Harper Government Drops India From List Of ‘Preferential Regime’, Increases 3% Import Tax

Source: International Business Times

Amid negotiations for Comprehensive Economic Partnership Agreement between the two countries, Canadian federal government this month decided to increase the tax on goods coming from India recently.

While announcing its budget, Canadian Finance Minister Jim Flaherty last week said that from January 1, 2015 onwards, its government will impose an extra three percent tax on goods coming from India.

India was one of the 72 countries that the Canadian government decided to drop out from the list of “general preferential regime” which offers lower tariff for export.

Canada introduced the special tariff system in 1974 to offer preferential market access to the list of developing countries.

Other than India, Canada removed Indonesia, South Korea, Israel, Mexico and Argentina and other BRICS countries – Brazil, Russia, China and South Africa from the special tariff deduction list.

However, the government decided to retain some of the India’s neighboring countries- Pakistan, Bangladesh and Sri Lanka under the list of lower tariff imposition.

According to Stephen Harper’s government, the decision was based on the economy status criteria set by the World Bank.

Though India was excluded from the favorable list, it is believed that the removal from the list won’t  impact India’s export if the Comprehensive Economic Partnership Agreement (CEPA) between the two countries is signed in time.

“Both governments have targeted to complete the agreement by the end of 2013. If that’s the case, clearly any potential impact of the removal from GPT (General Preferential Tariff) becomes irrelevant,” Business Standard quoted  the Former Canadian High Commissioner to India and Incoming President of the Canada-India Business Council Peter Sutherland, as saying.

The two countries have vowed to conclude the CEPA by end of this year. In an email sent to the International Business Times last February, Canadian government’s spokesperson Jennifer Chiu said that Canada could produce almost 40,000 new jobs once the CEPA was tabled.

The latest and the seventh round of Comprehensive Economic Partnership Agreement talks between the two countries was held in New Delhi February.