Canadian Textiles

Canada - Open for Business

The Investment Canada Act encourages investment in Canada that contributes to economic growth and employment and provides for the review of significant investments in Canada by non-Canadians in order to ensure such benefit to Canada.

Persons who are not Canadian citizens or permanent residents, within the meaning of the Immigration Act (i.e. someone who has been ordinarily resident in Canada for not more than one year after the time at which he became eligible to apply for Canadian citizenship), are required to comply with the provisions of the Investment Canada Act. Non-Canadians are required to file a notification each time they start a new business in Canada, and each time they acquire control of an existing Canadian business where the establishment or acquisition of control is not a reviewable transaction. Their investment is reviewable if the asset value of the Canadian business being acquired exceeds the following thresholds: (a) if the investor is a non-Canadian and is not a World Trade Organization (WTO) member, any investment over $5 million for a direct acquisition and over $50 million for an indirect acquisition; and (b) if the investor or vendor (excluding Canadians) is a WTO member, any direct investment in excess of $192 million in 2000 is reviewable. An indirect acquisition is not reviewable unless the value of the assets of the business located in Canada amounts to more than 50 percent of the asset value of the transaction. See An Overview of the Investment Canada Act (FAQ)

Investment Services

Investment, Science & Technology (IIT) is the Government of Canada's one stop shopping centre for investment services. IIT provides online business and investment information.

IIT personnel provides:

• immediate, accurate, investment-related information, relevant to a business situation;
• international cost comparisons, including wages and taxes;
• advice on Canadian programs and regulations;
• site selection data;
• a comprehensive list of government and private sector contacts.

Sources of Financing

Sources of Financing is a Canadian Government information source that ". . . discusses traditional or alternative sources of financing for small business. You will find an extensive directory of Canadian financial providers, a powerful search engine of financial providers, information on different types of financing and financial providers, and tips to help you secure financing".

Also, M.G. Publishing, 4865 Highway 138, RR1, St-Andrews West, ON K0C 2A0, Canada publishes the "Canadian Subsidy Directory", a reference source discussing more than 1700 programs and grants from various foundations, associations, government offices and organizations. See Canadian Business Publications

Trade Policy

The textile industry continues to operate under stiff international competition and the impact of Canada's international trade policy protocols including: 

1. World Trade Organization 1994 General Agreement on Tariffs and Trade (GATT), and 1994 Agreement on Textiles and Clothing (ATC);
2. U.S. Trade and Development Act of 2000;
3. Canada's 2003 New Partnerships for African Development (NEPAD);
4. sector-specific duty remission programme; and

World Trade Organization (WTO)

With reference to the GATT's Uruguay Round of Multilateral Trade Negotiations during 1986-1994, World Trade Organization (WTO), member countries continue to adjust to WTO protocols affecting the future of its textiles and clothing industries. The WTO, the successor to the General Agreement on Tariffs and Trade established in the wake of the Second World War, remains the only international organization dealing with the global rules of trade between nations that is mandated to ensure that trade flows between nations are smooth, predictable and as trade barriers-free as possible.

Thus, the industry operates under WTO's GATT 1994 tariff reductions, which, over the ten-year period of January 1, 1995 to January 1, 2005, have reduced the average tariff for textiles from 17 percent to 10.5 percent, and, for apparel, from 24 percent to 18 percent. As well, in the same ten-year period, WTO's ATC terminated apparel and textiles quotas between Canada and 32 low-wage countries with membership in the WTO. For two low-wage countries that are non-WTO members, annual quota growth rates of products remaining under restraint increase according to an established schedule. Restraint utilization data are presented online.

International Trade Canada (ITCan) supports the development of trade by providing services to exporters, developing policy, and by attracting investment in the Canadian economy.

North American Free Trade Agreement

The 1994 North American Free Trade Agreement (NAFTA) is designed to increase trade and investment among Canada, the United States and Mexico. NAFTA covers tariff elimination and the reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the North American free trade area, including regulation of investment, services, intellectual property, competition and the temporary entry of business persons.

Canada-Chile Free Trade Agreement

The 1997 Canada-Chile Free Trade Agreement (CCFTA) provides for duty-free access for 75 percent of total Canadian exports to Chile. CCFTA covers bilateral trade in goods and services, investment, and dispute settlement mechanism, and is complemented by two side agreements on environment and labour. Dairy, poultry and eggs products are excluded from tariff elimination and Canada retains its over-quota tariffs for these products, while Chile retains its tariffs for the same commodities.

Canada-Israel Free Trade Agreement

The 1997 Canada-Israel Free Trade Agreement CIFTA covers the elimination of tariffs on Canadian and Israeli goods. CIFTA rules of origin are less restrictive than those under North American Free Trade. In addition, as both Canada and Israel have free trade agreements with the United States, U.S. made materials will, under specific circumstances, be treated as originating inputs when used to produce goods in Canada for exports to Israel and to produce goods in Israel for export to Canada. To resolve any disputes under the Agreement, both countries have agreed to be governed by a binding dispute settlement process.

Canada-Costa Rica Free Trade Agreement

The 2002 Canada-Costa Rica Free Trade Agreement gives barrier-free access to Costa Rica with the immediate elimination of tariffs on most industrial products upon implementation of the Agreement. This includes some key Canadian export interests such as automotive goods, environmental goods, pre-fabricated buildings and some construction products such as steel structures.

As well, Canada is involved currently in free trade negotiations to establish:

1. a Free Trade Area of the Americas (FTAA);
2. a Canada-European Free Trade Assiciation (EFTA);
3. a Canada-Central America Four Free Trade Agreement (C4); and
4. a Canada-Singapore Free Trade Agreement (CSFTA).
5. Canada-Republic of Korea Free Trade Agreement (CRKFTA) and

is evaluating trade negotiations with the Andean Community (Brazil, Argentina, Paraguay and Uruguay), Caribbean Community (CARICOM), Dominican Republic and European Union. See the possible negotiations section.

Duty Remission

On December 14, 2004, Canada announced a five-year renewal to December 31, 2009 of commodity-specific duty remission orders covering: outerwear greige fabrics; shirting fabrics; outerwear apparel; blouses, shirts and co-ordinates; and outerwear fabrics. Apparel and textiles producers, who have utilized earlier commodity -specific duty remission programmes, are allowed to import certain quantities of apparel or fabrics duty-free to complement product lines they make in Canada, and duty remission is restricted to levels remitted to a manufacturer in 1995. It is expected that the duty remission orders will assist Canadian manufacturers facing stiff import competition, tariff reductions and quota elimination.

Canadian International Trade Tribunal

The Canadian International Trade Tribunal (CITT) , an administrative tribunal operating within the trade remedies system is mandated:

1. to conduct inquiries into whether dumped/ subsidized imports have caused, or are threatening to cause, material injury to an industry;
2. to hear appeals of decisions of the Department of National Revenue made under the Customs Act, the Excise Tax Act and the Special Import Measures Act;
3. to conduct inquiries and provide advice on such economic, trade and tariff issues as are referred to the Tribunal by the Governor in Council or the Minister of Finance;
4. to conduct inquiries into complaints by potential suppliers concerning procurement by the federal government that is covered by the North American Free Trade Agreement, the Agreement on Internal Trade and the World Trade Organization Agreement on Government Procurement;
5. to conduct safeguard inquiries into complaints by producers that increased imports are causing, or threatening to cause, serious injury to domestic producers; and
6. to conduct investigations into requests from producers for tariff relief on imported textile inputs that they use in their production operations.