Monday, June 30, 2008

Canada’s Economy Rebounds

(Virginia Galt — Globe and Mail)

After the unexpected contraction of Canada’s real gross domestic product in the first quarter of this 2008, it now appears that the economy will post “relatively slow economic growth, but positive economic growth” overall for the year, Federal Finance Minister Jim Flaherty said Monday.

“We’re on track to accomplish that this year …although obviously, the economy has slowed down,” Mr. Flaherty said in an interview after Statistics Canada reported that the GDP rebounded 0.4 per cent in April after declines in February and March.

“One month doesn’t make a trend, of course, but it’s more in line with what the forecasters, including ourselves, were anticipating.”

Mr. Flaherty said the first quarter’s 0.3 per cent drop in the GDP “was a concern – but it was explainable, on analysis, by the factors affecting the auto industry, particularly a strike at a parts plant in the United States.”

Mr. Flaherty said the Statscan report, which showed that manufacturing production rose by 1.9 per cent in April and that the retail sector was up by 0.6 per cent, “reflects strong economic fundamentals in Canada …I am particularly encouraged by continuing consumer confidence in Canada.”

Mr. Flaherty declined to say whether he believes the Canadian economy now has enough momentum to avoid a technical recession – which economists define as two consecutive quarters of negative growth.

“I don’t do that, other than what private sector forecasters say.”

However, several economists said Monday that it appears that the Canadian economy will eke out modest growth in the second quarter and for the balance of this year.

Statscan on Monday cited increases in manufacturing, and wholesale and retail trade in April, offsetting declines in construction, oil and gas extraction and exploration. Read more.

Poll Suggest “Unease” Over Direction of the Country

(Arielle Godbout — Canwest News Service)

As Canada celebrates its birthday, only a slim majority of citizens feel the country is “moving in the right track,” according to a new poll for Canwest News Service and Global National.

Fifty-six per cent of respondents in the Ipsos Reid poll said Canada was on the right path, while 44 per cent felt the nation was “headed in the wrong direction.”

“It’s not an enthusiastic country at the moment,” said John Wright, Ipsos Reid’s senior vice-president. “But it’s not the end of the world and it certainly isn’t a time when people are panicking.”

The poll also measured Canadians’ attitudes toward the economy and the need for an election. “You have to judge the mood of a country a little bit like the mood of an individual,” Wright said, explaining the multiple topics. “Sometimes your stomach’s not feeling well but your head’s clear.”

Sixty-five per cent of Canadians surveyed believed the economy’s condition to be “very good” or “good,” but that number is down six percentage points since May.

And while Ontario and Atlantic Canada appear to be the most pessimistic, with respondents who feel the economy’s state is “poor” hovering at 40 and 38 per cent respectively, symptoms of unease are being seen across the country, said Wright.

“Even in places where you would have an expectation that things were going really well, such as in Alberta and where the oil patch is, it’s even there where some anxiety is rising up.” Twenty-two per cent of Albertans polled said the economy was in “poor” condition. Read more.

Trade Has Saved America From Recession

(Fred Bergsten — Financial Times)

The global economy has clearly decoupled from the US and world growth remains close to 4 per cent in spite of the absence of any increases in domestic US demand. Continued expansion abroad, especially in the emerging market economies, has in fact cushioned the slowdown and so far prevented recession in the US. Hence we are also experiencing the first episode in history of reverse coupling, in which the rest of the world pulls the US forward rather than the opposite.

The most striking feature of the current global economic situation is that the US is the only major country that is seriously contemplating recession and that has adopted aggressive expansionary policies to combat that risk. Most other countries are more worried about inflation than slower growth. Many are experiencing reduced growth, to be sure, but part of their slowing is a natural cyclical reaction to four years of near-record global expansion, at more than 4½ per cent from 2004 to 2007, and the need to focus on price stability. The additional losses because of the housing and credit crises in the US amount only to a couple of 10ths of 1 per cent in most areas, including Europe and Japan. It will reach a full percentage point or more only in the fastest growers such as China, where expansion will remain near 10 per cent. Many of these cuts are in fact welcome as their central banks are tightening monetary policy rather than easing it.

Global growth is thus still likely to approach 4 per cent in both 2008 and 2009 in spite of the sharp slowdown in its largest single economy. The emerging market economies, which now account for half of world output calculated at purchasing power parity exchange rates by the International Monetary Fund, are still expanding at 6-7 per cent. Even the nearest neighbours of the US – Canada and Mexico – are nowhere near recession and have altered their policies much less forcefully. In spite of the international transmission of substantial financial as well as real economic shocks from the US, the traditional relationship where “the world catches cold when the US sneezes” no longer holds.

The second striking feature is the reverse coupling of the global economy. Over the past two quarters, the US has recorded positive growth at an annual rate of 0.8 per cent (in spite of the pronouncements of many observers that recession had already set in). Its “net exports of goods and services”, the gross domestic product equivalent of the current account balance, have strengthened at an annual rate of almost 1 per cent of GDP during that period. Hence the totality of recent US expansion has been provided by the strengthening of its trade balance. Domestic demand has been falling but the US has been saved from recession by the rest of the world. Read the complete article.

Sunday, June 29, 2008

Americans More Anxious About Future than Canucks: Poll

(CTV News)

Canadians are more likely than Americans to think NAFTA has been bad for their country, while the economy and the soaring cost of fuel have become top issues on both sides of the border, according to a new poll.

The bi-national survey was conducted by The Strategic Counsel for CTV and The Globe and Mail, and involved interviews with 1,000 people in Canada and 1,000 in the U.S.

Among Canadians, 44 per cent thought the North American Free Trade Agreement was bad for Canada, while 43 per cent thought the opposite. The results suggest the debate over NAFTA is far from over, 14 years after the deal came into effect.

“I think it’s a sleeper issue,” Peter Donolo, a partner in The Strategic Counsel, told “I think that neither one of the two major parties wants to exploit it, or is in a position to exploit it. The question is whether it could ignite the moribund political standing of the NDP.”

NAFTA became a central issue in the U.S. Democratic nomination race, with both Barack Obama and Hillary Clinton suggesting they would be willing to renegotiate the trade deal.

However, Americans seemed more favourable to NAFTA, with 46 per cent saying it was good for the United States and 36 per cent saying it was bad.

On both sides of the border, the economy was a major concern.

Among Canadians, unemployment issues and the economy was tied with gas prices as the number one issue, at 18 per cent. The environment was just behind at 16 per cent.

Here are the top issues with a percentage-point change from a Jan. 10-13 poll in brackets:

• Economic issues: 18 per cent (+6)
• Gas prices: 18 per cent (+15)
• Environmental issues: 16 per cent (-6)
• Health care: 11 per cent (-1)
• Social/Moral issues: 9 per cent (N/A)
• Foreign policy issues: 6 per cent (-2)

Less than a year ago, gas prices had barely registered at 3 per cent, while the environment had been the top issue at 22 per cent.

“The economy has been growing as an issue of concern for Canadians,” said Donolo. We’ve seen gas prices throughout the summer as a big issue, and we’ve seen a number of car plant closings.” Read more.

Listening Post: Media Coverage of the Oil Crisis

(Al Jazeera-English)

The ups and ups of the price of oil — are the media getting it right or pumping up a crisis?

The price of oil is at an all time high. Consumers are feeling the pinch, while producers are seeing profits go through the roof. Just why 2008 has seen the surge in prices it has (almost reaching the $140-per-barrel mark) is a mystery even the media's best talking heads cannot agree on. Peak oil, speculation, supply and demand, political instability, China and India's booming growth, all these reasons and more are seized upon by the pundits trying to bring clarity to the story. Does the media’s coverage ignite our understanding or does it throw fuel on the fire, increasing the speculation that may be raising prices?

Is NAFTA Road About Trade — Or Treachery?

(Gabriela Rico — Arizona Daily Star)

It is a steel and concrete corridor that will run right through the Old Pueblo, connecting Mexico City to Edmonton, Alberta.

Its purpose is to facilitate trade among the three countries and minimize traffic and congestion for residents. Or is it evidence of a move afoot to intertwine the three North American countries and blur the lines of sovereignty? That’s a matter of opinion.

The Canamex Corridor, as defined by Congress in the 1995 National Highway Systems Designation Act, is a joint effort involving Arizona, Nevada, Idaho, Utah and Montana.

