US, Europe Join Trade Fight over Ontario’s Green Energy Plan

(CB Online – Maria Babbage, The Canadian Press)

Ontario’s green energy ambitions appear to be pitting the country’s biggest trading partners against Canada in a dispute over government subsidies for solar and wind power projects. Both the United States and the European Union want to join consultations over a trade complaint made by Japan to the World Trade Organization, saying they have a significant stake in the discussions.

Even though the dispute is with Ontario, the federal government is ultimately responsible to defend the province because Canada is a signatory to the WTO, said International Trade Minister Peter Van Loan. “We always want to maintain good trading relationships with our major partners, and we always want to make sure that our actions are World Trade Organization compliant,” he said Friday in an interview with The Canadian Press. “In this case, we certainly encourage the Ontario government to take advantage of the consultations phase of this process to seek a satisfactory resolution.”

Earlier this week, both the U.S. and the EU argued in separate letters to the WTO that they have a “substantial trade interest” in the talks. Read more here.

Green Rule Draws Flak

(Financial Post)

As investment in Ontario’s alternative-energy sector continues apace, legal experts are warning the provincial government may be violating international trade agreements with its local-content requirements. At the same time, energy producers are finding it difficult to meet the “made-in-Ontario” rules, which require a certain percentage of a project’s cost be sourced within the province.

“The EU is really fuming about this,” said Milos Barutciski, an international trade partner with Bennett Jones LLP, in Toronto.

“While on the one hand they’re negotiating with Canada about access to government procurement, the main province that they’re interested in getting access to comes up with this fairly straightforward discriminatory restriction on government procurement.”

Officials from the European Union have recently joined a call from the government of Japan asking Ontario to drop the domestic-content requirements of its legislation, saying it views Ontario’s rules as protectionist and a violation of international trade agreements. Read more here.

Japan Questions Local-Content Requirements in [Ontario’s] Energy Programme

(WTO News)

Japan, at the meeting of the Council for Trade in Goods on 21 May 2010, expressed concern over what it said were local-content requirements in a renewable-energy programme in Canada’s province of Ontario. It asked Canada to explain the consistency of the requirements with various WTO agreements, including the GATT 1994 provision on equal treatment for imports, and the Agreement on Trade-Related Investment Measures. The European Union and the United States expressed interest on this matter.

Canada said that its trade officials are reviewing the programme, and that Japan's questions had been forwarded to Ontario.

On another matter, Chinese Taipei expressed concern that Canada imposes higher tariffs on products from Chinese Taipei as compared to products from developing economies with higher levels of per capita GDP. It urged Canada to provide non-discriminatory tariff treatment to products from Chinese Taipei as Canada had done with other members that are at comparable levels of development.

Canada said that it already maintains very low tariffs, and that recently, it had eliminated tariffs on manufacturing inputs and machinery. It added that these measures have benefited its trading partners, including Chinese Taipei.

The Goods Council approved requests by the European Union to extend deadlines on its tariff negotiations with other members on its enlargements in 2004 and in 2007 respectively. It also approved a request by Argentina to extend its waiver related to the introduction of the Harmonized System 1996 changes, and forwarded the decision to the General Council for adoption.

EU Takes Aim at Canada Post, Ontario Green Energy Act

(Embassy – Lee Berthiaume)

Canada Post, provincial liquor boards across the country and Ontario’s new Green Energy Act are all being targeted by the European Union in its trade talks with Canada, confidential EU briefing notes show. While none are considered deal breakers, several touch on long-standing irritants between the two sides and go a long way to revealing just how far-reaching a deal negotiations are hoping for.

Last May, the Ontario government passed the Green Energy Act. The intent was to lay the foundation for a new renewable energy industry in the province. One of the key aspects was feed-in tariffs, in which the government pays individuals, communities and businesses that generate electricity from renewable sources like solar or wind. The idea is to offset the cost of implementing such projects.

However, in order to take advantage of the feed-in tariff program, or FIT program, a certain percentage of the project must include provincially-made goods and labour. […]

“The idea behind the domestic content regulations is to encourage investment, green manufacturing and construction and installation jobs in Ontario,” reads one of the EU documents. A second document (neither are dated) reads that the EU’s objective is “to convince the governments of Ontario and Canada to abandon the requirement to use domestically produced equipment to produce renewable electricity in order to benefit from high feed-in tariffs.” It goes on to state that the medium-term objective is to avoid the Ontario initiative becoming a precedent for other provinces. Read more here.

Pupatello Touts Potential of Cargo Village

(Windsor Star – Doug Schmidt)

Essex County specialty greenhouse produce picked fresh in the afternoon and placed on store shelves the next morning in Berlin – and “that’s just scratching the surface,” Economic Development and Trade Minister Sandra Pupatello said of the initial promise of developing a “cargo village” at Windsor Airport.

