US embassy cable - 05OTTAWA2700

UNCLAS OTTAWA 002700 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD 
SUBJECT: CANADA'S GLOBAL SAFEGUARD INQUIRY INTO BICYCLES 
FINDS 'SERIOUS INJURY' 
 
REF: OTTAWA 01021 
 
1.  The Canadian International Trade Tribunal (CITT) has 
published its final report determining that imports of 
bicycles are a principal cause of "serious injury" to 
Canadian bicycle manufacturers.  CITT has recommended a 
surtax on assembled or unassembled bicycles with a wheel 
diameter greater than 15 inches and a FOB of C$225 or less 
(equivalent to C$400 retail) of 30% in the first year of 
application, 25% in the second year and 20% in the third 
year. 
 
2.  Possible exception for U.S. manufacturers:  CITT has 
recommended that bicycles imported from countries with which 
Canada has entered into a free trade agreement (U.S.A., 
Mexico, Israel, Chile) and developing countries other than 
China, the Philippines, Thailand and Vietnam be exempted, 
presumably under WTO rules for small developing-country 
suppliers. 
 
3.  As explained in reftel, an exception for 
U.S.-manufactured bicylces is almost meaningless, because 
very few U.S. manufactured bicycles fall into the affected 
price range, and 95 percent of U.S. bicycle companies 
manufacture their products overseas.  U.S. distributors and 
U.S. chains retailing in Canada (such as Walmart) will be 
affected 
 
4.  If the Canadian government implements CITT's 
recommendations, the price of imported bicycles will increase 
substantially, which will adversely impact distributors, 
retailers, consumers and arguably the environment.  At a time 
when the Canadian government has issued a "one ton challenge" 
for citizens to lower their share of CO2 emissions and  urged 
petroleum conservation to mitigate Hurricane Katrina's effect 
on oil prices, raising bicycle prices seems 
counter-intuitive. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
WILKINS