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Bicycle Makers Plead for Protection

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OTTAWA , Canada (June 21) – The two largest remaining bicycle makers in Canada see their factories threatened by lower-cost foreign imports. They have started a last-ditch effort today in Ottawa to seek emergency protection from Asian rivals. Procycle Group Inc. and Raleigh Canada Ltd. are asking the federal government to slap a 48 % […]

OTTAWA , Canada (June 21) – The two largest remaining bicycle makers in Canada see their factories threatened by lower-cost foreign imports. They have started a last-ditch effort today in Ottawa to seek emergency protection from Asian rivals.

Procycle Group Inc. and Raleigh Canada Ltd. are asking the federal government to slap a 48 % tariff on foreign bike imports to stop the bleeding of manufacturing jobs to China, Vietnam and other Asian nations. They warn a failure to get temporary safeguard protection could spell the end for “the vast majority” of bike manufacturing in Canada.

The case should set a precedent for how Ottawa responds to the new economic reality where Canadian factory owners are trying to decide whether to keep production going locally or move it offshore themselves.
“The manufacturing industry is watching this with considerable attention,” said Larry Herman, a trade lawyer with Cassels Brock in Toronto who is not acting for either side in the case.

Procycle and Raleigh appear at the Canadian International Trade Tribunal this morning seeking the rarely used “safeguard” shelter from foreign competitors. This is allowed under global trade rules if an industry faces serious injury from a sudden, unexpected flood of imports.
The case may turn into a political hot potato for Ottawa because Finance Minister Ralph Goodale, not the independent and quasi-judicial CITT, must ultimately approve safeguard actions.
Procycle and Raleigh say the imports in question have almost doubled in recent years to 1,063,768 units in 2004 from 538,523 in 2000.

Mr. Goodale may be forced to choose between angering Beijing – Canada’s top new trade priority – or voters in Quebec, where the biggest bike manufacturing plants are located and where hundreds of textile jobs have already been lost to Asian competitors such as China.
The retail bicycle market in Canada is worth as much as $300-million in annual sales, but market share held by Canadian producers has plummeted in recent years, sliding to 30 % in 2004 from 58 per cent in 2000. Imports now control 70 % of the market.

Canada’s largest retail stores are fighting the requested safeguard, warning it would drive up bicycle prices, erode selection and send Canadians cross-border shopping to the United States for better deals. (Source: Globe and Mail ,Canada)

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