The transportation portion calls for the development of a continuous four-lane roadway from Mexico through the U.S. into Canada.

There are two other trade corridors: One runs from the southern Mexico city of Manzanillo, Colima, through Laredo, Texas, to Canada’s Prairie-to-Ports Gateway & Inland Port, anchored by Saskatoon, Moose Jaw and Regina in Saskatchewan. The other corridor veers east from Laredo through Kansas City up to Winnipeg, Manitoba.

As officials in all three countries grapple with the logistics of creating such thoroughfares, there is growing concern that the so-called “superhighways” are a visible step toward the blending of economies, cultures and resources. Read more.

A Plan B for Deepening Economic Ties in the Americas

(Marcela Sanchez — Washington Post)

It has been a frustrating start of the century for those promoting economic integration of the Americas. The hemisphere seems more ideologically divided than at any time since the Cold War, putting off any hopes of reviving the idea of a Free Trade Area of the Americas, snuffed out two and half years ago in Argentina when regional leaders spent more time emphasizing their differences than anything they had in common.

Those who see a free trade agreement as a way to promote growth, reduce disparity and increase competitiveness are asking themselves what to do next. More specifically, they wonder what can be achieved at the Summit of the Americas to be held in early 2009, when a new U.S. president is expected to attend.

It may be time to try Plan B. Nancy Lee, former deputy assistant secretary for the Western Hemisphere at the Treasury Department, contends that rather than striving for an all-encompassing trade agreement, the region should get more of its fundamentals in order and pursue a narrower goal. In a chapter for the forthcoming book “The White House and the World: A Global Development Agenda for the Next U.S. President,” to be published by the Washington-based Center for Global Development, Lee proposes a regional agreement to improve the hemisphere’s investment climate.

Such an agreement would establish standards for doing business in the Americas, a region where many countries are far behind the average global standard. It would aim, for instance, to reduce burdens on private entrepreneurs by simplifying processes to start up a business, pay taxes, clear customs and access credit.

A hemisphere-wide agreement, Lee argues, both would increase investment and boost growth. It would spread economic benefits to areas and populations so far neglected, especially by permitting “small businesses trapped in the informal sector (to) shift to the more productive formal sector.” Read the complete article.

Saturday, June 28, 2008

ICC Keynote Focuses on CBP’s Partnerships to Combat Counterfeit Product Importation


U.S. Customs and Border Protection’s Office of International Trade Assistant Commissioner Daniel Baldwin gave a keynote address today [Thursday] at the International Law Enforcement Intellectual Property Crime Conference in Halifax, Nova Scotia, Canada highlighting how partnerships are an integral part of CBP’s strategy to combat the illegal importation of counterfeit goods.

“All of us face a common threat from the international trafficking in counterfeit and pirated goods, Assistant Commissioner Baldwin told the group. “It is essential that we work in partnership to identify and disrupt the international distribution networks of these goods.”

Baldwin’s keynote address highlighted CBP’s intellectual property rights enforcement work emphasizing CBP’s partnerships with industry, trading partners and other U.S. government agencies to detect and seize counterfeit goods.

CBP continues to seize a wide range of counterfeit goods with an increasing focus on products that pose a safety threat and could harm consumers.

“At one time, we viewed fake goods primarily as a commercial threat to our economies. We now understand that the trade in fakes also presents equally serious threats to our national security and consumer safety,” said Baldwin.

CBP seizures of counterfeit and pirated goods have risen dramatically. In fiscal year 2007 CBP made 13,657 IPR seizures with a domestic value – the value of fake goods – of more than $196 million, an increase of 27% by value over the previous year. In the last five years, CBP seizures of IPR infringing products has risen about 110%.

The conference was hosted by INTERPOL and the Royal Canadian Mounted Police in partnership with Underwriters Laboratories. It focused on law enforcement’s role in IPR enforcement, with the theme of “Working in Partnership Against a Common Threat.”

Friday, June 27, 2008

Obama, McCain Mislead America About “Foreign” Oil

(Yael T. Abouhalkah — Kansas City Star)

Both Barack Obama and John McCain are engaging in xenophobia with their complaints about America’s use of foreign oil. Check it out:

Obama says on his Web site that “energy security requires stemming the flow of money to oil-rich regimes that are hostile to America and its allies....” Obama fails to give any examples, however.

McCain says on his site that the next president needs to make “the hard choices that will break our nation’s strategic dependence on foreign sources of energy...”

Both presidential candidates ignore some facts with their statements.

The largest supplier of petroleum to America is ... Canada, which meets about 25% of our monthly needs. Mexico is the third biggest with around 13%. In other words, 38% of the U.S.’s monthly imports come from our two most important North American allies.

Sandwiched at second place (supplying 15% of our petroleum) is Saudi Arabia, which certainly sits in a long-unstable region. But Saudi Arabia is hardly “hostile” to America, as Obama implies. In fact, it’s been one of the steadiest suppliers America has had in the past two decades.

Indeed, the only nations that supply a rather significant amount of petroleum and are openly hostile to America are Venezuela and Nigeria, both at about 12%. So where’s Iran? The United States buys little or no oil from that nation, which supplies China and other countries instead. Others in the top 15 suppliers include Russia, the Virgin Islands, Brazil, Kuwait and the United Kingdom.

Hardly a list of rogue nations.

Industrial Product and Raw Materials Price Indexes, May 2008

(Statistics Canada)

Petroleum prices increased substantially for a third consecutive month in May, driving up the indexes for manufactured goods and raw materials prices. However, if energy products were excluded, the price movement for both those indexes would have been negative.

From April to May, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.6%, down from the 1.6% increase in April. May’s increase was almost entirely attributable to petroleum and coal products, which continued their upward climb with an increase of 8.2%, similar to the rate recorded in the previous two months.

Prices for other IPPI products, with the exception of energy, declined 0.5%, their first decrease after five straight monthly increases. Among non-energy products, 13 major groups out of a total of 20 posted declines, led by primary metal products as well as motor vehicles and other transport equipment. Summary statistics and a link to the data file can be found here.

Minister Ritz Strengthens Agricultural Ties with Japan

(Agriculture & Agri-Food Canada)

Canadian farmers produce some of the safest beef in the world and Federal Agriculture Minister Gerry Ritz has taken that strong message into meetings with agricultural leaders in Japan.

“The safety and quality of Canadian beef is second to none and our ultimate goal is to gain full access to the Japanese market for our beef and cattle,” said Minister Ritz, following his discussion with Masatoshi Wakabayashi, Minister of Agriculture, Forestry and Fisheries.

Japan currently restricts imports of Canadian beef to animals under 21 months of age which have had specified risk material removed.

“Canada understands the value of food safety,” said Minister Ritz. “I reiterated our commitment to providing safe beef exports and also emphasized that Canada has been recognized by the World Organization for Animal Health (OIE) as a controlled-risk BSE country, and as such, we should have full OIE access to the Japanese market.”

Japan is the second-largest importer of Canadian agri-food products, buying more than $3 billion of Canadian agriculture, agri-food and seafood products last year.

“This Government is constantly looking for new and innovative ways to improve market access for Canadian agricultural producers,” said Minister Ritz. “Japan is already an important trading partner and we are working hard to maximize opportunities for our farm families in the Japanese market.”

Earlier this week, Minister Ritz held two days of productive meetings in Moscow with Russian Agriculture Minister Alexey Gordeyev regarding Canadian pork and beef products.

Thursday, June 26, 2008

Plenty of Incentive to Speculate

(Video: AP/Story: Export Development Canada – Peter G. Hall)

One of the marvels of recent economic developments is the surge in commodity prices. It wasn’t anticipated, but it has persisted, and the debate about its causes rages on. Two key views have emerged: on one side, those who feel it’s mostly about supply and demand fundamentals, and on the other, those who see a heavy speculative element. Does the latter side have a point?

Price movements have been dramatic, and have involved a broad range of goods. Since the summer of 2007, oil prices have more than doubled to $130 a barrel. Base metals have been on a tear since 2005, with copper, nickel, lead, zinc, aluminum and steel now fetching several times their original prices. Food has more recently joined the fray, with wheat, coarse grains and rice prices, up 125% since early 2007, spurring price increases across the agri-food sector.

