OTTAWA — Canada could have some diplomatic explaining to do after announcing it is eliminating special tax exemptions for goods exported here by China, Brazil and 70 other countries.
The general preferential tariff, or GPT, was introduced in 1974 as a way to encourage trade and economic development among the world’s poorer countries.
The tax break is significant as it applies to most products sold to Canada; about 75 per cent of eligible goods enter Canada duty-free, with the remainder receiving some other type of exemption.
Despite their growing economic, political and military might, China and other “higher-income and trade-competitive countries” such as Brazil and South Korea have remained among the 175 countries allowed to enjoy the tax break for years.
But the government said Thursday that based on a year-long review, it plans to remove 72 countries — including China, Brazil and South Korea — from the list of eligible states by Jan. 1, 2015.
While domestic firms will likely be happy with the decision, analysts told Postmedia News last year that part of the reason those countries had remained on the list in the first place was because of the potential political and diplomatic costs of taking them off.
“It becomes a bit of a political issue,” trade analyst Lawrence Herman said at the time, adding, “I don’t think Canada or any of the other industrialized countries would be able, politically, to remove China as a GPT recipient.”
lberthiaume@postmedia.com
Twitter:/leeberthiaume
