Wednesday, December 31, 2008

New China Advanced Manifest Rules

(American Shipper)

The new rules require the manifest for all cargo imported or transshipped into China to be submitted to China Customs electronically 24 hours prior to loading of cargo at foreign ports for container ships. Non-container ships must submit the electronic manifest 24 hours before arrival at the first port of call. For export cargo from China, the pre-stowage manifest must be filed 24 hours prior to loading of cargo at mainland China ports and a final manifest, the loading manifest, must be submitted 30 minutes prior to loading.

China Customs will screen the information and advise vessel operators whether they can accept cargo. Vessels carrying un-manifested or rejected cargo may be refused entry to or exit from Chinese ports. Reasons for subjecting goods to a “No Discharge” order include quarantine regulations, drug enforcement or national safety.

Most ocean and air carriers have details on their website about how the advanced manifest rules will affect their customers. Read more here.

New World for China Textile Exports as Quota Systems End

(Xinhua)

The sun set Wednesday on a quota and license system that governed China’s textile trade for decades.

As the United States-China and European Union-China agreements on textiles and clothing expired with the old year, the Ministry of Commerce terminated supervision over quotas on 21 categories of textile exports to the United States and licenses on eight categories to the European Union.

Textile companies might see Thursday — the first day of 2009 — as the beginning of an unfettered era of free trade, but the outlook is clouded by weakening demand and rising protectionism amid the financial crisis.

There are few signs that shipments by the world’s largest textile exporter will soar.

“With global demand slumping, the expirations will not bring about a repeat of the sharp increase in textile and clothing imports from China that occurred in early 2005,” said Sun Huaibin, spokesman for the China National Textile and Apparel Council.

He said that worries about such an increase and its damage to the U.S. market were “groundless.”

He said slackening demand resulted in a persistent low rate of quota usage this year.

Quota prices fell from a peak of nearly 20 U.S. dollars to less than 2 U.S. dollars within a year, said Liu Min, a trader with Shanghai Mai Si Ke Te International Trading Co. Ltd.

“Our exports declined more than 60 percent compared with last year. I heard many textile companies cut exports to the lowest level in recent years. Some even failed to use up the quotas acquired before the third quarter,” said Chen Shubin, general manager of Foshan Qiaoli Textile Import and Export Co. Ltd. in Guangdong Province.

Analyst said shrinking orders in the fourth quarter and dim prospects for next year would mean a “tight” year for textile makers. Textile companies’ top challenges would be to secure their market share and tailor production to the domestic market. Read more here.

Sunday, December 28, 2008

Beef Facts You’ve Been Dying to Know

(Grain News)

Canadian beef customers
In comparing figures for 2002 and 2007,the U.S. is still Canada’s largest customer for beef (who knows what 2009 will look like). The U.S. imported 266,000 metric tonnes of beef from Canada in 2002 and that increased to 298,000 metric tonnes in 2007. Mexico is No. 2 importing about 27,000 metric tonnes in 2002, with a big increase to 40,000 metric tonnes in 2007. Japan was the third largest importer in 2002 importing about 8,000 metric tonnes, but by 2007 Canada’s third largest beef customer was Hong Kong and Macau importing about 15,000 tonnes. Japan is gone.

Beef production in Canada
Western Canada dominates beef production in this country. In 2002, about 40 percent of the beef herd was in Alberta, 25 percent in Saskatchewan, 12 percent in Manitoba, nine percent in Ontario, and six percent

In B.C. In 2007, Alberta still had about 40 percent, but Saskatchewan had increased to 30 percent. On the feeding side, 71 percent of Canadian cattle are fed in Alberta, with nine percent in B.C., Saskatchewan and Manitoba, and 18 percent in Ontario. Read more here.

Friday, December 26, 2008

US Investigation Hits Chinese Export Subsidies

(Journal of Commerce)

The Department of Commerce announced its preliminary findings in its anti-subsidy investigation against Chinese exporters of kitchen-appliance shelving and racks from China.

The agency found that several Chinese exporters have received net countervailable subsidies ranging from 13.22 to 197.17 percent.

As a result of its findings, Commerce will instruct Customs and Border Protection to suspend liquidation of entries of subject merchandise and to collect a cash deposit or bond based on these preliminary rates. Commerce expects to issue its final determination in the case in May, 2009.

The U.S. petitioners in the Commerce investigation were Nashville Wire Products; SSW Holding Co.; the United Steelworkers, and the International Association of Machinists and Aerospace Workers. Read more here.

Thursday, December 25, 2008

US Economy Shrinks as IMF Warns of Great Depression

(Agence France Presse)

The US economy shrank in the third quarter, official data confirmed Tuesday, as the IMF’s top economist warned of a second Great Depression offering no respite from relentless gloom ahead of Christmas.

The abrupt 0.5-percent contraction of gross domestic product (GDP) in the world’s largest economy was seen as marking the start of a steep downturn for the United States after GPD growth of 2.8 percent in the second quarter.

Stocks on Wall Street rose in early trading however as the contraction had been expected and was unrevised from a previous estimate. The Dow Jones Industrial Average was up 0.54 percent and the Nasdaq rose 0.60 percent.

“This report is largely old news,” said John Ryding at RDQ Economics, who forecast fourth-quarter data out next month would be far bleaker.

“Given signs that the recession has deepened in the current quarter, we look for around a 6.0 percent drop in real GDP,” he said.

Britain’s economy also shrank by 0.6 percent in the three months to September compared to the previous quarter, against a previous estimate of 0.5-percent contraction, the Office for National Statistics said.

Britain and the United States will be in recession if their economies contract again in the fourth quarter, according to the traditional definition of a recession as two consecutive quarters of negative economic growth.

The IMF’s top economist, Olivier Blanchard, maintained that governments around the world should boost domestic demand in order to avoid another Great Depression similar to the global downturn that shook the world in the 1930s.

“Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad,” Blanchard said in an interview with the French newspaper Le Monde. Read more here.

Wednesday, December 24, 2008

Extensions to Submit PIP Applications

(I.E.Canada)

Due to the hardship caused by the global economic downturn, CBSA has advised that the PIP program will consider granting extensions up to March 31, 2009 on a case-by-case basis for legacy PIP members to re-apply for the modernized PIP program.

Legacy PIP members are those PIP members who were approved before June 30, 2008. To ensure uninterrupted membership and continued PIP benefits, re-application under the new program must be submitted by December 31, 2008 unless an extension is granted.

Those requiring extensions should send their request via the PIP e-mail box at pip-pep@cbsa-asfc.gc.ca. CBSA has advised that requests for extensions will receive prompt attention.

NAM forms Customs and Border Coalition

(Journal of Commerce Online)

The National Association of Manufacturers announced the creation of a new Customs and Border Coalition charged with making sure that business concerns are addressed when government agencies are developing security rules and procedures that govern exports and imports.

“The NAM is launching the CBC because we see a critical need for a unified business voice on border issues,” said John Engler, NAM president and chief executive. “We can have secure borders without shutting down commerce.”

The group said that the coalition will bring together individual businesses and associations to review programs and regulations issued by government agencies affecting transportation of manufactured products across the nation’s borders in order to assess where changes are needed to assure that commerce is not unnecessarily impeded.

“We will work with government agencies to offer practical alternatives, whenever possible, for achieving our mutual security objectives without disrupting commercial traffic,” Engler said.

Engler cited as an immediate issue of concern the controversial 10+2 security filing rule proposed by Customs requiring importers to submit 10 types of information and shippers two new types prior to loading a container for shipping.

Engler said, “As it was originally written, the 10+2 rule would have cost U.S. manufacturers as much as $20 billion annually, created huge delays and missed shipments in the global supply chain, risked shutting down U.S. production lines and actually worsened security by increasing the amount of time containers sat around available for tampering at foreign ports.” Read more here.

American Auto Crisis Would Reach Far Beyond the Northern Border

(Detroit Free Press – Jason Myers and Richard Blouse)

Jayson Myers is president of the Canadian Manufactures & Exporters Association and vice-chair of the Ontario Manufacturing Council and Richard Blouse is president and CEO of the Detroit Regional Chamber.

A lot of ink, air time and space on the Web have been dedicated to discussing the economic fallout that would be felt throughout the U.S. if one or more of the American auto companies failed. The cascading effect through the entire U.S. economy would be devastating at a time when an already weak economy could not afford another blow.

What is not as widely known is the negative impact that would be felt in Canada. The Ontario Manufacturing Council recently commissioned a study – similar to one completed by the American Center for Automotive Research on the impact in this country – to get a better idea of what the failure of American carmakers would mean to Canada. The Canadian losses could quickly reach a million jobs under a worse-case scenario.

The studies are clear evidence of the fact that the U.S. and Canadian economies are inextricably connected. Our two nations are each other’s largest trading partners. The auto industry is a big part of this equation.

Last year, the U.S. purchased $53 billion in automotive goods from Canada. Canada was, in turn, the customer for $50 billion worth of automotive products from U.S. manufacturers. Vehicles and parts flow seamlessly across the Northern Border in an integrated supply chain because the American and Canadian auto industries operate as one. And in many ways, they are integrated into a much larger global economy.

The magnitude of job losses in Canada would further undermine many other sectors of the U.S. economy that depend on exports to America’s largest trading partner, just as the struggling American auto companies are affecting the Canadian economy. This is a vicious cycle that only hurts both nations.