Is speculation a factor? Human behaviour suggests so. Sudden price spikes are usually spurred by shortages, or at least the perception of shortages. Consider food. A mere rumour that local supplies are running low is enough to trigger a rush on supplies. To the merchant, this looks like a surge in demand, so up go prices as the order book fattens. Does the demand surge reflect fundamentals? Far from it. Worry that the current food distribution system will fail them leads private citizens to buy, not just for current needs, but to build their own personal food inventories.

The mechanism is similar for producers. Rather than let short supplies shut down their production lines, savvy businesses will likewise build up stocks of what they need for the future. As this catches on across the world economy, demand swamps available supplies, putting pressure on the global production system and ultimately, prices. Why? Because global production maintains enough supply to meet day-to-day needs, but is not geared for sudden private inventory building.

The process doesn’t stop here, though. As with any sustained price rise, it is better for producers to buy additional supplies early, and sell at the latest possible point in time, either marking prices up to reflect rising input costs, undercutting competitors who didn’t pre-buy earlier at lower prices, or a combination of the two. Either way, there is a strong incentive to purchase a lot more than current needs dictate, adding further to the perception of a general supply shortage.

And then there are other market players. These have little or no direct connection to the commodity in question, but see large price increases, and want a piece of the action. They have significant clout, given the sizable liquidity generated by robust global growth in the past four years. And data suggest that they are quite active in current commodity transactions. Their incentive is strong. In the past year, major global stock market indexes have fallen on average by 15%. In the same timeframe, commodities in US dollar terms have jumped by almost 50%. What is more, the incentive has been magnified by crisis in other parts of the economy. This activity is enhancing the perception of shortages, but has little relation to demand and supply fundamentals.

The bottom line? Speculative bubbles are almost impossible to fully identify before they burst, but oddly enough, are always a no-brainer in hindsight. Knowing that the incentives to over-invest in commodities are currently very strong suggests that a near term price correction could well occur.

Going Green to Save Some Green

(Video-UPS/Story-American Progress)

The same week that gas reached $4 a gallon earlier this month, diesel hit $4.71 a gallon. What does this mean for commercial truckers? It means that it now costs about $1,200 to fill up a tank of gas. At least 935 trucking companies went out of business due to rising fuel prices in the first quarter of 2008 alone, and these numbers have been climbing every quarter for the last five quarters.

Going green has become a matter of necessity for companies whose business involves driving. Consumer shipping businesses like UPS and FedEx may not be the greenest of the green—Climate Counts gives them scores of 39 and 28 out of 100 respectively—but they’ve recently begun deploying innovative strategies that will certainly begin reducing their carbon dioxide emissions and can serve as a model for other commercial shippers trying to stay afloat by using less gas.

Eliminating Left Turns: Trucks can waste a lot of gas idling while waiting for a left turn. At the beginning of 2007, UPS therefore eliminated all left turns from delivery routes, and has so far reduced over 30 million miles from their routes. This has saved 3 million gallons of gas and 32,000 metric tons of CO2—the equivalent of removing 5,300 passenger cars from the road for a year.

Compressed Natural Gas Delivery Trucks: UPS has deployed over 800 delivery trucks across the United States that run on compressed natural gas. While the trucks look just like the diesel-guzzlers in UPS’ fleet, they release 20 percent fewer emissions and improve fuel economy by 10 percent. Read the complete article.

Consultations on WTO Trade Facilitation Negotiations


The Department of Foreign Affairs (DFAIT) has requested assistance from the Canada Border Services Agency (CBSA) to collect comments from CBSA Stakeholders on the current proposals put forward at the World Trade Organization (WTO) Doha Round Trade Facilitation negotiations. CBSA has in turn contacted the members of the Border Commercial Consultative Committee, including I.E.Canada.

The CBSA actively supports DFAIT at the WTO Negotiating Group for Trade Facilitation (NGTF) meetings, as the majority of the NGTF's work focuses on border-related rules and procedures. As the NGTF is moving towards creation of a text for a potential WTO Trade Facilitation Agreement, DFAIT has posted a notice on its website seeking views and concerns from interested Canadian stakeholders.

To this end, stakeholders with an interest in border-related issues, such as customs fees and procedures, transit of merchandise through third countries, publication and transparency of foreign trade regulations, and sharing of export information by customs administrations, are invited to submit comments on proposals currently under discussion in the context of the Doha Round Trade Facilitation negotiations.

The deadline for comments is August 1, 2008.

To access the DFAIT website go here. You may either submit your comments directly through the DFAIT website, or through the association by sending them to Amesika Baeta at

Ottawa Adds $62M to Funding for Queenston Lewiston Bridge Overhaul

(The Canadian Press)

A major overhaul of the Canadian plaza at the Queenston-Lewiston Bridge got a big boost from Ottawa on Wednesday. Niagara Falls MP Rob Nicholson announced the federal government will kick in $62 million to assist the Niagara Falls Bridge Commission with the final half of the project.

The $130-million makeover is aimed at making one of Canada's busiest border crossings more efficient.

Bridge commission general manager Tom Garlock says the changes are geared toward improving bridge operations in an ever-changing tourism and trade industry. The planned improvements include new inspection facilities, a new animal inspection facility, and additional passenger primary inspection lanes.

Garlock says work is expected to start immediately and should be complete by early to mid-2011.
Read the complete press release and backgrounder here.

EICS / EXCOL Bulletin – Canada Day Holiday 2008

(Export & Import Controls Bureau)

Tuesday 01 July is a statutory holiday, and the Bureau's offices will be closed (no officers or Help Desk staff will be available). The EICS system will be available during normal hours.

Please note that the Help Desk email ONLY will be monitored on Tuesday the 1st between 08:00 - 16:00 (EST) for urgent messages.

Questions or problems can be directed to the following EICS email address:

$7-a-gallon gas, 10-million Fewer Cars: Rubin

(Matthew Trevisan — Globe & Mail)

A new forecast calls for gasoline prices to hit $7 (U.S.) a gallon in the next two years and oil to soar to $200 a barrel by 2010.

The report by CIBC World Markets also predicts there will be 10 million fewer cars on the road in the United States by 2012.

“Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America's highways in history,” Jeffrey Rubin, the lead author, wrote in Thursday's report.

Economist Benjamin Tal, who co-authored the report with Mr. Rubin, said Canadians can expect to pay about $1.85 to $2.00 per litre of gas at the pumps by 2010.

Mr. Tal also expects the numbers of Canadian vehicles on the road to drop by 700,000 by 2012 – much less than the 10 million predicted in the U.S.

“We don't have the same story in the sense that most low income Canadians have better access to public transportation,” he said, referring to the report's U.S. calculations that estimates that about half the cars coming off the road will be from Americans who make less than $25,000.

In Canada, the decrease will be mainly come from middle-class families that own two or three cars, Mr. Tal said.

By 2012, the report predicts, the average miles driven in the United States will decrease by 15 per cent, and sports utility vehicles, which accounted for almost 60 per cent of U.S. market share in 2006, will drop to less than half that level. Overall vehicle sales will drop from 14 million to 11 million by 2012 – the lowest level since the early 1980s. Read the complete article.

Wednesday, June 25, 2008

Canada-U.S. Relations: The Politics of Adolescence

(Megapundit — Macleans)

“The last thing Canada needs is a protectionist in the White House,” John Ibbitson writes in The Globe and Mail, “especially since every indicator is pointing to major Democratic gains in Congress.” And yet for many reasons—some ideological, some honest, some downright stupid—we continue to overwhelmingly favour Barack Obama’s stated protectionism over John McCain’s stated promises to defend NAFTA and, perhaps more importantly, to “reduc[e] border lineups and streamlin[e] regulations.” For our own sake, let’s hope America doesn’t get the change it so desperately needs!

Clearly both candidates are intent on winning friends north of the border, John Ivison suggests in the National Post. After all, Obama dismissed his own past trade rhetoric as “overheated and amplified,” and went out of his way to tell Fortune magazine that he’d spoken to Stephen Harper after securing the Democratic nomination. In fact, though McCain and Obama might just be lusting after our “ample natural assets—those being our reserves of oil and natural gas”—Ivison believes “all the signs point to the beginning of a beautiful friendship with Canada, whoever becomes the next president.”

CTA’s Bradley Offers Advice to Shippers

(Truck News)

David Bradley, CEO of the Canadian Trucking Alliance (CTA), warned shippers at the Pharmaceutical and Personal Care Logistics Association that they will have to continue paying sufficient surcharges in light of rising fuel costs.

