In their appearance before the Committee, the witnesses spoke about a variety of issues related to Canadian businesses. For example, they discussed a range of tax considerations, regulatory matters, business financing and development, research, innovation and commercialization, and trade.

TAX CONSIDERATIONS

Capital Cost Allowance Rates

The Canadian Institute of Chartered Accountants informed the Committee that, in certain cases, capital cost allowance (CCA) rates do not correspond to actual depreciation rates. For that reason, it proposed that the rates be continuously adjusted to reflect the true economic life of the asset, which could encourage investment and increase productivity.

Regarding the CCA rates for assets used in natural gas liquefaction, the Canadian Association of Petroleum Producers called for the harmonization of these rates with manufacturing and processing assets in Class 43; with this change, existing Canadian liquefied natural gas (LNG) exports would be more competitive with LNG exports from the United States and Australia, and investment in new liquefaction facilities in Canada could increase.

Table 3 – Selected Capital Cost Allowance Classes and Associated Rates, Canada, 2012

Class	Rate (%)	Description
3	5	Most buildings acquired before 1988 (or 1990, subject to certain conditions). Also includes the cost of additions or alterations made after 1987.
8	20	Property used in the business that is not included in another class. Also includes data network infrastructure equipment and systems software for that equipment acquired before 23 March 2004.
10	30	Motor vehicles, automobiles and some passenger vehicles.
17	8	Roads, parking lots, sidewalks, airplane runways, storage areas or similar surface construction.
29	25 in the first and third years, 50 in the second year	Eligible machinery and equipment used for the manufacturing and processing in Canada of goods for sale or lease acquired after 18 March 2007 and before 2012 that would otherwise be included in Class 43.
43	30	Eligible machinery and equipment used for the manufacturing and processing in Canada of goods for sale or lease that are not included in Class 29.
52	100	General-purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data-processing equipment acquired after 27 January 2009 and before February 2011.

Source:       Prepared using information from Canada Revenue Agency, CCA classes.

In commenting on the role of the temporary accelerated CCA for manufacturing and processing in encouraging investment in Canada, increasing productivity and enhancing the competitiveness of Canadian business, Canadian Manufacturers & Exporters and the Greater Kitchener Waterloo Chamber of Commerce suggested that the measure should be made permanent, while the Canadian Steel Producers Association and the Chemistry Industry Association of Canada argued for an extension of the measure.

The Green Budget Coalition noted that the accelerated CCA is being phased out for the oil sands sector, and indicated that it should also be phased out for the mining sector.

Tax Rates

Regarding the general corporate income tax rate, the Investment Industry Association of Canada told the Committee that the current rate, which has not resulted in a decline in corporate tax revenue, should remain unchanged. The Canadian Bankers Association said that provincial governments should be encouraged to achieve and maintain a 10% corporate income tax rate.

The Canadian Labour Congress noted that businesses have accumulated $500 billion in capital because of the relatively low tax rate; it proposed that the rate be increased, with the resulting corporate tax revenue used to help businesses in strategic sectors. Similarly, the Réseau SOLIDARITÉ Itinérance du Québec requested a reduction in tax measures that benefit corporations, with the resulting corporate tax revenue used to help the homeless and the poor. The Professional Institute of the Public Service of Canada suggested that further corporation tax rate reductions should be eliminated.

Corporate Group Taxation

The Tax Executives Institute, Inc. commented that income taxation of affiliated corporations as a group would reduce the group’s borrowing costs and improve liquidity; as well, it would eliminate both the group’s costs associated with current tax planning strategies and enforcement of such strategies by the Canada Revenue Agency (CRA). In highlighting that Canada is the only G7 country that prohibits the sharing of tax losses among affiliated entities, it suggested that Canada — similar to the United States — should implement an elective tax loss or attribute transfer system that would allow the transfer of losses and tax credits among affiliated corporations; the election would be made annually. The Canadian Institute of Chartered Accountants advocated a loss transfer system among corporate group members.

Taxation of Small and Family Businesses

In its appearance before the Committee, the Canadian Federation of Independent Business noted that small businesses have a higher tax burden as a percentage of total revenue than do larger businesses, and proposed either that the small business tax rate be reduced to one half of the general corporate income tax rate or that the government aim for a combined federal-provincial rate of 12%.

