stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
Pain threshold: U.S. demand for higher 'de minimis' limit worries Canadian retailers
space
Businesses fear raised tax exemption would give foreign merchants an unfair advantage
space
By SALMAAN FAROOQUI
  
  

Email this article Print this article
Monday, September 10, 2018 – Page B1

American negotiators in the NAFTA talks find themselves on the same side as some Canadian economists on the issue of how Canada treats ecommerce shipments coming into the country.

The United States is using the talks to try to get Canada to raise its so-called "de minimis threshold" - the level below which goods are given exemptions from duty and sales tax. Today, that threshold is very low: U.S goods up to $20 in value are exempt from duty and sales tax when shipped to Canadian customers.

Canadian goods shipped to the United States, on the other hand, are exempt from duty up to up to US$800 in value. (Each state has the right to collect sales tax, though in most cases they don't.) The discrepancy has long been a trade irritant between the two countries, and U.S.

Trade Representative Robert Lighthizer and U.S e-commerce retailers have been pushing for Canada to raise its de minimis threshold closer to the U.S. limit.

A higher exemption would benefit U.S. e-commerce giants such as Amazon.com Inc., as well as smaller companies that sell goods across borders.

The issue does not have the same profile as other matters at the bargaining table, such as Canada's protection of its dairy market and the United States' wish to eliminate the current system for resolving trade disputes.

To some, the threshold is a matter on which the Canadian government could give some ground - which could mean savings for consumers, but pain for some retailers. A study by the C.D. Howe Institute found that the Canadian economy could benefit over all from a higher threshold because it would put more money in the hands of consumers. Daniel Schwanen, the study's author, said that Ottawa would actually save money if de minimis thresholds were raised because they would need to spend fewer resources on border services to check incoming goods.

"They would collect fewer duties but the costs [for border services] would be lower," he said.

"It's not a bad thing to compromise on. We think this is a thing that Canada could put on the table, and it could please the Americans."

Bank of Montreal senior economist Sal Guatieri said studies show that consumers would benefit by saving money on U.S.

imports, and would receive products quicker because of less friction with cross-border shipments.

"It would be a big win for parcel delivery companies, with a rush of new orders by Canadians from the U.S." But he said Canadian businesses could be undercut by a significant margin if American goods are exempt from sales tax as well as duty. He said that negotiators will have to sort out whether an increase in Canada's de minimis threshold would exempt goods from both.

"I believe it's not one of the red lines that the Canadian government has set," Mr. Guatieri said, saying that it is likely that negotiations will be about how much Canada raises its de minimis level, rather than if it will raise it at all.

The retail industry, however, sees trouble. Larry Rosen, chief executive of men's wear brand Harry Rosen, says allowing U.S businesses to undercut Canadians through a tax exemption would give foreign merchants an unfair advantage in the Canadian market when compared with local businesses. "I'm optimistic that even if there is an increase in the de minimis ... it won't be as severe as [US$800, the U.S. limit], although any amount is a concern," Mr. Rosen said.

Karl Littler, spokesperson with the Retail Council of Canada, said raising Canada's de minimis threshold would have a severe impact. A study conducted by PricewaterhouseCoopers Canada commissioned by the retail council found that more than 300,000 jobs could be lost by 2020 and provincial and federal governments would lose more than $10.8-billion in annual revenue if taxes and duties were waived for all cross-border shipments worth $800 or less.

The report found similar results if Canada raised its de minimis threshold to just $200, with a loss of 286,224 jobs and $10.2-billion in government revenue.

"You'd basically get two different streams of tax treatment, and the advantageous treatment goes to any external shipper who sends goods into Canada," Mr. Littler said.

"You'd then have an incentive to set up your distribution centres outside of Canada," he continued, meaning that Canadian jobs could end up shifting to the United States. E-commerce platform eBay Inc. has been lobbying for years for Canada to raise its de minimis threshold.

"[EBay] Canada has long advocated for an increase in Canada's de minimis threshold as a way of reducing the frictions that prevent small and medium-sized businesses from fully engaging in global trade," Andrea Stairs, general manager for eBay Canada and Latin America, said in an e-mail.

She says the current rules put Canadian businesses at a disadvantage for supply chain inputs and make accepting returns a hassle.

Associated Graphic

U.S goods up to $20 in value are exempt from duty and sales tax when shipped to Canadian customers, while Canadian goods shipped to the United States are exempt from duty up to up to US$800 in value.

JOHN SOMMERS II/REUTERS


Huh? How did I get here?
Return to Main Eric_Reguly Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page