We commend the Bush administration for providing $13.4 billion in immediate federal loans as an interim plan to give the American automakers time to restructure. The Canadian government is to be applauded too for committing $2.8 billion in credit to the industry. We stand ready to support the auto companies as they develop plans for long-term viability, which is in the best interests of both nations.

Canada Post Support Workers Vote to End Strike

(The Canadian Press)

Support workers at Canada Post have voted to accept a deal that will put an end to a more than month-long strike.

The Public Service Alliance of Canada issued a statement Tuesday morning saying the 2,100 Canada Post employees accepted the deal that was tabled the day before.

The acceptance comes after the members rejected two previous offers made last week.

The four-year deal will see members receive a pay increase of 2.5 per cent over the first two years and a further raise of 2.75 per cent during the final two.

PSAC also says the new agreement resolves the contentious issue of sick leave and family-related leave.

The union says the agreement offers an improved short-term disability plan to take the place of personal days.

PSAC members went on strike on Nov. 17, several months after their contract expired. Mail delivery was not disrupted.

Brussels “Postpones” Start of 24-hour Container Regulations

(Janet Porter — Lloyd’s List)

Plans by the European Union to tighten container security through a scheme modelled on one already operational in the US are falling behind schedule, partly because of the difficulty of obtaining uniformity across member states.

Requirements to complete security clearance for containers 24 hours before vessel loading have been in place for US-bound boxes for some time and have worked well, largely because of close co-operation between the authorities and shipping lines when the rules were being drafted.

The Washington-based World Shipping Council, which represents most global carriers, now hopes to repeat that success story in Europe, where Brussels is working on a similar set of rules.

One of the biggest lessons learned from the US when the 24-hour rule was being developed was the importance of consistency and the need for security assessments to be conducted in the same way at ports across the country, said Crowley Maritime chairman and chief executive Tom Crowley. Read more here.

Canadian Finance Minister Pledges to Keep Deficit Spending Temporary

(CEP News – Christine Wong)

Canadian Finance Minister Jim Flaherty said Tuesday that although Ottawa will run a deficit in 2009, it will only be temporary.

“We’ll ensure we don’t create a structural deficit,” Flaherty told media after a Toronto event announcing extended contribution deadlines for the Registered Disability Savings Plan. “We’ll ensure (any) spending that puts us into deficit will be temporary.” He said the government specifically wants to avoid a fiscal situation seen in the 1970s and ‘80s, when he said excessive program spending only worsened the shortfall on the federal books.

Flaherty and Conservative Prime Minister Stephen Harper only recently moved from previous public pronouncements to avoid slipping into a deficit at any cost, with Harper telling CTV in a year-end interview the 2009 deficit will likely be about $30 billion.

Flaherty did not say how long Ottawa would be in the red, but said the government will lay out its plans for how it will get back into the black in the January 27, 2009 federal budget.

Flaherty said the issue of banks loosening their consumer lending practices will likely come up when he meets with the heads of Canada’s big five banks in a few weeks. For now, he said, the government plans to work with the banks on the issue rather than forcing a solution by legislative means. “We’ve been hearing concerns about access to credit. It’s a major concern going into 2009,” Flaherty said. “(We’ll) work with (the banks) to ensure (credit) is affordable and accessible.” Read more here.

Tuesday, December 23, 2008

CBSA Holiday Schedule

(CBSA)

The following message is from CBSA (EDI08-105)

The Electronic Commerce Unit at the CBSA will be closed on Thursday, December 25 and Friday, December 26. December 25 and 26 will not be counted in the calculation of overdue entries. B3 entries processed and accepted on December 25 and 26 will appear on the daily K84 notice generated through overnight batch on December 29, and statement dated December 30.

The December monthly K84 will be generated on the evening of December 29 (payment details were indicated in message EDI08-101 sent on December 12th, 2008, login required). The exchange rates from December 25 through December 29 will remain unchanged.

The Electronic Commerce Unit will be closed on Thursday, January 1, 2009; January 1 will not be counted in the calculation of overdue entries. B3 entries processed and accepted on January 1 will appear on the daily K84 notice generated overnight batch on Friday, January 2, and the statement dated Monday, January 5. The exchange rates from January 1 through January 2 will remain unchanged.

For emergency, please call the EDI Hotline at 1-888-957-7224.

Monday, December 22, 2008

China Protests Latest U.S. Trade Case at WTO

(Reuters – Ben Blanchard)

China said on Sunday it had consistently respected the rules of the World Trade Organization and would work with the WTO on a suit lodged against it by the United States aimed at halting export subsidy programs.

The United States began legal action at the WTO on Friday to halt Chinese government subsidy programs to boost the sale of Chinese-branded goods around the world. The subsidies benefit a wide range of Chinese industrial sectors, including household electronic appliances, textiles and apparel, a range of light manufacturing industries, agricultural and food products, metal and chemical products, medicines and health products, the U.S. Trade Representative’s Office said.
The subsidies include cash grant rewards for exporting, preferential loans for exporters and payments to lower the cost of export credit insurance, the USTR said.

However, China’s Commerce Ministry, in a short statement on its website said China respected the rules. “China has all along respected the rules of the WTO, and opposes trade protectionism,” it paraphrased an unnamed official as saying. “China will deal with (the suit) in accordance with WTO rules.” Read more here.

Employers, ILWU Resume Contract Talks at Vancouver

(Journal of Commerce Online – Courtney Tower)

Employers and foremen represented by the International Longshore and Warehouse Union returned to contract negotiations Friday in Vancouver facing the possibility of a strike at western Canadian ports as early as January 2.

“The employers are looking for a signal of willingness [by the 450 ship and dock foremen] to pick up the pace of the negotiations,” said Greg Vurdela, vice president of the British Columbia Maritime Employers’ Association. “We will know that when we sit down at 9.30 a.m. [local time] whether there is a sign of hope for a resolution,” he said.

Vurdela spoke as employers broke a media blackout during the talks, which adjourned Monday when no progress was made with the union, which represents 5,160 port employees. The union members have been working without a contract since March, 2007, and negotiations have moved desultorily since April, 2008.

A strike or lockout would halt container-handling at Vancouver, Canada’s busiest gateway for Asia imports, and Prince Rupert, a growing entry point for Asia trade moving to the U.S. Midwest.

Employers in the new contract want to introduce new technology on the docks in order to modernize work processes and improve efficiencies. A similar demand to call dockworkers electronically instead of by historic union hall morning calls was settled earlier this year.

The ILWU continues to refrain from commenting, but it is known that after talks failed to progress Monday, both sides sought and received reaffirmation from their memberships of their negotiating positions.

Friday’s bargaining is taking place under the auspices of two federal mediators, who for the first time will take a more active role in the talks. Read more here.

Average Weekly Earnings Continue to Rise in Canada

(CEP News – Geoff Matthews)

The average weekly earnings of payroll employees in Canada edged above $800 in October as workers in eight of the 10 provinces were paid more than in the previous month, Statistics Canada reported Monday. Average earnings rose 0.3% from September (+3% from a year ago) to $801.24, up from $788.49 in September and $777.64 in October of 2007.

Workers in accommodation and food services continued to see their wages increase. The average weekly paycheque in the sector was $353.77, up 1.5% from September and 8.8% more than a year earlier. Forestry workers saw a 1.1% month-over-month increase in their average weekly earnings to $1,033.44, up 7.9% from October, 2007.

Mining and oil and gas extraction employees continued to command the highest average weekly wages at $1,482.58. That represented a 0.5% decrease from September but was 4.3% higher on an annual basis.

Of the 20 sectors reporting, workers in 13 showed higher average weekly earnings in October compared with September while employees in the other seven earned less.

Alberta and British Columbia were the only two provinces to report smaller weekly earnings compared with September. In both provinces, the average was down by 0.6% bringing the Alberta figure to $888.73 and B.C. to $777.98.

Quebec recorded the biggest month-over-month increase among the provinces, with average earnings up 2% from September to $755.03. In Ontario, the average inched up by 0.1% to $830.83.

Despite the October dip, Alberta still posted the strongest year-over-year growth in average earnings (+4.3%), followed by Nova Scotia (+4.1%) and Saskatchewan (+4%).

The number of employees nationally rose by 0.1% on a monthly basis in October (+1.5% year-over-year) to 14,623,400. Fourteen sectors saw an increase in the number of workers, five reported declines from the previous month and one was unchanged.

Since October 2007, the number of employees has increased by 212,500 (+1.5%).

Japan’s Gloom Deepens as Exports Suffer Record Drop

(Miwa Suzuki — AFP)

Japan’s economic woes deepened Monday as data showed it suffered a record drop in exports amid a global crisis while sentiment drastically weakened even among heads of major companies. Japan reported a trade deficit of 223.4 billion yen (2.5 billion dollars) in November as exports fell at their fastest-ever rate, according to official figures released from the finance ministry.

The Japanese economy “stepped up the pace of its decline last month but is falling head over heels this month,” said Hiroshi Watanabe, economist at Daiwa Institute of Research. “Japan has been hit by an unprecedented, sudden change in climate,” he said.

A survey published in the Nikkei economic daily Monday showed a rapid worsening in sentiment even among large companies. The mid-December survey found 99.3% of chiefs at Japan’s 137 major corporations believe the domestic economy is deteriorating. Among them, those who said the economy is worsening “rapidly” rose to 86.8% from just 10.8% in the previous survey conducted in early October, the daily said.

