Overseas Market Profiles - Canada

An Expert's View about Business Environment in Canada

Last updated: 8 Feb 2011

Recent Developments
Canada maintains a liberal trade regime. There are no foreign exchange restrictions, and import licenses are only required for a limited number of goods. Imports are generally subject to import duties.


Canada imposes anti-dumping and/or countervailing duties on several imports from the Chinese mainland, including waterproof footwear, flat hot-rolled carbon and alloy steel sheet and strip, hot-rolled carbon and high-strength low alloy steel plate, oil country tubular goods, seamless carbon steel oil and gas casing, carbon steel welded pipe, carbon steel pipe nipples and adaptor fittings, carbon steel screws, mattress innerspring units, copper pipe fittings, aluminium extrusions, thermoelectric containers and bicycles.


Canada is Hong Kong's 17th largest export market. Hong Kong's total exports to Canada grew by 6% to US$2,799 million in the first eleven months of 2010, while imports from Canada expanded by 30% to US$1,407 million.


Thanks to the recuperating domestic and external demand as well as a well-functioning banking sector, Canada emerged from its first recession since 1992 in 2010. While the ongoing European debt crisis and the slowing of the pace of global recovery may take its toll on the Canadian economy, Canada, after resuming growth of an estimated 2.8% in 2010, is forecast to grow at a more moderate rate of 2.0% in 2011.


Current Economic Situation
Bouncing back from its first recession since 1992, Canada saw an encouraging growth of 2.8% in 2010. The knock-on stimulus effects of the government’s fiscal policy, plus a healthy banking and financial system, continued to support domestic demand, while the reviving US economy pepped up exports. On the other hand, the revival of industrial production, especially in the automotive and construction-related fields, helped rebuild confidence by reducing the unemployment rate to 8% in 2010 after peaking at 8.7% in August 2009.


Looking forward, the ongoing European debt crisis and the subsequent appreciation of Canadian dollar may restrain the country’s exports, while the slowing global recovery would slow the pace of job creation and industry recovery. Taken together, the Canadian economy is forecast to grow at a slower rate of 2.0% in 2011, following an estimated GDP expansion of 2.8% in 2010.


Trade Policy
Canada maintains a liberal trade regime. There are no foreign exchange restrictions, and import licenses are only required for a limited number of goods. Imports are generally subject to import duties.


Import licenses are required for items regulated under the Export and Import Permits Act. The Act lists various agricultural products (poultry, eggs, and dairy products), a number of textile and clothing items, and certain steel products.


The importation of certain commodities is however tightly controlled. Examples of regulated goods include: food products, drugs and medical devices, hazardous products, some offensive weapons and firearms, endangered species and motor vehicles.


Duties are assessed on the transaction value (the price actually paid or payable for the goods), including commission, brokerage, packing, royalties and transportation to the Canada point. Hong Kong and China origin goods are eligible for the preferential tariffs under the Canadian General Preferential

Tariff (GPT) Scheme.
To enhance the productivity and boost the overall competitiveness of local businesses, Canada has become the first G-20 economy to eliminate all remaining tariffs on manufacturing inputs, of which about 76% are textiles items and the remainder includes chemicals, plastics and articles, and certain articles of wood, glass, aluminium and graphite, and machinery and equipment. Duties on 1,541 tariff lines were eliminated on 5 March 2010, while duties on an additional 381 tariff lines will be phased out over a five-year period and removed altogether on 1 January 2015. The full list is available at http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2010/tn49-eng.html.


A provincial sales tax (PST) is assessed on all imports to Manitoba (7%), Prince Edward Island (10%), Quebec (7.5%) and Saskatchewan (5%). Additionally, a broad-based value-added sales tax, known as the goods and services tax (GST), is levied at 5%, effective 1 January 2008. In Newfoundland and New Brunswick, the PST and GST were combined in April 1997 to form a harmonised sales tax (HST) at a standard rate of 15% for all goods and services, which was reduced to the current rate of 13% on 1 January 2008, while Nova Scotia restored the HST to 15% on 1 July 2010. On the same date, British Columbia and Ontario harmonised their sales taxes at HST rates of 12% and 13% respectively. In addition, excise duties and taxes are charged on goods such as spirits, wine, beer, tobacco products, fuel-inefficient vehicles, automobile air conditioners and certain petroleum products


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Posted: 03 February 2011, last updated 8 February 2011

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