“However you cut it, whatever fuel surcharge formula you use, carriers need to generate enough revenue to survive,” he explained. “The combination of the base rate, fuel surcharge, accessorial and other charges must add up to an amount that provides for an adequate return on investment. Two plus two must equal four at the end of the day.”

Bradley pointed out that 40-50% of carrier revenues currently result from fuel surcharges. While he admitted that’s “bizarre” he also said “putting that genie back in the bottle is extremely difficult.”

He went on to say: “Changing fuel surcharges in isolation of rates is not tenable for carriers. You want a new formula, fine. But you have to look at all the fuel used to pick-up and deliver your load. You want lower fuel surcharges, fine. But then rates have to go up. Whatever formula you come up with, carriers want you to stick to it.”

Finally, Bradley urged shippers to take a long-term view and to secure capacity now.

“Many markets are soft right now, there is excess capacity and changing balance. But the capacity situation will resolve itself and when it does things could tighten quickly.”

World Bank Applauds Canada’s Americas Focus

(Embassy – Lee Berthiaume)

A senior World Bank official last week applauded the government’s decision to make Latin America and the Caribbean a foreign policy priority, describing Canada as “one of the few bilateral countries that has an interest in the Americas.”

Pamela Cox, the bank’s vice-president for the Latin American and Caribbean region, also said the World Bank is not calling on Canada or any other country to slow down on free trade talks with the region despite the fact soaring food and energy costs will slow economic growth there.

“Obviously the bank supports free trade,” she told reporters in a briefing at Chateau Laurier. “We think the benefits are huge.... We think the benefits, especially to Latin America, would be large.”

Ms. Cox was appointed to her position in 2005, but said last week’s visit was her first and was intended as a way to recognize Canada’s new commitment to what she described as the “lost continent.”

Latin America has seen a number of ups and downs since the 1970s, she said, but the region as a whole has enjoyed five per cent growth per year over the past five years, partly due to the adoption of sound fiscal policies in many countries, but particularly thanks to strong commodity prices.

She warned, however, that challenges are on the horizon, particularly for countries in the Caribbean and Central America that import both food and fuel.

“We do see growth continuing, probably going down slightly – about 4.5% per year – and we do see some countries struggling a bit,” she said.

Over the past year, Canada has made the Americas a priority; it is channeling more aid to the hemisphere and has launched a robust campaign to ink free trade agreements with a variety of countries in the hemisphere, including the Caribbean Community, Peru, Colombia and the Dominican Republic.

The goal has been to strengthen democracy and open market systems in a region where Canada has more than $100 billion in investments, primarily in the mining and energy sectors, but where populism and socialist policies, including nationalization of industries and natural resources, are on the rise.

Ms. Cox acknowledged the political divide that exists in the hemisphere, particularly South America, but said: “We need to have everybody around the table, no matter what kind of government they have, no matter what their world view.

“Unless you’re around the table and talking, it’s very hard to address global issues and have stability in the world.... Now what we try to do at the bank level, and I think Canada can also have a role in this, is to keep dialogue open and show examples of how people do things.” Read the complete article.

Emerson to Attend G8 Foreign Ministers Meeting in Japan


The Honourable David Emerson, Minister of Foreign Affairs and International Trade, [Tuesday] announced that he will attend the G8 Foreign Ministers Meeting in Kyoto, Japan, on June 26 and 27, 2008.

“The Foreign Ministers Meeting will provide an important forum in which to develop concrete and credible solutions to global challenges, and to strengthen global collaboration in developing those solutions,” said Minister Emerson.

During the Meeting, foreign ministers from the G8 countries of Canada, France, Germany, Italy, Russia, the United States, the United Kingdom and the host country of Japan will address international security issues such as nuclear non-proliferation, counterterrorism and peacebuilding, as well as a range of specific regional foreign policy issues, including Iran, North Korea, Afghanistan, Sudan, Zimbabwe and Burma.

Minister Emerson will also take the opportunity to champion Canada’s values of freedom, democracy, human rights and the rule of law.While in Japan, Minister Emerson will meet with Masahiko Komura, the country’s Minister for Foreign Affairs.

“I look forward to meeting with my Japanese counterpart, in particular because this year – the 80th anniversary of the establishment of diplomatic relations between our two countries – marks an important milestone in our relationship.”

Ministers Emerson and Komura will discuss Canada’s participation in the G8 Summit, which will be held in Toyako, Japan, from July 7 to 9, 2008, and which Prime Minister Stephen Harper will attend.

Tuesday, June 24, 2008

Two Weeks of Floods Disrupt U.S. Transport Economy

(Transport Intelligence)

Although not widely reported outside the U.S., the floods across the MidWest states of Iowa, Wisconsin, Missouri and Illinois have had a severe affect on the country’s transport infrastructure.

Heavy rains through mid-June resulted in flooding in many of the urban areas of these states with the evacuation of tens of thousands of people. Heavy floods have continued to flow down the Mississippi river course throughout the past week. The floods have already had a savage impact on agricultural production in what is the largest region for U.S. farming.

The effect on the North American rail network has been particularly acute. Rail lines running through the northern MidWest states have been closed with heavy damage to infrastructure such as bridges. The most severely affected companies have been Burlington Northern Santa Fe and Union Pacific, although Canadian National Railway has also been impacted badly.

The wider consequences on the rail sector have been the reduction in agricultural bulk traffic which is a key market segment for the rail roads. Overall the Association of American Railroads estimates that volumes have fallen by 4.4% in the MidWest with non-grain farm produce falling by 16% over the past week. Intermodal volumes have also fallen heavily with river barge activity on the Mississippi coming to a halt.

Road freight has been less vulnerable, although the road infrastructure, in what is a geographically vast region, has been damaged with some major highways washed-away.

This has also led to the interruption of supply chains across much of the U.S., with traffic in shipping containers to and from the West Coast ports to areas such as Chicago and the East coast badly affected.

One further impact may be higher fuel prices, with the previously buoyant bio-ethanol industry hit badly.

CBP Modernizing Land Ports of Entry


RFID technology to help speed, streamline border crossing

U.S. Customs and Border Protection [Monday] announced plans for construction work to improve 39 major entry points along the U.S borders with Canada and Mexico over the coming months.

The construction, which entails deployment of Radio Frequency Identification (RFID) technology to 354 vehicle lanes, will help speed travel and further enhance border security.
Use of RFID will enable swifter processing at border crossings for travelers using new state-of-the-art travel documents. These documents include the passport card – a wallet-sized, cost-effective alternative to the traditional passport specifically designed for cross-border land and sea travel – and enhanced driver’s licenses (EDLs) being produced by several states.

Washington State began producing an EDL in February and currently has issued over 17,000.

The State Department currently has received over 300,000 passport card applications and will be in full production in July. In addition, the State Department will be incorporating RFID technology into the next generation Border Crossing Cards. These new cards, which the State Department will begin issuing later this year, will further enhance and streamline border crossing for BCC-holders.

“We want to alert travelers to the potential of increased wait times at some high-volume border crossings this summer,” said CBP’s Executive Director for Admissibility and Passenger Programs Paul Morris. “Deploying RFID readers will be a tremendous step in helping reduce congestion and long lines in the future. We also want to thank travelers for their patience during this construction phase and to encourage them to obtain one of the new RFID-enabled documents.”

These documents are the result of a new requirement, the Western Hemisphere Travel Initiative (WHTI), a Congressional mandate passed in 2004. The requirement went into effect for air travel in January 2007. Full implementation of WHTI for land and sea travel will go into effect June 1, 2009. To help mitigate impact, CBP is taking a phased approach with separate construction and installation phases, which will be complete prior to June 2009. Where possible, construction is taking place during non-peak hours.

CBP is conducting numerous press events and stakeholder briefings throughout the border communities to answer questions about the technology deployment and provide additional information about WHTI and the variety of document options available to travelers. As travelers gear up for the busy summer travel season, CBP also offers tips to help expedite processing at the port of entry by having their documents ready upon arrival at the primary inspection booth and to declare all purchases to the CBP officer, including fruits, vegetables and animal products. For questions regarding admissible or prohibited products, please see the “Know Before You Go” website.