The trade deficit, which was much larger than the October deficit of 67.7 billion yen, reversed a surplus of 784.4 billion yen a year earlier, even though imports fell for the first time in 14 months. Japan’s imports in November shrank 14.4% from a year earlier to 5.55 trillion yen on lower oil prices, while overall exports tumbled 26.7% to 5.33 trillion yen.

The fall in exports was the steepest decline in comparable data dating back to 1980, the ministry said. It was also the first time Japan has incurred a trade deficit for two straight months since October-November 1980, when the nation was reeling from a second oil crisis.

Japan has enjoyed a large trade surplus since the 1980s thanks to brisk demand for its cars and other goods but the recent financial turmoil and a strong yen have hit exports hard. November shipments of automobiles plunged 31.9% with microchips and other electronics components falling 29.0%. Read more here.

Consumer Confidence Hits 27-Year Low in December

(Reuters – David Ljunggren)

Consumer confidence in Canada dropped for a third consecutive month in December, hitting a 27-year low, the Conference Board of Canada said on Monday.

The index in December fell to 67.7 from 71.0 in November, the lowest mark since the 63.0 recorded during the recession of 1981-82. The index was 100 in 2002.

“Consumers continue to be gloomy about their financial situation, indicating that they are financially worse off today than they were six months ago. Similarly, they expect to be worse off six months from now,” Conference Board chief economist Glen Hodgson told a news conference.
He also said the board was revising its forecast for 2009 and would most likely come out with a gloomier set of figures early in the new year.

The index is based on a poll of 2,000 Canadians that the board carried out between December 4 and 12.

No Holiday Break From Bad Economic News

(Eric Beauchesne — Canwest News Service)

The bad economic news is not ready to take a holiday break, with an expected “ugly” report this coming week on growth in the economy, measured as gross domestic product, and further news of falling incomes and spending by consumers in Canada’s largest export market, the U.S.

“In Canada, October GDP will be the only major economic news . . . and it’s going to be ugly,” warned Avery Shenfeld, an economist at CIBC World Markets. It projects the economy contracted by 0.4 per cent during the during the first month of the final quarter of the year, which is projected to have been the start of the recession here.

And it’s going to get uglier.

“The fourth quarter was stumbling on its very first step, and the worst is yet to come,” Shenfeld said. “Shutdowns in major auto plants, layoffs in other sectors and a slowdown in home building will see the quarter end with a thud.”

Don’t expect any growth for some time to come, he warned.

“Indeed, it’s hard to see any growth in the Canadian economy until fiscal and monetary stimulus start to have some effect in the second half of 2009,” Shenfeld said.

The news from south of the border, where the recession began a year ago, will also continue to send chills through Canadian exporters, according to TD Securities analyst Millan Mulraine. Read more here.

Privacy Act of 1974; U.S. Customs and Border Protection – 011 TECS System of Records Notice

(Department of Homeland Security)

SUMMARY: In accordance with the Privacy Act of 1974 and as part of the Department of Homeland Security’s ongoing effort to review and update legacy system of record notices, the Department of Homeland Security is publishing a revised system of records notice for the system formerly known as the Treasury/CS.244, Treasury Enforcement Communication System, October 18, 2001, as a Department of Homeland Security system of records notice titled, DHS/CBP-011 TECS. Additionally, the Department is giving notice that it plans to consolidate into this newly revised system of records the following legacy system of records: Treasury/CS.272 Currency Declaration File, October 18, 2001; Treasury/CS.224 Suspect Persons Index, October 18, 2001; Justice/INS-032 National Automated Immigration Lookout System (NAILS), October 17, 2002; and Treasury/CS.262 Warnings to Importers in Lieu of Penalty, October 18, 2001. Categories of individuals, categories of records, and the routine uses of this legacy system of records notice have been reviewed and updated to better reflect the Department of Homeland Security DHS/CBP-011 TECS, which is no longer an acronym.

Saturday, December 20, 2008

PM, McGuinty Pledge $4-billion For Auto Makers

(Video: CTV • Story: The Canadian Press/Globe & Mail)



In an effort to avoid a “catastrophic” collapse of the auto industry, the federal and Ontario governments have announced a $4-billion bailout package for the Canadian subsidiaries of the Big Three automakers.

The announcement by Prime Minister Stephen Harper and Premier Dalton McGuinty in Toronto came a day after U.S. President George W. Bush offered $17.4-billion U.S. in emergency loans to General Motors and Chrysler.

The Canadian plan will provide General Motors Canada with loans of up to $3 billion and Chrysler Canada will receive up to $1 billion. The companies will get the money in three instalments, with the first portion coming Dec. 29.

“We are doing this on the assumption that we cannot afford either in the U.S. or in Canada a catastrophic short-term collapse,” said Mr. Harper.

Mr. McGuinty, whose government will provide $1.3 billion of the total emergency loans package to General Motors and Chrysler, put a human face on the crisis that has hit the auto industry.

“Here in Ontario we have 400,000 people and their families who rely on the auto industry so that they can put food on the table and keep a roof over their heads,” said the Ontario premier who thanked Mr. Harper for the support.

“What the prime minister and I are saying today is that those people and their jobs are worth fighting for.”

Mr. Harper, however, warned that today's announcement “is not a blank cheque” for the industry, suggesting both the companies and their employees will have to make concessions. Read more here.

Friday, December 19, 2008

Inflation Slows to 2.0%

(AFP)

Inflation slowed to 2.0% in the twelve months to November, from 2.6% the previous month, due to much lower gasoline prices, Statistics Canada said Friday.

On a monthly basis, the consumer price index fell to 0.3% last month, the government agency said.

Gasoline prices fell 14.4% year over year in November, offsetting hikes in food (7.4%) and lodging (3.9%).

Summary statistics and a link to the data files are on the Statistics Canada website.

Prince Rupert’s $530 Million Port Expansion Delayed

(Bloomberg – Hugo Miller)

The port of Prince Rupert in British Columbia will delay a C$650 million ($530 million) expansion slated for next year by at least 18 months, the Globe and Mail reported, citing a report prepared for the federal government.

The port authority’s finances have worsened because of a decline in shipping revenue, the paper said. The company has exceeded federal debt limits and can’t borrow C$200 million it needs for the expansion, the newspaper reported.

Canadian National Railway Co., the country’s largest railroad, opened a C$170 million facility at the port last year to offer an alternative to Los Angeles and Long Beach, California for cargo shipped between Asia and North America.

Don Krusel, president of the port authority, attributed the delay to the economic slump rather than its borrowing difficulties, the paper said.

Harper to Announce Auto Plan on Saturday

(Reuters – John McCrank)

Prime Minister Stephen Harper will unveil an aid package for Canada’s auto industry on Saturday, responding to Washington’s move to provide U.S.-based automakers with $17.4 billion in emergency funding.

The Canadian package could amount to several billion dollars. The governments of Canada and the province of Ontario have said they would provide an amount proportionate to the automakers’ footprint in Canada, estimated at about 20% of North American production capacity.

Harper views the U.S. aid package as “a very positive development,” his spokesman said on Friday.

The spokesman declined to give more details of what Harper would announce on Saturday. The prime minister will appear with Ontario Premier Dalton McGuinty. Read the complete article here.

Mexico Joins Canada in WTO Beef Complaint vs. U.S.

(Associated Press – Bradley S. Klapper)

Mexico joined Canada in opposing a new U.S. law on country-of-origin labeling for fresh beef and pork by filing a complaint with the World Trade Organization on Thursday.

A WTO official said the body received Mexico’s official complaint, which starts a 60-day consultation period between Mexican and U.S. authorities. After that, Mexico can ask the WTO to set up an investigative panel. Such trade disputes can result in punitive sanctions, but usually after years of litigation.

The WTO official spoke on customary anonymity and copies of the complaint were not immediately available. The Office of the U.S. Trade Representative in Washington could not immediately comment.

Canada’s government filed its complaint earlier this month, saying it was concerned the U.S. rules were discriminating against Canadian agricultural exporters.

Under country-of-origin labeling, foreign cattle and pigs must be segregated in U.S. feedlots and packing plants, prompting some firms to only deal with American livestock. Foreign animals are also required to have more documentation about where they come from and, in the case of cattle, must have tags that indicate they are free of mad cow disease.

Canadian farm groups say a growing number of meat plants in the U.S. are refusing to accept Canadian cattle and hogs for processing since the Country Of Origin Labeling (COOL) law went into effect on October 1.

EU to Ban 22 Dangerous Substances from Pesticides

(Industry Week – Agence France-Presse)

The EU states and parliament agreed a compromise deal on December 18 under which 22 toxic substances will be banned from use in pesticides, negotiators announced. The deal must be formally endorsed by the parliament in Strasbourg and the 27 member states.

“We have made a great step forward for the protection of consumers’ health and of the environment,” said German Green MEP Hiltrud Breyer.

The chemcial blacklist includes eight substances used in the manufacture of herbicides, 11 used in fungicides and three in insecticides, many of them produced by Bayer and BASF – including Ioxynil, Amitrol and Iprodion.

The substances will be banned due to their toxic or carcinogenic effects.The compromise deal, under which a longer list of substances to be banned was dropped, came after the phytosanitary industry complained that 40% of its ingredients would be struck off.

