Proposed bike tariff puts chill on retailers 

Thirty per cent surtax would raise price of low-end commuter bikes, kids bikes

With gas prices rising, cities rethinking transportation strategies, and a prevailing trend toward more active living, the bicycle industry is booming. Sales of bicycles in Canada have been increasing steadily, and according to one 2003 report about 42 per cent of Canadians list cycling as a regular activity.

But the issue of where a growing number of Canadians are getting their bikes – mostly China and Taiwan – has resulted in calls for emergency protection tariffs of 30 to 48 per cent on imported bicycles.

According to Canadian companies Raleigh Canada and Procycle, the Canadian bike manufacturing industry is being threatened with cheap bikes from China and Taiwan. The number of bikes produced and sold in Canada has declined by more than 200,000 units per year since 2000, while the number of imports has increased from about 500,000 units per year to more than a million units in the same time frame. Without tariffs, there is concern that hundreds of jobs could be lost in Quebec.

The political implications of the proposed tariff have not been lost on its critics – the Quebec factories are located in key Liberal Party ridings, where candidates won narrow victories over the Bloc Quebecois. It has also been pointed out that the proposed tariffs come at the same time that Canada is crying protectionism over U.S. tariffs applied to softwood exports.

The trade tariffs were recommended by the Canadian International Trade Tribunal and would be applied on a temporary basis until the Canadian companies can readjust their production and business models to include more high-end bikes and specialty bikes that would not compete directly with cheap Asian imports.

The issue will go to the federal finance minister next month, and will be reviewed by cabinet before a final decision is made.

Opponents of the proposed tariff include several big box retailers, like Costco, Wal-Mart, Zellers and Canadian Tire, which exclusively sell mass market bikes in the price range that would be impacted by the tariffs.

The Independent Bicycle Retailers of Canada also objects. Unlike the big box stores, they generally buy bikes through a network of distributors, which in turn will increase the markup on low-end commuter bikes and kids bikes. In other words, if the tariff is only supposed to apply to bikes valued at $400 or less, with the addition of distributor fees it could also apply to bikes in the $600 to $700 range.

Jay Taylor, the owner of Snow Covers Sports in Whistler, is skeptical that the tariff will pass, but says it will likely affect his business if it does.

"Most of what we sell is above that price point, but what it does do is it hits the kids bike market pretty hard, and in a sport where we’re trying to encourage participation that’s going the wrong way, it’s sending the wrong message, and it’s making it more difficult to get people into the sport," he said.

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