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Ottawa, December 21,1995
1995-113

Government Announces Lower Preferential Tariff Rates for Developing Countries

Related document:

• Backgrounder.

Secretary of State (Financial Institutions) Doug Peters today announced that on January 1, 1996 the government will lower preferential tariff rates of duty on over 3,000 products from developing countries. This action is the culmination of a two-year review of Canada's General Preferential Tariff (GPT) for developing countries that involved wide consultations with Canadian producers and GPT beneficiary countries.

"Canada's GPT helps stimulate the export sectors of many developing countries. The preferential tariffs also benefit Canadians by improving consumers' access to imported goods and by providing producers with better access to lower cost production inputs," Mr. Peters said.

Among the more than 3,000 reductions in GPT rates of duty, developing countries and Canadian consumers will particularly benefit from the new GPT rates on raw cane sugar, canned tuna, a wide variety of machinery products, and certain household kitchenware.

The GPT rate reductions will help to maintain margins of tariff preference offered to developing countries as Most-Favoured-Nation tariff rates of duty decline as a result of the implementation of the Uruguay Round trade agreement. Imports under the GPT preference amounted to $4.2 billion in 1994 or approximately 3 per cent of Canada's total imports.

Background information is attached.

___________________
For further information:

Patricia M. Close
Tariffs Division
(613) 992-6881

Backgrounder

During the 1970s, most industrialized countries instituted tariff preferences (referred to as the Generalized System of Tariff Preferences or GSP) for developing countries to encourage their economic growth through increased trade. On July 1, 1974, Canada introduced its version of the GSP called the General Preferential Tariff (GPT). Key features of the Canadian GPT system include:

• GPT rates are generally two-thirds of the Most-Favoured-Nation duty rate, although many are lower.
• Since 1983, all GPT eligible imports from the least developed of the developing countries have been permitted duty free entry to Canada.
• There are liberal rules of origin, with GPT beneficiaries being allowed to cumulate origin content with other GPT beneficiaries
• A formal and transparent process to safeguard the interests of Canadian producers operates through the Canadian International Trade Tribunal.

The GPT has been renewed twice since its inception. The current expiry date is June 30, 2004. In January of 1994, the Minister of Finance announced that consultations would be held with interested parties on the possible expansion of GPT product coverage and reduction of GPT rates. This review was undertaken in light of the fact that the GPT tariff preference (the difference between the MFN rate of duty and the GPT rate of duty) has been eroded as MFN tariff rates are being reduced as a result of the implementation of the Uruguay Round results under the World Trade Organization.

The GPT review, which included extensive consultations with Canadian industry and GPT beneficiary countries, has led to today's announcement by Doug Peters, Secretary of State (Financial Institutions) that many GPT rates will be reduced starting on January 1, 1996. The government has also decided to broaden GPT product coverage, effective January 1, 1996, by including 200 additional products to the scheme.

The Government of Canada is continuing to consult with Canadian industry and GPT beneficiary countries on ways to further improve preferential tariff access to the Canadian market, especially for the poorest of the developing countries. As well, documentary requirements for obtaining preferential entry are being reviewed with a view to streamlining the process for importers to be able to claim the GPT.