Shopping at Duty-Free?

by MEAT&POULTRY Staff
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How much money would a move by the federal Canadian government to remove all remaining tariffs and duties on imported food processing machinery, including meat and poultry processing equipment, which the government has under consideration, save Canadian processors? And would tariff-free equipment imported into Canada significantly alter the landscape of food processing technology in that country?

According to Dennis Hicks, president of Pemberton & Associates Inc., a food-processing equipment distributor based in Toronto, Canada, the answer to the first question is 9%, perhaps 9.3%. The answer to the second: "Probably not much."

That’s because Canada already has in place free-trade agreements with several countries that are big suppliers of processing equipment to Canada’s food and meat industries, including the United States and some European countries. "Removing the tariffs isn’t going to affect the equipment we bring in from the States because it doesn’t have any tariffs anyway because of NAFTA," Hicks told MEATPOULTRY.com. "The reality is that not a lot of duty has been paid on this kind of equipment for several years." Pemberton, for example, imports processing equipment from Marlen, among several other U.S. suppliers. "To the extent that equipment can claim and verify it’s made in America, it isn’t subject to tariffs," he said.

Pemberton opposes the government proposal to remove any remaining tariffs. "We worked hard to get companies to bring their equipment here under the previous tariff arrangement," Hicks commented. "The last thing we need in this country is a bunch of cheap stuff from Third World countries flooding the market."

He added that equipment from some eastern European countries – Poland, Czechoslovakia – is beginning to show up in Canada, "but it’s very small." Canada does not have a free-trade agreement with Japan, and there is some Japanese equipment in use in Canada’s food-processing industry, "but by and large, the Japanese are only interested in commodities where you can sell a lot of them, like televisions," he said.

There have been reports that the government’s proposal is driven by the present high value of the Canadian dollar against other currencies (it has risen 20% in value against the U.S. dollar since last March; C$1 now equals US$0.92), but Hicks doesn’t buy that reason. "It sounds altruistic, but I think this is all because a couple of large Canadian processors" – he didn’t name them – "want to save money."

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