Tuesday, October 28, 2014


Although Canada brags about its free trade deal with the US, we still pay duties on a lot of stuff. If I understand duties in a general sense, the concept is that some of our industries need to be protected in order to survive. So as a country, we made an agreement with the US that if a consumer wants to buy a product from the US and we have such an industry in Canada, the consumer has to pay a duty, which one presumes is given to the industry to compensate for the fact that the product wasn't bought from them. The idea being that we should be buying from our own back yard.

Except that this concept is flawed on so many levels, I can't count them all. But let's start with the example where the thing I want to buy is actually for sale in Canada. Let's say that I want a new set of bed sheets. The Canadian linen industry makes bed sheets. So if I choose to buy from the US, I'm hurting the Canadian linen industry. So I buy American and pay a duty which is presumably paid to the Canadian linen industry to compensate them for a lost sale. Sounds fine. But let's ask the bigger question. Why did I choose the US product? Was there something special about it? Was it so much cheaper that even with the duties, it still worked out to less money? Was it a style, or quality, or fabric, or brand not available in Canada? The concept starts to break down here, because ultimately, the linen industry is getting rewarded for not making the products I want. That makes no sense.

Where things really start to get stupid is the wide-reaching general categories that products fall into. It's one thing to say that I'm buying American bed sheets, which is something Canada makes and I therefore have to pay a duty. But there are many specialty products, like mattress toppers made of various materials, that are only for sale in the US. The problem is that this product falls into the same category that protects linens. So again, if I want a specialty mattress topper, I'm going to pay extra for it simply because our own industry doesn't make it. Reward for inaction.

I think it's time to re-evaluate this strategy. If an industry wants to survive, it shouldn't expect to be permanently propped up by its government. It has to learn to survive on its own merits. If you want to last as a linen company in Canada, you need to learn to make the products we want. If you don't, you shouldn't get a red cent.

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