Highlights
6:50
So we did a panel of US experts, and I will be sending everyone on this line the recording of that session if you choose to look at it.
10:28
Now, not everyone's used this, not everyone is interested, but I do want to be very clear that the de minimis program instituted by the United States has been very widely used in Canada, and unfortunately, it's been very widely used by many other companies.
11:34
So, people bring goods from Canadian production and from foreign production, and they bring it into a warehouse in Toronto. They ship the goods into the US, duty-free, up to $800.
11:51
And again, up to $800 to one person on one day.
11:59
A lot of companies are using it; a lot of companies on the line are using it.
12:03
It's a real challenge going forward because what was a very useful and very positive program has been really taken over by a few entities, and the political pressure is quite substantial.
17:41
Now, we will have a working group over time regarding the USMCA Kuzma renewal.
17:50
That's our free trade agreement with the US and Mexico.
18:11
The second issue on our agenda is the least developed countries tariff (LDCT).
LIST OF COUNTRIES AND APPLICABLE TARIFF TREATMENTS
18:19
As many people know, we provide duty-free access to key markets for countries like Bangladesh and Cambodia.
18:29
This is under the least developed countries' tariffs.
18:33
Now, the LDC program is a part of the bigger initiative, usually called the Generalized System of Preferences, GSP, and implemented here through the GPD, meaning we give lower rates of duty to developing countries. And for many years, it was a very sleepy program.
24:32
In fact, the EU has something even more, if you will, generous.
24:38
It's essentially a sewing forward.
24:40
They don't even need to cut in the LDC.
24:44
So the bottom line is this is a way to just simplify things and make it easier for companies and for producers in those LDCs to work with Canada.
24:59
So very much a positive development.
25:04
There's also specific requirements regarding direct shipment.
26:37
So the bottom line is it's taken a very, very narrow specific requirement and made it very much aligned with other tariff agreements.
26:53
Now there's another issue that's come up. So, having extended the LDC tariff, and again, if nothing had been done, the LDC tariff would have disappeared on December 31, 2024.
27:10
So, first of all, it's been extended for 10 years, which is good.
35:46
So up until 2016, there was something called the Trans-Pacific Partnership. It was led by quite a range of countries, including the United States, which was party to that.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
36:27
So there's a range of countries that are involved, the most important of which for our discussion is Vietnam.
36:34
I would also just mention that the UK is in the process of securing accession to this agreement.
36:41
It's just not quite clear where it is today. It's very, very close.
41:00
Now, if that's not clear from my tone, that's a pretty hard thing to do. And just to flip it on its head, the Canadian producers of sewing thread wouldn't be able to have their sewing thread made in Canada qualify.
41:24
So we've got a big pickle here.
41:27
We have a deal, and it was implemented a number of years ago when everything, all the tariffs, had been phased out. But no one—or very few people—can qualify the goods.
41:41
My sense is about 10% of the trade with Vietnam comes in duty-free under CPTPP. That's a bitter pill, I would say.
41:54
And again, this is, not to put too fine a point on it, this is how to put lipstick on a pig if you're the Canadian government.
42:04
Now, the Canadian government had very little choice; they had little influence in changing these rules, but this is sort of the exact opposite reality.
42:16
So this is rules of origin creating new opportunities for Canadian apparel makers. Really? It's almost the exact opposite.
42:25
It's so hard to find short-supplying fabrics that actually people understand what they can do, are aligned with what they need, and are available. So the rules are terrible.
47:40
So we will have probably early 2026, if we're lucky, new tariff arrangement with Indonesia, zero duty, and a very simple and straightforward cut.
Canada-India Comprehensive Economic Partnership Agreement negotiations
48:21
And ASEAN is a wildly diverse trade bloc.
48:25
You know, when you've got, you know, Cambodia, Burma, or Myanmar, whatever you wanna call it, and Singapore, I don't know how that all works.
48:36
But I would like to think that it will work some fashion or another. We get a lot of calls.
