Sunday, October 21, 2007

Work at Canadian Border Crossing to Begin Nov. 5

(Seattle Post-Intelligencer)

Major construction at the Peace Arch Canadian border crossing will begin Nov. 5 -- and bring major delays.

Officials said Thursday that the $70 million-plus project – to be completed by January 2010 – will completely rebuild the border station, increasing border security and expanding traffic capacity.

Work on southbound lanes will cut the number of inspection booths for people entering the United States by about 50 percent – with four remaining. Work on northbound lanes into Canada will be in January.

Vancouver is hosting the 2010 Winter Olympics Feb. 12-28.

The Blaine border crossings between Washington and British Columbia see the third-highest volume of passenger traffic and the fourth-highest volume of commercial trucks along the entire U.S.-Canadian border, according to the Washington Department of Transportation, which calculates that commercial traffic has increased 85 percent over the past 10 years.

Judge Rolls Out Fines for Car Scam at Border

(Jamie Hall — Edmonton Journal)

An Edmonton man who lied to Canada Customs in an attempt to save $1,400 in import fees for a $47,000 luxury vintage car he purchased in the U.S. will wind up paying more than $12,000 in fines and taxes.

James David Bodman, 55, pleaded guilty in Calgary provincial court Friday to violating the Customs Act, making false statements.

In April, Bodman drove a 1962 Rolls Royce Silver Cloud through the 24-hour border crossing at Coutts, south of Lethbridge. He declared $20,700 US for the vehicle – for which he would have been charged about $1,400 Cdn in import duties and taxes – when he had actually paid $47,000 US.

“He was trying to save a buck,” said Canada Border Services Agency spokeswoman Lisa White, “and now he has a criminal record.” Bodman, who works in construction, was fined $1,860 in provincial court after entering the guilty plea.

He is also required to pay import duties and taxes to reflect the value of the vehicle, roughly $3,000.

In addition, Bodman had to pay $7,700 in civil penalties to retrieve his vehicle, which was seized at the border in April.

Bodman’s Edmonton lawyer, Alex Pringle, told the court his client received some bad advice before heading to the U.S. to pick up the vehicle and was “very embarrassed” by the incident.

Bodman declined comment when reached Friday by phone at his Edmonton home.

White said the case is a cautionary tale for Albertans, an increasing number of whom are purchasing personal vehicles in the U.S. and driving them back to Canada.

Despite the recent surge in the Canadian dollar, cars can be substantially less expensive to buy in the U.S.

The border crossing in Coutts, for instance, which is a main Alberta portal that operates 24 hours a day, sees an average of 65 such vehicles a day.

Some have been purchased on EBay, others through dealerships or private transactions.

“This is a really hot topic now,” said White, “and people need to know before they go pick up their car what the rules and regulations are.

“They need to be truthful about declaring the real value of their vehicles because if they don’t, they will be caught.

Thursday, October 18, 2007

Canada Sets Course for Broader Tax Cuts


Canada’s Conservative government signaled on Tuesday it would back away from its approach of small targeted tax credits and propose broad-based corporate and individual tax cuts, possibly in a fiscal plan expected in November.

Canada’s minority Conservative government unveiled its policy agenda on Tuesday in the Speech from the Throne, opening a new session of Parliament.

In addition to repeating a pledge to cut the federal sales tax for a second time to 5 percent, the government appeared poised to flesh out what it called a “long-term plan of broad-based tax relief,” either in its traditional Fall Economic and Fiscal Update or in a budget next spring.

Finance Minister Jim Flaherty has been criticized for showering minor tax breaks to target groups in his last budget rather than slashing income tax rates.

“What you have is direction ... what we’ll be looking for is specifics in terms of what they’ll be doing with broadly-based tax relief,” said Perrin Beatty, president of the Canadian Chamber of Commerce.

“That’s what they’re suggesting here and that would be encouraging if it were so,” he said.

One surprise detail in the policy outline is a hint that the federal government may consider invoking special powers allowing it to strike down provincial laws and regulations that it sees balkanizing the country and making it less competitive.

It cites inter-provincial barriers for trade and labor as a hindrance to competitiveness.

There has been much speculation that Ottawa would use this constitutional authority to break an impasse with some provinces over the creation of a single securities regulator.

Every province has its own securities regulator but the government has been pushing to replace that system with a single securities regulator.

“They’re signaling a more activist approach to ensuring a single market in Canada,” said Beatty.

Jayson Myers, president of the Canadian Manufacturers Association gave the speech a mark of 7.5 out of 10 and anticipates Flaherty will continue to help out his sector by extending a special write-off for manufacturers on investments in machinery and equipment.

Manufacturers have been hit hard by the Canadian dollar’s strong rise in the past few months, which has not been accompanied by cheaper input costs for businesses, Myers said.

“I’m very worried. The rate of closures is picking up, the rate of lay-offs is picking up,” he said.

“This is like an immediate price cut of 66 percent on your export sales if you’re priced in U.S. dollars.”

The text of the Speech From the Throne is at available here.

Tuesday, October 16, 2007

CBSA Taking Phased Approach to Implementation of Mandatory EDI

Yesterday was the implementation date for mandatory EDI (electronic data interchange) by the Canada Border Services Agency (CBSA). However, responding to concerns raised by members of I.E.Canada, the Canadian Society of Customs Brokers and others, CBSA issued a customs notice on Friday, October 12, 2007 announcing that they will take a phased approach to mandatory EDI by giving clients a six-month transition period to fully implement their EDI capabilities.

Clients already capable of transmitting EDI are expected to do so. However, CBSA has signaled that it will work with industry to address any issues arising from the EDI requirement, most notably the handling of multi-line invoices. According to CBSA officials, this means that even customs brokers and self-clearing importers that are currently EDI capable will be permitted to submit paper if they are experiencing particular challenges with EDI due, for example, to the time involved in capturing invoices that may have hundreds of lines. All paper entries will have to be accompanied by an exceptions lead sheet indicating why paper is being submitted. In this way, CBSA plans to monitor the problems that industry is experiencing with EDI and to work towards solutions.

The new lead sheet, on I.E.Canada website in English and French, has a new line item for “multiple invoice lines” and requires brokers and importers to indicate the number of lines. CBSA is expected to set a threshold soon for the number of lines at which electronic transmission of the release transaction will become mandatory and will increase the threshold over the transition period. Customs Notice 07-029 is available here. Further developments and details of the phase-in requirements will be communicated by CBSA as they become available.

Rising Dollar Puts Border Agency at Odds With Own Regulations

(Canadian Press)

The soaring loonie has placed Canada’s border agency in violation of its own regulations.

An audit has found that the Canada Border Services Agency has been inadvertently giving American travellers a big price break over Canadian travellers for a special card that speeds their passage across the Canada-U.S. border.

The so-called Nexus pass, which allows pre-screened passengers to clear customs quickly, currently costs $80 Canadian, a price set by regulations established in 2002.