The construction is occurring in Blaine, Wash. and Nogales, Ariz. in June, and in the following locations throughout summer and fall (listed in no particular order): Buffalo, Champlain, Massena and Alexandria Bay, N.Y.; Detroit, Port Huron and Sault St. Marie, Mich.; El Paso, Laredo, Brownsville, Hidalgo, Rio Grande City, Fabens, Progreso, Del Rio, Roma, Presidio and Eagle Pass, Texas; Derby Line, Highgate Springs and Alburg, Vt.; Sweetgrass, Mont.; Calais, Houlton and Madawaska, Maine; International Falls, Minn.; Sumas Point Roberts and Lynden, Wash.; Pembina, N.D.; San Ysidro, Andrade, Tecate, Otay Mesa and Calexico, Calif.; San Luis, Douglas and Lukeville, Ariz.; and Columbus, N.M.

A sustained, large-scale ad campaign will also be launched later this year to advise national audiences in the United States and Canada about the new document requirement.

Monday, June 23, 2008

McCain’s Free Trade Stance Comes Under Fire


From CNN’s Lou Dobbs Reports:

Senator McCain today pandering to business special interest groups with his unqualified support for NAFTA, but the senator didn’t deliver his pro-free trade pitch in this country where millions of jobs have been lost as a result of those agreements. Instead he went to Canada to talk to their business elite.

In addition to his enthusiastic support for NAFTA, the senator also voted for all sorts of trade deals. Voting for trade deals with Oman (ph), Singapore, Chile, Vietnam, Central American nations and African nations. And just in case there is any doubt, back in December, Senator McCain said he would seek deals with more countries saying, “I’m the biggest free marketer and free trader you will ever see.”

Senator McCain’s position on free trade and its impact on working people in this country and our middle-class shouldn’t be much of a surprise when we consider just who’s giving the senator economic advice, none other than Carly Fiorina, the former CEO of Hewlett Packard. She presided over the thousands of layoffs at Hewlett Packard and was ultimately fired herself, but not before she received a $21 million severance package and more than $500,000 in mortgage assistance. And it was Carly Fiorina who defended outsourcing of American middle-class jobs to chief overseas labor markets by saying, “there is no job that is America’s God-given right anymore.”

“Toward a New Washington Consensus on Trade” Via AlterNet:

It’s not that politicians like McCain “need to be educated” about economics, as he admitted. It’s that they do not comprehend how economics impacts international affairs. Behold McCain at a recent town meeting.

“We need our Canadian friends, and we need their continued support in Afghanistan,” he said. “So what do we do? The two Democratic candidates for president say they’re going to unilaterally abrogate NAFTA. How do you think the Canadian people are going to react to that?”

Opinion-makers, think-tankers and other assorted conventional wisdom spewers depict McCain’s thesis as unquestioned truth. They claim that though most Americans oppose our trade policies, the world’s masses love them, and if we change them, we will lose allies.

This rationale justifies the fabled Washington Consensus — the set of right-wing globalization measures currently destabilizing the world economy. And because our politicians’ international curiosity begins and ends with turning French Fries into Freedom Fries, this rationale goes unchallenged in America’s political debate.

Facts, however, are persistent things — facts like the Toronto Star report showing “almost half of all Canadians [believe] NAFTA should be renegotiated,” with 80 percent saying it has done little or nothing for workers. McCain wonders how Canadians will react to NAFTA criticism, but the results are already in: According to polls, they prefer the NAFTA-bashing Barack Obama by a five-to-one margin over the NAFTA-glorifying Arizona senator.

“Canadians believe NAFTA needs serious work,” said Jack Layton, leader of Canada’s New Democratic Party. The likely prime minister candidate told me he wants to reform the pact because it helps corporations overturn laws and because its lack of standards forces workers into a wage-cutting, environment-destroying race to the bottom. Read the complete article.

Saturday, June 21, 2008

John McCain Goes to Ottawa, Defends NAFTA

(Video: A-Channel News/Story: CTV News)

“What a blessing it is for the United States to have in Canada a neighbour we fear only on ice rinks and baseball diamonds…”

He took a detour from his presidential campaign and went to Ottawa to address the Economic Club of Canada.

“There aren’t any votes to be won up here,” he told the audience before setting out on a speech outlining the importance of Canada and U.S. relations, particularly in the economic sphere.
Although he did not refer directly to his presidential rival Barack Obama, McCain alluded to the Democrat’s criticism of NAFTA.

“Demanding unilateral changes and threatening to abrogate an agreement that has increased trade and prosperity is nothing more than retreating behind protectionist walls,” he said.
McCain said if he is elected president, he will respect international agreements. Obama criticized the economic pact during his Democratic primary battles with vanquished leadership contender Hillary Clinton. Both the presumptive presidential nominee and the former first lady campaigned promising they would seek changes in the pact.

McCain said NAFTA has helped American and Canadian businesses and workers. “Since the agreement was signed, the United States has added 25 million jobs and Canada more than four million,” he said.

“We have established North America as the world’s largest economic market and the integration of our economies has led to greater competitiveness of American and Canadian businesses. Because of our common market, our workers are better able to compete, and to find opportunities of their own in the global economy.”

Friday, June 20, 2008

EDC Improves Export Financing Guarantees For Small Business

(Export Development Canada)

Export Development Canada (EDC) has introduced enhancements to its Export Guarantee Program aimed at further encouraging financial institutions to advance loans to small- and medium-size enterprises (SMEs) in Canada. These program changes will help SMEs access financing from their financial institutions in support of Canadian exports and foreign investments.

“We have been working closely with our partners in the Canadian banking sector to revise the Export Guarantee Program to ensure that it continues to meet the evolving needs of both SMEs and the banks,” said Eric Siegel, President and CEO of EDC. “These improvements should increase access to trade-related financing for more companies and should be of help to Canada’s manufacturers, particularly those in the automotive sector.”

A number of changes have been made to facilitate the ease of use of the program by financial institutions. As highlighted in the Government’s 2008 federal budget, a key change to the program is the availability of more coverage to financial institutions from EDC for guarantees valued at $500,000 or less. EDC has increased coverage for these transactions from 75% to up to 90%. For guarantees valued between $500,000 and $10 million, EDC has increased the availability of coverage to up to 75% for all transactions, where previously coverage was limited to 50% for certain types of transactions.

Canadian Direct Investment Abroad (CDIA) is important to Canada’s capacity to trade, yet presents greater risks. Recognizing this, EDC will now consider providing up to 100% coverage for CDIA-related qualifying facilities as part of a larger package of bank credit provided to a company to support foreign investments.

The enhanced program also has more flexibility to accommodate a broader range of client needs such as: financing support for single and multiple export contracts; financing of work in progress and the purchase of equipment related to exports; margining of foreign-domiciled inventory; margining of receivables created under the federal Scientific Research and Experimental Development (SR&ED) tax program; and, the margining of foreign accounts receivables.

Since 2003, the Export Guarantee Program has quadrupled in size in terms of companies served. In 2007, approximately 200 SME companies were served and guarantee coverage valued at over $230 million was provided in partnership with Canadian financial institutions. More than 30 financial institutions have taken advantage of the program to help meet the needs of their clients.

Manitoba Joins Border States in Looking at ‘Enhanced’ Drivers Licences

(The Canadian Press)

Legislators from the Dakotas, Minnesota and Manitoba are looking at so-called “enhanced driver’s licences.” The idea is to provide secure border crossings without forcing travellers to have passports.

The licences, using an embedded information chip, would be voluntary. Officials say they would also be more expensive than regular driver’s licences, but cheaper than passports. The officials spoke at the close of a legislative forum held in Bismarck, N.D., this week for legislators and other officials from North and South Dakota, Minnesota and Manitoba.

A few states have been given the go-ahead for the enhanced licences and officials in Manitoba have expressed interest.

Deputy Manitoba Premier Rosann Wowchuk says everyone wants to ensure that border crossings remain as unrestricted as possible to avoid economic damage on both sides. “When you live right next to one of your major trading partners, and you have thousands of people going back and forth, neither of us want to see that movement restricted because it will affect both of our economies,” Wowchuk said.

State Senator Tom Fischer (R-Fargo) said he expects legislators to take up the issue next year. “I would think that North Dakota would have a great interest in enhanced driver’s licences because of the proximity to the border and the amount of people that cross the border on a daily basis,” he said.

Minnesota state Representative Lanning said people will have to be educated about the enhanced driver’s licences. Some are confused about the difference between that concept and the Real ID system that U.S. Homeland Security officials want states to adopt, he said.