Moreover, regarding the total tax burden imposed on small businesses, the Canadian Federation of Independent Business indicated that payroll taxes have the greatest impact on business growth, as all businesses must pay them regardless of their level of profitability. As well, it requested that the hiring credit for small businesses be extended until EI rates remain stable and argued that CPP premiums should not be increased.

Believing that a complex tax code can affect the growth of small businesses and the ability to attract investors, the Edmonton Chamber of Commerce suggested that the government should conduct a review of the ITA and other federal tax legislation.

The Edmonton Chamber of Commerce also said that transferring ownership of a family business to a family member is difficult due to the imposition of tax on the capital gains of the business’ assets at the time of transfer. In that context, it called for a comprehensive federal review of tax provisions affecting estate and succession planning to ensure that such familial transfers are treated fairly for tax purposes; the review should occur in the next 24 months.

Customs and Excise Tax

The Retail Council of Canada informed the Committee that certain goods sold in Canada are at a competitive disadvantage when compared to identical goods sold in the United States; this situation leads Canadian retailers near the Canada-U.S. border to have relatively less revenue, as U.S. retailers experience higher sales. It advocated the elimination of tariffs on certain goods that are not produced domestically, and highlighted that the customs revenue that would be lost would be offset by increased taxable income as well as GST revenue from Canadian retailers.

In speaking about competition between meals prepared in restaurants and prepared meals sold in grocery stores, the Canadian Restaurant and Foodservices Association noted that the former incur the GST while the latter are tax-exempt. According to it, the exemption in relation to prepared meals sold in grocery stores should be removed.

Regarding the harmonization of provincial sales tax and the GST in certain provinces, the Medicine Hat and District Chamber of Commerce highlighted that investors are paying HST on asset management services, and requested that such services be GST-exempt.

International Taxation

Regarding proposed foreign affiliate dumping rules that impose a tax on certain investments made by a Canadian corporation in a foreign affiliate, the Tax Executives Institute, Inc. told the Committee that, while the government’s targeting of abusive tax-motivated foreign affiliate dumping transactions will be beneficial, the proposed rules will reduce Canada’s attractiveness as a destination for foreign investment.

As well, the Tax Executives Institute, Inc. mentioned two Income Tax Regulations that affect the taxation of non-residents and/or payments to non-residents that were previously highlighted by the Advisory Panel on Canada’s System of International Taxation. Regarding Regulation 102, it said that the waiver system in respect of the withholding tax is cumbersome for non-residents. It also noted that, due to the difficulty and delay in obtaining a waiver from paying the withholding tax as prescribed in Regulation 105, non-resident service providers charge higher fees to Canadian businesses to offset the tax. Regarding both regulations, it suggested that a self-certification system based on current information reporting requirements should be implemented in order to shift compliance costs to the non-resident party.

The Canadian Institute of Chartered Accountants urged the general adoption of policies suggested by the Advisory Panel on Canada’s System of International Taxation.

Tax Administration

Financial Executives International Canada informed the Committee that the CRA’s auditor incentive system, which measures total taxes reassessed by auditors, results in a high number of audits; it proposed an incentive system based on additional tax revenue collected by reassessments of taxpayers, which would increase the effectiveness of the monitoring of audits.

As well, Financial Executives International Canada spoke about the administrative costs associated with CRA audits and the resolution of disputes, and noted that field auditors do not have the authority to apply a range of outcomes when settling disputes with taxpayers; from that perspective, in order to prevent litigation of minor tax issues, it requested that these auditors be granted the power to settle disputes.

Regarding the administrative burden imposed on businesses that report income for both income tax purposes and for collection of the GST/HST, Financial Executives International Canada proposed that consolidated tax reporting be permitted.

In order to provide certainty, fairness and transparency in respect of the limitation period for taxpayer reassessments, the Edmonton Chamber of Commerce suggested that tax returns should be deemed assessed by the CRA on the 120th day after filing of the return.

