[Congressional Record Volume 153, Number 69 (Monday, April 30, 2007)]
[Senate]
[Pages S5308-S5309]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself and Ms. Cantwell):
  S. 1250. A bill to direct the United States Trade Representative to 
conduct an investigation of the personal exemption allowance that 
Canada provides for merchandise purchased abroad by Canadian residents, 
and for other purposes; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise today to address the urgent need to 
end Canada's trade-distorting personal customs duty exemption scheme, 
which severely disadvantages border-area businesses in Maine and across 
the country.
  The U.S.-Canada Free Trade Agreement of 1989 and the subsequent North 
American Free Trade Agreement, NAFTA, of 1994 were intended to create a 
level playing field for companies in both countries in terms of cross-
border commerce. However, the spirit--if not the letter of these 
agreements--have been abrogated by Canada's schedule of personal 
exemptions from customs duties and taxes for returning Canadian 
residents.
  Under this scheme, Canada allows its residents no personal exemption 
from customs duties on goods purchased during trips abroad lasting less 
than 24 hours. For trips between 24 and 48 hours, Canadians are exempt 
from their government's duties and taxes on only the first C$50 of 
purchases. In contrast, the United States allows its residents to bring 
$200 of merchandise into the country duty free upon returning from a 
trip abroad lasting less than 48 hours.
  As the U.S. Trade Representative said in its 2007 National Trade 
Estimate Report on Foreign Trade Barriers, this disparity between the 
Canadian and U.S. personal duty exemption schedules discourages 
shopping visits to the United States by Canadian border residents. 
Understandably, it is therefore a major concern for Maine and other 
U.S. border-area businesses, which rely on such cross-border commerce 
for their very livelihoods.
  Canada's personal duty exemption scheme has thus produced an 
unwelcome area of friction in a largely vibrant and friendly cross-
border relationship. Moreover, it is inconsistent with Canada's 
international trade obligations to the United States under Chapter 
Twelve of the North American Free Trade Agreement. Under that 
agreement, Canada is obligated to accord to United States service 
providers,

[[Page S5309]]

including retail and distribution service providers, treatment no less 
favorable than that it accords to its own service providers and the 
service providers of any other country.
  When one considers, as Canada's government no doubt has, that foreign 
travel by Canadian residents lasting less than 48 hours is almost 
exclusively to the United States, Canada's personal customs duty 
exemption scheme appears to be a deliberate attempt to favor its own 
retail establishments at the expense of U.S. merchants just across the 
border. This scheme thus defeats the very purpose of NAFTA--to foster 
cross-border commerce unrestrained by protectionist policies.
  Despite this inconsistency with NAFTA and frequent requests by U.S. 
lawmakers and trade officials, Canada has for years refused to change 
its personal duty exemption scheme. That is why Senator Cantwell and I 
today introduce a bill that would direct the U.S. Trade Representative 
to initiate an investigation of Canada's personal duty exemption scheme 
under the section 301 process of the Trade Act of 1974--the statue 
setting forth the procedures for identifying and taking action against 
foreign trade practices which are unjustifiable or burden and restrict 
U.S. commerce.
  The section 301 process exists--like NAFTA itself--to ensure that 
mutually respectful trade relationships can efficiently handle and 
amicably survive substantive disagreements over trade rules. We 
therefore introduce this bill not to embarrass or chastise Canada but 
to formally initiate the process of bringing this particular 
disagreement to a principled resolution. I urge our colleagues from 
border and nonborder States alike to join us seeking that fair outcome.
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