Canada has taken its first significant action to try to curb the billions of dollars that Canadians spend shopping for cheaper goods in the United States.
The steps included a $5 handling fee on packages mailed to Canada, the dropping of the duty-free limit on packages to $20, from $40, and an unusual unilateral reduction in tariffs covering $1-billion of annual consumer imports.
The tariff measure, which took effect Thursday, affects 25 popular goods from cameras to video cassette recorders, mostly from Asian suppliers. The duties on these products were substantially higher than those levied by the United States; the lower tariffs should help Canadian stores lower prices.
Still, analysts, citing price differentials that range to 50 percent and more between Canada and the United States, said they doubted the moves would serve as a deterrent to shopping in the United States.
Every day tens of thousands of Canadians head south in search of cheaper cigarettes, beer, television sets, dairy products and hundreds of other items. Tens of thousands of others order merchandise by phone from American catalogs.
Same-day trips to the United States registered at the border rose to a record 5.22-million in November, up 3.8 percent from October and up 24 percent from November 1989.
The trend is transforming the border.
Across the northern United States new shopping centers, appealing specifically to Canadian wants, have risen.
A few miles north, in Canada, merchants are folding. The retailers, already hit by a recession that has kept unemployment over 10 percent, lament that they are losing more than $3-billion a year to the cross-border shopping.
A bottle of beer illustrates the tax gap: In Canada, taxes represent 53 percent of its cost; in the United States 19 percent. "There's no silver bullet, but what the government has done today is in the right direction," said Alasdair McKichan, president of the Retail Council of Canada, which represents most retailers.
Announcing the measures, Revenue Minister Otto Jelinek insisted, "We are not telling Canadians where to shop and where not to shop," but added, "We've got to create an atmosphere that will encourage Canadians to shop at home."
Jelinek also announced moves to crack down on tobacco and alcohol smuggling. A pack of cigarettes in Canada costs three or four times what it does in the United States, and a bottle of wine is twice as high. With such differentials, a lively business has grown in contraband.
To reduce the incentive for importing cigarettes and alcohol, Jelinek disclosed that federal customs officers would for the first time begin collecting provincial tobacco and alcohol taxes at the border.
Lending rate 7.46 percent: Hopes of a speedy end to Canada's economic woes are fading as the country faces the prospect of higher interest rates to offset a sliding Canadian dollar.
The central Bank of Canada's key lending rate, a benchmark for all Canadian interest rates including home mortgage and prime rates, rose Thursday for a third consecutive week to 7.46 percent.
Nancy Bolduc, 25: An incurably ill Canadian woman who won the right last month to halt medical treatment died Thursday after being disconnected from her respirator.
Nancy Bolduc, 25, had been paralyzed from the neck down after contracting a rare degenerative illness called Guillain-Barre Syndrome.
Bolduc, who was conscious but immobile, tried twice in the past year to starve herself. She could watch TV but not read, and could speak only with great effort. A Quebec judge granted her wish to be allowed to die last month in a landmark case that pitted advocates of patients' rights against critics who felt Bolduc's death would sanction suicide.
The syndrome affects the nervous system, causing numbness in the limbs and paralysis.
_ AP, New York Times, Reuters.