50:30
I want to switch gears a little bit and actually maybe just before I do this, I just want to put in contrast what Vietnamese government has and what the Indonesian government has.
50:51
Vietnam under the CPTPP has a terrible rule of origin and as a result, 10% of Vietnamese exports to Canada are free.
51:02
Indonesia, which is not part of the CPTPP, has a bilateral free trade agreement with Canada, which is in its final stages of being implemented.
51:17
So it's still a why, you know, it's still a way, but you know, is it 12 months, is it 14 months? Maybe it's in that region.
51:25
If I were Vietnam, I would say, why am I, why am I dealing with this rule when what I want is what the Indonesians have?
51:38
And I think that's going to be an important issue going forward.
51:41
And why in the world aren't we just signing a bilateral with Vietnam?
51:48
Simpler terms, better rules, and we can get something else in exchange.
51:54
So I do think that's going to kind of a very common theme going forward.
54:10
Now, since that time, we submitted our comments, the King Power Federation, and many individual companies sent in letters to the point where I think our members and people that have worked with us, we had like 200 submissions—a huge number of submissions of concern to CBSA. So all of these changes have been stopped.
54:36
CBSA has published a statement to say that's not our intention, we don't want to change evaluation in this way. No problem. The problem is that no one trusts CBSA.
54:51
So our association along with a bunch of others are trying to get the ability to review the term—the final definition of these terms before they're implemented. So frankly, I'd like the Canadian Bar Association, their trade committee, to look at it because whenever you have terms like this, the terms say they would be constructed in a broad sense, which could include any type of arrangements that caused the goods to be exported. What does that mean?
55:33
No one knew what it means. No one knows what it means today. So we've got a big area.
55:42
Not much is happening because CBSA has other disasters on its hands, but we will come back to that at some point, okay?
55:53
So the bottom line is the industry was concerned.
55:57
Had a huge opposition.
56:01
We really mobilized a lot of companies and we continued to work with other associations trying to get some clarity about what's going on.
56:12
Okay, so I also want to skip ahead to responsible supply chains.
56:20
Years ago, we would just worry about trade agreements and things like that, but now it's very much trade rules and then this other stuff.
56:31
So we have an entity in Canada called the Canadian Ombudsperson for Responsible Enterprise. Otherwise, no one is CORE.
56:42
We also have reporting under the Supply Chains Act; most people know it as Bill S211 reporting.
56:52
We have a forced labor statute, meaning any goods made with any amount of forced labor are not admissible to Canada.
57:02
And we also have new human rights due diligence legislation.
57:08
So I'm going to skip ahead here. I might not be able to get back to the core, but that may not be the problem.
57:42
The issue is that forced labour is everywhere. The UN has identified some of our labour programmes that allow lower-skilled workers to come to Canada as basically forced labour.
57:59
Forced labor is everywhere. So 27.6 million are in forced labor, understatement, big understatement.
58:09
It touches almost every product, everywhere. It's all over the place. So how do you deal with that?
58:19
So if you look at what the King government has said, it is that, okay, remember you had the bill S211 last year.
58:27
At some point in the future, if legislation passes, there's going to be a new supply chain due diligence regime, similar to what's in Europe, requiring government entities and businesses to scrutinize their supply chains and take action to resolve these risks.
58:46
A lot of people on the line completed Bill S211 reports, but then it was just a pain.
58:54
That's for some a very big pain, but now there's going to be a requirement that if you find any problem, you have to fix it, subject to penalty.
59:06
Now, just to continue, a new oversight agency—another agency—will be created to ensure ongoing compliance.
59:15
So this was announced on Monday.
59:18
Not sure whether it's ever going to pass.
59:20
I'm not sure whether the government will fall many months before it passes.
59:26
But this is the current plan of the King government.
59:30
And in addition to that, they're going to reinforce the prohibition on forced labor and fund CBSA and global affairs $25 million to do that.