Under Real ID, driver’s licences would have to meet a national standard and be linked to record-keeping systems. Critics say the plan is too costly and fear invasion of privacy.U.S. federal official says that by 2014 anyone seeking to board an airplane or enter a federal building will have to present a REAL ID-compliant card, except for people older than 50.

North Dakota state Representative. David Monson said he has reservations about enhanced driver’s licences. “If it’s going to be a precursor to Real ID and that data is in some agency out of North Dakota, then I think we want to steer clear,” he said.

Lanning said the discussion about enhanced driver’s licences is a good example of why such multi-state legislative and border meetings are important.

CBSA Message: Quebec National Day • Fete Nationale des Quebecois


The following is information concerning this year’s civic holiday in Québec on Tuesday, June 24, 2008. For all clients, overnight reports will run the evenings of Monday, June 23 and Tuesday day June 24, as usual. Daily notices/statements covering B3 entry data Monday, June 23 will be generated with a statement date of Wednesday, June 25 if the accounting office is in the province of Québec. In all other provinces, these K84’s will be statement dated Tuesday, June 24, 2008.

Goods released on Tuesday, June 24 in the province of Québec will be deemed to be released on Wednesday, June 25 , 2008. Goods released in all other provinces on June 24 will be deemed to be released on June 24, 2008. Should penalties appear on the statement of a client who is affected by the civic holiday, please FAX your application for waiver to 613-946-0242.

Le présent avis a pour but d’informer tous les clients des dispositions de cette année concernant le jour férié au Québec, mardi le 24 juin 2008. Pour tous les clients, les rapports de fin de journée seront produits pendant les soirées de lundi le 23 juin et mardi le 24 juin 2008 comme d’habitude. Les avis/relevés quotidiens pour les données de déclarations B3 de lundi le 23 juin 2008 seront imprimés avec date de relevé de mercredi le 25 juin 2008 si le bureau central de comptabilisation est situé dans la province de Québec. Dans les autres provinces, ces K84 seront imprimés avec une date de relevé de mardi le 24 juin 2008.

Les mainlevées accordées dans la province de Québec mardi le 24 juin 2008 seront considérées comme étant relâchées mercredi le 25 juin 2008. Dans les autres provinces, les mainlevées de mardi, le 24 juin seront considérées comme étant relâchées le 24 juin 2008. Si des pénalités apparaissent sur les relevés de clients touchés par le jour férié, ces clients sont priés de faire parvenir leur demande d’annulation par télécopieur au 613-946-0242.

Reference: Message EDI08-049

Government of Canada Expanding Trade Opportunities At Home and Abroad

(Minister of International Trade)

Canada is moving along its aggressive trade strategy by establishing 10 new trade offices in three countries and is expanding its Trade Commissioner Service in Canada with four new satellite offices. The announcement was made by the Honourable David Emerson, Minister of Foreign Affairs and International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, during a speech delivered for International Trade Day, in Mississauga.

“Canada is a trading nation. We are expanding our international footprint to maintain Canada’s competitive advantage in key markets, and to bolster our domestic economy and quality of life for all Canadians,” said Minister Emerson. “Today’s announcement is another example of our government’s commitment to keep our economy strong. These new trade offices will help provide our companies with the tools they need to access global supply chains and expand their commercial activities.”

Minister Emerson announced that new trade offices will open in six cities across China (Chengdu, Nanjing, Qingdao, Shenyang, Shenzhen, Wuhan), two in Mexico (Tijuana, Villahermosa) and two in Brazil (Porto Alegre, Recife). These are in addition to two new offices in India (Hyderabad, Kolkata) and one in Mongolia (Ulaanbaatar) announced in April. The government will also add new trade staff to existing offices in Brazil, Chile, China, Colombia, India and Panama.

“Canadian business has been demanding more service in growing markets abroad as well as enhanced local service in Canada,” said Minister Emerson. “Today this government is delivering on our commitment to the business community to improve these services.”

At home, new satellite offices will be established in Kitchener, Ottawa, Victoria and Windsor. Additional trade officers will also be added to existing regional offices.

“These offices play a key role in encouraging small and medium-sized enterprises to seek international opportunities and succeed in new markets,” said Minister Emerson. “Expanding our domestic points of service means more Canadian businesses will be active on the world stage.”

During his International Trade Day speech, Minister Emerson outlined the milestones Canada reached in trade and investment over the past year. The government has vastly increased bilateral ties with Canada’s global partners, in keeping with its commitments under the Global Commerce Strategy. This year, Canada signed a new free trade agreement (FTA) with the European Free Trade Association countries of Iceland, Liechtenstein, Norway and Switzerland.

In addition, Canada signed an FTA with Peru and concluded negotiations with Colombia. The government is continuing negotiations with Korea, the Caribbean Community, the Dominican Republic, Jordan, Singapore and the Central American Four countries of El Salvador, Guatemala, Honduras and Nicaragua, while at the same time looking ahead to possible new initiatives with countries such as Panama.

Canada has concluded negotiation of foreign investment promotion and protection agreements with India and Jordan, and negotiations with a number of other countries are ongoing. Canada also concluded new air agreements with Jordan, Iceland, New Zealand, Singapore, Mexico, Barbados, the Philippines and Panama, and launched negotiations with the European Union for a comprehensive open skies agreement that would govern air services between Canada and all 27 EU countries. Moreover, Canada expanded its work with China and India through existing science and technology agreements. Just last week, our country took another step to deepen and broaden our commercial and economic relations with France with the signature of a Canada-France Joint Action Plan.

“We know that trade follows investment,” said Minister Emerson. “With all these bilateral arrangements, Canada is attaining a stronger position to climb global value chains, increase inward and outward investment, gain preferential market access for Canadian firms and, ultimately, generate prosperity at home.”

The new trade missions are part of the government’s Global Commerce Strategy, which provides $50 million per year to further develop Canada’s trade and investment interests at home and abroad.

Thursday, June 19, 2008

U.S. Manufacturers Plan to Expand Domestically

(Industry Week – Adrienne Selko)

Over the next three years, 44% of North American companies plan to expand production in the U.S., according to a survey released on June 19 by National Association of Manufacturers (NAM), The Manufacturing Institute, the Canadian Manufacturers and Exporters (CME) and Deloitte Touche Tohmatsu.

Furthermore, 57% of say they will become more globally competitive over the next five years across the supply chain from sales, marketing and customer service to engineering and information technology.

“The survey clearly shows concerns that manufacturing companies want government to address,” said Emily DeRocco, President, The Manufacturing Institute. “Manufacturers cited controlling labor costs, enacting favorable tax policies and assisting with the severe shortage of skilled manufacturing workers, including engineers, scientists and technicians, as the top three areas that policymakers should address to help improve their global competitiveness.”

DeRocco points out that “structural, non-production costs (corporate tax rates, employee benefits, legal costs, natural gas prices and pollution abatement) for U.S. manufacturers have increased to an amount 31.7% higher than the average for our major trading partners, representing a significant and long-term problem for America’s manufacturers and their employees.”

Nearly 80% of respondents identified tax cuts for manufacturers as the key factor promoting innovation and research & development (R&D). “Clearly, Congress needs to extend the R&D credit that expired at the end of last year,” noted DeRocco.

The survey looked into how North American manufacturers view tree-trade agreements and found that they are positive about their experiences with 49% reporting that NAFTA helped their business to become more competitive, while only 10% say it has hurt their business. The remaining 41% said it did not affect them one way or the other.

CBSA Releases OGD Single Window Framework


The Canada Border Services Agency has released the long-awaited OGD Single Window Framework. This document provides the high level vision of the CBSA and its Other Government Department (OGD) and Agency partners in support of the OGD Single Window Initiative. It describes the long-term goals of Canadian border management relating to the processes required to meet and enforce regulatory requirements for commercial shipments in an electronic commerce world.

The OGD Single Window Initiative aims to implement a streamlined, Government of Canada approach for the electronic collection, use and dissemination of commercial trade data required to support the mandates of participating partners. The OGD Single Window Initiative seeks to deliver a more efficient, effective and integrated approach to collecting and consolidating advance commercial information.

There are currently 11 government departments and agencies participating in the initiative, including CBSA, the Canadian Food Inspection Agency, Health Canada, and the Department of Foreign Affairs and International Trade.

The report can be downloaded here (PDF format).

D11-4-16, Advance Rulings Under Free Trade Agreements


The following is now available on the CBSA Web site: D11-4-16, Advance Rulings Under Free Trade Agreements.