China: Processed Food Imports Set to Soar in Next Five Years

(Flex-News)

The head of China’s food industry body has said the level of imported processed foods will increase their market presence in China over the next five years despite the effects of the global recession.

Wang Wenzhe, chairman of China National Food Industry Association said the trend towards more imported foods in the years to come was inevitable – with imports set to reach 1 trillion Yuan (US$147 million) by 2013. “The most important thing is that we are better off than we were 30 years ago,” he said

He added: “With the global economic crisis as the backdrop, it will be very important to boost international trade in order to improve the competing power of China’s food industry.”

The National Bureau of Statistics showed the per capita disposable income for urban dwellers rose from 343.4 yuan (about US$50.5) in 1978 to 13,785.8 Yuan last year. The per capita net income for rural people also went up from 133.6 yuan to 4,140.4 Yuan last year.

China’s food sector generated 3.27 trillion Yuan last year, compared to 47.1 billion Yuan in 1978. The sector’s sales revenue is expected to skyrocket to 4 trillion Yuan this year. In 1992, Wang said China exported US$ 9.6 billion worth of foodstuffs, while imports were valued at US$4 billion. However, while food exports soared to US$32.3 billion last year, imports were fast closing the gap, rising to US$30.6 billion. Read more here.

Truckers Protest Pre-set Speeds

(Joe Belanger — London Free Press)

A convoy heads to Toronto to oppose a top speed of 105 km/h

If the snow don’t get ‘ya, the truckers probably will.

Drivers heading east on the Highway 401 today can expect a slow commute as a big winter storm — dubbed a “snow-mageddon” — blows in.

But if forecasters are wrong and the massive storm doesn’t hit, truckers across Ontario and even from the U.S. say they’ll go ahead with a protest caravan that begins west of Cambridge on the 401 and runs through to Toronto.

The truckers are protesting Ontario’s new speed limiter law that begins Jan. 1, requiring rigs be equipped with micro-chips to pre-set a truck’s top speed, which in Ontario would be capped at 105 km/h.

Many truckers work in a just-in-time industry, where goods are delivered straight to factories and time is crucial.

But the truckers say their beef with the law is it’s unnecessary and will only cause more road headaches, as frustrated drivers try to get past slower-moving rigs.

In an integrated trucking industry, some trucks passing through Ontario from outside may not have the needed limiters, they also point out. Read more here.

To the Rescue: Bush to Give Low-Interest Loans to Carmakers

(Associated Press)



The Bush administration came to the rescue of the troubled U.S. auto industry Friday, offering $17.4 billion in loans in exchange for concessions from car makers and their workers.

Bush explained that the “orderly” bankruptcy the White House had been toying with in recent days might send the auto makers into an unstoppable death spiral because of their weakened state and likely increased consumer unwillingness to buy their products.

“My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis,” he said. “It could send our suffering economy into a deeper and longer recession.”

There are strings attached. Among them, firms must: provide warrants for non-voting stock; accept limits on executive compensation and eliminate perks such as corporate jets; allow the government to examine their books and records; report and the government has the power to block any large transactions (> $100 M); comply with applicable Federal fuel efficiency and emissions requirements; and, not issue new dividends while they owe government debt. Additionally, debt owed to the government will be senior to other debts, to the extent permitted by law.

Update: More information at the Wall Street Journal. Lengthier video from CNN via TPM.

Former Dallas Mayor Ron Kirk to be Named to Obama Cabinet

(Todd Gillman — The Dallas Morning News)

President-elect Barack Obama will name former mayor Ron Kirk the post of U.S. trade representative on Friday, thrusting the pro-trade former Dallas mayor into a sensitive balancing act between unions and business interests.

Mr. Kirk has been calling friends today to tell them about his selection to the Obama Cabinet. He told a reporter offering congratulations to “pack your bags.” A top Democratic official said the announcement will come Friday in Chicago.

“He’s an incredibly impressive guy with a wonderful background, particularly for this job,” said Mickey Kantor, who held the post under President Bill Clinton. “You’ve got to understand both substance and politics to be successful, and he certainly understands trade being from Texas.”

After eight years with Texans filling Cabinet seats and top White House posts, the Kirk appointment ends a near-drought as Mr. Obama and his Illinois-heavy team prepares to take over. Defense Secretary Robert Gates, a holdover from the Bush administration, was president of Texas A&M but isn’t from Texas.

John Murphy, vice president for international affairs at the U.S. Chamber of Commerce, lauded Mr. Kirk’s record of support for free trade and its benefits in Texas, though he isn’t known nationally.

“Trade has been one of the only bright spots for the U.S. economy, and the Obama team is going to need every tool in its tool box,” he said. Read more here.

Auto-Parts Profit Outlook Takes a Pounding

(Tony Van Alphen — Toronto Star)

Conference Board sees 58% drop by end of ‘09 amid weak U.S. demand

Deteriorating economic conditions will hammer profits in the auto-parts industry here by 58 per cent, or almost $1 billion, this year and in 2009, according to a gloomy Conference Board of Canada report.

In sharp contrast to a forecast last spring, the board said yesterday that profits for auto-parts companies will plunge 38 per cent this year, to $1.05 billion from $1.69 billion, and fall another 32 per cent to $700 million in 2009.

“Canada’s motor vehicle parts manufacturing industry is being forced to put on the brakes as a result of an unrelenting barrage of structural and macroeconomic developments that have materialized over the last two years,” board economist Sabrina Browarski said in the report.

The profit forecast for 2009 is the weakest since the board, an independent economic research agency, began collecting auto industry data in 1999.

Output will also fall for a fourth consecutive year in 2009, the board said. Revenues will tumble 17 per cent or almost $5 billion to $22.8 billion this year and slip another 3.4 per cent to $22.1 billion in 2009.

The board said revenues and profits will start increasing again in 2010. Profits will improve to almost $1 billion in 2010 and climb to $1.17 billion in 2011.

The latest forecast represents a big decline from the board’s outlook six months ago, when it predicted profits would slide to $1.5 billion this year but recover to $1.74 billion in 2009. Read more here.

A “Radical’ in Our Midst: Crossing Borders as Art

(Naj Wikoff — Lake Placid News)

Jerilea Zempel got a call from the Financial Times of Finland asking for information about her art. This was followed a day later by a call from the Colbert Report. They wanted to interview her. She knew something was up. She Googled herself to find scores of references to her being delayed for several hours by U.S. Customs as she attempted to return from installing one of her works of art, in this case the blanketing of a rented Hyundai Santa Fe with a form fitting crocheted white cozy at the Cultural Capital Festival in Sackville, New Brunswick.

The delay at the Houlton, Maine crossing irked her. She had a long, long drive home to Keene Valley. She had just finished two arduous weeks finishing and installing her art. She was tired. But more, the customs agents had gone through her laptop computer, her cell phone, her digital camera, her suitcases, her art materials, which included boxes of yarn, crochet tools and her sketchbook. It was invasive. It was creepy. Imagine complete strangers reading all your mail, diaries, checkbook statements and other records right in front of you and there is nothing you can do or say to stop them.

[snip]

“The border used to be open and friendly,” Zempel said. “People on both sides used to cross easily all the time. No more. I became aware of this a year ago returning to the U.S. on a bus from Toronto. They had us stand out in the cold for hours while they went through everyone’s baggage.” Read the complete article here.

Flaherty Gives Banks Deadline to Lend More

(Tara Perkins/Kevin Carmichael — Globe & Mail)

More aggressive approach would be irresponsible, bank executives argue

Finance Minister Jim Flaherty delivered the banks a deadline of just a few weeks to get more loans out into the sagging economy, prompting the banks to counter that they’re already doing enough and added lending could prove irresponsible.

With the country entering a recession, Mr. Flaherty and Bank of Canada Governor Mark Carney will meet with the banks’ chief executives early next month to discuss why credit remains tight even after unprecedented efforts by the federal government to pump cash into the financial system.

“We expect the banks to provide adequate credit in Canada,” Mr. Flaherty said at a news conference in Saskatoon yesterday. At the meeting in January, “I expect them to make it evident to us that they are taking steps to make that more available in Canada.”

The showdown promises to be tense. Bankers argue that they are lending responsibly and that anything more would be risky. Creditworthy borrowers are still able to access funds, they argue. Read more here.

Meanwhile…

Big Banks Respond to Pressure From Flaherty

(CTV News-The Canadian Press)


Big banks can’t re-ignite the lending market on their own, despite government suggestions to the contrary, the head of the association for Canada’s financial institutions said Thursday.

Nancy Hughes Anthony, president and chief executive of the Canadian Bankers Association, agreed that many sources for lending have been pulling back in the wake of the global credit crunch that has rocked financial markets around the world.

“Banks are working to fill the gap,” she wrote in a statement, as Finance Minister Jim Flaherty stepped up the pressure on the banks to loosen up their lending practices to help revive the battered economy.

“But banks don’t have the capacity to do it all.” Read more here.

Thursday, December 18, 2008

Bush Considering “Orderly” Auto Bankruptcy

(Associated Press)



The Bush administration is seriously considering “orderly” bankruptcy as a way of dealing with the desperately ailing U.S. auto industry.

White House press secretary Dana Perino said Thursday, “There’s an orderly way to do bankruptcies that provides for more of a soft landing. I think that’s what we would be talking about.”

President George W. Bush, asked about an auto rescue plan during an appearance before a private group, said he hadn’t decided what he would do.