But the regulations also allow Americans to pay US$50 for the pass - equivalent to $80 Canadian five years ago but now significantly out of whack as the loonie has soared higher than the greenback.

“The fee structure that was originally set in 2002 was no longer equitable in 2006 and favoured U.S. applicants,” says the newly released audit, based on findings from last year.

“In addition, by accepting a Nexus fee payment of US$50, in 2006 the CBSA was collecting less than the amount prescribed in the regulations.”

Nexus is an international program run jointly with the U.S. Customs and Border Protection agency. To date, more than 100,000 travellers have obtained the highway version of the pass, the part of Nexus examined in detail by auditors, after thorough security checks on both sides of the border and an in-person interview.

The program began as a land-border card, replacing a Canada-only program known as Canpass Highway, and expanded with a pilot project in late 2004 at the Vancouver airport to include air travellers.

Nexus has since broadened to include other international airports and border points, such as a marine crossing at Detroit-Windsor, and the now-harmonized program covers land, marine and air.

The popular card, good for five years and renewable, saves frequent travellers time and hassle at often-choked customs lanes and frees customs officers to concentrate on other travellers .

Both countries jointly set the fees in 2002 at the prevailing exchange rates.

Canadian applicants have always had the option of paying for the card in U.S. dollars, which is now a significantly cheaper option. But doing so requires using an American-issued credit card, international money order or certified cheque, hoops that few Canadians jump through.

Applicants using a Canadian credit card are automatically charged the $80, which means the fee system is heavily biased in favour of Americans.

The audit recommends reviewing the fee structure “to support a consistent fee arrangement between Canada and the United States.”

A spokesman says Canada’s border agency is re-examining the entire Nexus program to ensure the fees are appropriate and equitable.

“We’ve initiated a review of the costs associated with the program,” Chris Williams said in an interview.

The agency expects the review to be finished by April next year.

Monday, October 15, 2007

Loonie Gets No Respect in Some American Stores

(Tamara King — Canadian Press)

Armed with the strongest dollar in three decades, Canadian shoppers are flocking south of the border in search of the best bargains on everything from clothes to books to booze.

But a Canadian consumer group has a warning: watch which currency you’re plunking down for deals in the United States.

Bruce Cran, president of the Ottawa-based Consumers’ Association of Canada, says that since the two currencies hit parity, he’s been getting calls and e-mails from across the country about U.S. merchants whose exchange rates are all over the map.

In Bellingham, Wash., one store recently offered a rate of only 75 cents on the Canadian dollar. At another shop in Buffalo, N.Y., a Canadian dollar was worth just 60 cents, Cran said.

“It’s morally reprehensible, but an informed consumer shouldn’t even shop there,” Cran said.

During the Thanksgiving weekend in Fargo, N.D., sporting goods retailer Scheels was among those taking Canadian money at par. Others, like Target, were close, giving 93 cents for a Canadian dollar. But at Gordmans, a discount clothing store chain, a loonie was only worth 75 cents — the exchange rate last in effect in August 2004, according to the Bank of Canada’s website.

“I think I would’ve turned around on my heels,” said Jeanette Shewchuk, a Manitoban who spent part of the Thanksgiving weekend searching for bargains in North Dakota. “It should reflect the markets. It’s not fair.” Unfortunately, Cran says, there’s not much stopping retailers from charging whatever rate they like. “It is buyer beware.”

Cran’s advice: change your money at a Canadian bank before you cross the border.

That’s exactly what Adrienne Ross of Vernon, B.C., did for a shopping weekend in Seattle. She picked up her American funds before making the seven-hour drive south. “I usually don’t do it, because I don’t like having that much cash on me,” said Ross, 27.

This time, she decided to get American currency for a few reasons. Ross didn’t want to pay the fee charged by credit card companies to convert currencies, and she wanted to avoid a repeat of past experiences with stores flatly refusing to accept Canadian money.

Local business groups are noticing that, too. David Martin, the head of the Fargo-Moorhead Chamber of Commerce, sounded apologetic about some businesses in his city — about a two-hour drive from the Canada-U.S. border — that have trouble with Canadian cash.

Martin pointed out that some retailers, especially smaller ones, aren’t equipped to handle other currencies. Still, through its website and newsletters, the chamber encourages local businesses to accept Canadian money at the bank’s exchange rate.

“The more we’re willing and able to do that, the more business we’re going to have, the more Canadian shoppers we’re going to have,” said Martin.

Sunday, October 14, 2007

One Year Later, Americans Still Threatening Softwood Deal

(Vancouver Sun)

American lumber companies used the first anniversary of the controversial softwood lumber agreement to say the deal is at risk over what they claim is a $123-million under-payment of export taxes by Canada.

But the head of B.C.’s main forestry association urged the Americans to let the agreement work – including a binding arbitration process that is expected to resolve the U.S. complaints.

John Allan, president of the Council of Forest Industries, dismissed the threat from the Coalition for Fair Lumber Imports as simply an attempt to keep up political pressure within the U.S.

Allan said both the U.S. and Canadian governments have agreed to live by an arbitration over the under-payment issue. The London Court of International Arbitration is expected to deliver its decision next March.

The arbitration is over different interpretations of the wording in the agreement.
Even if the U.S. wins its case before the court – which Allan believes is unlikely – the most Canadian companies would owe is between $15 million and $50 million, he said.

The seven-year agreement limits Canadian lumber exports by imposing a tax in the West and a quota on shipments in the East. It went into effect on Oct. 12, 2006.

It revoked U.S. countervailing and anti-dumping duty orders and returned to Canadian exporters $4 billion U.S. in duties collected by the United States since 2002.

Despite what he termed “more of the same,” by the U.S. lumber lobby, Allen said the agreement has had its benefits for Canadian producers, primarily the return of duties. Its down-side is a sliding tax based on the price of lumber. The tax has been at the maximum duty level of 15 per cent for B.C. companies during the entire first year.

The duty refund – returned when one U.S. dollar was worth between $1.13 and $1.15 Canadian – has kept a number of B.C. companies afloat during the prolonged downturn the industry is now facing, Allan said. The collapse of the U.S. housing industry and the meteoric rise of the Canadian dollar have shrunk producer margins to nothing.

“If we hadn’t had seen the return of that money, the chances are that the economic carnage in the industry would be worse that what we see today,” Allan said. “I think you would have seen more bankruptcies, certainly more shutdowns and more curtailments. Some are using that money just to exist day-to-day. And some companies, like West Fraser and Canfor, have used that money to buy American assets.”

He described the agreement as a “mixed blessing.”

“It gave some structure to the relationship between Canada and the U.S. on softwood lumber. It brought in a dispute resolution process but it didn’t stop the complaints of the U.S. coalition.”
But it is the dollar, not the softwood tax that has hurt companies the most, Allan said. A one-cent change in the value of the dollar has a $130 million impact on the value of forest products in B.C.

The dollar has climbed 61 cents Cdn against the U.S. greenback since 2002, adding up to an $8-billion impact on the industry over the last five years.

