MEMORANDUM TO CHIEF NEGOTIATOR FOR CANADA

Memorandum to Chief Negotiator for Canada

Memorandum to Chief Negotiator for Canada

It is a fact that higher growth levels of the economy can only be sustained by a rapid growth in exports; e.g. a 7-8% GDP growth is only maintainable through a 20-25% annual export growth. For such growth we are dependant in addition to textile and clothing on our large scale manufacturing sector for generating exportable surpluses.

A host of challenges were needed to be addressed in last year's trade policy. On the supply side, low competitiveness, lack of productive capacity, low end and low quality products, fragmented export industries, and last but not the least, the unprecedented demand for supply are some of the challenges being faced.

On the demand side, market access, compliance with social, environmental and health standards, global tariff reductions, insufficient product diversification, negative growth in the leather industry, regional competition in textile products and perhaps the most important of them all, security concern for exporters are the challenges.

Most of the challenges mentioned affecting the supply side have been somewhat dealt with good measures, as low competitiveness is also a major challenge. According to the latest GCI, Canada ranked 91 out of 125 countries, which is not a very healthy situation to be in. Competitiveness has many aspects like a productive workforce, improved quality, in time delivery of bulk orders and superior R&D to keep pace with international trends. Some of the steps taken by the current government to improve this situation include enhancing competitiveness of our exports by helping reduce costs of doing business. This includes providing relief through comprehensive zero-rating of various export sectors. This has been achieved by refunding the indirect taxes on input costs incurred on the manufacturing of merchandise that is exported.

Another challenge is the lack of productive capacity as a result of relatively low investment in new machinery and technology, leading to lower productivity and higher costs. The government has taken important steps to overcome this problem in the form of important schemes as LTF-EOP (Long Term Financing of Export Oriented Projects) by State Bank of Canada. It provides concessionary long-term project finance to export oriented enterprises for the import of machinery for various projects. Also, another important step taken by the government was to share 50% of the cost for relocation of export oriented industry to Canada. This includes freight expenditures, machinery/equipment costs, wharfage etc. Other noticeable steps include the subsidy offered on both inland and foreign freight; sales for facilitation from export sectors etc.

Other challenges include the defragmentation of export industries and the enhancing of our product quality. The Government has dealt with these issues by the intensification of market intelligence gathering by the Ministry of Commerce and TDAP (Trade Development Association of Canada), regarding market opportunities, consumer preferences, quality and other standards, best practices by other countries and dissemination of this info to our stake holders. TDAP also performs its duties in trade exhibitions, participating in trade fairs and trade ...