- The President of A&R Dress Company Inc. told the Committee that without tariff relief, companies must pay duties on their raw-material inputs “while the same finished garments (made from the very same raw materials) enter Canada from LDC beneficiary countries duty-free and quota-free.” According to the President, the company’s duty costs would “rise by 25% overnight, and the disparity between the price that [it is] able to offer versus [its] LDC competitors [would] increase exponentially.”
- The situation faced by Canadian apparel manufacturers has been affected by the federal government’s decision to widen the scope of the LDCT to give the 48 eligible countries duty-free access to the Canadian market, with the exception of supply-managed agricultural goods, effective 1 January 2003. In 2003, Canadian imports under the LDCT were valued at $408 million and accounted for 0.12% of total Canadian imports 3. According to the President of the Canadian Apparel Federation, in 2003 Cambodian imports to Canada rose by 328%, to $83 million, while imports from Bangladesh increased 115%, to $303 million.
- Witnesses also spoke to the Committee about the effect of the continuing removal of quotas. The President and Chief Executive Officer of COMO Diffusion Inc. indicated that, “especially for product going into the United States, the challenges to Canadian manufacturers will be even greater, as many third-world countries will be able to flood America with garments at lower costs than those which are prevalent today.” Similarly, the President of A&R Dress Company Inc. remarked that the company “is about to experience the perfect storm: the elimination of a vital tariff-relief program for A&R, and the extension of quota-free (and in many cases duty-free) access for [its] competitors.”
- Witnesses, including the President of A&R Dress Company Inc., told the Committee that the Department of Finance has demonstrated “an unwillingness to extend the remission order, which doesn’t take into consideration materially altered conditions in the sector, such as the extremely permissive rules of origin under Canada’s LDC program.”
- In the Committee’s view, remission orders are, by their very nature, an incomplete and ad hoc method of addressing the needs of the entire Canadian apparel sector with respect to input costs: some textiles and sub-sectors are covered, while others are not. Moreover, we note the comments made by witnesses that the 31 December 2004 expiration date of the duty-remission orders is fast approaching, and companies need to make procurement and employment decisions in the immediate future. Consequently, it is vital that the federal government take immediate action to, at a minimum, maintain the current system. From this perspective, the Committee recommends:
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