- During the House of Commons Standing Committee on Finance’s examination of Bill C-21, An Act to amend the Customs Tariff, witnesses from the apparel industry shared their views about Canada’s duty remission program and the level of tariffs on textile imports. While witnesses supported the Bill’s intention to extend Canada’s General Preferential Tariff (GPT) and Least Developed Country Tariff (LDCT) for a further ten years, they urged the Committee to consider the effects of the proposed legislation in the context of Canada’s overall tariff regime. Specifically, they asked the Committee to examine the duty-remission orders covering the apparel industry — many of which are due to expire on 31 December 2004 — and, more generally, tariff levels on imported fabric inputs.
- The Vice-Chair of Peerless Clothing and President of the Canadian Apparel Federation informed the Committee that “the existing and imminent tariff and quota challenges facing the apparel industry mean that the extension of the … tariffs, which is before [the Committee] in Bill C-21, cannot be done without also implementing a measure that will enable the Canadian apparel industry to compete.” While the Committee agrees with this assessment, duty-remission orders and tariff levels lie outside the scope of Bill C-21. Because the duty?remission orders in question will expire shortly, the Committee has decided to issue this report, which summarizes the issues brought to our attention and makes recommendations that we believe will assist this important industry.
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- According to Industry Canada, the apparel industry is the tenth largest manufacturing sector in Canada, with more than 93,000 employees working in 3,900 establishments. It accounts for 2% of Canada’s total manufacturing gross domestic product (GDP), 4% of manufacturing investment and 4.4% of total manufacturing employment 1. The President of the Canadian Apparel Federation also told the Committee about the importance of the industry, indicating that “it draws on a large range of skills, including relatively low-skill and low-technology employment suitable for some new entrants to the Canadian labour force. In the urban areas, where the industry is concentrated, these entry-level jobs enable apparel companies to play an important role in socializing new entrants into the Canadian workforce. These entry-level workers develop their language and work skills, and they often move into more skilled jobs in the industry or in the broader economy.” Moreover, we were told that the apparel industry’s exports to the United States total approximately $3.5 billion.
- Canadian apparel “manufacturing-importers” — firms that retain design and marketing control, and some production, in Canada, while complementing these activities and products with offshore production — play an important role in providing jobs for Canadians. The President of A&R Dress Company Inc. remarked that “[t]oday, all apparel stakeholders (including the Department of Finance, Industry Canada and the Department of Foreign Affairs and International Trade) agree that ‘manufacturing-importers’ represent one of the most vital sub?sectors in today’s trading environment, and is one of the sub-sectors that is most likely to maintain employment in Canada."
- Speaking on behalf of one such organization, the President and Chief Executive Officer of COMO Diffusion Inc. told the Committee that, within the manufacturing-importers industry, “manufacturers have found a way to blend domestic manufacturing with a certain amount of importation to maximize our overall results and to offset the attractiveness our retailing customers find in sourcing products on their own in the Far East — China, Thailand, and lesser-developed countries. The fact that we have to compete with these direct purchases and can find a way to do so while employing hundreds of Canadians is something I personally am very proud of, both in our company in particular and the industry in general."
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