Canadian IBDs say import surtax will kill them off - BikeBiz

Canadian IBDs say import surtax will kill them off

Yesterday, the Canadian International Trade Tribunal made its long awaited decision into the Canadian bicycle manufacturer's claim that bicycle imports from Asia were "injurious." The tribunal heard evidence from all sides in the debate during a hearing in June. To the consternation of independent bicycle dealers, the CITT sided with the Canadian Bicycle Manufacturers' Association.
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Most bikes - except folders and other small wheeled machines - will now likely face a surtax of 30 percent.

And this is not just cheap bikes imported from China, the surtax would be imposed on quality bikes imported from Taiwan and Vietnam.

The Canadian International Trade Tribunal recommended that Canada impose a three-year surtax on bicycles with a freight-on-board (FOB) value of $225 Canadian or less. The 30 percent tax would drop to 25 percent in the second year, 20 percent the third and would then be dropped.

The Canadian Bicycle Manufacturers' Association complained to the CITT in 2004, asking it to impose a 48 percent tariff on foreign bike imports in order to stem the flow of lower-cost foreign imports into Canada. According to reports from Procycle Inc. and Raleigh Canada Ltd, imports have almost doubled in recent years to 1,063,768 units in 2004 from 538,523 in 2000.

Canadian manufacturers fear that without the tariff protection they will continue to lose jobs to Asian nations.

However, IBDs said the tariff will hit Canadian cyclists hard in the pocketbook and could "devastate'' hundreds of small retailers across the country.

Canada has about 1200 independent bicycle retailers.

Geoffrey Kubrick, the lawyer representing the Canadian Bicycle Manufacturers' Association, said:

"The Canadian industry is being so swamped by imports from China and from a bunch of other countries - mostly Asian economies - that they can't keep up with all the competition so they're asking for a temporary protection."

Retailers disagree with this assessment.

"This has nothing to do with importation of bicycles, because I'm going to tell you that bicycles coming from outside the country for the most part are more expensive than bicycles produced in Canada,"said Kevin Pidgeon of Tommy and Lefebvre, an IBD in Ottawa.

He told the Edmonton Sun that the anti-dumping case is all about Raleigh Canada and Groupe Procycle trying to monopolize the Canadian market.

In a letter to Canada's deputy prime minister Anne McLellan, Michael McAnally of Edmonton's Revolution Cycle said:

"We cannot survive as a viable business under these proposals."

This argument was not believed by the CITT.

In an executive summary, the CITT said:

"The Tribunal found that the domestic producers of bicycles suffered significant overall impairment and, thus, incurred serious injury. This injury took the form of a serious deterioration in production, capacity utilization, sales volume, market share, sales revenue, cash flow, employment, and ability to invest. As well, gross margins and net income were not at the levels that the domestic producers could have achieved in the absence of the increased imports."

A PDF of the CITT's paper can be downloaded here:

http://www.citt-tcce.gc.ca/.../gs2e001_e.pdf

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