OTTAWA, April 24, 2012 /CNW/ - Canadian retailers face four significant factors which contribute to differences in retail pricing between Canada and the U.S., Diane J. Brisebois, President and CEO, Retail Council of Canada (RCC) told the Standing Senate Committee on National Finance.
"I would urge the committee to help set the record straight about the real causes of price differences in Canada versus the United States," said Brisebois. "What retailers in Canada want is a level playing field to compete with their US counterparts so that they can bring the best products at the best value to Canadian consumers."
The Senate Committee commenced its study into the reasons for price discrepancies between Canada and the United States on October 19th, 2011 at the request of Finance Minister Jim Flaherty. Brisebois provided a detailed assessment of the factors which contribute to the discrepancy and submitted RCC's recommendations.
Brisebois addressed these factors:
- Import Duties on Finished Goods
- Supply-management affecting prices of food products such as dairy and poultry
- Vendor Pricing in Canada, and
- Regulatory harmonization
"One of the main areas where the Federal Government does have a role to play is in eliminating the outdated tariffs on finished goods entering into Canada," Brisebois told the committee. "While these tariffs are only applied to 10 per cent of all products entering Canada, they are overly represented at the retail level and for some retailers, they may account for nearly 100 per cent of the items they import and sell."
Brisebois gave the example of the tariffs applied to hockey products. "For the most part, there are no duties applied in the United States yet the same products entering into Canada carry tariffs as high as 18 per cent."
Brisebois' comments also underscored the necessity for governments and consumers to understand the particular pressures on retailers who operate businesses on the border. These retailers, already facing declining tourism, are heavily burdened by tariffs and supply management issues which propel more people who live close to the border to dip into the U.S. to save the difference.
Brisebois also discussed the issue of supply management, noting it is a sensitive topic, but must be addressed. "And if the government wanted to provide retailers in Canada with a level playing field, they would exempt or restrict these supply managed products from personal exemption - as they do with tobacco and alcohol - and actively enforce those rules at the border."
Country pricing is one of the largest contributors to the difference in pricing, Brisebois said. "The reality is that suppliers of products - those where you would tend to see the greatest difference in pricing - will charge Canadian Retailers up to 50 per cent more to buy those products than they charge Retailers in the United States."
She added that while the government may not have a direct role to play in this area, "it is important that the Committee's final report sets the record straight about vendor pricing in Canada."
Brisebois also noted, "Lack of harmonization and different standards and requirements (between Canada and the U.S.) all contribute to increase prices of products in Canada."
And she said that RCC applauds the government's creation of the Canada-US Regulatory Cooperation Council but is "a bit skeptical about its implementation."
As an example of uneven implementation of harmonization, Brisebois noted that, "Even after (the regulatory council) was announced on February 2011, our submission provides the example of new car seat testing regulations that came into force and which were not at all harmonized with the United States."
Brisebois stressed that retailers across Canada believe and understand that consumers have every right to shop when and where they want.
"Retailers compete locally and globally and their only request is to ensure that governments in Canada strive to establish an environment where businesses in Canada can compete on a level playing field."
Retail Council of Canada (www.retailcouncil.org) is the Voice of Retail. Founded in 1963, RCC is a not-for-profit association which represents more than 45,000 stores of all retail formats, including department, grocery, independent merchants, regional and national specialty chains, and online merchants.
For further information:
VP Communications and Marketing, RCC
1 888 373-8245 ext. 228
416 922-0553 ext. 228
416 574-2552 (Mobile)