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CITT Issue Heats Up

October 7, 2005 – In what might be the most important fight of their business lives, the Canadian bicycle industry has been scrambling over the past month to come up with a joint strategy in response to the Canadian International Trade Tribunal (CITT) recommendation of a 30% surtax on imported bicycles.

The issue was a hot topic of debate at Expocycle 2005, Canada’s bicycle trade show held recently in Montreal. Following a pair of meetings held during the show, one organized by BTAC (Bicycle Trade Association of Canada), and the second by CASBI (The Canadian Association of Specialty Bicycle Importers), a new organization was formed last week by the owners of Canadian bicycle stores. The new Independent Bicycle Retailers of Canada (IBRC) quickly issued a press release slamming the surtax.

“Canadians already bear the highest bicycle tariffs in the world. The proposed 30% surtax would be applied in addition to two existing protections – a 13% customs tariff that is applied to every bicycle imported into Canada irrespective of origin, and special anti-dumping duties ranging from 5-50% that have been imposed on bicycles from Taiwan and China for well over a decade,” the group wrote in the release.

The idea behind forming the new group (which was spearheaded by Usman Valiante, a corporate policy analyst and avid cyclist) and putting out the press release was to provide a united voice for bicycle retailers speaking out against the surtax – similar to how CASBI represents 13 distributors/wholesalers such as Kona, Aurora Cycle Supply (KHS), RB Inc. (Jamis) etc.

“It’s outrageous that cyclists across Canada, my business, my staff’s jobs, the health of our nation, and the environment are all up for sacrifice to bail out two globally uncompetitive businesses that have failed to adapt despite 15 years of trade protection,” said Mike Theil, the owner of four Bicycle Sports Pacific stores in Vancouver and one of seven IBRC regional representatives across the country.

The two businesses Theil referred to are Procycle Group Inc. and Raleigh Canada, the two Canadian Bicycle Manufacturers Association (CMBA) companies that requested the CITT inquiry which ultimately led to the recommendation.

Kona’s Jacob Heilbron has been vehemently opposed to the surtax and said all of the media attention resulting from the various press releases has been a positive for those on the CASBI/IBRC side of the argument.

“It’s huge in the media and that was what we felt had to happen in order for the message to get out there,” Heilbron told Pedal recently. “If you get enough people saying the surtax is bad and politicians hearing from their constituents that they’re going to lay off people, there is so much noise that it’s an unpalatable political decision. The entire B.C. Liberal caucus is opposed to the surtax.”

Heilbron is helping to organize massive petition drives with the goal of getting 1,000 signatures from inside the industry and thousands more from consumers. He is also encouraging everyone to write their members of parliament to let them know how much opposition there is. “If you can get a letter to every single MP in your province and every Minister listed on the CASBI website, that will serve as a message to our politicians that this is a hot issue in our industry,” he said.

On the other side, both Procycle Group and Raleigh Canada continue to argue that they desperately need the surtax put in place to have an even playing field and a chance of survival.

“This is one of the remaining competitive industries, but at this point they just cannot keep up,” Geoffrey Kubrick told the Canadian Press recently. Kubrick is a lawyer representing the manufacturers and he said the companies simply ‘can’t cope any longer.’

The decision to impose the surtax is now up to the Ministry of Finance, but with a federal election only months away, and trade relations with China and the softwood lumber debates with the U.S. also hot items, the government may want to sweep this issue under the rug until after the voting is done.

With Procycle and Raleigh on one side claiming they will have to close their factories and layoff 600 workers if the surtax is denied, and the IBRC on the other side saying that hundreds of bike shops could have to lay off employees if it does go through, the Liberal government is in a tough ‘no win’ situation.

Which means people on both sides of the surtax argument could be waiting with baited breath for at least a few more months.

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