Friday, October 12, 2007

PARS, RMD No Longer Accepted by Canada Customs

Starting Mon. Oct. 15, Canada Border Services Agency (CBSA) will no longer accept paper release forms for Pre-Arrival Review System (PARS) or Release on Minimum Documentation (RMD) from brokers and importers on most shipments.

The new mandatory line release requirements, which require electronic submission via EDI, were imposed by CBSA at the Ambassador Bridge in Windsor this past April and are now being expanded to all border crossings.

CBSA says elimination of paper at the time of release is a precursor to the e-manifest -- know as Advanced Commercial Information (ACI) -- in Canada. Some carriers are concerned about the impact of this change when importers and brokers are not available and electronic transmission of release documentation has not occurred.

CBSA says it is currently developing a protocol that trucking companies can follow should documentation not be immediately available. In the meantime, CBSA says it will not turn back trucks at the border because of a broker’s failure to send the e-manifest electronically.

Also, because EDI transmission is still compatible with certain existing parameters, CBSA will continue to temporarily allow documentation for goods that are subject to another government department and where there is no EDI link between CBSA and the other agency, according to Livingston International.

Also there are exceptions if the invoice represents more than 999 lines; if there is more than one warehouse sub location code; or goods moved into a bonded warehouse, among a few other scenarios.

Is Loonie Strength Due Merely to Eagle Weakness?

(Stephen Poloz — Export Development Canada)

With the Canadian loonie flying alongside the American eagle, it is easy to forget that just 200 days ago the former was cruising 15 cents below the latter. How, exactly, did we get here?

There is certainly no shortage of explanations for the strong Canadian dollar. We are reminded that Canada has a trade surplus, a fiscal surplus, a strong consumer, high commodity prices, and incipient inflation pressures that point to the possibility of higher interest rates. All of these, and other factors, may play a role at one time or another in boosting the Canadian dollar.

And then there is the favourite explanation – the weak U.S. dollar. There are also many reasons given for the recent decline in the U.S. dollar against most currencies: the trade deficit, the fiscal deficit, a softening consumer, high commodity prices, and a sub-prime mortgage market meltdown that has led to lower interest rates. In other words, many of the same global factors that make for a strong Canadian dollar tend to make for a soft U.S. dollar.

But interpreting the loonie’s move as due merely to U.S. dollar weakness is problematic. For one thing, we need to keep the U.S. dollar’s recent weakness in historical perspective. Measured against a basket of currencies, the U.S. dollar is about where it was in 1995. In between, it rose by about 25%, peaked in early 2002, and has since retraced its steps. Why? Because the world economy slowed and fell into a series of crises during 1997-2002, and has healed itself since.

Furthermore, the Canadian dollar has risen much more than the U.S. dollar has declined this year. The Canadian dollar has risen by 16% in nine months, from its level of 86 cents at the end of 2006. The U.S. dollar has declined only 5% against a basket of currencies in that time. The euro is up 7%, the yen 3%, sterling 3%, and the Australian dollar 11%.

Why has Canada’s currency risen the most? First of all, the price of oil averaged around US$60 during the fourth quarter of 2006, and in recent weeks the price has been around $80. EDC’s model of the Canadian dollar indicates that each $10 change in the price of oil causes a move in the Canadian dollar of 3 cents. Accordingly, oil can account for the rise in the Canadian dollar to around 92 cents; of course, those who believe that oil prices will keep rising, to $90 or $100, can use this argument to justify a level of the Canadian dollar as high as 95-98 cents.

Secondly, the U.S. economy is slowing and many believe that Canada will be largely untouched by this, adding upward momentum to the loonie. Whether the Canadian economy (and for that matter, the world) can remain immune to a U.S. slowdown remains to be seen. Recent export performance certainly suggests otherwise, but analysts who believe that the two economies have decoupled can use this argument to explain another 2-3 cents of the Canadian dollar’s rise.

The bottom line? Much of the loonie’s recent flight – up to around 95 cents – appears to have been driven by fundamentals. The remainder is more speculative in nature, propelled either by pure trading momentum or forecasts of even higher oil prices and continued strong growth in Canada – an unlikely confluence of events.

Thursday, October 11, 2007

Canada Trade Surplus Widens; Imports Fall Faster Than Exports

(Bloomberg News)

Canada’s trade surplus unexpectedly widened in August, with imports falling twice as fast as exports as fewer cars and parts moved across the border with the U.S.

The surplus grew to C$4.1 billion ($4.2 billion), from a revised C$3.4 billion in July, Statistics Canada said today in Ottawa. Imports fell 3.9 percent and exports dropped 1.8 percent, with both declines paced by the automotive industry. The only categories with gains were exports of machinery and both imports and exports of farm and fish products.

Economists had forecast the overall surplus would be little changed from the initial July estimate of C$3.7 billion, according to the median of 25 estimates in a Bloomberg News survey.

The wider trade surplus may not last, coming the month before the Canadian dollar rose to parity with the U.S. currency for the first time since 1976, making Canadian exports less competitive. Canada’s currency has risen 19 percent this year and 62 percent over the last five years.

In the auto industry, Canada exports most of its production to the U.S., and parts often move back and forth across the border as vehicles are assembled. In August, U.S. consumers were hit by the collapse of the subprime-mortgage market.

A separate Statistics Canada report today showed Canadian new-home prices rose 6.5 percent in August from a year ago. From July, home prices rose 0.4 percent, slower than the 0.6 percent gain economists polled by Bloomberg had expected.

Wednesday, October 10, 2007

Canadians Take Loonie For a Ride

(Allison Lampert — CanWest News/Montreal Gazette)

Some U.S. car dealers roll out welcome mat for bargain-hunting Canucks — some don’t
Brian McBride was looking forward to this Thanksgiving weekend, and he’s not even Canadian.

McBride, whose family owns the Bill McBride car dealership in Plattsburgh, N.Y., about 100 kilometres south of Montreal, was expecting big business over the three-day holiday. There are the Americans, celebrating Columbus Day, and an expected influx of customers from Quebec.

For McBride and other U.S. auto dealers near the northern border, business has been soaring over the last few months, right along with the loonie, which closed Friday at $1.018 US.

In September, when the loonie hit par with the dollar for the first time since 1976, McBride’s sales of new Subarus nearly doubled compared with the same month last year.

Canadians eager to save $10,000 and more on higher-end U.S. cars accounted for a third of those sales.

“The response has been very, very good,” McBride said. “It’s progressively mushrooming.”

The strong loonie is coming at an ideal time for dealers like McBride.

In the U.S., already-weak auto sales are predicted to decline in 2008 to a decade-low level, due to slowing employment growth, the housing market and high energy costs, a report this week by Scotia Bank economist Carlos Gomes said.

But car manufacturers such as General Motors, BMW and Porsche are penalizing U.S. dealers who sell new models to Canadians.

