safeguard Recommendations for imported bicycles. (Use the CC News Database to follow our ongoing coverage of this situation, by choosing 2005 for Year, Any Month and "CITT" or "Tariff" for search term).

It is important to note that the Recommendations may still be implemented by the Prime Minister and Finance Minister - either in their present or a modified form. To implement these measures does not require a vote in the House of Commons. While there is considerable feeling among experts we spoke with that the ruling Liberal party will not attempt to implement recommendations during the campaign period prior to the election, it is legally possible for them to do so.

At present, there are three appeals before the courts regarding the Recommendations. Canadian Tire, Specialized Bicycles and the Retail Council of Canada (representing mass merchants such as Wal-Mart) have all alleged that the Tribunal made errors of fact that mean that the Recommendations should be withdrawn. It is not likely that any court decisions will occur before the election takes place (January 23rd, 2006).


CASBI Update

On November 29th, a general federal election was called for Monday, January 23, 2006. A looming issue in this election is the Canadian Bicycle Manufacturers' Association ("CBMA") campaign to impose a 30% Surtax on Canadian bicycles.

On September 1, 2005, the Canadian International Trade Tribunal ("CITT") recommended that the Government of Canada impose another layer of taxes on bicycles as a result of a complaint filed by the CBMA.

The CBMA does not represent all Canadian bicycle manufacturers. It only has two members - Procycle and Raleigh Canada. Both of these companies concentrate on assembling steel-frame bicycles in their two Quebec factories, which they sell to mass merchants. None of the other Canadian bicycle manufacturers supports the CBMA's Surtax, including Norco, Devinci, Cervelo, or CASBI member Argon 18.

Since September, it has become clear that there is no public support for the Procycle/Raleigh Surtax. In spite of strong opposition to the 30% Surtax, the Martin Government did not formally reject the CITT's September 1st recommendation before the election was called on November 29th.

The only party in the House of Commons that appears to support the CBMA Surtax is the separatist Bloc Québécois. The Bloc Québécois position and the Liberals' indecision on this issue stand in stark contrast to the clear opposition to higher bicycle taxes expressed by the other national parties - the Conservative Party of Canada ("CPC") and the New Democratic Party ("NDP").

The purpose of this Update is to let you know where the national parties represented in the House of Commons stand on the Procycle/Raleigh Surtax. We have also included website links which will help you contact the parties and your local candidates to find out what they will do to ensure that the new government does not add another 30% of taxes onto bicycles.


1. The Liberal Party of Canada

Prior to the election, CASBI wrote several letters to senior Liberal government Ministers, including Finance Minister Ralph Goodale, International Trade Minister James Peterson, and Industry Minister David Emerson. Unlike the other national parties, Paul Martin's Liberals have still not rejected the Surtax.

Paul Martin has had over three months to make up his mind on the bicycle Surtax issue. His indecision on this issue is puzzling in light of recent Liberal commitments to promote the environment and to make cities more liveable. As time goes on, more and more voters in the Canadian bicycle community are asking:

Where does Paul Martin stand on imposing higher taxes on bicycles?

Before you decide on how to cast your ballot, ask the Liberals to take a stand on this important issue by contacting: www.liberal.ca/contact_e.aspx.

You can also contact your local candidate by inserting your postal code in the box in the top right corner of the Liberal Party website: www.liberal.ca/default_e.aspx.

2. The Conservative Party of Canada ("CPC")

Prior to the election, the CPC's International Trade critic, Ted Menzies, called for the Liberals to reject the CITT call for a 30% Surtax on imported bicycles. The CPC's opposition to the Surtax is unequivocal:

"The Canadian bicycle manufacturing industry has operated under protection of tariffs up to 50% for the past 15 years. During that time, manufacturers such as Norco and Kona Bicycle specialized and pursued export opportunities, creating world-class businesses while a small part of the industry has petitioned the Tribunal for continued tariff protection...