The MPP for Windsor West said the local airport is “ideally situated” to be transformed into a regional air cargo hub, and she announced Friday that Windsor is getting $200,000 to study the proposal in greater detail. Pupatello used a visit to the airport to announce a total of $350,000 in provincial funding for three initiatives designed to bring new jobs and investment to the area.

“There’s no doubt in my mind that we have potential here,” she said in announcing the funding under Ontario’s communities-in-transition program.

Pupatello praised Mayor Eddie Francis for continuing to push the airport initiative. More than $100,000 in additional funding is required to undertake the second phase of a feasibility study begun by Germany’s Lufthansa Consulting, and Francis said he’ll be seeking city council’s support, although he added the funding was already contained in the airport’s most recent capital budget. Read more here.

Controversial HST Bill Passed in Ontario

(CBC News)

Legislation to create a single 13% sales tax in Ontario passed third and final reading Wednesday despite strong objections and delaying tactics by the Opposition. Finance Minister Dwight Duncan told the legislature that blending the five per cent goods and services tax with the provincial tax will lower costs for businesses, allowing them to cut prices for consumers and hire more staff.

“Doing nothing is not an option [and] the status quo is just absolutely the wrong thing,” Duncan said in third-reading debate. “This package will create jobs.” The government estimates the harmonized sales tax (HST) will help create almost 600,000 jobs in Ontario over the next decade.

In an interview from Mumbai, India, Premier Dalton McGuinty said he is convinced the HST is critical to help reposition Ontario as it comes out of a recession in which the province lost hundreds of thousands of jobs.

“I think people understand in their heart of hearts that our world has changed and the old world is not coming back,” said McGuinty. “There are a number of things that we need to do to adjust to the new reality and secure a better future for our families, and one of those is to put in place a modern, competitive tax system.”

The opposition parties failed to convince the government to hold public hearings on the HST bill across the province, and accused the Liberals of being afraid to face a voter backlash against the new tax. The Liberals used their majority “to ram through the HST bill as quickly as possible and with little debate as possible,” said NDP Leader Andrea Horwath.

The Progressive Conservatives reluctantly admitted defeat after weeks of trying to block the HST, including a 44-hour occupation of the legislature by two Tories, asking for frequent votes to delay proceedings, and repeatedly calling McGuinty a liar. Read more here.

New Exporters to Border States (NEBS) Mission to Buffalo, February 17-18, 2010

(Ontario Ministry of Economic Development & Trade)

You are cordially invited to participate in the next NEBS Mission to Buffalo on Wednesday, February 17 and Thursday, February 18, 2010.

NEBS is a cost-effective program ideally suited for anyone involved in export development to the U.S., whether working in a management, inside or outside sales, marketing or business development position. It offers practical, hands-on information on the fundamentals of exporting to the United States by combining expert briefings on such topics as U.S. banking, legal and tax considerations, immigration issues, U.S. customs clearance procedures, logistics and regulatory requirements. The mission also includes site visits to a U.S. customs border entry point and warehousing facility.

If your company has been in business for at least one year and has a manufacturing or service base in Ontario, and you are interested in obtaining additional information on this program, please complete the attached form and fax it to the fax number provided.

OTA Encouraged by HST Change

(Trucking.com)

Ontario Trucking Association president David Bradley welcomed the introduction in the Ontario Legislature of legislation enacting the government’s proposed new harmonized tax system.

Bradley was particularly pleased to note that according to the government's background material, as part of the transition to the HST and wind-down of the RST, the Multi-Jurisdictional Tax (MJVT) will also be wound down and that under the transition rules the MJVT would simply no longer apply to renewals or new registrations under the IRP on or after July 1, 2010.

“For the Ontario trucking industry the fact that the government has moved forward on its budget commitment to harmonize the provincial sales tax with the federal goods and services tax starting next year is extremely good news,” Bradley said. “OTA has been seeking this announcement for a number of years and it’s been a key recommendation of virtually every OTA pre-budget submission this decade. The introduction of the legislation today is great news for the industry.” Read more here.

Manufacturing in Ontario Works: Pupatello

(Canadian Manufacturing – Mike Ouellette)

Two concrete messages came from the Revitalizing Canadian Manufacturing conference held yesterday at the Ted Rogers School of Management.

The first is that Canada desperately requires a national manufacturing policy similar to the policies enacted by all of the countries we compete against. This policy should contain sector-specific planning and be devised to encourage investment in emerging markets, not the overly-commoditized, ailing markets of years past – those have already been lost.

“You can’t create wealth in an economy by spinning people’s debt. You eventually have to make something people want to buy,” said Jayson Myers, president and chief economist for the Canadian Manufactures and Exporters.

Jim Stanford, an economist for the Canadian Autoworkers Union, says such a policy must include something for all sectors of manufacturing, citing the federal focus on the oil sands as an impediment to progress. “Digging stuff out of the ground and selling it to someone else to process makes you a ‘swack’ of money up front but doesn’t further the knowledge base, which is inherently more useful,” Stanford said. Read more here.