63:00
In respect to Indonesia, we may look at a bit of a mission to Indonesia in October of next year. That's number one.
63:11
Number two, we're going to have a lot of engagement around Canada-U.S. trade.
63:20
We also have some other agreements that we didn't really touch on, things like our free trade agreement with the European Union, and we're discussing with the Portuguese government to bring some companies from Canada to Portugal to potentially do business there to make their goods there.
63:40
So there will be quite a few of these opportunities, okay?
Full Transcript
1:04
I'd like to welcome everyone to our webinar today.
1:08
We'll be going through a whole set of trade policy updates over the past year and leading into next year.
1:18
My name is Bob Kirk, and I'm the Executive Director of the Canadian Apparel Federation, and we have quite a lot of material to work through. So let me just explain how we're going to do that.
1:34
I plan to be in and out within an hour, partially because I believe I have COVID and I'm a little gravelly. I think we need to work through a bunch of information.
1:49
You should, in your control panel, have a question icon so you should be able to ask questions as we go through.
1:57
What we will attempt to do is conclude the session today and just take a day or two to fix and update a few of the slides so that maybe by Monday we'll have them out to you.
2:12
I think you'll see why because we're trying to build lots and lots of links to external sources so that you can find that information for your own purposes.
2:22
So, bottom line, we're going to get started now. Ask questions, and we will get the slides out in the next few days.
2:31
We will also send a recording, actually, earlier—probably by tomorrow.
2:37
So with that, I'll get started.
2:40
And what I'll do is turn off my camera so I'm not a distraction.
2:46
First of all, I want to go through the sort of big picture here.
2:51
The agenda is Canada-U.S. trade, the modernization of the GPT and the LDC tariff, and then a whole bunch of other free trade information.
3:09
I don't think the list that's right there is the actual order we'll go through, but there you go—responsible supply chains and some other issues.
3:21
So let's get started here.
3:25
This is one of those slides I need to update.
3:29
This is last year's figures, but the figures are pretty much the same this year.
3:37
China's number one; number two is Vietnam.
3:40
We'll talk about Vietnam in the context of the CPTPP, and Bangladesh and Cambodia are LDCs.
3:49
So we will touch on all of those countries during the presentation.
3:58
Once again, we will update those in the slides that you receive.
4:03
I may also encourage you to look at India, Indonesia, Sri Lanka, and Mexico—all those countries will be touched on at some point today.
4:17
As I mentioned, the first topic is going to be Canada-U.S. trade.
4:29
Now this would always be the case, but it's particularly the case because of the reliance or fondness for the issue of tariffs in the incoming U.S. administration.
4:45
As people will be aware, our finance minister stepped down a couple of days ago, Chrystia Freeland, and she was our point person in renegotiating NAFTA, which essentially created the KUSMA and/or the USMCA depending on how you want to refer to it.
5:12
This is an interesting picture.
5:15
This was Chrystia Freeland in, I believe, LaGuardia coming back from a negotiating session. She was so ridiculed and abused, if you will, by the U.S. administration, Bob Lighthizer and Donald Trump, that her children created a t-shirt that says, "Mama does not eat cold chopped liver."
5:43
Interesting kind of statement, but she took a lot of abuse, and she delivered a pretty good agreement for Canada.
5:52
Now, she's gone, and there's a very real question about what the government's gonna do, what the Canadian government's gonna look like, who the Prime Minister will be, etc. So we're just—there are many loose ends.
6:08
That's, I guess, the best way of putting it.
6:12
Having said that, we are where we are, and if I could say one thing, Donald Trump tweeted out that she will not be missed.
6:25
This was his quote, and I would say that she should create a t-shirt that says "She will not be missed," and that will assist her greatly in, I don't know, running for the leadership of a political party if she chooses to do so.
6:41
Anyway, bottom line is she's not there.
6:43
We're not really sure how the government's going to handle this, and that's just part of the course these days.
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