For example, they may refuse to supply dealers with top-of-the-line, high-margin models. In other cases, they may decline to reimburse dealers who incur costs for customer incentives. Other makers, including Honda, won’t honour warranties on U.S. imports.

Even Subaru, which permits these sales, is now making it tougher for Canadians to get their 2008 U.S. car warranties honoured in Canada.

As a result, said McBride, “We’re anticipating future growth, but we don’t expect this to continue forever.”

In 2007, Canadians are expected to import about 150,000 U.S cars, up from 112,800 last year. Scotia Bank’s Gomes estimates 1.65 million vehicles will be purchased this year in Canada, up from 1.61 million in 2006.

Auto manufacturers said cars are priced based on local-market factors, including operating costs, that tend to be higher in Canada. Gomes noted that companies have had trouble adjusting their prices to the value of the loonie, which ascended from 85 cents to the U.S. dollar in March to parity in September.

Still, manufacturers of luxury cars — the market with the most pronounced gap on prices between Canada and the U.S. — are trying to discourage cross-border shopping.

Then there’s the process of importing the car, which obliges the owner to pass through three government bodies: Canada’s Registrar of Imported Vehicles, the U.S. Customs and Border Protection and the Canada Border Services Agency.

New cars don’t have to be registered in the U.S., but they must be brought to an American customs office at least 72 hours before export.

For Ashlee Lynn Wismach, the time invested to import her Audi TT coupe, when she moved from California back to Montreal last year, would make her think twice about buying a car in the U.S. — unless she could get a really good deal. “It’s a headache,” she said.

“That’s why people hire a broker to do it. If it was a matter of saving $500 I wouldn’t do it. If it’s a question of saving, say $5,000, I would do it.”

Indeed, the prospect of saving thousands of dollars on a U.S. car makes the hassles worth it, some Canadians say. In Shelburne, Vt., John DuBruhl said inquiries from Canadians account for about half the calls received at his family’s luxury-auto dealership.

But DuBruhl’s dealership won’t sell new Mercedes, BMW and Porsche cars to Canadians, because of potential repercussions from the manufacturers.

He can sell used cars.

“Please, put it in the headline — we can’t sell to Canadians,” his receptionist tells a reporter.

“They’re killing me with calls.”

Tuesday, October 9, 2007

EU and China to Limit Chinese Clothing Exports to Europe Until End of 2008

(The Canadian Press)

The European Union and China have agreed to cap Chinese clothing exports to Europe until the end of 2008, the European Commission said Tuesday.

The EU’s executive arm said it would run “joint import surveillance” with the Chinese Foreign Trade Ministry for the next year for some types of clothing instead of lifting all quotas on Chinese textiles as originally planned for the start of 2008.

Some European manufacturers had feared that they would have to compete with a flood of cheap Chinese bras and T-shirts when quotas were lifted. EU officials had asked China to try to contain its ballooning exports to Europe, the largest purchaser of Chinese goods.

Courier Low Value Shipment Program Review

(CIFFA e-Bulletin)

Canada Border Services Agency (CBSA) has undertaken a Courier Low Value Shipment (LVS) Program Review. The Review team will take a comprehensive approach, consulting not only internally within the CBSA but also widely within the industry and with other government departments and stakeholders.

The purpose of the Courier LVS Program Review is to re-examine and re-evaluate the program in light of the current environment with the objectives of identifying present and future model flows; best industry practices both nationally and internationally; co-operative risk management measures; and opportunities for automation and the streamlining of processes. The review team will identify short, medium, and long-term goals for process improvement.

Over 26 million shipments are processed each year through the LVS Program.

Monday, October 8, 2007

Tariff-ic Savings

(Thane Burnett — Winnipeg Sun)

We’re getting more bang for our buck – but good luck figuring out our confounding customs duties

Golly — everyone in the family wants something different.

You’re looking for an Andy Warhol painting for the den.

Your spouse can’t decide whether to get a great deal on a microwave oven or just spring for an entire $1.5-billion nuclear reactor.

And those darn kids. Neat freak Billy hopes to pick up a few hundred brooms while dreamer Sally thinks she’s finally saved enough for her own dirigible — because who doesn’t want their own lighter-than-air balloon?

It’s Thanksgiving weekend, and the Canadian tradition is to ditch Grandma again at someone else’s house for dry turkey and head off to old Uncle Sam’s for the real feast. And with our majestic loonie staring the bald eagle square in its single good eye — our dollar soaring to 31-year highs — it’s perhaps the proudest time to leave your money in another country.

But gosh — those most recent “Departmental Consolidation of the Customs Tariff 2007” reports are harder to follow than British darts on the sports network.

Most Canadians don’t realize there are scores of items that are entirely duty-free coming back into Canada — including almost anything made in the U.S. or Mexico. It means all you pay if you pick up, say, a helicopter — as long as it’s not over 2,000 kg — is just the Canadian sales tax coming back home.

But while Sally gets her dirigible free of any cross-border tariff, uptight Billy will pay 6.5% on his brooms. If he wants toothbrushes to wash that bad taste away, it’s another half a percent, son.

The rules of what’s allowed free between the U.S. and Canada (most downhill skis) and what’s not (most cross-country skis) have always taken the mind of a lawyer to figure out.

And sometimes, even that wasn’t enough. Heading into the U.S. by steamship in August 1897, wealthy Canadian lawyer and cabinet minister’s son Stewart Tupper was caught getting off the boat with his deep pockets filled with four silver candlesticks and silver salt shakers.

As a New York Times piece of the era explained: “Mr. Tupper was plainly embarrassed, and when he made a trip down into still another pocket, the crowd around stood on tip-toe expecting to see a diamond necklace come forth. It was, however, a handsome silver spoon in a morocco case.”

A diamond ring, a silver watch and several jubilee medals later, and poor Mr. Tupper was hit with a $30.32 duty.

“This staggered him, but he paid it and refilled his pockets,” the Times reported in the day.

Customs tariffs and duties — into the U.S. and into Canada — still confound. A Canada Border Services Agency spokesman recalled to Sun Media that the nuclear reactor your spouse wants to buy in America is entirely tariff-free. But, in fact, changes to the provisions clearly point out nuclear reactors carry an 8% tariff. It’s the machinery for isotopic separation and non-irradiated fuel elements which you can bring back for free. As long as they’re from the U.S. or another preferred trading country.

Better to just settle for a satellite, which carries a lesser 6.5% tariff. Or a hang glider, which, along with cellphones and video games and lots of stuff made out of plastic, you can bring in by the truckload with no tariff.

Carol Osmond, senior policy adviser for I.E. Canada, the Canadian Association of Importers and Exporters, said she understands why consumers would be confused about what — beyond the usual personal exemptions of $50 for a 24-hour trip or $400 for a 48-hour stay — we’re allowed to freely bring (after Canadian taxes) back home.

“There are hundreds of thousands of pages,” she said of the tariff provisions.

But she said there are fewer than there once were. She added, however: “Will some go away completely? Maybe not.”