But he, like Perino, spoke of the idea of bankruptcies organized by the federal government as a possible way to go.

“Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring,” he said. “These aren’t normal circumstances. That’s the problem.” Read more here.

Surprise of the Year: Keynesianism Revived

(Export Development Canada – Peter G. Hall)

Choosing a key surprise for 2008 is no small feat. Rumblings in economic and financial markets earlier in the year culminated in the upheaval of the last few weeks, in many ways radically altering the economic landscape. Market upheaval has likewise birthed radical policy responses.

At first blush, the list of candidates is long and distinguished. On the economic front, sharp contractions in output in the world’s largest economies have begun. Decoupling, the notion that slowdown would be confined to the U.S. economy, was disowned by its proponents by mid-year. Commodity prices plummeted. Inflation concerns evaporated. Confidence melted. On the financial front, the collapse or near-collapse of venerated Western institutions, together with plunging equity markets, were events that transcended the experience of today’s market players.

These are huge movements, by any standard. But were they surprising? For those who foresaw a global slowdown, not entirely. Much of what is happening is the stuff of downturns in economic cycles. We haven’t had one for a long time, so this is a particularly big one. All economic interruptions are painful in the short term. But a key concern with big downturns is their potential to undermine the very economic superstructure on which they are built. Systemic failure in the marketplace outlasts economic downturns, and poses a significant threat to long-term growth.

This was a preoccupation of famed economist John Maynard Keynes in the 1930s, who pointed to temporary failure in the marketplace as a key inhibitor to the proper working of the economy. He famously proposed the notion of substantial state intervention, which would create demand and in turn, jump-start the economy. His advice was taken, and proved so potent that it was difficult to suspend these temporary spending programs. The legacy these Keynesian measures left was the inhibiting fiscal deficits and debt-loads of the post-war period – a legacy that Western economies have painfully spent a generation trying to undo, with varying levels of success.

Against this backdrop, the recent return to Keynesian stimulus measures is staggering. Recent days have brought an instant deluge of massive public spending announcements, spanning many nations and all varieties of economic ideology. And the financing for these packages? In many cases, countries are prepared to do what was broadly unthinkable at the beginning of the year: run up deficits, even considerably large ones, with the promise that they will be temporary. The policy shift is seismic, and will have a marked impact on near-term economic performance.

Most economy-watchers agree that the global recession is just taking hold, meaning that there will be more bad news before we begin getting good news. As such, we have likely not seen the end of the wave of Keynesianism, and short-term public deficit projections will likely grow. But they are likely to bear fruit, moving us through the economic downturn in the near-term period.

The bottom line? As surprising as the return to Keynesianism is, it is here, and it is big. If Keynes didn’t underestimate its potency, he perhaps did underestimate its staying power. Maybe the surprise two years from now will be that today’s measures indeed proved to be temporary.

Canada Policy Makers Press Banks to Unlock Credit

(Reuters – Louise Egan)

Canada’s finance minister and central bank chief will lean on banks to keep loans flowing to companies and consumers in a meeting scheduled for early January, Finance Minister Jim Flaherty said on Thursday.

Flaherty also said additional tax cuts by the federal government are on his agenda for the January 27 budget, alongside increased spending in areas such as infrastructure.

He made the remarks to reporters in Saskatoon after announcing the creation of an economic advisory council, comprised of 11 high-profile business and financial experts, to help him sort through various spending and taxation ideas.

Both Flaherty and Bank of Canada Governor Mark Carney urged banks publicly on Wednesday to avoid hoarding capital and keep credit flowing to businesses and households during the tough economic times.

“He (Carney) and I are meeting with bank CEOs at the beginning of January and I expect them to make it evident to us that they are taking steps to make credit more available in Canada,” Flaherty said.

Banks are under market pressure to raise their capital levels even though they are higher than required by regulators and above average by global standards.

The lack of credit availability emerged as a top priority for provincial finance ministers in a meeting with Flaherty on Wednesday. Read the complete article at here.

Lacey Act Import Declaration Form

(IE Canada)

The Plant and Plant Product Declaration Form (PPQ Form 505), the import declaration form that has been developed for purposes of implementation of the Lacey Act Amendments, is available for use and has been posted on the APHIS website here (PDF).

As of December 15, 2008, this paper declaration form is being accepted on a voluntary basis. Filing of the declaration form will not become mandatory until April 2009, when Customs and Border Protection hopes to have an electronic process in place for filing the forms.

As the paper form will serve as the basis for the electronic declaration, IE Canada wants to receive comments that members may have regarding the form. Send your comments to Amesika Baeta at abaeta@iecanada.com.

CBP Continues Inspection of Canadian Firewood; New Commercial/Personal Certificate Required

(CBP)

U.S. Customs and Border Protection continually inspects loads of firewood coming from Canada into the United States to prevent the entry of unwanted guests – the six-legged variety.

Despite CBP’s ongoing inspection efforts, the threat of invasive species hitchhiking in wood shipments across the US-Canadian border remains. Effective December 15, for commercial shipments and January 1, 2009 for noncommercial or personal shipments, hardwood firewood must be accompanied by either a treatment certificate or a treatment label certifying that the wood was heat treated to a core temperature of 71.1º Celsius for 75 minutes. The requirement can be found in Title 7, Code of Federal Regulations, 319.40-7(c). Without this proof of treatment, travelers will be turned back to Canada to dispose of their hardwood firewood. Hardwoods generally include: oak, beech, ash, maple, cherry and certain other varieties.

Softwood firewood, such as pine, may enter without treatment but it must be free of pests. It must also have written certification, a requirement which varies according to the type of wood and origin. If inspection at the border reveals plant pests, or if certification is lacking, travelers may have to take the firewood back to Canada. Read the complete press release here.

Valuation (Assists) – Is Your Invoice Declaration to Customs Accurate?

(Alan Dewar — GHY International)

It has come to our attention that recent Compliance Verification Audits completed by Canada Border Service Agency (CBSA) auditors have found a fairly widespread problem with regards to so-called “undeclared assists” that has had the effect of goods in such cases being undervalued for Customs purposes.

The term “assists” refers to something of value provided by an importer to a foreign producer. Generally speaking, the value of the assist needs to be added to the transaction value when calculating Customs value. Failure to disclose “assists” and properly account for them when determining the transaction value of goods is considered an infraction of the Customs regulations and is therefore subject to the assessment of fines under the Administrative Monetary Penalty System (AMPS).

For your reference, he definition of “assists” is dealt with extensively in Departmental Memorandum D13-3-12 (you can download a PDF of it here) which outlines and explains the application of various sections of the Customs Act in determining the value for duty of import transactions involving the goods and services referred to in subparagraph 48(5)(a) (iii) of the Act.

If you have supplied any of the following, free of charge or at a reduced cost to a foreign supplier:

(a) materials, components, parts and other goods incorporated in the imported goods;

(b) tools, dies, moulds and other goods utilized in the production of imported goods;

(c) any materials consumed in the production of the imported goods;

(d) engineering, development work, art work, design work, plans and sketches undertaken elsewhere than in Canada and necessary for the production of the imported goods;

and have not declared the value of these “assists” to the CBSA, we would strongly encourage you to contact your GHY Account Representative or our Consulting Department so that we can review the valuation of your goods and remedy the matter through voluntary amends if necessary. Taking this simple precaution will not only bring your past imports into compliance, thereby avoiding AMPS penalties that would otherwise be applicable should your imports ever become subject to future verification by the CBSA, but will also set you on the right track for the correct valuation of future imports.

CP Rail Laying Off 600 Workers Temporarily

(CBC News)

Canadian Pacific Railway has given temporary layoff notices to 600 employees across the country.

The railway company, based in Calgary, blamed the looming economy for being forced to temporarily lay off staff.

Spokesperson Breanne Feigel said the cuts affect train operators, mechanical employees, and track maintenance staff in its workforce of 16,000.

“We are seeing a decrease in volumes as Canada's economy is impacted,” Feigel said.

“Some of our customers are looking to hold off, or have no need for commodities or products to move, and as a result that impacts CP as a contributor to the supply chain.”

Feigel said none of the employees are facing permanent job loss. And the company expects to start hiring some of them back within a few weeks as the economy picks up.

The railway is also looking at reducing travel expenses and cutting flex days for office staff. There is also a hiring freeze on management positions.

Wednesday, December 17, 2008

U.S. Timber Coalition Says B.C. Violating Softwood Deal with Pine Kill Wood

(The Canadian Press)

A U.S. forest industry lobby group is accusing the B.C. government of using the province’s pine forest beetle kill epidemic to violate the U.S.-Canada Softwood Lumber Agreement.

The U.S.-based Coalition for Fair Lumber Imports says B.C. timber is being sold for as little as 25 cents per cubic metre and the cheap wood is being used to produce softwood lumber products that are being sold in the United States. Coalition spokesman Steve Swanson says in a statement that while the entire North American forest industry is struggling during a worldwide economic downturn, British Columbia is virtually giving away its taxpayer-supported natural resource.

The U.S. coalition says the 25-cent B.C. wood can sell for up to $20 a cubic metre in the states.

Neither B.C. Forests Minister Pat Bell or a spokesman for the provincial forest industry were immediately available for comment.

Earlier this week, Canada’s slumping forest industry asked Ottawa for a relief package that adds up to about $600 million over five years.

