OTTAWA—Representatives of Canadian business, including the Rubber Association of Canada (RAC), are reacting cautiously to Canadian Finance Minister Jim Flaherty's plan to address “country pricing”—the higher cost of most goods in Canada compared with the U.S.—in national legislation this year.
Mr. 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,” Mr. Flaherty said in his speech.
“Our Consumers First agenda will help ensure Canadians are also protected in the marketplace,” he said. “When Canadian families spend their hard-earned money, they should be confident they are being treated fairly in a competitive marketplace.”
Several Canadian retail associations, especially the Retail Council of Canada (RCC), have urged the government for some time to address the price differential between Canadian and U.S. goods, including tires.
In a February 2013 report to the Canadian Senate, the RCC demonstrated the wide price gap between certain goods in Canada and 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 91 cents U.S.)
In a statement, Diane J. Brisebois, president and CEO of the RCC, praised Mr. 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.”
Ms. Brisebois said the RCC looked forward to working with the government to define specifics of how to address country pricing.
Manufacturing firms, however, had generally negative reactions to Mr. Flaherty's announcement. They said they charge more in Canada because they have higher expenses in that country for necessities such as shipping and safety regulations.
RAC President Glenn Maidment was guarded in his comments on Mr. Flaherty's speech.
“We're a trade association, and this is an issue that is extremely difficult for us to talk about,” Mr. Maidment told Tire Business. “I was a little surprised to see country pricing in (Mr.) 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,” he said.
The tire industry is different from other manufactured goods industries, in a way that benefits consumers, according to Mr. Maidment.
“There are literally dozens of tire distributors and importers, so there is a lot of competition out there,” he said.
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