Liberalizing cross-border online sales is one NAFTA request to which Canada should yield: Neil Macdonald

The lobbyist on the other end of the phone laughed.

I'd just asked a question about Canada's so-called de minimis threshold, a subject which, even in wonky Ottawa, provokes glances at heaven and condescending grins.

As in: "Oh, that again. When will you understand that no one understands it and nobody cares?"

Well, that might be true. Canadian media dislike complex trade issues, and Canadian consumers are largely a supine, uninformed, apathetic bunch, inclined to do whatever they're told and behave like the milk cows they're treated as, by government and industry.

But we all should care. We are fools if we don't.

Expanding consumer choice

Changing the de minimis threshold, simply put, means that all those American retail websites we've come to regard as foreign and inaccessible would suddenly become part of our shopping world.

Our consumer choices would expand exponentially. Our money would go further. And we would enjoy the benefits of — I'm going to go ahead and use a dirty, un-Canadian word here — competition.

The de minimis is widely understood as the threshold under which goods can be shipped into the country free of duty or taxes. The American level is set at $800 US, meaning Americans can shop websites worldwide and know their merchandise will land on their doorstep quickly and without obstruction.

But Canada, protectionist fortress that it is, has kept its level at $20 Canadian — among the stingiest in the world. Canada wants Canadians shopping in Canada, and has built legal walls at the border to ensure that.

For years, a coalition of e-commerce companies and other firms that do a lot of cross-border business have lobbied Ottawa to raise the Canadian de minimis, arguing the increased competition and lessened paperwork would benefit everyone.

The Conservatives didn't do it. Finance Minister Bill Morneau pretended, politely, to listen, and to consider petitions and polling indicating Canadians want the threshold raised, but really, he hadn't the slightest intention of changing anything either.

Then along came Donald Trump, who is much harder to politely ignore.

On page five of his administration's recent list of "asks" in the North American Free Trade Agreement (NAFTA) renegotiation, Trump's trade officials demand a Canadian de minimis "comparable to the U.S. de minimis shipment value of $800."

A slew of Democrats and Republicans in Congress support the demand.

This, on the face of it, is bad news for both the status-quo-loving finance department and the Retail Council of Canada (RCC), which claims to represent a million retail employees and which has spent a lot of money fighting any change in the de minimis, at all, ever.

The RCC argues that if American merchants were allowed to ship tax- and duty-free into Canada up to $800, that would immediately put Canadian merchants, who are forced to collect HST on behalf of Ottawa and the provincial governments, at a roughly 13 per cent disadvantage, which would be brutal, and unfair. (The U.S. has no federal sales tax, and its customs agents do not collect sales taxes on behalf of state governments).

Diane Brisebois, RCC CEO and president, pounds away at it relentlessly. Just the other day, she tweeted that the Canadian media are "not understanding de minimis — it means giving U.S. online sellers a free pass on collecting SALES TAXES !!!!"

It's a compelling argument. It's also disingenuous, if not false.

The Trump administration isn't asking Canada to stop collecting sales taxes — and the e-commerce coalitions and their lobbyists say they aren't either.

Look again at the American "ask:" a de minimis "comparable" to what is allowed in under American rules.

Then look at the American rules.

When Barack Obama, in early 2016, signed a bill authorizing a rise in the American de minimis from $200 US to $800 US, the legislation talked only about "articles that may be imported duty-free." Not "tax-free."

Canada could easily meet the American demand by exempting shipments under $800 from duties and tariffs, but insist that American merchants collect HST on shipments to Canada.

That is perfectly possible. In recent years, Amazon has been forced to collect and remit state-level sales taxes for all interstate shipments in America.

It would also effectively cut out customs brokers, the parasitical entities hired by American courier companies to handle shipments to Canada.

Customs brokers figure out how much duty and tariffs are owing, then add tax, then add their own big fat fees, often doubling (or worse) the cost to the Canadian customer. The government loves them, because not only do they do customs agents' work for them, their involvement helps gum up the border and discourage e-commerce from America.

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Gordon Ritchie, the trade expert who helped negotiate the original free trade agreement with the Americans, says the de minimis outcome could be "huge" to Canadian consumers.

"I would probably use it as one of those sweet spots to give on, in return for some other concession in Canada's interest."

I asked Karl Littler, spokesman for the Retail Council, whether his group would drop its absolute opposition to a higher de minimis if sales taxes were collected on shipments from the U.S.

He'd anticipated the question. It would be closer to equivalence, he said, but the RCC has a new reservation: American retailers who pay duty to the U.S. government when they bring in a good from, say, China, are given a rebate of that duty when they ship the good out of the country. That's apparently a problem. (Canadian merchants get the same rebate from the Canadian government when they ship abroad, but never mind).

Access to the U.S. market

One suspects the RCC and its members are simply terrorized by the prospect of exposure to the world of American retail, where competition is cutthroat and merchants operate on ever-thinner margins.

But then that was the same argument made against free trade in the first place. When it happened, Canadian retailers had to become more competitive, or perish.

Personally, I believe in paying my taxes, and would happily pay HST on purchases from U.S. e-retailers if given real access to the American market. It's also dead certain that American retailers would move vigorously into Canada if all the paperwork and customs brokers and delays at the border were eliminated.

Bring them on. And for heaven's sake, wake up, Canadian consumers. Pay attention. This is about your money.

This column is part of CBC's Opinion section. For more information about this section, please read this editor's blog and our FAQ.