Invoking a 30% surtax on imported bicycles will confirm to the world that Canada's international trade strategy is to leave Canada's entrepreneurial exporters to fend for themselves in global markets and build tariff walls at home to protect votes...

Paul Martin has to face the consequences of 12 years of Liberal inaction on the trade and productivity policy fronts...Canadian industry can succeed at home and abroad but piecemeal tariff protection is not the way for the developed world to deal with globalization."

To make sure the CPC understands how important this issue is to you, visit www.conservative.ca/EN/1045/.

To contact your local CPC candidate, visit www.conservative.ca/EN/candidates/.

3. The New Democratic Party ("NDP")

Prior to the election, NDP Leader Jack Layton took a stand and clearly stated the NDP's position as follows:

"The NDP disagrees with the Canadian International Trade Tribunal (CITT) action to impose a 30% surtax on imported bicycles. This surtax would penalize Canadian consumers unfairly; sabotage the financial prospects of hundreds of independent Canadian retailers, and make environmentally friendly transportation more expensive. In fact, this is an alternative type of transportation that we should be encouraging, given the fact that Canada has committed to reducing greenhouse gases.

The Canadian bicycle manufacturing industry consists of two factories in Quebec, employing a total of about 600 people. The domestic industry, such as it is, is merely an assembler of previously imported frames and components; most parts (80%, by one calculation) are imported.

Punitive measures against independent bicycle retailers and cyclists across Canada will not save these jobs. For years federal New Democrats have been urging the Liberal government to put in place a national jobs strategy that would address the effects of globalization; sadly, our calls for such an essential policy have been ignored. In the absence of such a strategy, thousands of jobs have been lost, particularly in the textile and softwood industries. The federal government must come up with a plan to help all such affected companies re-orient their market strategy, rather than enacting an ad hoc surtax that is not in the public interest."

To contact the NDP or your local NDP candidate, visit: www.ndp.ca/contact.

4. The Public Outcry over the Procycle/Raleigh Surtax

In addition to this opposition from national political parties, the past three months have demonstrated that Canadians strongly oppose the CBMA Surtax, including the Canadian bicycle industry, bicycle stores, progressive cities, federal politicians, and Procycle/Raleigh customers.

Some recent examples of the public outcry over the Procycle/Raleigh Surtax include:

* West Vancouver joins the City of Vancouver in opposition to the CBMA Surtax: www.nsnews.com/issues05/w102305/104305/news/104305nn7.html

* Bicycle Trade Association of Canada ("BTAC") Press Release: www.btac.org/news/news.html?id=05Oct07_1

* Canadian Cyclist Editorial - "Bicycle Tariffs Make No Sense": Here

CASBI's October Update contains further details on this rising tide of opposition: www.casbi.ca/update.html.

CASBI consists of the following companies: ACS Distributing (KHS), Argon 18, Asama Cycles (Kuwahara), Cybersport (Brodie), Louis Garneau Sports, Marin Bikes Canada, RB Inc. (Jamis), Revolution Cycles (Electra), Ten Pack Distribution (McNeil BMX), The Bicycle Group (Kona) and Vellendtech (Fuji).

CASBI believes that it would not be in the public interest to increase bicycle taxes by adding a third layer of protection to shelter a couple of companies because:

* Higher bicycle costs will discourage a healthy family recreational activity at a time of rising concern over the physical fitness of Canadian adults and children.

* Given Canada's Kyoto commitments regarding greenhouse gas emissions, environmentally friendly means of transportation should be encouraged, not discouraged.

* It does not make sense to impose additional taxes on cycling when rising gasoline prices are making driving unaffordable to many Canadians, and many cities are actively promoting bicycle commuting.

* It is unfair to hurt hundreds of small IBD businesses located across Canada to protect a relatively small number of jobs in a couple of towns.

* Imposing protectionist barriers on imports from developing countries will not help Canada to diversify and grow its trade with these increasingly important trading partners.

More background information on this important issue may be found at www.casbi.ca, and feel free to contact your CASBI member supplier.