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Canadian Businesses Concerned Over NAFTA Changes

by Mike Godfrey,, Washington

25 January 2017

Uncertainty over the future of the North American Free Trade Agreement (NAFTA) will be a drag on Canadian business investment in 2017, according to research by the Canadian Chamber of Commerce.

The Chamber's 2017 Crystal Ball Report warns that the year ahead will represent a time of uncertainty for Canadian businesses, as a result of the ambiguity surrounding the Canada-US trade relationship and international trends including a global slowdown, technological innovations, and the automation of many low-skilled jobs. The report was based on the results of a series of roundtables organized by the Chamber.

The report noted that uncertainty over NAFTA could cause businesses to hold off on large investments. Other concerns include Trump's proposed Border Adjustment Tax and US corporate tax cuts. Were the US corporate tax rate no longer border-adjusted, American imports could no longer be deducted from revenues. The Chamber said this would mean that imports were taxed at 20 percent, which "would have the same effect as a 20 percent tariff."

This would "distort the market, increase consumer prices, and create an uneven playing field for companies and consumers alike. Canadian manufacturers would be significantly disadvantaged and would lose sales. American businesses would have to scramble to readjust supply chains to favor domestic sources."

Perrin Beatty, President and CEO of the Chamber, commented: "We've heard loud and clear from the Canadian business community that it has concerns about the global economy, particularly with regard to Canada-US relations, the renegotiation of NAFTA, and the future of other trade agreements."

He added: "We've heard from businesses in all sectors that they are surprised by anti-trade sentiment and are concerned about a retreat from globalization in the years ahead. The consensus was that the rise of anti-trade, anti-immigration political parties is a global phenomenon and could be an important risk factor for Canada."

TAGS: tax | investment | business | free trade agreement (FTA) | tariffs | trade treaty | Mexico | agreements | Canada | trade | business investment | North America

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