Clement says firms coping with higher Canadian dollar

Wed Mar 17, 2010 6:39pm EDT
 
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By David Ljunggren

OTTAWA (Reuters) - Canadian Industry Minister Tony Clement said on Wednesday that higher productivity and lower taxes are helping domestic companies cope with the effects of a stronger Canadian dollar.

Clement made his comments a day after Finance Minister Jim Flaherty signaled he was more comfortable with a higher dollar despite complaints by manufacturers that it makes doing business harder.

Clement said firms were benefiting from factors such as lower taxes, higher productivity and government efforts to reduce dependence on exports to the United States.

"All of these things have a cumulative effect that we expect will more than overcome the fact of the high dollar," he told reporters, saying he thought most firms were adjusting "very well".

The main opposition Liberal Party said Clement was ignoring the problems posed by the rising Canadian dollar, which closed just below 99 U.S. cents on Wednesday, its highest level in almost 20 months.

A higher Canadian dollar makes it harder for firms to sell their goods in the United States, which takes 75 percent of all Canadian exports.

"In the past, it's been a challenge for companies in Canada because of the fact that they relied historically on the lower dollar to be their productivity and competitiveness edge," Clement said.

The Canadian dollar hit an all time low of 61.79 U.S. cents in January 2002. It recovered gradually, hitting parity in September 2007 before falling back.   Continued...

 
<p>Canada's Industry Minister Tony Clement speaks during Question Period in the House of Commons on Parliament Hill in Ottawa March 16, 2010. REUTERS/Chris Wattie</p>