Improving Interprovincial Trade: The City States Of Canada (BTO Article)

Jan 5, 2009 | Government News

 
 
By David G Friesen, Friesens Corporation                               
 
 
 
 
 

Introduction

Canada prides itself in being a nation of free-traders.  This may be true as regards our relationship with other countries, but it is hardly the case internally.

Few Canadian know that we have greater barriers to trading within our country, than we do with trading with other countries.  A case in point is the relationship our two largest provinces, Ontario and Quebec, have with other provinces.

 
 
 

Background  

We all know that we live in a global village and that the world is becoming a smaller place each day.  Trade with all countries is becoming easier and more common, as we source products and services from near and far.
David G Friesen, Friesens Corporation

David G Friesen, Friesens Corporation

Friesens is in the business of manufacturing books.  Books travel tariff free throughout the world.  All nations agree that the availability of knowledge should be unrestricted for all people in countries both rich and poor.  As a result books carry no duty, and so companies like ours compete with Asia, India, Europe and America.

We understand this and accept that we must compete on a global scale, even as our petro dollar currency makes us increasingly less competitive with other nations.

The Problem

Today we deal freely with customers in all 50 states.  We compete with printers from all over the world.  The only government sponsored barriers we face are in our own country … from Ontario and Quebec. 

Both provinces have circumvented the promise of free trade at home by setting up tax credit programs for publishers who have their books manufactured in their home province.

What Are These Programs?

Ontario and Quebec have Publishing Tax Credit Incentive programs for book publishers.  These programs offer tax credits as high as 30,000 dollars per book title.  However, in order for the publisher to qualify, the book must be printed in their province.

Given that the majority of English language publishing takes place in Ontario, and virtually all French language publishing in Quebec, this places our firm in a very difficult position.

At Friesens we estimate that we lose more than 3,000,000 dollars of business annually from customers in these provinces … customers who would like to deal with us.

Why Do These Provinces Have These Programs?

I suspect provincial governments incorrectly believe that if they keep Canadian companies out, they are supporting local companies.  What this accomplishes of course is trade distortions all too familiar in Canada.

For example, one of our customers wrote us recently saying:

“I am writing because I have been part of the Ontario publishers lobby to increase the printing portion of the Ontario tax credit from 15 % to 30 %.  In order to be really functional for publishers we need hard cover manufacturing capacity to return to the province.  If the tax credit were improved, would the potential increase in business be sufficient incentive for Friesens to consider setting up a facility in the Lake of the Woods area, or some other community just inside the Ontario border?”

Is that what we have to do to do business in Canada?  No wonder we are lagging behind other countries.  And our politicians have the gall to tell us to become more efficient and productive!

We Cannot Be An Island

I have a brother-in-law in business in Ireland.  A country that once relied on tariffs, now is part of the EU and has no tariffs.  He sources wood in Canada, steel in Turkey, fabric in India and machinery in China … all without any barriers or tariffs.  No wonder that country is thriving.

What To Do

Business does not have the wherewithal to lobby Provincial governments in Ontario and Quebec.  We need help from our own government in Manitoba to work with us.

While they have been aware for many years of this situation, nothing has changed.  Indeed, it has only become worse.

Mr Premier, we need your help in leveling the playing field so that we can go out and be successful in our own country.

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