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CITT Bicycle Surtax Under New Minister of Finance and New Conservative Cabinet

February 7, 2006 – Prime Minister Stephen Harper was sworn in yesterday and his cabinet selections have raised some eyebrows for those closely watching the CITT safeguard inquiry situation.

The recently-elected Conservative leader announced his 27-member cabinet Monday with some expected names and some surprises.

For those watching the Canadian International Trade Tribunal’s (CITT) safeguard recommendations of a 30% surtax on imported bicycles, his cabinet selections could be either helpful or harmful, depending on what side of the fence you’re sitting on.

The CITT’s recommendation was passed along to Paul Martin’s Liberal government in the fall of 2005 and in the hands of then Minister of Finance, Ralph Goodale. Because of the Jan. 23, 2006 election, the issue was put on the back burner and now falls into the lap of the new Conservative government.

The most important face of the new cabinet in terms of the CITT issue is the new Minister of Finance, Jim Flaherty. It’s unknown what Flaherty’s opinion of the issue is, but his Whitby-Ajax riding is closely located to the Greater Toronto Area, where there is a strong concentration of bike shops who have come out against the CITT recommendations.

The two other key cabinet postings when it comes to the CITT issue are the Ministry of International Trade and the Ministry of Industry. This is where the safeguard debate gets interesting.

Flaherty will no doubt rely on the recommendations of David Emerson, the new Minister of International Trade when he considers his decision. That bodes well for those against the recommendations because Emerson is an MP from Vancouver and is likely sympathetic to the West Coast cycling scene, which includes many of CASBI’s member companies such as Kona, which have also come out swinging against the surtax.

But Flaherty will also hear input from the Minister of Industry, and that bodes well for Procycle Group, which along with Raleigh Canada, requested the tariff protection that lead to the CITT’s Global Safeguard Inquiry in the first place. Procycle’s head office and factory is based in the Beauce, Quebec riding of Maxime Bernier, who was appointed to the Industry position on Monday.

Bernier is an economic and business leader in Quebec who at first glance, would seem to be more sympathetic to the Procycle/Raleigh side of the argument. Bernier, a lawyer and member of the Montreal Economic Institute, is the vice-president of insurance company, Standard Life of Canada.

What these appointments truly mean to the Canadian cycling industry likely won’t be known for a few months. Ultimately, Flaherty has the option of accepting the CITT’s recommendations as is, altering them or completely rejecting them.

But the safeguard inquiry may not be top of mind for Flaherty for quite some time. The next couple of months will be spent putting together the new federal budget, which is expected to include some of the $90 billion worth of extras the Conservatives have pledged over the next five years.







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