Tax Simplification

In its appearance before the Committee, the Certified General Accountants Association of Canada argued that the complexity of Canada’s tax system must be addressed if Canada is to remain competitive, attract investment, and create jobs and economic growth. From that perspective, it proposed that all levels of government work together with a view to modernizing and simplifying the ITA in a revenue-neutral manner; the result could be increased compliance by and lower compliance costs for taxpayers, as well as lower administrative costs for government and a more secure tax base with predictable revenue. In particular, it felt that the Committee should determine the scope of the review, with an expert panel created to review the ITA and, subsequently, to make recommendations about modernization and simplification of the tax system.

Regarding unlegislated tax proposals that add uncertainty and unpredictability to the tax system, the Certified General Accountants Association of Canada suggested that a technical tax amendment bill should be introduced and/or that a sunset provision should be implemented in respect of proposed changes to the ITA in order to ensure that tax amendments are legislated after a prescribed period of time and to prevent legislative backlogs.

The Edmonton Chamber of Commerce noted that tax incentives complicate the tax system, increase compliance costs, and allow for tax evasion and avoidance. It also commented that a broader tax base would facilitate lower taxes for all taxpayers. Consequently, it advocated the establishment of a royal commission to undertake a comprehensive review of tax statutes; the review should focus on reducing compliance costs, and ensuring neutrality, simplicity, efficiency and fairness.

Similarly, Financial Executives International Canada proposed that the Minister of Finance establish a task force to undertake a comprehensive review of the ITA, with the objective of reducing complexity and compliance costs.

In commenting that a simplified tax system would increase productivity and improve Canada’s competitiveness, the Canadian Institute of Chartered Accountants suggested a two-stage approach to simplification: establish an independent office that would provide advice on reducing both legislative and administrative complexity, perhaps modelled on the U.K. Office of Tax Simplification; and create an expert panel that could examine a wide range of areas in relation to taxation, such as language, the costs and benefits of various provisions and the use of anti-avoidance rules.

Financial Executives International Canada indicated that certain sections of the ITA no longer achieve the desired policy objectives and should be eliminated. As well, it advocated a consolidation of measures that contain too many provisions, such as the CCA classes.

REGULATORY MATTERS

Co-operatives

The Canadian Co-operative Association told the Committee that co-operatives are businesses that employ Canadians, pay taxes, create jobs and operate in almost every sector of the economy; for these reasons, they should not be regulated at the federal level by Agriculture and Agri-Food Canada. In its view, a more suitable federal department, such as Industry Canada, should have responsibility for co-operatives.

In noting the recent reduction in the size of the Rural and Co-operatives Secretariat, which coordinates federal programs that affect co-operatives, Desjardins Group similarly argued that Industry Canada should have federal responsibility for co-operatives; it believed that the Department should create a co-operative secretariat. It also proposed that co-operatives be eligible for federal programs that support businesses, such as those administered by Industry Canada.

Desjardins Group also spoke about demutualization applications, and suggested that the government should have safeguards to prevent unjustified monetary gain by a member or members of a mutual insurance company or co-operative as a consequence of demutualization.

Securities

The Portfolio Management Association of Canada told the Committee that the establishment of a common securities regulator could help to protect investors against fraud and could increase confidence in Canadian capital markets. It supported funding for the Canadian Securities Transition Office for at least an additional fiscal year and urged the government, in cooperation with the provinces, to develop legislation in light of the December 2011 Supreme Court of Canada ruling. Similarly, the Canadian Bankers Association supported the creation of a common securities regulator.

Supply-managed Commodities

In speaking to the Committee about milk prices set by the Canadian Dairy Commission, the Canadian Restaurant and Foodservices Association noted that high milk prices in Canada have prompted Canadians to buy milk in states along the Canada-U.S. border; as well, it noted that milk and cheese smuggling operations have developed. It urged the government to modernize the supply management system so as to increase the market for dairy and poultry products.

Payment Systems

The Canadian Restaurant and Foodservices Association and the Retail Council of Canada informed the Committee that merchants incur higher processing fees for certain credit cards, which results in higher consumer prices and lower profit margins. The former called for changes to the Code of Conduct for the Credit and Debit Card Industry in Canada in order to eliminate the honour-all-cards rule and to permit surcharging.

