Document 4J5NQQMyaXLLZpVJ8vNw3N6nx

P '/S' if. AlotrxJ / fftOM . LASALLE, QUEBEC, - . . cc: a. B. Harris OATC Juno 17/ 1966 ' ' N. Grecco V/. T. Witter c. A. Moore suojcct TARIFF REFERENCE.120 J. S. Bagnall RcrcNcc . 66 -- 77 . ' R. B. Bridges V;. R. Douglas - 7_*/ R. Boon TO Mr, A. G. Erdman ; G. D. Bradley T. P. Fojey / 4 . i' The Tariff Board has completed its study of Reierence 120 Chemicals ten years after it was assigned t Lis tas k. The first volume of its report was tabled in Parliament June 13, 1S66. This volume contains the meat of the Board's > report - the recommended tariff rates and s chedules. The recommendations of the Board are not yet effective and will not be until presented to Parliament as a Bill for enactment - probably with the 1967 Budget presentation in the Spring of next year. In the meantime, several govern ment bodies will be studying the report and receiving argu ments pro and con from interested parties. It is in Monsanto's best interests to determine the net effect of , the proposed rates and make the appropriate representation to Finance and Industry Departments. . HIGHLIGHTS OF RECOMMENDATIONS k\ , 1. Chemicals a. In general, rates on chemicals now made in Canada and dutiable now at 15% B? - 20% MFN are reduced to 10% \ BP - 15% MEN. .. . ' b. Chemicals not made now will enter a: 0 - 15% in per petuity . c. Class or kind is eliminated as a basis.for establishing a higher or lower tariff rate (will still be used in assessing dump). d. Several end-use items are eliminated and materials which previously entered duty free will now be dutiable at 10 - 15% or 0 - 15%. 2. Plastics .* a. The form of the plastics schedule remains unchanged - -- named plastics (those now known and of some importance) have been assigned rates which are in general slightly higher (2% to 10%) than previously. - DSW 587737 STLCOPCB4093073 i ` " Mr. A. G. Erdman -2- t' : June 17, 1966 a category for unspecified plastics - the products of the futurer-has been established at 0 - 0%'. GENERAL ' !' In both Plastics and Chemicals, the format, of the recom mendations is a rigid-one in that all products of future manufacture have a rate established 0-0 for plastics and 0-15 for chemicals. Any increase in tariff rates from these levels requires an act of Parliament. Because of the extreme difficulty (as shown by experience of the last 20 year's) in " obtaining increases in this manner, we can assume to all intents and purposes insofar as increases are concerned, that these rates are fixed. Reduction of rates on a temporary basis of a product not available in Canada would still be obtainable through order- in-council. Although a fairly lengthy procedure - 6 months to 1 year - this procedure would be effective. -v. EHT:kh i } 1 DSW 587738 STLCOPCB4093074 RATES PROPOSED ON PRODUCTS OF PARTICULAR IMPORTANCE TO MCCAN PRESENT BP - MEN PROPOSED BP - MEN Styrene ' 15 - 20 10-15 Vinyl chloride . 15 - 20 Phenol (for plywood resin) 0-0 10 - 15 ` ' 10 - 15 ' Formaldehyde Urea 0-0 - 15 - 20 . 5-10 0-0 ' Melamine , 15 - 20 10 - 15 Polystyrene PVC SAN ABS - 10 - 10 5-5 10 - 10 7$ . . 10 - 10 . 0-0 10 -vio Phenol formaldehyde Urea formaldehyde 0-0 o-o W . . 10 - 10 7-2- - 1\ Plasticizers General 15 - 20 , ' Santicizer 160 0-0 : 10-15 , 0-15 Rubber Chemicals Made 15 - 20 Not made 0-15 `! ' 10 - 15 *0-15 Oil additives Made 15 - 20 10-15 ' Maleic Not made 0-5 15-20 ; 0-15 1 10-15 . Phthalic anhydride 2-ethyl hexanol iso-octanol iso decyl alcohol *\ 0-0 10 - 15 15-20 ' , ' 10-15 0-0 ; 10-15 0-0 ; \ i 1 ! 0-15 DSW 587739 . STLCOPCB4093075 4 [.; .' /, DRAFT COVERING LETTER AND STATEMENT Director, Tariffs Division, Department of Finance, Ottawa. Dear Sir:- Re: Tariff Board Reference No. 120 . .(Chemicals).. `. / . Attached is the statement of the Industry Committee for the Study of Reference 120 (Chemicals) res pecting the report of the Tariff Board. ' The Industry Committee is an informal one representing the industry at large, and does not speak for any particular company, or specialized group of companies within the chemical industry. Its comments a* a therefore ^ made in relation to Broad points of principle, rather than to tariff recommendations on individual chemicals. Our views, as expressed in the attached statement, have Been circulated to over one thousand companies in the chemical industry. '' . We will Be glad to meet with the group' of tariff specialists which we understand has Bedn set up to hear oral representations. We' can then explain and amplify points made in the attached statement, and will Be glad'to deal with any questions not covered By our statement.' . . ". Yours very truly. J. A. Davis, Chairman. v DSW 587740 STLCOPCB4093076 ` 0 ' . STATEMENT BY THE INDUSTRY COMMITTEE FOR THE. STUDY OF REFERENCE 120 (CHEMICALS) ON THE REPORT BY v. . THE TARIFF BOARD . i . The-overall objective of the Industry Committee in Reference