Current Issue

"Country pricing' proposal gets cautious response

Comments Email

OTTAWA, Ontario—Representatives of Canadian business, including the Rubber Association of Canada, are reacting cautiously to Canadian Finance Minister Jim Flaherty's plan to address “country pricing”—the higher cost of most goods in Canada as compared with the U.S.—in national legislation this year.

Flaherty mentioned the projected legislation, without giving details of what it might contain, in a Feb. 11 speech outlining the 2014 budget plans of the Conservative government of Prime Minister Stephen Harper.

“We are ... standing up for hard-working families trying to make ends meet,” Flaherty said in his speech. “Our Consumers First agenda will help ensure Canadians are also protected in the marketplace.”

A number of Canadian retail associations, especially the Retail Council of Canada, have urged the government for some time to address the price differential between Canadian and U.S. goods. In a February 2013 report to the Canadian Senate, the RCC demonstrated the wide price gap between certain goods in Canada compared with identical goods in the U.S.

For example, the RCC said, the average price for a passenger tire in Canada was $169.69, compared with $128.21 in the U.S. (At that time, the U.S. and Canadian dollars were near parity; today, the Canadian dollar is worth about 90 cents U.S.)

In a statement, Diane J. Brisebois, president and CEO of the RCC, praised Flaherty and the Harper administration “for proposing measures in Budget 2014 that will take another bite out of price differences between Canada and the U.S.” She said the RCC looked forward to working with the government to define specifics of how to address country pricing.

Manufacturing firms had generally negative reactions to Flaherty's announcement. They said they charge more in Canada because they have higher expenses in Canada for such necessities as shipping and safety regulations.

Glenn Maidment, president of the Rubber Association of Canada, was guarded in his comments on Flaherty's speech.

“We're a trade association, and this is an issue that is extremely difficult for us to talk about,” Maidment said. “I was a little surprised to see country pricing in Flaherty's budget, because Conservative governments generally are less inclined to make corrections to the market. We have more questions than anything about this, but we'll be interested to see what the government does to enforce it.”

The tire industry is different from other manufactured goods industries, in a way that benefits consumers, according to Maidment. “There are literally dozens of tire distributors and importers, so there is a lot of competition out there,” he said.