If you’re searching for a quick guide to what are the most popular items to bring back across the border for free, you’d have better luck walking on glass — which, by the way, can be brought back without a border charge. Canadian officials say while they’re seeing more used cars being brought north, it seems impossible for them to break down what we’re carrying back home. They simply suggest Canadians first check items by calling their help-line at 1-800-461-9999. Because there’s little chance of you making sense of it on your own.

If your family brings artist paintbrushes back into Canada — and you’ve used up your personal exemptions — prepare to pay a 7% tariff. But if you make it all the way into New York’s Lower East Side, to the trendy and chic Woodward Gallery — home to modern masters like Pablo Picasso — they’ve set aside a 1964 Andy Warhol painting of Jackie O. It’s yours for just under $3 million.

“It would be a very good weekend to come,” owner Kristine Woodward said.

And while those paintbrushes will get you stopped for an extra fee at the border, the almost-$3-million Warhol will not. It’s tariff-free. But sadly, there doesn’t appear to be a large discount for travelling so far.

Sunday, October 7, 2007

U.S.-Bound Shoppers Slow Border Traffic

(CBC News)

While many Canadians are staying home for Thanksgiving weekend, others are more interested in cross-border shopping trips — and the extra traffic in some locations has meant longer wait times to enter the United States.

The longest delays on Saturday of any border crossing in Canada were at Emerson, Man. The estimated wait time for a vehicle trying to reach an inspection booth before entering North Dakota was 3½ hours at its peak, according to the Canada Border Services Agency.

That’s probably because more Canadians appear to be taking advantage of their new buying power south of the border, an agency spokeswoman said.

Canada’s currency closed the week at just under 1.02 US, gaining against the U.S. dollar in foreign exchange trading Friday on news of strong Canadian job growth in September.

The loonie rose more than a cent and a half to reach a new 31-year closing high of $1.0185 US, the biggest one-day gain against the U.S. currency since June 1, 1970 — when the Canadian dollar was permitted to float.

By the afternoon, wait times had dropped to about an hour at Emerson, across the border from Pembina, N.D., said Loretta Nyhus of the Canadian Border Services Agency in Winnipeg. She said people in the Manitoba community were probably making more same-day visits because of the proximity to U.S. shopping centres.

Other Saturday morning wait times for U.S.-bound vehicle traffic: Three hours at the Pacific Highway crossing, linking Surrey, B.C., to Blaine, Wa.; Two hours, 30 minutes at Cornwall, Ont., to Rooseveltown, N.Y.; Two hours, 30 minutes at St-Bernard-de-Lacolle, Que., to Champlain, N.Y. ; One hour, 45 minutes at the Blue Water Bridge crossing, linking Sarnia, Ont., to Port Huron, Mich.; and, One hour at the tunnel linking Windsor, Ont., to Detroit.

Nyhus said extra border staff will be working this holiday weekend at places like Emerson to handle the increase in traffic.

“What goes in one direction has to come back,” she said. “And we expect long lineups for people returning to Canada Saturday night, Sunday and into Monday.”

Most border officials were reporting minimal or no delays crossing into Canada from the U.S.

Saturday, October 6, 2007

Wait-Times Skyrocket at Border Crossings

(CTV News/Canadian Press)

As the Canadian dollar continues to enjoy parity with its U.S. counterpart, hordes of bargain-hungry Canadians are heading south, leaving some with agonizing border wait times at entry points into the United States.

On Saturday, wait times for domestic travelers at the Pacific Highway and Douglas crossings in Surrey, B.C. were as high as 3½ hours according to the Canadian Border Services Agency.

The St-Bernard-de-Lacolle crossing in Lacolle, Que., the Emerson, Man. entry point and the Queenston-Lewiston Bridge in Queenston, Ont., also reported wait times of more than two hours.

The long lines represent a dramatic increase for service standards at border primary inspection booths. Canadian Border Services reports usual processing of travellers takes 20 minutes on most weekends and holidays and a mere 10 minutes during weekdays.

Meanwhile, the majority of border officials are reporting minimal or no delays crossing into Canada from the U.S. as Americans decide to stay at home.

As the U.S. greenback takes a beating amid recession fears and a credit crunch, tourism to U.S. cities near the border has surged and the American retail sector reports significant gains as a result.

“When the exchange rate began getting closer to par we saw an increase in Canadian clients ... and they’re coming throughout the year, instead of just off-season,” Steve Gendall, owner of the Maple Leaf Motel in nearby North Conway, told the Canadian Press earlier this week.

The loonie closed Friday’s trading day in Toronto up 1.59 cents to US$1.0185, prompting long-weekend shoppers to head south to get more bang for their buck.

Canadian overnight travel to the U.S. rose to its highest first-quarter level since 1993, according to a report released by Statistics Canada in late August.

Canadians took about 3.7 million trips into the U.S., an increase of 4.8 per cent from the same time period in 2006.

In total, Canadians spent about $3.1 billion in the U.S. during the first quarter — an increase of five per cent.

“We expect it will be a double-digit increase for 2007 ... with the dollar reaching parity,” Chris Ryall, Canadian representative for the New Hampshire Division of Travel and Tourism Development, told CP.

“Having the loonie on par with the U.S. dollar really helps increase the spending,” he said. “It definitely attracts people to stay longer and spend more.”

Americans made fewer than 1.8 million overnight trips to Canada by air and car between January and March. The numbers represent a decline of 6.3 per cent from 2006, marking the eighth consecutive year-over-year quarterly decline.

Minister Orders Investigation into Border Guard Videos

(Vancouver Province)

Public Safety Minister Stockwell Day ordered an investigation Tuesday after embarrassing video clips of border–guard recruits appeared on the online networking site, Facebook.

The recruits posted photographs of themselves drinking in uniform, called Prime Minister Stephen Harper a “serial killer” and referred to French Canadians as “f–––ing bastards” on the popular website, according to CBC News.

Facebook quickly removed the offensive material.

“I was very concerned after watching media reports on allegations of improper conduct and hateful language from employees and recruits of the Canada Border Services Agency,” Day said in a statement.

“I immediately directed my officials to look into these allegations and take appropriate disciplinary action where warranted. . . . It is regretful that the report on a small number of individuals has reflected poorly on the CBSA,” Day said.

The CBC report said former Victoria border guard Chris Hughes tipped the network to the material on Facebook.

Hughes, who is in his 40s, questioned whether the recruits were qualified to protect Canada’s borders from terrorists.

A drinking party at a CBSA training centre in Rigaud, Que., was allegedly the site for some of the embarrassing photos that made it onto Facebook.

One recruit referred to Quebec as “the land of poutine and frog,” and “f–––ing French bastards.”

Hughes and a former colleague, also in his 40s, were hired to work in the summer as border guards, but were not kept on permanently.

The two men claim CBSA dumped them in favour of younger, cheaper student recruits.

Hughes expressed concern about the ability of the students to do their job.