Restaurant Sector

In speaking to the Committee, the Canadian Restaurant and Foodservices Association noted that the restaurant sector is not represented by a government department. In its view, an assistant deputy minister in Industry Canada should be responsible for the restaurant sector in order to ensure that policy decisions consider the sector’s views.

Burden

In its appearance before the Committee, and in recognition that — in some cases — provinces and/or municipalities have regulations that duplicate federal regulations, the Canadian Construction Association suggested that the government should conclude inter-jurisdictional agreements for harmonized regulations and create a single federal-provincial entity to administer these regulations.

Regarding the regulatory burden faced by small financial institutions, Credit Union Central of Canada noted that one half of all credit unions are very small financial institutions, with implications for compliance costs; it requested that the situation of small financial institutions be considered when the recommendations in the Red Tape Reduction Action Plan report are implemented. Desjardins Group indicated that affiliated co-operatives face a high individual compliance burden, and suggested that such co-operatives could comply at the group level in meeting certain statutory reporting requirements.

The Canadian Convenience Stores Association advocated implementation of the recommendation in the Red Tape Reduction Action Plan report that would require the government to remove an existing regulation that imposes administrative costs on businesses in each instance where a new regulation would increase such costs.

In commenting on foreign investment in Canada’s oil and gas sector, the Canadian Association of Oilwell Drilling Contractors argued for a stable and competitive regulatory regime that would make Canada an attractive place for investments by global oil and gas producers.

According to the Canadian Institute of Chartered Accountants, federal forms should use standardized business reporting language, known as XBRL, which would reduce compliance costs for taxpayers and enhance federal data collection.

BUSINESS FINANCING AND DEVELOPMENT

Co-operatives, Social Economy Enterprises and Small Businesses

In speaking about the ability of co-operatives to raise capital, the Canadian Co-operative Association told the Committee that the RRSP rules in the ITA prohibit co-operative members who own more than 10% of the shares of a co-operative from purchasing additional shares of that co-operative to hold within their RRSP; it suggested that the rules should be revoked. It also advocated the creation of a national investment fund to support existing and new co-operatives.

The Social Economy Working Group indicated that the Quebec co-operative investment plan — the Régime d’investissment coopératif — provides income tax incentives for workers to invest in the companies that employ them, and requested a similar federal program so that co-operatives could remain well-funded.

As well, the Social Economy Working Group commented on social economy enterprises, stating that such enterprises benefit the community rather than specific individuals. In its view, they should be eligible for federal support programs that currently help small and medium-sized businesses.

In order to promote business ownership by young entrepreneurs and to support business succession, the Regroupement des jeunes chambres de commerce du Québec proposed that potential entrepreneurs be able to use their RRSP funds — without penalty — to finance the purchase of their first business, provided the amount is repaid within 10 or 15 years.

Flow-through Shares and the Mineral Exploration Tax Credit

The Small Explorers and Producers Association of Canada informed the Committee that the ITA’s flow-through shares program is an important financing mechanism for small oil and gas companies, and suggested two measures that it believed would enhance benefits for investors and could increase the level of financing for such companies: raising the annual Canadian development expense conversion limit to $4 million from $1 million, and changing the taxable capital threshold for conversion eligibility to $50 million from $15 million. In its view, these changes could offset higher development and exploration costs in the junior oil and gas sector.

Financial Executives International Canada and the Investment Industry Association of Canada said that the flow-through share program has been successful in encouraging private investment in the oil and gas and mining sectors, and advocated an expansion of the program to other sectors. According to Financial Executives International Canada, the program may increase the commercialization of innovation, and expansion to other sectors would not increase the program’s federal fiscal cost since it only transfers tax deductions between taxpayers. The Investment Industry Association of Canada indicated that the program could be expanded to include the biotechnology and green sectors.

The Prospectors and Developers Association of Canada noted that the temporary Mineral Exploration Tax Credit (METC) provides Canada with a competitive advantage when compared to other countries, as it reduces the risk faced by investors in Canadian exploration activities. It believed that, in order to facilitate the implementation of long-term exploration projects, the METC should be made permanent.

According to the Mining Association of Canada, it is difficult for junior mining companies to raise capital; from that perspective, it advocated the extension of the METC and the flow-through shares program for an additional year.