Ontario Cities Should Fight ‘Buy American’ Policy: McGuinty

(CBC News)

Ontario’s premier rallied municipal governments Tuesday to fight U.S. protectionism alongside the federal government.

Dalton McGuinty said the premiers have agreed to keep supporting efforts made by Prime Minister Stephen Harper to lobby U.S. President Barack Obama’s administration with regard to the “Buy American” provision of the U.S. government’s economic stimulus package.

“And I strongly encourage you to do the same,” he told the annual meeting of the Association of Municipalities of Ontario in Ottawa. […]

Ottawa city councillor Peter Hume, president of the AMO, said Ontario cities have already been talking to the American Conference of Mayors.

“We are encouraging our border colleagues, our border cities to talk to their mayors, to explain to them the impact that these policies would have on both of our economies,” he added. Read more here.

Persuasion Key to Countering U.S. Protectionism, McGuinty Argues

(Toronto Star – Joanna Smith)

Ontario Premier Dalton McGuinty is encouraging municipal governments to combat “Buy American” policies by reaching out to their neighbours below the border instead of adopting protectionist measures of their own.

“We are kidding ourselves if we think we can be safe by building a lifeboat just for the people in our communities,” McGuinty told the annual conference of the Association of Municipalities of Ontario this afternoon according to an advance copy of his speech. “In an age of globalization, at a time when our jobs depend on strong trade, what's called for is not a lifeboat for a select few. We need an ark, for all of us.”

McGuinty said the best way to recover from the economic downturn is by working together. “I want to thank all of you who have spoken out against 'Buy American' protectionism and reached out to your counterparts across the border,” McGuinty said, adding that he and other premiers have endorsed efforts by Prime Minister Stephen Harper to ask the U.S. to exempt Canada from the protectionist provision in its federal stimulus bill. “I strongly encourage you to do the same,” McGuinty said. Read more here.

Ontario Sales Tax Reform: Small Pain for (Hopefully) Longer Term Gain

(CBC News)

Ontario’s budgetary move to blend its provincial sales tax with the federal goods and services tax might have some political watchers puzzled.

After all, Ontario has been hard hit by a manufacturing meltdown, especially in the auto sector. Thus, provincial unemployment is rising, making Ontario residents particularly crabby these days.

To analysts, boosting prices on household goods does not seem the best way for Ontario’s premier, Dalton McGuinty, to wiggle his way into voters’ good graces.

But, most economists sing in unison when it comes to tax harmonization.

These practitioners of the dismal science generally agree that, when a province adds its sales tax, eight per cent in Ontario’s case, to the current five per cent national GST, the region and the country as a whole win in terms of economic expansion and increased productivity.

“This tax reform is long overdue as Ontario struggles to put its economy on a better growth path,” wrote Jack Mintz, a University of Calgary economics professor and former president of the C.D. Howe Institute recently. Read more here.

CTF and Business Debate Ontario Tax Harmonization

(Canadian Taxpayers Federation)



Kevin Gaudet of the Canadian Taxpayers Federation and and Len Crispino of the Ontario Chamber of Commerce discuss the merits and drawbacks of Ontario's plan to harmonize the PST with the GST on the CTV program Canada AM.

Ontario to Merge Sales Tax with Federal Tax: Reports

(Reuters)

The government of Ontario will unveil tentative plans to harmonize its provincial sales tax with the federal sales tax in its budget on Thursday as it tries to help businesses weather the recession, several newspapers reported on Wednesday. The proposed reforms would see Ontario merge its 8% sales tax with the 5% federal good and services tax.

The reports said the changes are designed to help make businesses more competitive since the new harmonized system would allow companies a refund on taxes paid on goods and services to run their operations.

The move might anger consumers, however, as they may see increased taxes on items such as heating oil, diapers and children’s clothing, all which are now exempt from the provincial sales tax.

Earlier this month the province’s finance minister said Ontario would run a deficit of around C$18 billion ($14.6 billion) over the next two years as it spends money to try to stimulate the economy.

The Globe and Mail said the tax reforms are part of a move by the province to address its reversal of fortunes as the economy of Ontario, once the country’s richest province, has been one of the hardest hit by the recession. Read more here.

Get Ready for Canadian Rule

(Fast Company – Anya Kamenetz)

Now that Dubai has collapsed, Canada’s looking like the next best place to weather the economic storm. “When the tidal wave comes, the question is can you still feel the ground under your feet? And we can.” That’s the view of Sandra Pupatello, Ontario’s minister of International Trade and Investment, whom I met with today in New York.

Surprisingly, Canada’s economy is outperforming the rest of the developed world. Its banks were too strictly regulated to take in the worst excesses of the subprime madness and as a result, it’s beating even Swiss banks: In fact, at the beginning of the crisis last fall, the country’s banks were rated the best capitalized in the world. While the U.S. has been tiptoeing up to the necessity of bank nationalization, Stephen Harper’s Conservative government has no problem with charges of “socialism.” They’ve put into place one of the most generous bank stimulus plans around to try to stem the credit crunch. Read more here.