“If you were a terrorist and you wanted to get into Canada . . . come when the students first go on the job,” he told the CBC.

Following a series of embarrassing incidents in which Canadian border guards – who were not armed – deserted their posts on the border because they feared for their safety, the Conservative government announced it would issue them firearms.

The first armed border guards at Surrey, B.C., crossings were deployed Aug. 31.

“Border services officers are being provided with duty firearms to enhance their law–enforcement effectiveness and their safety as they fulfill their duties,” the government said in a press release at the time.

“In total, 4,800 border services officers will be trained and deployed by the end of the training process.

“This includes the 400 new border services officers who will be hired, trained and equipped in order to eliminate dangerous ‘work–alone’ situations.”

Thursday, October 4, 2007

Technology Seen as Key To Upgrading Food Safety

(Washington Post)

A consensus is building among [U.S.] government and food industry officials that the fix for the country’s import safety system is likely to require better-targeted inspections, though not necessarily more of them.

Yesterday, Mike Leavitt, secretary of health and human services and chairman of a panel established by President Bush to study the safety of imported food, reflected that point of view when he said: “We simply cannot inspect our way to safety.”

Leavitt was speaking in a packed auditorium at the Department of Agriculture, where the Interagency Working Group on Import Safety heard from more than 40 speakers. The panel is compiling a list of recommendations that is expected to be issued by next month and is likely to include an emphasis on using technology to target risky importers and coordinating oversight among agencies.

The idea that inspections need not be increased has been challenged by consumer advocates and those in Congress who have proposed a series of reforms to the food safety system, including importer fees and consolidated oversight under a single agency. They consider increased inspection necessary but acknowledge that the Food and Drug Administration’s budget makes that difficult under current circumstances.

The question of how to keep the nation’s imported food supply safe emerged early in the summer after a series of recalls and warnings, mostly about Chinese products. The problems included an unknown number of pets that died from pet food tainted with a toxic chemical, followed by contaminated toothpaste, toys with excessive lead and seafood with banned antibiotics.

The spurt of news came as U.S. consumers remain concerned about an E. coli outbreak last year that cleared shelves of spinach and led to at least three deaths. Only 66 percent of shoppers are confident that the food they buy at the grocery store is safe, down from 82 percent last year, according to the Food Marketing Institute.

At first, attention turned to the government’s reliance on random inspections to catch problems, and demands that those inspections be increased. The FDA inspects less than 1 percent of the food under its oversight, including seafood and produce. The Consumer Product Safety Commission has fewer than 100 investigators for the 15,000 types of consumer items, from toys to electrical outlets, that come into the country every year.

In the weeks since then, however, as President Bush’s panel set to work, at least a half-dozen pieces of legislation were introduced in Congress and a series of hearings on the proposed laws were held, the prevailing sentiment has come down to this: The U.S. import safety system is indeed broken, but the short-term fix probably lies in requiring manufacturers to ensure the safety of their suppliers and giving U.S. regulators more power to oversee the safety system they put in place. Importers could be expected, for example, to certify that their suppliers are meeting tough safety standards.

Government and industry officials note that the sheer volume of imports – $2.2 trillion this year, twice the level in 2000 – makes increasing inspections impractical. It would require hundreds, if not thousands, of new inspectors, and would slow business at the borders, they say.

“People can say, ‘let’s increase inspections’ and that is all well and good, but you are looking for a needle in the haystack,” said Tom Stenzel, president and chief executive of the United Fresh Produce Association.

Instead, the import safety panel is expected to push for expanded use of technology to more quickly identify risky imports. Leavitt has supported the use of technology at the border that could read the contents of a sports drink bottle, for example, looking for potentially toxic chemicals without opening it. The FDA is developing a food-safety strategy to be unveiled this fall that would rely on risk-based inspection but has not asked for more resources to pay for more inspections.

“There is an emerging consensus that we should continue to improve our ability to detect threats but not rely on detection as the front line,” said Scott Faber, vice president of government affairs for the Grocery Manufacturers Association. “Our inspectors should be the remedy of last resort.”

But increasing inspections remains the cornerstone of many of the congressional proposals under consideration, along with empowering the FDA to mandate recalls. Senate Majority Whip Richard J Durbin (D-Ill.) and Rep. John D. Dingell (D-Mich), chairman of the House Committee on Energy and Commerce, have both proposed charging importers a fee that would raise hundreds of millions of dollars and help fund more inspections. Supporters of the legislation say that although increasing inspections may not be enough to tackle the entire food safety problem, it is critical to the process.

“We need more inspections at foreign factories or processing plants as well as inspections at our ports of entry,” Donald L. Mays, senior director of product safety at Consumers Union, told the panel yesterday.

Which viewpoints prevail may depend on how much lawmakers are able to accomplish before the end of the year. In the short term, consumers may see more resources for the FDA and other regulatory agencies, said Rep. Diana DeGette (D-Colo.), vice chair of the Energy and Commerce Committee. More systematic restructuring of the food safety system, including consolidating oversight under a single agency, will take time, she said. “We need to beef up every area of food safety,” she said.

New Passport Guarantor Policy in Effect

(Passport Canada)

The Honourable Maxime Bernier, Minister of Foreign Affairs today announced a new guarantor policy for Canadian passports. This new policy allows most Canadian adult passport holders residing in Canada or the U.S. to act as guarantors for passport applications. Today’s announcement is the next step in the continued efforts by Canada’s New Government to improve passport services.

“Canada’s New Government is taking positive action to improve passport services for Canadians. And unlike the previous government, we are delivering results. In only a few months, we have increased Passport Canada’s capacity by 40%, we have launched the simplified passport renewal process and we are announcing today the new guarantor policy,” said the Honourable Maxime Bernier, Minister of Foreign Affairs.

Under the new policy effective today, an eligible guarantor must:– Be a Canadian citizen 18 years of age or older; – Hold a five-year Canadian passport that is valid or has been expired for no more than one year; – Have been 16 years of age or older when they applied for their own passport; and – Have known the applicant personally for at least two years.

Demand for Canadian passports has more than doubled over less than a decade. In 1999-2000, Passport Canada issued 1.7 million passports. In 2006-2007, it issued 3.6 million passports and this fiscal year, the figure is expected to reach more than four million.

Now, any family member as well as any individual residing at the applicant’s address may act as guarantor, provided he or she meets the requirements noted above. To simplify the verification of guarantor eligibility, Passport Canada will use its own database, thereby increasing the security and efficiency of the process.
For more information on travel documentation required for travel to the United States and upcoming changes due to the U.S. Western Hemispheric Travel Initiative, please visit the CBSA website.

Wednesday, October 3, 2007

Poll Says Most North Americans Support Free Trade

(CTV News)

Twenty years after Canada and the United States negotiated the controversial Free Trade Agreement, most North Americans believe the deal fueled economic growth, according to a new poll.

The FTA was finalized in October 1987 and was designed to erase trade restrictions between the two countries. Critics worried it would erode Canada’s sovereignty.

