21st August 2018

CPCA WINS TARIFFS EXEMPTION ON PAINT CONTAINERS

The federal government has granted the Canadian Paint and Coatings Association's request for an exemption from the proposed countermeasure tariffs on US goods coming into Canada as of July 1. CPCA had been concerned about pails, cans, vats and totes that come into Canada, since there are very few suppliers of these in the country.

In June, Ottawa invited Canadian stakeholders to comment on a list of proposed retaliatory tariffs on US goods being prepared in response to US tariffs on Canadian steel and aluminum. In a formal submission to the Department of Finance, CPCA noted the proposed tariff on imported US steel drums and cans (proposed Tariff 7310.29) could be interpreted to include containers used by Canadian paint and coatings manufacturers.

With no Canadian manufacturer of some styles of these pails and cans, particularly for architectural paint and aerosol sprays, Canadian-based manufacturers would have faced millions of dollars in higher input costs in relation to competing with finished products imported from the US.

CPCA president and CEO Gary LeRoux pointed out, “The North American paint and coatings industry is highly integrated with many US owned companies operating manufacturing plants here in Canada supported by cross-border supply chains. These tariffs could be the last straw for many Canada-based manufacturers, especially small-and medium sized enterprises, already considering possible relocation to US jurisdictions with lower taxes, fewer regulations, lower energy and labour costs, ongoing exchange rate challenges and other incentives for plant relocation.”

Due to increasing consolidation in recent years, CPCA says, nearly half of all paint and coatings products sold in Canada are imported from plants in the United States, an increase of nearly 15 per cent over the past decade. Over that time consolidation has resulted in the closure of Canadian manufacturing plants and the relocation of many head offices to the US. The proposed countermeasure would have imposed tariffs on all Canadian paint and coatings manufacturing facilities, both Canadian and US-owned, and further exacerbated current competitive and regulatory alignment challenges between our two countries.

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