In order to increase tax neutrality, the Green Budget Coalition suggested that the METC for flow-through shares should not be renewed.

Financing for High-risk Businesses

In its appearance before the Committee, the Investment Industry Association of Canada requested a range of measures to help generate capital at various stages of business development, especially for businesses that are capital-intensive and/or high-risk. For example, it supported the creation of angel networks for Canadian businesses, public-private partnerships, financial literacy for entrepreneurs, changes to the taxation of capital gains, lower regulatory costs, and a better balance between securities and tax rules.

The Canadian Institute of Chartered Accountants suggested that an angel tax credit should be created to support investments in innovative start-up companies.

Taxation of Investment Dealers

In highlighting that income tax changes in 2008 that required investment dealers to treat unrealized income — such as broker warrants — as taxable income affected the dealers’ ability to receive warrants instead of cash for payment of underwriting fees incurred when shares are issued, the Investment Industry Association of Canada urged an amendment to the current rule so that such income is not taxable.

RESEARCH, INNOVATION AND COMMERCIALIZATION

Government Funding

In their appearance before the Committee, the Canadian Federation for the Humanities and Social Sciences, the University of Manitoba and the Association of Universities and Colleges of Canada proposed that the funding for the three federal granting agencies — the Canadian Institutes of Health Research (CIHR), the Natural Sciences and Engineering Research Council of Canada (NSERC), and the Social Sciences and Humanities Research Council (SSHRC) — and for the Canada Foundation for Innovation (CFI) be increased. McGill University advocated renewed, stable and predictable support for the granting agencies in light of variable funding in the past two years, and the Canadian Association of University Teachers suggested that their funding should be increased by $500 million annually.

The Canadian Federation for the Humanities and Social Sciences said that a greater proportion of increased funding of the granting agencies should be allocated to SSHRC, while the Association of Universities and Colleges of Canada indicated that grant funding should include the indirect costs incurred by institutions when conducting research.

Regarding the administration of the federal granting agencies and their grants, the Canadian Association of University Teachers proposed that grant applications be reviewed by the scientific community and that the agencies be more arm’s length from the government. The Canadian Alliance of Student Associations called for agency-funded research to be available to the public in an open-access format.

Figure 5 – Percentage of Gross Domestic Expenditure on R&D (GERD) Financed by Government, Selected Organisation for Economic Co-operation and Development (OECD) Countries, 2009

Source:       Prepared using data from Organisation for Economic Co-operation and Development, Main Science and Technology Indicators, Volume 2012 Issue 1, 6 July 2012.

Polytechnics Canada highlighted that the College and Community Innovation Program, which is administered by NSERC, is one of the few programs focused on applied research; it requested that the program’s funding be increased by $15 million annually.

In order to foster innovation, the Canadian Chamber of Commerce suggested that a new national innovation strategy should be created; the strategy should include research, commercialization, training and retraining. Similarly, the University of Saskatchewan advocated such a strategy to support human, physical and technological capital through investments in advanced education, research, knowledge transfer and business development.

McGill University requested greater funding for research infrastructure through the CFI, and both it and the Association of Canadian Community Colleges called for renewed funding for the Knowledge Infrastructure Program. The Council of Ontario Universities also spoke about research infrastructure, and requested funding of data infrastructure, as well as the creation of a national framework for such infrastructure so that data collected by academic researchers could be used for policy and economic development purposes. The University of Toronto proposed direct funding of large capital projects to modernize facilities and to maintain Canada’s international competitiveness.

The Canadian Psychological Association suggested that projects funded by the granting agencies should recognize the role of psychological factors in research conducted in relation to health and neurosciences.

In speaking about direct funding of applied research, Canadian Manufacturers & Exporters commented that such funding has high administrative costs and shared its view that governments do not always make the best decisions regarding the type of technology to support. The Toronto Board of Trade and the Association of Universities and Colleges of Canada advocated direct grants for this type of research.

Polytechnics Canada highlighted the voucher programs in Alberta, the Netherlands and Australia for late-stage applied research, and proposed the creation of a national voucher program for late-stage commercialization support at approved research and development service providers. Similarly, a voucher program was supported by Canadian Manufacturers & Exporters, which indicated that businesses could choose the support services they need for innovation.