No. 120 was to obtain a modern flexible tariff in line with those of leading industrial countries which would: a) Increase the industry's share of the domestic market and thus reduce unit costs thereby improving its competitive position in both domestic and export markets. b) Encourage the expansion of existing capacity and the . -v establishment of plants for new products so that Canada can expand the manufacturing sector of the economy i^pace with other industrial nations. . To accomplish this., the essence of the proposals put before the Tariff Board by the Industry Committee was; ' . a) To have the Brussels Nomenclature adopted for classifying chemicals and allied products. _ b) To have statutory rates of .157. B 1? cktiCL 207. M.F.N. for the Brussels headings in general. c) To make provision for temporary exceptions from the heading rates for non-competitive chemicals or plastics in such a way that they could be cancelled when the circumstances changed without the ./ necessity of proceeding through budgetary proposals. d) To secure the deletion or modification of end-use items. DSW 587741 STLCOPCB4093077 2 e) To eliminate anomalies and inconsistencies in the existing chemical ana plastics tariff. There are important features of the Board's report with which we cannot agree. 1. The rates recommended by the Board represent a substantial reduction from the 157. B.P., 207. M.F.N. recommended by the Industry Committee and, for the most part, are lower than the existing rates on the major portion of chemicals made in Canada. The adoption of the Board's rate proposal would; mean that the chemical industry would fail far short of^ts^growth potential in years to come. . i 2. The Board's proposal of free statutory' rates in the headings and the elimination of the made - not made in Canada distinctions preclude the use of the feature whereby goods are automatically accorded higher rates of duty on achieving made in Canada Status. This feature is embodied in the existing tariff and its extension to all chemicals and plastics was incorporated in the Industry Committee proposals. If the Board's recommendations were adopted it would no longer be possible: a) to obtain within a reasonable time a higher tariff rate when chemicals are made in Canada, - ' DSW 587742 STLCOPCB4093078 . " 3 " '. . . . ' ' i .' _. ; * b) to be assured of duty protection on manufacture. The only provision that the 3oard suggests for altering - such rates as new Canadian production develops is through budgetary proposals laid before Parliament from time to time. This suggestion of referring to Parliament each time a change is required in respect of new or prospective production of a particular chemical or plastic is impracticable, costly and discouraging; . . * In any case,- should the recommended rate of Free be bound .... . 'v, under G.A.T.TV the suggested approach of going back to Parliament for revisions becomes completely illusory. . The establishment of duty rates for basket items would conform with the practice in other industralized countries,.. It . would assist long-term.planning and encourage consideration of ` manufacture in Canada by indicating the .tariff rates that would apply. . ' ' 3. The Board's proposal of free or low heading rates provide loop-holes for circumventing the tariff granted specific products.. 4. The rules for the Interpretation of the Nomenclature, the Section and Chapter Notes, and the explanatory Notes to the Brussels Nomenclature form an integral part of the Brussels Nomenclature classification system. They are-essential for its understanding, interpretation and administration. The Tariff Board has recommended that "as nearly as may be" the rules and-notes be DSW 587743 STLCOPCB4093079 4 4 prescribed by Order-in-Council "to serve as an aid" in the inter pretation of the recommencled tariff items. They cannot merely be an "aid", but must form an integral part of the recommended chemicals schedule. ' 5. The Board recommended different rates for most chemicals or plastics, which were unknown, unimportant or unavailable from Canadian production (at least as was known to the Board at the time .of the hearings), from the rates recommended for those products in the same Brussels heading^ that were regarded^as ' available from Canadian production. This decision by the Board resulted in the necessity of creating more than 800 sub-headings. If the same rates were -recommended for the basket sub-headings as for the generality of the products under the same headings, which the Board has considered available from Canadian production, hundreds of sub-headings could be eliminated. . Our proposal,'.'.therefore, would greatly simplify the tariff structure to be incorporated into the statute. It need not-change the'.effective .level of rates, which can be adjusted downwards by Order-in-Council. 22nd July 1966 DSW 587744 STLCOPCB4093080