Study On Canada-US Price Differences Yields Many Benefits

By Chuck Andary

Canadians who live in border cities know all too well the savings that can be had by shopping on the American side of the border. With the American and Canadian dollars near parity, however, one would expect that price gaps would be narrower. Sure, we have to consider that there are, generally, higher taxes on Canadian businesses, the French language labelling requirement, and a lower demand that factor into the price that consumers pay, but are these factors enough to justify a 20% price difference on many consumer goods?

Canadian Minister of Finance Jim Flaherty has asked the Senate Finance Committee to look into these price differences and find out why Canadians are paying more. This is a positive step by the government as it aims to provide information on several consumer and governmental concerns.

First, Canadians simply want to know why they are paying more than Americans for the same products, especially given the fact that the North American Free Trade Agreement (NAFTA) does not allow for tariffs on most goods that originate from the USA. The problem is that many of these goods do not originate in the USA as required by section 4 of NAFTA; thus, they are subject to tariffs. Currently, the price difference and the low likelihood that they will be forced to pay taxes at the border is enough incentive to compel many Canadians to shop in the US.

read full article http://www.canada-usblog.com/2011/09/15/study-on-canada-us-price-differences-yields-many-benefits/