The Association of Universities and Colleges of Canada spoke about methods to increase links between the private sector and academic institutions to further innovation. In its view, there should be more federal research funding for university students to work in the private sector. Similarly, the University of Toronto requested greater funding of industry internships involving university students.

Sector-specific Government Support

The Canadian Renewable Fuels Association told the Committee that 60% of the $500 million in the Sustainable Development Technology Canada NextGen Biofuels Fund has been allocated to projects, and requested that the objectives of the program not be changed to fund projects outside the renewable fuels sector.

The Grain Farmers of Ontario commented that plant-breeding research is more successful when it occurs in the region where the plant will ultimately be grown; from that perspective, it advocated greater federal funding for the development of wheat varieties for Ontario. It also suggested that Agriculture and Agri-Food Canada should change its winter wheat research efforts so that research is conducted for wheat varieties that could be grown throughout Canada.

The Canadian Cattlemen’s Association proposed an increase in funding for beef research, asked that federal research funding be for a minimum of five years, and supported the maintenance of such funding in relation to animal health and welfare, the environment, plant breeding and food safety.

In the view of the Mining Association of Canada, innovation is needed to address declining ore reserves, meet regulatory standards and manage higher operating costs. It advocated an $18 million annual investment over five years for the Canadian Mining Innovation Council, which facilitates mining-related research and development (R&D).

The Forest Products Association of Canada called for continued federal support for research and innovation so that novel paper and wood products can be commercialized and exported.

Collaboration and Partnerships

In its appearance before the Committee, the Canadian Federation for the Humanities and Social Sciences proposed that the government invest in cross-sector collaborations among academic institutions, governments, communities and not-for-profit entities. McGill University requested support for international and inter-sectoral partnerships that would strengthen links between Canadian and international universities and between Canadian universities and foreign businesses, as well as funding for bilateral or multilateral research initiatives. Canadian Manufacturers & Exporters advocated an increase in federal funding for collaborative research between businesses and academic institutions.

International Science and Technology Partnerships Canada and the Canada-Israel Industrial Research and Development Foundation noted that international partnerships stimulate the commercialization of technology, and said that the government should promote collaboration among researchers when the objective is commercialization. International Science and Technology Partnerships Canada requested an increase in funding to $20 million annually for five years.

In speaking about the contribution of colleges to the development of small and medium-sized enterprises (SMEs), the Association of Canadian Community Colleges noted that colleges provide businesses with expertise, equipment and students for applied projects. It called for an increase in government funding for partnerships between community colleges and small businesses, suggesting that support should be between 1.25% and 5% of the total federal investment in research at post-secondary institutions.

The University of Manitoba suggested that federal investments in partnership programs, like those administered through the granting agencies that foster research partnerships between SMEs and universities, should be increased.

Scientific Research and Experimental Development Investment Tax Credit

Canadian Manufacturers & Exporters told the Committee that reduced federal support for the Scientific Research and Experimental Development (SR&ED) investment tax credit could lead companies to invest in countries other than Canada. It suggested that the CRA should simplify the administration of the credit, that the credit should be partially refundable and that an accelerated depreciation rate for investments in capital equipment that are used in R&D should be applied.

The Canadian Steel Producers Association highlighted recent changes to the SR&ED tax credit that it believed will reduce support for capital-intensive projects. It advocated a refundable credit for large corporations as well as the introduction of R&D programs for such projects.

The Canadian Institute of Chartered Accountants also commented on these recent changes, and proposed that the measure support all businesses that conduct R&D, regardless of size. In its view, the changes that reduce the general tax credit rate and that exclude capital expenditures should be repealed, and the credit should be made partially refundable in order to encourage foreign investment.

The Association of Universities and Colleges of Canada requested that the balance between the SR&ED tax credit and direct spending on research be adjusted, while the Canadian Association of University Teachers said that the SR&ED tax credit is a blunt instrument. According to the latter, direct funding of applied research should be increased and an independent scientific review panel should be created to select funding recipients.

Intellectual Property

In speaking to the Committee about intellectual property (IP) protection in Canada, McGill University commented that its international business partners would like stronger protection; consequently, it proposed that Canada develop a stronger IP regime. Regarding international IP treaties, the Alliance of Canadian Cinema, Television and Radio Artists urged Canada to sign the World Intellectual Property Organization Beijing Treaty on Audiovisual Performances.

