The federal government will tackle the persistent price gap between goods in Canada and the U.S. with new legislation that was unveiled on Tuesday.

Retailers support the proposed bill, but some observers are skeptical about the approach, which would investigate and publicly call out firms that set prices unfairly high in Canada.

The announcement comes as the price gap is naturally shrinking because the Canadian dollar has hit the 87-cent (U.S.) range.

The Price Transparency Act, tabled in Ottawa on Tuesday, is designed to “name and shame” manufacturers and distributors that demand higher prices for goods sold in Canada, Industry Minister James Moore said.

“This legislation will not set or regulate prices in Canada,” he told reporters at a news conference held at a Toys R Us store in Etobicoke.

The announcement follows through on a commitment the government made in its 2014 budget, following a Senate investigation into the reasons for a persistent U.S.-Canada price gap.

The Senate committee blamed everything from high tariffs to higher Canadian costs to “country pricing” — the practice of some large multinational brands of charging Canadian retailers more than U.S. merchants for identical merchandise.

The legislation would give the federal Competition Commissioner the power to collect evidence on so-called cross-border price gouging and publicly report its findings.

These powers will serve as “an effective tool” and will result in “immediate downward pressure on prices,” Moore said. “We believe those who are engaging in this practice . . . will abandon it.”

While there are some legitimate cost differences between selling goods in the U.S. and Canada, studies have shown that Canadians routinely pay between 10 and 25 per cent more than U.S. shoppers for television sets, cars, tires, and other products.

Canadian consumers often make the mistake of blaming retailers for price gouging, Diane Brisebois, head of the Retail Council of Canada told reporters.

“I can assure you, for the thousands of Canadian retailers we represent . . . [the proposed legislation] is a step in the right direction,” Brisebois said.

Tariffs, duties, labour market differences, and shipping costs may account for about 10 per cent of the price difference, but not beyond that, Duncan Fulton, senior vice-president at Canadian Tire Corp., said in an interview.

“No retailer in their right mind would want to have a higher price than their competitor. It’s a highly competitive landscape out there,” Fulton said.

“The large majority of our vendors are quite fair in their pricing strategies. This is getting at a minority of players that, frankly, are not fair in their pricing strategies. I think just giving the commissioner these new powers may cause some of those minority players reason to rethink their strategy before they get called on the carpet.”

Business professor Mike Moffat is skeptical that the bill will have an impact.

If a particular company blames elevated transportation and shipping costs for having higher prices in Canada, “I’m not sure how the Competition Bureau is going to prove that’s an untrue statement,” short of auditing the entire company, said Moffatt, assistant professor in the Business, Economics, and Public Policy group at the Richard Ivey School of Business at the University of Western Ontario.

“I really don’t think the Competition Bureau has the time, money and interest to be doing this sort of thing.”

Instead, the federal government could have focused on market differences such as tariffs, gas prices, electricity prices, or payroll taxes.

For instance, on Jan. 1, tariffs will increase on early 1,300 product categories from 72 countries, including China, India, South Korea, and Brazil. The tariffs will cost Canadian consumers an estimated $330 million per year, according to Moffatt’s research.

“It’s not to suggest the government shouldn’t be concerned with this,” Moffatt said. “But I think the approach is a bit suspect.’

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The name and shame approach “may have a very slight impact but nothing can really compare to where our friend the Canadian dollar goes,” said Doug Porter, chief economist at BMO Capital Markets who has extensively researched the U.S.-Canada price gap.

“With the currency back to 87 cents, a very quick calculation finds that prices are, on balance, about the same between the two countries when you take the exchange rate into account.”

At that exchange rate, an item that’s priced at $13.99 (U.S.) is effectively the same price as an item that costs $15.99 (Canadian.).

“There are still some cases where prices are much higher in Canada than in the U.S., but at 87 cents (U.S.) I think that’s the exception and not the rule,” Porter said.

Under the new legislation, the Competition Commissioner will have the power to file court orders to compel the production of evidence to expose discriminatory pricing practices, the government said.

The commission will also be able to publicly report situations where consumers are unfairly targeted with higher prices, Industry Canada said in a release.

“The intentional manipulation of prices on identical goods for sale in Canada and the U.S. places an unfair burden on Canadians and is simply wrong,” Moore said in a release.

The furor over the Canada-U.S. gap emerged after the Canadian dollar rose above the U.S. dollar in 2007 for the first time in nearly three decades.

Also, it became easier for Canadian consumers to compare cross-border prices on the Internet as more retailers launched websites.

Consumers blamed Canadian retailers. Retailers blamed suppliers. Suppliers blame the higher cost of doing business in a smaller country.

In 2011, the late Jim Flaherty, who was then federal finance minister, asked the Senate committee on national finance to investigate the reasons for the price disparity.

The report, released in February 2013, identified a number of factors.

Ottawa’s first response was to remove the tariffs on some items, such as baby clothes and hockey gear.