ELIMINATION OF TARIFFS ON MANUFACTURING INPUTS, MACHINERY & EQUIPMENT – UPDATE

The elimination of tariffs on manufacturing inputs, machinery and equipment that was part of the federal budget tabled March 4, 2010 has received first reading in Parliament. The tariff schedule is included in Bill C-9 which is called the Jobs and Economic Growth Act.

The majority of the 1,541 tariffs were eliminated March 5, 2010, with the remainder being gradually eliminated by January 1, 2015. When the second phase of tariff relief is implemented, more than $5 billion in imports will have been reduced to duty-free status.

Highlights of the tariff removals are as follows:

• Most manufacturing inputs, including machinery and equipment are duty-free as of March 5, 2010 starting January 1, 2011.

• Duty on most knitted fabrics was cut in half then reduced to duty-free by January 1, 2015 starting January 1, 2011.

• Some woven fabrics are duty-free as of March 5, 2010; the balance was cut in half then reduced to duty-free by January 1, 2015 starting January 1, 2011.

• The balance of manufacturing inputs will be phased out to duty-free by January 1, 2015 starting January 1, 2011.

The Minister of Finance stated that the permanent elimination of tariffs applied on a broad range of machinery and equipment will provide average annual savings of $88 million and the removal of all remaining tariffs on manufacturing inputs and machinery and equipment will provide an additional $300 million in annual duty savings for Canadian business.

The tariff elimination schedule is available from our technical consulting group.