Form B227, Request for a Free Trade Agreement Advance Ruling or for a Review of a Free Trade Agreement Advance Ruling, has been cancelled by the Canada Border Services Agency (CBSA). Changes have been made to the "Guidelines and General Information" section to remove references to this form. This memorandum has also been revised to include updated contact information in Appendix C, CBSA Regional and Headquarters Offices.

Trade Deal Shouldn’t Sacrifice Made-in-Canada Solutions

(Calgary Herald – Larry Hill, Canadian Wheat Board)

The grain producers of Western Canada are highly reliant on trade. We produce far more than what our domestic population can consume. Whether it is wheat, canola, peas or oats, we need to sell our products beyond our borders in order to maintain the prosperity of our farm businesses.

So it is not surprising that grain producers like me support trade. We also support rules to ensure that trade between nations is fair and principled.

The current Doha Round of the ongoing World Trade Organization talks holds promise of bringing greater fairness to agricultural trade between the world’s nations. The grain producers of Western Canada support the intent of these talks and we hope that they are successful.

By the same token, we are wary of the notion that we must give up major components of our made-in-Canada approach to marketing agricultural commodities to ensure that a deal is reached in the Doha Round. A call for such concessions fails to account for the reality of how our industry is structured and how orderly marketing systems like the Canadian Wheat Board, which I chair, actually function.

The Western Canadian grain industry has repeatedly been subjected to trade challenges – a total of 14 times since 1990. In each case, the result has been the same: the CWB does not violate international trade regulations and acts as a fair and commercial marketer of western Canadian wheat and barley.

This was confirmed as recently as 2005, when the U.S. International Trade Commission dismissed U.S. claims that Canada was in contravention of anti-dumping and countervailing duty laws.

The reason the CWB continues to be targeted is simple: protectionist interests in other competing nations view the CWB as a threat.

Intelligent Border Website: Multi-Year Action Plan


The final version of the Multi-Year Border ITS (Intelligent Transportation systems) Deployment Plan is now available for download on the Intelligent Border Project website. The Plan identifies the deployment strategy and implementation plan for the province in general, as well as for each of the fifteen Ontario-U.S. land-based border crossings, in moving towards achieving the Intelligent Border Crossing. Click here to download the document (318 pages PDF).

The Action Plan for the Intelligent Border Crossing (IBC) is a joint initiative of the Ontario Ministry of Transportation (MTO) and Transport Canada. The Action Plan is being developed to provide the safest and most effective border crossings between Ontario and the U.S. and support Ontario’s quality of life and economy through the deployment of technology in the form of Intelligent Transportation Systems (ITS).

Canada Amongst Top Five “Global Trade Friendly” Countries: WEF Study

(Agence France-Presse)

Hong Kong and Singapore are the two economies most conducive to global trade, according to a ranking by the World Economic Forum released on Wednesday.

The World Economic Forum’s new Global Enabling Trade Index survey of 118 economies looked at ten factors impacting trade, such as tariffs, customs administration efficiency and availability of transport and communications infrastructure.

The forum ranked Hong Kong number one thanks to its “very open market” as well as a “secure and open business environment.”

Singapore’s open business environment was also complemented by a “highly efficient and transparent border administration” and a well-developed transport and communications infrastructure.

Third and fourth places were taken by Sweden and Norway respectively, while Canada was ranked fifth.

The world’s largest economy United States, however, did not figure in the top ten, coming in at number 14, dragged down by its border administration, judged to be “lacking some efficiency.”

“Customs procedures (in the United States) are seen as comparatively burdensome (ranked 42nd) and there is a relatively high cost to import (ranked 65th),” said the WEF.

Export giant China fared even worse, ranked just 48th, reflecting “underlying weaknesses in its economy and its trading regime.”

“Above all, China is a fairly closed country. Although its economic success relies heavily on exports, imports are still severely inhibited by tariff and non-tariff barriers, despite the country’s accession to the WTO,” it said.

Fellow Asian giant India ranked even further down the list, at 71st place, due to its market access, which is rated as “severely restricted.”

Brazil was not far behind India, at 80th place, as its markets remain “fairly closed, with tariffs... inhibiting goods imports.”

Wednesday, June 18, 2008

CBP Develops New Online Trade Violation Reporting System


U.S. Customs and Border Protection’s Office of International Trade has developed a new online trade violation reporting system called eAllegations to provide concerned members of the public a means to confidentially report suspected trade violations to CBP.

As of June 17, members of the public may report information regarding suspected violations via a new online form on the CBP Website.

CBP has established this reporting system to make it easier for the public to notify CBP of possible trade violations. CBP will confidentially research concerns, determine the validity of the allegations and any actions required based on the subsequent review.

To report a possible violation, an individual must submit the following information: the type of trade violation, description of what has occurred, the products or goods involved and the alleged violator’s name and/or company. Other information may be included on a voluntary basis.

eAllegations is not intended for assertions of security issues such as terrorists or weapons of mass destruction. Violations that may be reported online through eAllegations include misclassification of merchandise, country of origin markings, health and safety violations, intellectual property rights violations, textile or other trade violations.

For example, eAllegations will provide a means to report a possible violator who is importing substandard steel, claiming that it is of a higher grade, therefore creating a potential safety issue. Other possible violations that can be reported include a company claiming a lower than actual value on a product they are importing to pay less duty or a company who is importing textiles from one country but stating that the goods are from another country to avoid quota restrictions.

Concerned members of the public bring to light many trade violations and it is in the U.S. Government’s best interest to make it as easy as possible for the public to report possible violations. All information submitted to CBP is voluntary and confidential.

For additional information please visit the eAllegations “Questions and Answers“ on the CBP Website.

Tuesday, June 17, 2008

Custom Officials’ Slowdowns Cause Long Airport Waits

(Vancouver Sun – Catherine Rolfsen)

Travellers going through customs at Vancouver International Airport today have faced waits of up to two hours because customs officials are deliberately slowing down lines to highlight a contract dispute, a union president said.

“The officers did tell me today [Friday] that they’re working to the full extent of their work description,” said Sue Neumann, customs excise union president responsible for Vancouver’s airport, sea ports and cruise ships. “This is obviously a reaction, this is not normal.”

The union is currently in a contract dispute with the Canada Border Services Agency, but is not in a legal strike position. Instead, individual customs can choose slow down border crossings by following every detail of their job description. Neumann said that this morning, a plane that would normally be processed in 30 to 45 minutes took 90 to 120 minutes.

But CBSA spokeswoman Tracie LeBlanc said any backups today at YVR are “not a work slowdown” but rather due to a convergence of incoming flights.

And Kate Donegani, a spokeswoman for the airport authority, said although “it’s certainly a busy Friday afternoon here,” there’s no indication the crowds are due to work slowdowns by customs officials.

She said unless the Canada Border Services Agency takes seriously the union’s concerns, “I can see this actually escalating and probably spreading out to other areas” such as cruise ships and sea ports. Vehicle border crossings could also be slowed down this weekend, another union official says.

“The union hasn’t directed anyone to take any job action, but I hear that there are several members that are taking matters into their hands and slowing things down,” Dan Leibel, who represents the customs excise union in southern B.C., said today.

Nevertheless, Leibel said border guards, in order to highlight their grievances, could work “by the book” rather than using their experience – meaning they could take a full four minutes rather than the usual 15 seconds to a minute for processing each car. And commercial vehicle inspections, which often take as little as five minutes, could be dragged on for up to eight hours, he said.

Leibel couldn’t say what is planned at specific crossings. “I’ve heard that some officers in some instances are going to let everyone through without charging them duty,” he said.

Opportunities & Constraints for Canada in the Global Movement of Goods

(CIFFA eBulletin)

Time for a New National Vision: Report of the Standing Senate Committee on Transport and Communications

The Standing Senate Committee on Transport and Communications has focused its efforts during the past year and a half on an in-depth examination of the Canadian container transportation system. The Committee began its hearings in June 2006 and completed its study in April 2008. [Its] goal was to find ways to allow Canada’s containerized freight transportation system to become more competitive so that Canada can attract a greater share of the North American container traffic.

With Asia’s largest market on one end, and North America’s largest market on the other, China to Chicago is a very important trade route for containerized traffic. With Canada’s ports strategically positioned to handle this traffic flow, the committee decided to examine the present constraints in the system as well as how these could be addressed in order to take advantage of future market possibilities.