But 77 percent of Americans and 73 per cent of Canadians now believe free trade is crucial to North America’s continued prosperity, according to an exclusive poll for Policy Options magazine that was provided to CTV News.

The survey was conducted by SES Research.

Among Canadians, 57 per cent of respondents said their country would be worse off without free trade. For Americans, it was 55.6 per cent.

By contrast, exactly one quarter of Canadians said their country would be better off without free trade, while 19.1 per cent of Americans said the same.

“Although we may feel we’re taken for granted some of the time, the reality is that for a lot of Americans, trading with Canada is a no-brainer,” SES pollster Nik Nanos told CTV News.

In 1988, a political attack ad targeting Brian Mulroney, whose government helped forge the FTA, depicted officials from Canada and the U.S. looking at a map of North America. In the climax, the U.S. official took out an eraser to rub out the border.

Simon Reisman was Canada’s chief negotiator for the FTA, and said he worked hard to get the best deal for Canada.

“We got it, we didn’t get it all. We left a little for posterity,” he said. “And now 20 years have gone by.”

The FTA was superseded by the North American Free Trade Agreement in 1994, which brought in Mexico as another major trade partner.

When respondents were asked if they supported strengthening economic integration between Canada and the U.S., 67 per cent of Canadians said yes.

The poll also covered another sovereignty issue: the movement of people between Canada and the U.S.

Despite heightened concerns about terrorism since the attacks of 9/11, the survey found that 58 per cent of Americans supported the free movement of people across the border — although 29.8 per cent only “somewhat supported” the idea.

For Canadians, it was a total of 64 per cent.

And when asked if respondents supported or somewhat supported creating a more integrated rail, highway and air transportation infrastructure between the two countries, a total of 72 per cent of Canadians backed the idea.

Americans were only slightly less enthusiastic at 67 per cent.

“This should be a bit of a reality check for American legislators down in Washington, that for Americans, when they view Canadians, they see the future as more access,” said Nanos.

Canadian business leaders said the survey should help them to convince U.S. politicians to stop focusing on tighter border control.

“The concerns that Americans have about terrorists coming from Canada is not a widely shared concern among Americans,” said Thomas D’Aquino of the Canadian Council of Chief Executives.

Tuesday, October 2, 2007

ACE Application Update

(CIFFA e-Bulletin)

The revised ACE application (which includes the expanded account types) has now been posted to CBP website. To access the application click on this link.

If you are an existing ACE Account and would like to apply for a new account type, you are not required to submit a new application. Instead, you should notify your CBP Account Manager or your Account Administrator of your request. However, if you are a current ACE Portal Account wishing to create a Service Provider, Facility Operator, Foreign Trade Zone Operator, or Cartman / Lighterman account type, you must submit your request by e-mail with a copy of your request to your CBP Account Manager, if applicable. Please provide the information noted on the new application for each of these account types. For those of you who are NOT currently ACE Accounts, please note that CBP has now added a new e-Mail option for you to submit your application. The new application should be submitted to

Monday, October 1, 2007

U.S. Senators Complain About Terrorists, Security at Canadian Border

(Canadian Press)

American senators demanded security upgrades at the Canadian border and complained about a terrorist threat from the north Thursday, citing an “alarming” report suggesting it would be easy to slip radioactive material into the United States.

The 13-page congressional report, the third to look at the border with Canada since Sept. 11, 2001, also gave legislators an excuse to accuse their neighbours of harbouring an inordinate number of terrorists.

“It's so hard to believe there's been so little progress in plugging these gaping security holes,” Iowa Senator Chuck Grassley, a Republican, told a Capitol Hill hearing. “They're simply wide open, waiting to be crossed by anyone carrying anything, even a dirty bomb or a suitcase-type nuclear device.”

The independent Government Accountability Office sent out investigators carrying large red duffel bags with simulated radioactive material and other contraband to see if they could get across the Canada-U.S. line at three of four unguarded spots late last year. They succeeded without much trouble. Someone called authorities during one of the stunts but the Border Patrol didn't catch up with those involved. In one case, the GAO personnel stood and waved at security cameras.

The report complains there are many state roads that end at the border that aren't manned or monitored. Some crossings are only staffed during the day and anyone could drive around barriers placed across the road at night, it said. “Our work clearly shows substantial vulnerability on the northern border to terrorists or criminals,” said Greg Kutz, the GAO's managing director for special investigations and forensic audits.

Senator Ken Salazar from Colorado said there's been far too much focus on the border with Mexico, where there's a massive problem with illegal immigrants, and not enough on the Canadian line. He called it a “huge disparity,” noting there are only some 1,000 Border Patrol agents in the north compared with nearly 12,000 at the U.S.-Mexico border. Salazar also complained there are more international terrorist groups active in Canada than anywhere else in the world, some 50 different organizations, citing a Canadian Security Intelligence Service study.

A CSIS backgrounder in 2002, not an official report, did make that estimate but included the caveat that there could be more in the United States. “This situation can be attributed to Canada's proximity to the United States which currently is the principal target of terrorist groups operating internationally,” said the commentary, “and to the fact that Canada, a country built upon immigration, represents a microcosm of the world.”

New York Senator Chuck Schumer called the report “extremely troubling,” telling the committee there are inadequate patrols on Lake Ontario and that terrorists have crossed from Canada through Buffalo. He did not elaborate on his comment and his office didn't return a phone call requesting clarification.

Ronald Colburn, deputy chief of Border Patrol at the Homeland Security Department, took a vigorous grilling but said there's nothing in the study that he didn't already know. “I don't get a sense that you really care about this,” thundered Democratic Senator Max Baucus of Montana, chairman of the finance committee. “Here we are in Congress trying to protect people. You've been avoiding a lot of questions. It's not been satisfactory.”

Colburn told him there is a serious national strategy in place but Congress needs to do its part by funding improvements for more security. “We agree the border is not as secure as it needs to be,” he said. “This is very remote and very challenging.” “To secure each unique mile of the border requires a balance of technology, infrastructure and personnel.” The department is sending 200 more U.S. agents to the northern line, said Colburn, and employs technical devices like cameras, sensors and unmanned aerial systems to keep track of what's happening. He noted illegal activity was down 20 per cent this September compared with last year and said only one per cent of illegal crossings come from Canada, with 99 per cent entering from Mexico.
The trouble is that more than 90 per cent of Canada's 30 million people live close to the border, he said.

Prime Minister Stephen Harper, in Toronto, said the study was testing U.S. security, not Canada's, but “obviously we have to be concerned.” “We work hand and glove with American authorities dealing with any kinds of threats or potential threats,” he said. “We are making significant investments as well, in both processes and people (by) hiring more border guards. So we're doing our bit.”