A Canada-U.S. Border Vision

(CSCB)

The Canadian Chamber of Commerce has released a paper titled A Canada-U.S. Border Vision, discussing opportunities for improvement of North American security and competitiveness with the new leadership in the U.S.

The paper identifies five border principles for Canada’s engagement with the United States:

• Taking a bilateral, co-management approach to the Canada-U.S. border;

• Giving strategic and resource priority to trusted shippers and travellers;

• Expanding the definition of the border to not always be ‘at the border’, including performing inspections and risk assessments at offsite venues;

• Moving the border ‘away from the border’ to our shorelines and foreign ports; and

• Achieving regulatory cooperation or mutual recognition on differences between our domestic product and consumer safety regulations.

The paper is available in English (pp. 1-15) and French (pp. 16-30) at: here.

Laurentian Bank Predicts Modest Economic Growth for Canada in 2009

(The Canadian Press)

Laurentian Bank of Canada predicts economic growth of just 0.5% in Canada next year. The Montreal-based bank released its economic outlook on Tuesday, saying the Canadian economy will be hampered by both the global economic slowdown and the recession in the U.S. The bank notes a troubled economy south of the border will weaken trade with Canada’s largest partner.

Laurentian says imports, exports, home construction and business investment will all be hit by the slowdown and bank interest rates will remain low.

It also predicts unemployment will rise next year, but says the extent of job losses won’t be known until the fate of the financially-troubled big three automakers is resolved.

Laurentian says the Canadian dollar will likely trade on average between 80 and 85 cents U.S. in 2009.

“The Canadian economy in 2009 will face challenges far more demanding than those in previous years,” said the statement, written by Laurentian Bank economists Carlos Leitao and Sebastien Lavoie. “The financial crisis impeding economies worldwide since the last quarter of 2008, coupled with a major economic slowdown, will have a growing impact over the year on Canada’s economic environment.”

Canada Wholesale Sales Fell 1.8% in October

(Bloomberg – Alexandre Deslongchamps)

Canadian wholesale sales fell more than three times as much as expected in October as demand for recyclable metals and cars slowed.

Sales dropped 1.8%, the most since February, to C$45.3 billion ($37.5 billion), Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg said sales would fall 0.5%, the median of 13 estimates, after a 1.1% gain in September.

The sales decline was led by a 6.9% drop in sales of cars and trucks and an 8% plunge in the “other products” category, its biggest since March 2001, caused by lower demand and prices for recyclable metals. Car and truck sales were 14% below a year ago, the agency said.

Excluding autos, wholesale sales fell 1.2%, with four of seven industry components tracked by the statistics agency recording a decline. Inventories rose for an eighth straight month, gaining 0.8%.

Excluding price changes, sales tumbled 3.6% in October, Statistics Canada also said. The Canadian dollar depreciated during the month and boosted the cost of imported goods, the agency said to explain the discrepancy.

Summary statistics and a link to the data files are on the Statistics Canada website.

Fed Cuts Key Rate to a Record Low

(Video: Bloomberg • Story: New York Times)



The Federal Reserve entered a new era on Tuesday, lowering its benchmark interest rate virtually to zero and declaring that it would now fight the recession by pumping out vast amounts of money to businesses and consumers through an expanding array of new lending programs.

Going further than expected, the central bank cut its target for the overnight federal funds rate to a range of zero to 0.25 percent and brought the United States to the zero-rate policies that Japan used for years in its own fight against deflation.

Though important as a historic milestone, the move to an interest rate of zero from 1 percent is largely symbolic. The funds rate, which affects what banks charge for lending their reserves to each other, had already fallen to nearly zero in recent days because banks have been so reluctant to do business.

Of much greater practical importance, the Fed bluntly announced that it would print as much money as necessary to revive the frozen credit markets and fight what is shaping up as the nation’s worst economic downturn since World War II.

In effect, the Fed is stepping in as a substitute for banks and other lenders and acting more like a bank itself. “The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth,” it said. Those tools include buying “large quantities” of mortgage-related bonds, longer-term Treasury bonds, corporate debt and even consumer loans.

The move came as President-elect Barack Obama summoned his economic team to a four-hour meeting in Chicago to map out plans for an enormous economic stimulus measure that could cost anywhere from $600 billion to $1 trillion over the next two years. Read more here.

Related: FRB press release.

Cut Tax or Risk Jobs, Banks Say

(Rita Trichur — Toronto Star)

Canada’s banks have issued a veiled warning to the government of Ontario – cut corporate taxes or risk losing high-paying financial sector jobs to other jurisdictions.

The Canadian Bankers Association – which represents 51 domestic and foreign banks – is telling Ontario in a carefully worded pre-budget submission to cut corporate taxes in its next budget. It argues that tax cuts are necessary to boost the province’s productivity, which is key to preserving a high standard of living and “a large number of high-quality, high-paying jobs.”

The association is asking Queen’s Park to reduce its corporate income tax rate to 10 per cent from its current level of 14 per cent. Given her druthers, president and chief executive officer Nancy Hughes Anthony would like the province to take action in next spring’s budget. If that’s not achievable because of the deepening recession, she says Ontario should at least formulate a long-term plan to achieve that goal.

“The difficulty we’ve had is we’ve heard from the premier, in particular, that `there is no way we are going to reduce taxes. And that’s it, that’s all,’” Hughes Anthony said in an interview yesterday.

“In terms of investment and businesses looking at coming into Ontario or staying in Ontario, making sure there’s all those jobs there and all that – that’s not a great message.”

Lobbying for corporate tax cuts is likely to prove a tough sell.

Ottawa has already given the banks a financial helping hand by agreeing to buy up as much as $75 billion in mortgages and backstop more than $200 billion in interbank loans.

Consumers are also smarting from a decision last week to pass on only part of a Bank of Canada interest rate cut. Some banks have also raised rates for credit card customers who are late in paying their bills. Read more here.

Implementation of COOL a Challenge

(The Beef Site)

The U.S. based Food Marketing Institute reports part of the difficulty in adapting to U.S. Mandatory Country of Labeling is that many products are covered by the new rules while many similar products are not, writes Bruce Cochrane. U.S. Mandatory Country of Origin Labelling came into effect September 30 and the U.S. Department of Agriculture is expected to begin enforcement in April.

The Food Marketing Institute represents about 15 hundred food retailers and wholesalers in the U.S. and around the world.

FMI chief legal officer Deborah White says part of the challenge facing retailers in implementing the new rules is that there isn’t a lot of rhyme or reason for what is covered and what isn’t.
“Our Congress here in the United States decided that the foods that should be covered by Country of origin Labelling are beef, pork, lamb, chicken, fresh and frozen produce, seafood and then sort of an assortment of nuts and miscellaneous items, that is peanuts pecans macadamia nuts and ginseng.

“In terms of whether or not any of these things should be covered or shouldn’t be covered, the Food Marketing Institutes has long opposed mandatory Country of origin Labelling. We feel that information on products can best be delivered to consumers through voluntary marketing type programs.

“We don’t believe that any of these products should be the subject of mandatory Country of origin Labelling but part of the challenge that our members have in implementing this is it is a sort of an ad-hoc list without a whole lot of rhyme and reason. For example chicken is covered but turkey isn’t or peanuts and pecans are covered but walnuts and almonds aren’t so that presents some challenges in and of itself.”

White notes the new labeling rules apply only to covered commodities that are sold by U.S. retailers but they do not apply to products sold in restaurants, products destined for export out of the U.S. or to products that fall [within] the USDA’s definition of processed commodities.

U.S. Chamber of Commerce Tones Down Trade Agenda

(Wall Street Journal – Martin Vaughan)

The U.S. Chamber of Commerce, usually one of the most ardent lobbying forces for new free trade agreements, has injected a dose of realism into its expectations for the tenure of President-elect Barack Obama.

The Chamber’s recommendations for the trade agenda under the next president, released Tuesday, eschew a narrow focus on approving controversial trade deals, and instead seek progress on a broad range of fronts. That includes supporting a worker assistance bill early in the next Congress, expanding aid and one-way trade benefits to poor countries, and beefing up export assistance to small and medium-size firms.

“This is our agenda for 2009 and beyond; it’s not an agenda for 2001,” retired Lt. Gen. Daniel Christman, the Chamber’s senior vice president for international affairs, said at a press conference. While the Chamber still will work to pass trade deals, the agenda reflects “the holistic way the Chamber is trying to deal with the question of international engagement,” Christman said.

The Chamber’s trade agenda has faltered over the past several years as trade deals with Colombia, Panama and South Korea have stalled in Congress, and the Doha round of global trade talks has careened off course. Obama has given business groups that support the deals little reason for optimism; on the campaign trail, he opposed the Colombia and South Korea pacts, and talked of punishing China for alleged unfair trade practices.

In the short term, the Chamber will focus on helping congressional Democrats pass the worker assistance legislation, in the hopes that doing so will help neutralize political opposition to trade deals.

“I think we’re at a point where it’s important to have trade adjustment assistance on its own merits….it just makes good sense,” said John Murphy, U.S. Chamber vice president for international affairs. “Obviously we hope that will lay a foundation of goodwill that will help us move forward on other trade agreements.” Read more here.

CBP User Fee Contingency Plan: January 1-31, 2009

(CBP)

The CBP has approved a contingency plan to allow conveyances that normally pay annual user fees to be cleared by CBP without a per crossing/arrival payment from January 1-31, 2009. This contingency plan does not affect the collection of per crossing/arrival fees for conveyances that normally pay per crossing/arrival.

