How safeguard tariffs could help Canadians
Michael Knell, Canadian Correspondent -- Furniture Today, January 8, 2006
Three weeks from now we'll know if the Canadian International Trade Tribunal will investigate whether the dramatic rise in imports of furniture from China has caused material harm to the Canadian industry.
Anyone who's paying attention knows it has. Jobs have vanished; factories have closed. That will continue because, for the second time in less than two decades, the Canadian furniture industry is undergoing a significant restructuring imposed by forces beyond its control.
I'm an economic nationalist. I believe Canada should have strong manufacturing industries capable of competing in a global economy, whether we're making cars, airliners, heavy machinery or furniture. But I'm not convinced safeguard duties will help much.
They might help if any duties were used to help the industry develop new manufacturing techniques, new products, new markets and other such things. But if such duties are imposed, the money will just go into the national treasury. The industry will be left to fend for itself.
Furthermore, since the complaint is China-specific, the effect will be short term. People in the know, such as industry veteran Gerry Cockerill, note that production already is beginning to move away from China to lower-cost countries such as Vietnam and India. Someone suggested to me that Africa eventually will become a furniture manufacturing power as producers seek ever-lower labor costs.
Canadian manufacturers filed the complaint, which has annoyed many retailers, who are correct when they say consumers don't need more reasons not to buy furniture. Turning a C$699 sofa from China into a C$1,199 sofa won't necessarily produce more sales of C$1,299 sofas from Canadian factories.
But almost every retailer I've spoken to, from small-town independents to the high-powered merchandiser for a national chain, believes there is a real need for Canadian furniture manufacturing. Imports can't provide the enhanced service demanded at higher price points. Imports and custom orders can't be used in the same sentence, whether you're talking about case goods or upholstery.
And, as more than one retailer has told me, lower prices don't necessarily equate to higher profits, particularly for independents.
This is a conundrum. Tariffs won't help, but the rising value of the Canadian dollar is aiding importers while making domestic manufacturers less competitive, both at home and in our primary export market, the United States.
Ten years ago, the Canadian Council of Furniture Manufacturers ran a highly successful program that distributed federal government money to companies wanting to invest in developing products and markets and improving manufacturing techniques.
We need a larger-scale version of that same program, financed by whatever safeguards tariffs are approved. If we don't get something like that, I'm afraid the entire exercise will prove futile.
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How safeguard tariffs could help Canadians
Jan 10, 2006
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