TRADE

Trade and Investment Agreements

In their appearance before the Committee, the Toronto Board of Trade, the Canadian Institute of Chartered Accountants and the Canadian Chamber of Commerce identified the ability to compete globally for trade and investment — particularly in the European Union, the Asia-Pacific region and other emerging markets — as a benefit for Canadian businesses and workers. The Toronto Board of Trade also suggested that the federal, provincial and municipal governments should coordinate their efforts designed to promote trade and investment abroad.

The Regroupement des jeunes chambres de commerce du Québec and the Canadian Federation of Independent Business encouraged the government to enter into free trade agreements to help eliminate barriers to trade and to develop new export markets for SMEs.

According to Canadian Manufacturers & Exporters, Canada should have a series of coordinated investment agreements that ensure fair treatment of Canadian investors in foreign markets and that provide effective dispute resolution measures. The Canadian Labour Congress and the Canadian Union of Public Employees asked that all investment agreements promote high labour and social standards, focus on strategic industries and contribute to sustainable global economic development.

The Canadian Steel Producers Association identified a need to address the illegal dumping of products in the Canadian economy and unfair trade practices, to support penalties for customs violations, and to provide adequate resources for the Canada Border Services Agency and the Canadian International Trade Tribunal.

The Medicine Hat and District Chamber of Commerce asked that the government invest in commercial services at border crossings so as to ensure consistency with the United States. It also urged the government to expand the border services provided at the Wild Horse Port of Entry in order to increase activity at this trade corridor and to provide Alberta with a second 24 hours-per-day port of entry for commercial transport trucks.

The Canadian Bankers Association highlighted that the U.S. Foreign Account Tax Compliance Act applies to Canadian financial institutions and account holders. In its view, future trade agreements concluded by Canada should prohibit the extra-territorial application of foreign laws to Canadian financial institutions.

Figure 6 – Volume of Imports of Goods and Services, Selected Country Groups, 2007–2017 (annual percentage growth)

Notes:        “F” indicates forecast.

The G7 nations are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Source:       Prepared using data from International Monetary Fund, World Economic Outlook Database, October 2012.

Investment Canada Act

Regarding legislation addressing foreign investment and taxes, the Calgary Chamber of Commerce requested that the government conduct a comprehensive, stand-alone review of the Investment Canada Act and, in particular, clarify the net benefit test as well as set criteria within that test for foreign, state-owned companies wishing to invest in Canada. It also suggested that the review should address parameters in relation to mutual concessions between countries in relation to foreign investment, an increase in the threshold for automatic review by the government, and improved transparency in respect of decisions made by the government regarding foreign investment.

Sector-specific Trade Issues

From the perspective of Canada’s agricultural and agri-food sector, the Grain Farmers of Ontario asked that imported grain products be subject to the same environmental and regulatory standards as domestic grain products, while the Canadian Cattlemen’s Association argued for increased investments in market development for beef exports. The Grain Growers of Canada indicated that access to markets for Canadian crops should be developed through Canada’s participation in the Trans-Pacific Partnership negotiations and in the European Union, Morocco, India, China and Japan. The Canadian Restaurant and Foodservices Association asked for fewer subsidies and for free trade in all agricultural products.

Regarding the petroleum sector, the Canadian Gas Association and the Canadian Association of Oilwell Drilling Contractors suggested that the government should focus on access to natural gas and crude oil markets in Asia. The former indicated that the government must act quickly, as other countries with natural gas reserves will also be pursuing market access opportunities within the next 10 years, while the latter highlighted that market access to the United States and Eastern Canada is also required, as petroleum products are being sold in Western Canada at a discounted price when compared to other petroleum price benchmarks, resulting in a loss of revenue for the industry and the government.

The Forest Products Association of Canada suggested that, when Canadian paper products are being promoted in new markets, Canada’s certified world leadership in terms of sustainably managed forests should be a focus.

According to the Canadian Association of Community Health Centres, health care should be exempted from an eventual comprehensive economic and trade agreement between Canada and the European Union, as well as from all other trade agreements.