OTTAWA - American suppliers who have to cover the impact of the weaker U.S. dollar at home are penalizing Canadian retailers and their customers by failing to reflect the true value of the strong loonie in their pricing, the Retail Council of Canada's president says.
One reason retail prices are higher in Canada than in the United States, even though the two currencies are now almost the same value, is that American suppliers have been cutting prices to maintain their U.S. market share and passing on their costs to higher currency markets like Canada and Europe, Retail Council's Diane Brisebois told the Commons finance committee Wednesday.
"Consumers are enjoying the most deflated retail prices in the U.S. that we've ever seen," Brisebois said. "It's called country pricing ... It is simply to keep the U.S. market going, so what we're seeing in Canada and Europe are prices 20 to 60 per cent higher than they should be."
And she turned the tables on the government, saying its tariff structure is a key reason prices in Canada are higher than in the U.S.
"Retailers in Canada pay significantly more by way of import taxes to bring goods to market," she said, citing the 17.5 per cent duty on steel-toe boots from Asia, the six per cent duty on cribs, the 15.5 per cent duty on hockey and soccer pads, and the five per cent tax on MP3 players. In all these examples, U.S. retailers pay less than half or no duty.
"There are hundreds upon hundreds of similar examples," she said. "We urge this committee and the government to eliminate those duties that put businesses in Canada at a disadvantage."
Brisebois also took a swipe at Finance Minister Jim Flaherty, saying a minority of customers are taking their frustration out on Canadian merchants in part because of the minister's public statements on the issue.
The industry spokeswoman appeared to be still smarting from last month's meeting with the finance minister, which resulted in Flaherty holding a press conference under a background that read "Standing up for Consumers."
Flaherty said at that time that retailers need to do better in passing on the impact of the stronger Canadian dollar to consumers.
Brisebois told the finance committee that Flaherty's remarks did not "reflect what happened in the meeting."
Speaking after her late afternoon testimony, she expanded her statement, saying that Flaherty had cast retailers in a bad light and that suppliers, importers and multi-nationals were more responsible for the high prices.
"The minister's role should be to ensure that consumers understand why prices are what they are," she said.
Flaherty should have also call the retailers' suppliers to the high-profile meeting, she added.
"You can't deal with this issue openly and honestly unless you have all the players there."
A spokesman for Flaherty said it was "regrettable" that Brisbois had cast what was a positive meeting in a negative light.
"As the minister said it was a frank and open discussion, and he said, an I quote, 'I urge Canadian distributors, wholesalers and retailers to reduce prices...' " said spokesman Chisholm Pothier.
Earlier in the day, Flaherty suggested the problems caused by the surging loonie had subsided somewhat since peaked above $1.10 U.S. two weeks ago, and added that Canadian consumers were beginning to see lower prices on the store shelves.
"It doesn't mean Canadian prices will be identical to the American prices because there are some other factors that come into play, but it does mean prices should come down and we're seeing that in the retail sector and that's a good thing," Flaherty told reporters.
The loonie traded as high as $1.10 U.S. in mid-November, but has fallen nearly nine cents in the past two weeks. It closed down 0.72 of a cent to 101.25 cents US on speculation that the Bank of Canada may cut interest rates on Dec. 4.
Representatives from the Canadian Chamber of Commerce and Canadian Federation of Independent Business said the dollar was having a serious impact on bottom lines for corporations, particularly manufacturers, but said the government could best help by reducing taxes and helping firms compete.