Public Safety Minister Stockwell Day added that Ottawa is looking at ways to beef up security on the Canadian side. He acknowledged there are challenges in securing the border, but said most people who try to make it through illegally are stopped. “You will read from time to time about someone who has been able to get, when they thought nobody was looking, across the thousands and thousands of kilometres of border,” he said in Edmonton. “What you didn't read about are the 21,000 people last year who didn't make it, who tried at various points, either at official border points or unofficial border points.” In the last 19 months, Ottawa has invested $430 million in security updates and hired 400 officers, he said. “No country is immune to terrorism, but I can tell you with the increased resources, both on the dollar side, the technology side and the personnel side, we're safer than we were a year and a half ago.”

Kenneth Luongo, executive director of Partnerships for Global Security, a group fighting the dangers of weapons of mass destruction, told senators that American investments at the Canadian border, including more than $122 million in technology improvements since Sept. 11, 2001, have been “well advised but insufficient.” Luongo noted the June 2006 arrests in Canada of 17 men allegedly planning to carry out attacks inspired by al-Qaida. And he raised the case of Ahmed Ressam, who was caught by U.S. officials at Port Angeles, Wash., on the eve of the new millennium, his vehicle's trunk filled with explosives for use in a bombing plot.

EDC: A Unique Canadian Approach for Growing Trade

(Export Development Canada)

Speech to the Conseil des Relations Internationales de Montreal (CORIM)
Eric Siegel, President and CEOExport Development Canada

Today unprecedented levels of globalization are steering more and even faster change. I get to witness it from the greatest vantage point yet – the Presidency of EDC. I was greatly honoured when the Government entrusted me with the stewardship of EDC last January. It comes with great responsibility to directly contribute to Canada’s competitiveness and success abroad. It also comes with an incredible opportunity to call attention to what we have at stake in Canada’s trade: the incredible opportunities within our reach, and the terrible costs should they fall from our grasp. It is in that spirit that I make my remarks today.

One of the greatest changes I have seen has been the evolution and growth of EDC itself. I take great pride in my own contribution to that, especially in managing change and restructuring to better meet client needs. That contribution is only one among many others, past and present, both at EDC and elsewhere in Government, that have helped us grow our mandate, build our capabilities and make us the force in trade finance we are today.

Let me recap briefly last year’s performance:

• In 2006, we worked with 6,805 customers completing $66.1 billion in exports and investments in 184 markets around the world.

• Almost one quarter of that business was in emerging markets – markets where Canadian business knows they have to be for future growth but where the risks are also higher.

• We worked with many small and medium sized businesses, 5,800 in all, on business valued at $15 billion.

• We also worked with most of Canada’s largest and most recognizable firms and we are proud of it. Growing Canada’s trade means growing Canada’s brand, and growing businesses that are recognized throughout the world.

• Finally, we had a net income of $1.2 billion – a balance sheet that we can put to work for Canadian business to take on greater risks in sectors and markets that are vital to growth. I will return to that point a little later in this speech.

It is an impressive list of results, now part of impressive cumulative results. The Government of Canada made a total investment of $983 million in equity since EDC was created. In that time our cumulative business volume has been $629 billion.

Read the complete text of the speech here.

Apparel Importers Prepare for a Post-2008 World

(Deborah Belgum —

The world of apparel importing will change drastically at the end of 2008.

But how it will change is the unanswered question.

Safeguard measures that curb imports on 34 categories of apparel and textiles from China will expire on Dec. 31, 2008.

No one is sure what will happen after 2008. More safeguard measures could be imposed. Anti-dumping measures could be requested or countervailing duties could be sought to stem Chinese apparel.

But Janet Labuda, the chief enforcer of apparel and textile quotas and duties for U.S. Customs and Border Protection, doesn’t believe her job will disappear overnight.

“I know our resources in border protection will be shifted to free-trade preferences and revenue protections,” she said. “And if China has to continue to pay high duty rates, I don’t know how that will affect our enforcement.”

Many Chinese manufacturers are renowned for finding clever ways of getting around paying duties. They have been known to classify apparel as toys, brooms, toilets and other non-duty or low-duty items. They have also been known to ship goods to another country and then the United States to fly below the quota radar.

Labuda wondered whether domestic manufacturers will file anti-dumping cases restricting Chinese apparel imports after 2008. “People think anti-dumping cases will occur. I have my doubts,” she said. “They have to prove material injury to a U.S. industry, and it is very expensive to pursue. Five years ago, it cost about $1 million in legal fees, and now it would be about $3.5 million.”

Because of foreign-trade subsidies on some apparel exports, she believes that importers will pressure the U.S. government to slap countervailing duties on clothing coming from Asia. That has already been discussed on items coming from Vietnam, which joined the World Trade Organization this year. The organization promotes free trade among the group’s 151 countries that are members. China joined in 2001.

Under WTO rules, a country can launch its own investigation into foreign subsidies and decide to charge extra duties. “The test here is not as difficult,” she noted. Labuda was in San Pedro, Calif., speaking on Sept. 12 at the sixth annual China Conference, a two-day event organized by Cargo Business News.

With China now the largest apparel supplier to the United States, its role after 2008 is keeping many people guessing.

But Robert Krieger, president of Krieger Worldwide, a Los Angeles customs brokerage and freight forwarder, suggested watching Europe and seeing how it handles its apparel and textile quotas on 10 categories that expire at the end of this year.

“If the EU [European Union] starts initiating anti-dumping measures against China, then it is time to panic,” he said.

Krieger suggested preparing Chinese factories for anti-dumping investigations by making sure business records are in order.

Profit margin With textiles accounting for 42 percent of the $25.1 billion in duties collected on goods coming into the United States last year, Labuda said she doubted the government would issue a green light on Chinese apparel after 2008.

“Chinese goods continue to pay a large portion of that 42 percent,” she said.

Customs will be scrutinizing goods coming from countries that are part of the various free-trade agreements and trade-preference pacts struck in recent years by the Bush administration.

“I think Chinese imports will continue to increase, and they may continue to transship [to a third country] to keep [apparel and textile] statistics down and stay off the radar,” she said.

One concern is that after 2008, the apparel and textile market will be flooded with Chinese goods, pushing lesser-developed countries such as Indonesia, Turkey and various African nations out of the business.

“AGOA [the African Growth Opportunity Act] is falling apart, I have heard,” Labuda said. “What the role of the WTO is will be very interesting from our perspective.”

Ilse Metchek, executive director of the California Fashion Association, noted that any time the market is flooded with goods, the price drops and it becomes less desirable. “When there is dumping in fashion, it kills,” she said.

Bruce Berton, director of international business consulting at Stonefield Josephson Inc., a Los Angeles accounting firm, believes that China could curtail its own apparel exports.

He recalled when silk first started being exported from China to the United States in 1991. “There was so much silk coming in from China that the Chinese asked our government to put a quota on silk to increase the price,” he said. “The U.S. could raise the duty ratios on Chinese goods.”

He also noted that the Chinese government is pushing its business community to establish more high-tech industries that deliver higher profit margins and revenues than the apparel industry. “I don’t see the apparel industry growing, especially if industries move inland, where transportation costs are higher,” he said.