The contingency plan has been authorized due to the late delivery of the Decal and Transponder Online Procurement System (DTOPS), which did not go live until November 17, 2008, and left annual fee subscribers with an abbreviated window of opportunity to submit their electronic applications for annual fee renewals. As a result, internal CBP resources are stressed to actually process all the applications for annual fee renewals by the end of the calendar year.

In order to be eligible for the waiver of the per crossing/arrival fee from January 1-31, 2009, commercial and private conveyance operators must present the following evidence:

Commercial Conveyances:
• 2008 transponder, or
• DTOPS transmission receipt, or
• CBP Finance Center receipt, or
• Verification through the ACE system of the 2008 annual fee payment

Private Conveyances:
• 2008 transponder, or
• DTOPS transmission receipt, or
• CBP Finance Center receipt, or
• CBP Form 368 (Cash Collection or Receipt)

If a conveyance is covered by an active 2008 transponder, CBP will not require proof of payment for the 2009 renewal to waive the per crossing/arrival fee.

Questions regarding this notice may be directed to Mr. Chris Kennally at (202) 344-2476.

Tuesday, December 16, 2008

China to Impose New Manifest Requirements for Imports, Exports Beginning Jan. 1

(World Trade Interactive)

Effective January 1, 2009, all goods imported into or exported from China will have to comply with new manifest regulations. According to a December 7 report from the Department of Agriculture, these requirements are contained in the General Administration of Customs’ Decree No. 172, which will replace Decree No. 70 that has been in effect since February 1999. It is too soon to know, the USDA states, if the new decree will significantly impact agricultural trade with China.

According to the report, the general provisions listed in Decree No. 172 focus on standardizing the procedures for customs documents required for goods entering and leaving China, with electronic forms being favored over paper. A total of five documents are required to gain clearance: an application form, samples of bill of lading and shipping order, relevant business stamps, copy of license or certificate of qualifications, and any additional required documents.

The decree also sets minimum requirements for when the documents must be submitted, which vary depending on mode of transportation. For imports, the applicable time periods are 24 hours (ship), 4 hours (plane), 2 hours (train) or 1 hour (vehicle) before arrival at the first port of call. For exports, the specified deadlines are 24 hours (ship, container), 4 hours (plane), 2 hours (ship, non-container, or train) or 1 hour (vehicle) before loading.

The USDA notes that any alterations to the manifest documents must be made before the final submission deadline. The only exceptions are for uncontrollable events, goods being stowed on different vehicles or when the amount of bulk cargo is within prescribed limits.

Go here for an unofficial translation of the decree (PDF).

OPEC Plans Drastic Cut in Oil Production

(Washington Post – Steven Mufson)

Facing its biggest test in a decade, the Organization of the Petroleum Exporting Countries is planning to make a major cut in oil output at a meeting in Oran, Algeria, tomorrow in an effort to stop the slide in oil prices, which have dropped by two-thirds since July.

Confronted by sputtering world oil demand, the cartel is expected to make production cuts of about 2 million barrels a day to reduce the size of world inventories and to boost prices back up to the $75-a-barrel level that Saudi King Abdullah has called reasonable. It will be the group's fourth meeting in four months as it tries to adjust to the weakening world economy.

“They are going to cut and they are going to cut big,” said Roger Diwan, a partner at PFC Energy, a Washington consulting firm. Even after substantial OPEC output cuts earlier in the fall, world oil inventories “are building much faster than people thought,” Diwan added. Oil stocks are big enough to cover 57 days of supplies, up from the five-year average of 52 days.

Reaching the $75-a-barrel price target could be a tough task, however. U.S. oil demand has been weaker than any time since the economic slowdown that followed the Sept. 11, 2001, attacks on the World Trade Center and Pentagon. Even though retail gasoline prices have plunged to a nationwide average of $1.66 a gallon for regular, cash-strapped motorists continue to use less fuel than they did a year ago. The Energy Information Administration is forecasting a 3.4% drop in motor fuel use for 2008, and a bigger drop in oil-based motor fuel after taking rising ethanol use into account. Click here for the complete article.

Manufacturing in 2020: 80% of Companies Will Have Multi-Country Operations

(Industry Week – Adrienne Selko)

A new study, “Manufacturing in 2020” by Capgemini, examined how manufacturers expect to do business in 2020. Based on responses from over 150 manufacturing companies in eight countries, the study identifies a number of key findings about possible changes in the coming years:

• Manufacturing will become increasingly global by 2020, with around 80 % of manufacturers expected to have multi-country operations, compared with just over half today.

• Supply chains will also increase in complexity and consolidate. Half the companies surveyed said they will be using fewer suppliers by 2020, but 40% said they will be using more distributors as increased competition drives them to reach new markets.

• Manufacturers appear uncertain what actions to take about green issues, but as political and social pressure increases around emissions reduction, urgent action will be required to reach 2020 targets. • Differences between the manufacturing industries in developed and emerging markets will also continue to evolve.

“The manufacturing industry will change significantly over the next ten to twelve years, but with careful planning and preparation, manufacturers around the world can position themselves for competitive advantage,” said Nick Gill, Global Manufacturing Sector Leader, Capgemini.

“Closer collaboration with customers and suppliers and the systems put in place to manage this will be key to future success. In addition, manufacturers should be planning now for the upturn following the current recession and preparing for a more fluid movement of manufacturing between plants. With the complexity of the supply chain predicted to increase significantly along with greater concerns about supply chain disruption, manufacturers must ensure they have the necessary systems in place to support their business.”

Read the complete article or access the full report here.

Ambassador Bridge Truck Crossings Plummet

(Today’s Trucking)

If this keeps up, there might not be a reason for a second bridge at the Windsor-Detroit Gateway after all.

Freight traffic over the world’s busiest border crossing declined by nearly 500,000 trucks through November from 2007.

According to reports, truck traffic on the Ambassador Bridge dropped 14.9 percent to 2.7 million from 3.2 million last year.

The stats were compiled by the Public Border Operators Association, which monitors crossings between Michigan and New York with the province of Ontario.

The Ambassador is forging ahead with a twin span between Windsor and Detroit. At the same time governments on both sides of the border are in the final stages of planning a new bridge abut 3 km downriver of the Ambassador.

The declining trend has been similar at other major Ontario-U.S. border crossings.

The second-busiest crossing, the Blue Water Bridge at Sarnia-Port Huron, Mich. saw traffic total 1,475,979 trucks through November, off 1.75 percent.

At the Peace Bridge between Buffalo and Fort Erie, Ont., declined by 1.78 percent.

IKEA Official Criticizes U.S. Lacey Act

(Heath Combs — Furniture Today)

Declaration requirements said “unrealistic”

A compliance officer at a U.S. distribution facility for Swedish retailer IKEA said the requirements for import declarations in the Lacey Act, passed last year to combat illegal logging, are unrealistic.

Amendments to the act require importers to declare the origin and species of wood used in their products.

Enforcement for some products affected by the amendments was to have begun on Dec. 15 but was postponed until April 1. Enforcement for wood furniture will begin on July 1.

A comment period for federal rulemaking on the amendments ended this week.

Christopher Smith, a compliance specialist with Ikea Wholesale Inc. in Westhampton, N.J., said in comments posted on a federal Web site that record-keeping requirements in the revised Lacey Act will overwhelm supply chains and cause the cost of wooden goods to skyrocket, unless the regulation is narrowed.

Smith outlined suggestions and challenges to the supply chain for vertically integrated retailers in an 11-page letter.

He said the law would require Ikea to transmit 33.6 billion lines of data over the course of a year if the company were to track wood species from the its network of 1,380 suppliers of components and finished goods in 54 countries.

“Trying to trace this information to certify compliance all the way through the supply chain to the harvesting of each and every tree is unrealistic,” Smith said. Read more here and click here to read Smith’s letter.

ATA Releases: American Trucking Trends 2008 - 2009

(American Trucking Associations via Marketwatch)

The American Trucking Associations announced today the release of American Trucking Trends 2008-2009, an annual state of the industry report. This trucking industry almanac provides essential industry data that motor carriers need to make sound business decisions, especially in tough economic times.

“This report highlights the essential role that safe, reliable and efficient motors carriers play in our nation’s economy,” said ATA President and CEO Bill Graves. “Nearly every good consumed in the United States is put on a truck at some point. Americans need to keep in mind that the national economy is directly linked to an effective transportation industry,” he said.

According to American Trucking Trends 2008-2009 the industry continues to be a major employer in the United States. In 2007, there were 8.9 million people employed in trucking-related jobs; nearly 3.5 million were truck drivers.

Additional highlights from the report include statistics that indicate the trucking industry’s important role in domestic and international commerce. In 2007, trucks transported 57.8 percent of the value of trade between the United States and Canada, up 3.4 percent from the previous year, and transported 66.2 percent of the value of trade between the United States and Mexico, up 4.8 percent. At present, Canada and Mexico rank No. 1 and No. 3, respectively, in terms of U.S. trade partners.

American Trucking Trends 2008-2009 reports that all trucks used for business purposes in 2006 logged 432.9 billion miles. Class 8 trucks accounted for 139.3 billion of those miles, up from 130.5 billion in 2005. In addition, trucks consumed 53.9 billion gallons of fuel for business purposes and paid $37.4 billion in federal and state highway-user taxes. Commercial trucks make up 12.5 percent of all registered vehicles, but paid 36.5 percent of total highway-user taxes in 2006.

American Trucking Trends 2008- 2009 provides information on U.S. truck tonnage, employment numbers, freight revenues, engine sales, modal share and international trucking. Topics explored also include safety statistics, top trailer manufacturers, highway-user taxes, U.S. motor carrier size and distribution, trucking employment by state, fuel consumption and emissions data. Trends contains data from different sources; therefore, the most recent year available may vary. The report can be purchased at ATABusinessSolutions.com or by calling 1-866-821-3468 (toll free). Media should contact Tiffany Wlazlowski at 703-838-1717 or twlazlowski@trucking.org.

U.S. Retail Pain Jumps Border

(Marina Strauss — Globe & Mail)

Early this fall, suitors were knocking on the door at Linens ‘N Things’ Canadian subsidiary. Business was steady, even five months after its U.S. parent had collapsed into bankruptcy protection.

Today, the company’s 40 Canadian stores are being liquidated and the home furnishings chain’s plight serves as a stark example of how quickly the domestic industry has fallen victim to the U.S.-led downturn.

It also bears witness to how subsidiary chains on this side of the border are finding themselves vulnerable to the current squeeze on credit and financing. As such, they could serve as an early warning system for the broader retail sector in a protracted recession.

“I think, unfortunately, their world is going to get a lot worse before it gets better,” said Jack F. Williams, the American Bankruptcy Institute’s resident scholar, of the outlook facing the retail sector on both sides of the border.

“Our two economies are becoming more and more interrelated,” said Mr. Williams.

“In many of these instances, the U.S. counterpart is in financial distress, whereas the Canadian affiliate is reasonably successful.”

“The bankruptcies here in the United States will probably expose [Canadian affiliates’] cash flow to a greater drain,” Mr. Williams said.

More retailers in Canada than ever before are owned by foreign - usually U.S. - players, and more of those owners are struggling in the global economic crisis.

“It appears that Canadian sales trends are rapidly moving to resemble U.S. trends,” Desjardins Securities retail analyst Keith Howlett told investors on Friday. Read more here.

Nearly 600,000 Canadian Jobs Would be Lost With Collapse of Big Three: Report

(CBC News)

Canada would lose nearly 600,000 jobs within five years if the Big Three automakers completely shut down, according to a report prepared for the Ontario Manufacturing Council, an advisory panel of industry and labour representatives.

The 11-page report, which was prepared by the Centre for Spatial Economics, projects a bleak economic picture for the province and the rest of the country if the automakers went out of business.

Effects on employment would be felt right away, the report states, with Canada losing 323,000 jobs if production ceased immediately, 281,800 in Ontario alone, the report forecasts. Those figures would climb in five years to 582,000 jobs nationally in 2014, 517,000 of those in Ontario.

A cut in production by 50 per cent would eliminate 157,400 jobs nationally immediately, 141,000 in Ontario. By 2014, 296,000 jobs would be lost, 269,000 in Ontario.

The depreciation of the dollar, lower interest rates and lower production costs eventually help the economy to partially recover but the loss of the Detroit Three leaves a permanent dent in Canada's economy in terms of jobs and output, the document says. Read more here and view the report here (PDF).

Head of IMF Fears Unrest without Action on Economy

(Gary Duncan — The Times)

Violent unrest may be sparked around the world by a prolonged global slump unless governments act with greater urgency to jump-start stalled economies, the head of the International Monetary Fund said on Monday.

Dominique Strauss-Kahn sounded a stark warning over the consequences of what he argued was weak and uncertain government reaction to the economic crisis. He used a hard-hitting speech in Madrid to single out eurozone nations over what he attacked as an inadequate response.

The broadside from the IMF's managing director came as fears over a protracted global recession, and political fallout, mounted after China said that its factories' output registered the weakest growth in almost a decade last month.

Without swifter and more determined action by governments to boost economies, a world recovery could be delayed until late next year or early in 2010, with grave consequences, Mr Strauss-Kahn said. “A lot remains to be done, and if this work is not done it will be difficult to avoid a long-lasting crisis that everyone wants to avoid.”

The IMF has called for governments in leading economies to spend a combined 2 per cent of global GDP, or $1.2 trillion (£1,075 billion), to try to fend off the danger from global recession. “If we are not able to do that, then social unrest may happen in many countries - including advanced economies,” Mr. Strauss-Kahn suggested. Read more here.

Monday, December 15, 2008

US Customs Opens Fast Lane at International Falls

(Associated Press)

A new fast lane of sorts will open in International Falls on Monday for some travelers who want to cross the U.S.-Canadian border with less delay.

The U.S. Customs and Border Protection says pre-screened, low-risk travelers will be allowed to use the NEXUS lane. It will operate between 6:30 a.m. and 8 a.m., every day.

Approved applicants will be issued a photo-identification card. Participants must present their NEXUS card and make a declaration when they cross the border. They will then be released, unless chosen for a selective or random review.

Both the United States and Canada must approve an individual’s application.

Managing the Economic Meltdown

(Christopher Guly — The Lawyers Weekly)

Canadian lawyers face new challenges

The “perfect storm” created by the current economic downturn could generate considerable legal action in several practice areas, such as international trade and investment as well as litigation resulting from a potential escalation of cross-border trade disputes, according to McCarthy Tétrault’s John Boscariol, who heads the firm’s international trade and investment law group and is a partner in the litigation group in Toronto.

“When there are slowdowns, particularly in the context of a crisis, governments tend to erect trade barriers in an effort to protect employees and manufacturing in their country — measures that could violate obligations under trade agreements,” said Boscariol, who chairs the Ontario Bar Association’s international law section and serves as co-chair of the Canada committee for the American Bar Association (ABA)’s international law section.

Already, there are concerns that incoming U.S. President Barack Obama and his Democrat colleagues in Congress could spark one of the largest protectionist initiatives in recent memory. That in turn could lead to other actions on this side of the border.

“When markets slow down, companies bring forward more trade remedy cases, more countervail cases and more anti-dumping cases,” said Boscariol. “When companies start to suffer, they tend to blame imports.”

He adds that with massive government subsidization underway in the U.S., there could be legal challenges in Canada over whether such subsidies run afoul of U.S. trade obligations. So far, the European Union “has fired a warning shot over the bow,” indicating that it would be prepared to take the U.S. to the World Trade Organization if the U.S. government proceeds with a financial bailout of its auto industry and it’s found to have violated international trade law. Read more here.

Canadian Executive Has Trouble Crossing Border to go to Work

(Oliver Moore — Globe & Mail)

A Canadian senior executive planned to fly to Montreal early this morning and drive toward upstate New York, unsure whether border guards would let him into the United States.

In the tiny Adirondack community of Clifton, people were watching nervously and wondering what Scott Travers’s sudden inability to enter the country would mean for the recovery of their struggling area.

“Here we have someone that’s been a godsend and they’re keeping him out,” said town supervisor Bob Snider. “Totally ridiculous: This is someone who’s trying to help us.”

Mr. Travers is president and CEO of a Nova Scotia holding company that has a stake in the local paper mill. Closed for seven years, the mill reopened in 2007 and now employs more than 100 people and has created hundreds of spinoff jobs…

But his travels appear to have raised a red flag. He said he was warned on a recent visit that he would need more documentation and last week approached the border armed with a letter from his employer, pay stubs, character references and a completed application for a work permit.

It was not enough.

“I was interrogated ... I was fingerprinted, I was photographed, I was sent out of the country,” Mr. Travers said, adding that he has no criminal record or even an unpaid fine.

“They were convinced that I was taking a job from [an] American.”

U.S. Customs and Border Protection does not discuss specific cases, but the incident sparked a sharp reaction from state politicians. Read more here.

Trade, Education, Public Infrastructure, Fiscal Policy Pose Biggest Challenges for U.S. Global Competitiveness

(MarketWatch/Business Wire)

New Private Equity Council-Sponsored Study by Noted Economists Baily and Slaughter Offers Recommendations to Maintain and Expand U.S. Economic Leadership

The incoming Obama Administration and the new Congress should invest in worker training and education, pursue trade liberalization, accelerate public and private infrastructure investment, and take steps to rein in exploding health care costs to ensure that America maintains its competitive leadership in the global economy, according to a new study released today by the Private Equity Council.

The study was authored by Martin Baily, chairman of the White House Council of Economic Advisers during the second Clinton Administration, and Matthew Slaughter, associate dean and professor of international economics at the Tuck School of Business at Dartmouth College and a CEA member during the second George W. Bush Administration. The paper examines the forces shaping America’s global competitiveness and identifies policy prescriptions to ensure continued U.S. leadership in the changing global economy. The PEC commissioned the paper to contribute to a debate on competitiveness policy issues and stimulate action on a competitiveness agenda in 2009.

The authors cite major threats to U.S. global economic leadership in the decades ahead: trade barriers, declining graduation rates, deteriorating roads, bridges and other public facilities, scatter-shot tax and spending policies, and the unchecked growth in health care costs.

According to the paper, after a century of development that created the world’s largest economy, the United States since 2002 has experienced significant declines in its productivity growth.(1) The current capital markets crisis and economic recession have exacerbated concerns about U.S. economic strength - in capital markets, financial institutions and the manufacturing sector, with particular concerns raised about U.S. automakers. Read the complete article. The study is available in PDF format at the PEC website.