The container system in Canada is made up of a number of components – ships, railroads, trucks, container/marine terminals, information technology and labour. The policy environment in which these various components operate is a patchwork of federal, provincial and municipal jurisdictions. What the Committee found was that each level of government has a significant impact on each of these components and that each has a vital role to play in ensuring that the system works at an optimal level. In addition, the private sector is a key driver in how the system is financed.

The committee found that there were a number of areas that require attention in order for the system to operate as a seamless network from coast to coast. These include: improving railroad services; rationalizing a patchwork of trucking regulations across the country; dealing with labour shortages in the industry; updating port policies; improving infrastructure; dealing with environmental issues; and integrating more information technology into the container transportation system. While Canada is in a unique position to take advantage of the expanding container traffic, the Committee recognizes that these challenges will have to be addressed in order for this to take place.

The committee strongly believes that container transportation must be viewed as a system and that each part must function efficiently if the supply chain is to flourish. Today, there are fragile links in the system, such as port congestion, system reliability, labour shortages, uncoordinated government policy, and under utilization of information technology. The report looks at these and other issues in terms of national policy and Canada’s place in the international movement of containers.

The complete summary including the list of recommendations to improve container transportation in Canada can be found here and the full report (PDF format) is available here.

Friday, June 13, 2008

Appointment of Stephen Rigby as Next CBSA President

(Government of Canada: PMO)

The Prime Minister’s Office announced yesterday that Mr. Stephen Rigby, currently Associate Deputy Minister of Foreign Affairs, will become President of the Canada Border Services Agency on 1 August 2008. He replaces Mr. Alain Jolicoeur.

Mr. Rigby has had a distinguished career in the civil service, including two years as Executive Vice-President of the CBSA, Acting National Security Advisor to the Prime Minister, and Assistant Commissioner in a number of policy areas at the Canada Revenue Agency.

This and other changes in senior ranks of the public services, and biographical information, are announced on the
Government of Canada website here.

Ottawa Orders CN Rail to Remove 12,000 Wheels

(The Canadian Press/AFP)

The federal government has ordered CN Rail to find and remove potentially faulty wheels from its trains.

The emergency safety directive from Transport Minister Lawrence Cannon comes after the Transportation Safety Board warned thousands of wheel sets could cause derailments. Since 2000, 15 derailments due to loose wheels have been reported in Canada, and at least two in the United States, Canada’s TSB said.

The potentially faulty wheel sets were assembled at a Canadian National’s Transcona wheel shop between April 1, 1998, and February 28, 2001. Of the 43,000 sets made in that period, up to 12,000 may remain in service in North America on some Canadian Pacific Railway, Canadian National Railway and U.S. freight cars.

The Transport Department says the October 15 deadline gives CN the time needed to track all the wheels on train cars throughout Canada. In issuing the order, Cannon said he wants to prevent any future derailments related to faulty wheels.

U.S. Airline Industry Heading for “Catastrophe” Warns New Study

(Transport Intelligence/CTV News)

Canadian airlines still in “reasonably good shape” however

At current oil prices, several U.S. airlines will default on their obligations to creditors, beginning at the end of 2008 and early 2009, according to a study issued today (June 13) by AirlineForecasts LLC and the Business Travel Coalition (BTC).

According to that report, $130/barrel oil prices would increase yearly airline costs by $30bn, while carriers would be able to generate only $4bn in fare increases and incremental fees. “The implication of this alarming trend is that several large and small airlines will ultimately end up in bankruptcy – and of those, some will be forced to liquidate,” it suggested.

“If oil prices stay anywhere near $130/barrel, all major legacy airlines will be in default on various debt covenants by the end of 2008 or early 2009. U.S. commercial aviation is in full blown crisis and heading toward a catastrophe.

“Airlines are the primary source of inter-city transportation, critical to national and local economic development, the flow of human capital, movement of just-in-time parts for manufacturing, perishable food and other goods critical to our economy. With airlines gravely threatened, so is our economic well-being.”

Specific findings of the AirlineForecasts/BTC study include:

• The top 10 U.S. airlines will spend almost $25bn in higher fuel costs this year over last year when jet fuel averaged $2.11 per gallon. Fuel hedge benefits could offset $5 to $6bn of the increased fuel costs.

• Earnings for the group (of U.S. airlines), when one-time reorganisation charges are removed, were less than $4bn in 2007, the only year of profitability this decade. “The group could lose as much as $9bn over the next 12 months if the current range of oil prices holds.”

• Airlines have the ability to raise some cash, and moreover, suppliers such as aircraft manufacturers, leasing companies and travel management companies will have an incentive to support large airlines that provide a stream of value. “Nevertheless, without a swift reduction in the price of fuel, the industry is headed toward a massive failure that will result in more bankruptcies, including liquidations.”

While there is little doubt the industry is hurting both in Canada and the U.S., Joe D’Cruz, a management professor at the University of Toronto, said Canadian airlines are in “reasonably good shape.”

“In Canada, the industry is insulated by a couple of things,” D’Cruz told, noting that the overall Canadian economy is in better shape than its American counterpart.

“We (also) don’t have the intense (airline) competition. There is competition, but the airlines refrain from destructive competition. (And they) seem to pass on increases in high oil prices to travelers. They are hurting, but they are not in a disastrous shape.” Read more here.

Thursday, June 12, 2008

Teamsters Call for National Rebate Program

(Teamsters Union Canada)

Trucking companies risk closing if government doesn’t take action

With thousands of jobs in the ground-transportation industry at stake, Teamsters Canada is urging the federal government to establish a national rebate program to mitigate the effects of high gas and fuel prices. The program is based on effective provincial models.

The union, which represents thousands of Canadian truckers, today called on the government to use budget surpluses to assist the transport industry. The practice already exists provincially; the Quebec government gives independent drivers protection against rising gas and fuel costs, the Teamsters said.

“One thing is sure: current gas and fuel prices will have dire consequences for the health of Canada’s economy,” predicted Teamsters Canada President Robert Bouvier. “The federal government must take action to protect the future of transportation-industry workers and all Canadians.

According to transportation experts across the country, the prices of gas and fuel-which has surpassed the $1.50 per litre mark in several regions of the country, imposes a perilous cost on trucking companies, brokers and owner-operators, the Teamsters said.

“In my 40 years in this business, I have never witnessed such a critical situation. It is only a matter of weeks before companies will begin to disappear,” says Robert McAulay assistant director of the union’s central division freight and tank haul division.

Since the vast majority of goods arrive at Canadian stores by truck, higher fuel prices could further inflate food prices, which are already on the rise.

“Even a minor rise in gas and fuel costs impacts the price of produce, goods and services,” said Richard Van Grol, assistant director of the union’s freight and tank haul division in Western Canada.

“In the long term, customers will suffer the consequences.”

‘Discontented’ Border Guards May Start Slowdown

(Dave Battagello — The Windsor Star)

Canada Customs officers are so disgruntled with the state of contract negotiations, they’re prepared to stage slowdowns that will make for “a long, hot summer” for commuters, vacationers and truckers at Windsor’s border crossings, a union leader said on Wednesday.

“The union is not calling for a work slowdown of any sort — but our members are really upset,” said Marie-Claire Coupal, 4th national vice-president and the former local union president for 550 customs officers in Windsor.

The union has been without a contract for almost a year and the two sides are far apart in negotiations on salary issues and work conditions.

“Our members are discontented enough to start a slowdown,” Coupal said. “We have no control — that’s the problem. They may take some of these things into their own hands.”

On the cusp of being required to carry firearms and with increasingly demanding work conditions in the new security era, their union has been calling for customs officers to be paid salaries comparable to police and correctional officers.

The union has been seeking a 29.3 per cent salary hike over three years, but the latest offer from the Canada Border Services Agency was for under two per cent annually over four years.

“We’ve done a comparison of work between different police agencies and that’s where we end up,” Coupal said. “That’s the market value.

“It sounds like a lot, but if you look at what we are taking on, it’s not out of line.”

Tracie Leblanc, a spokeswoman in Ottawa for the Canada Border Services Agency, would not comment on the state of negotiations, but issued a statement on the potential for a slowdown in Windsor and other border crossings: “The CBSA will respond quickly to any situation in order to maintain the security of our border and ensure that it remains open to legitimate travellers and goods.”

There are no talks scheduled between the two sides. Read the complete article.

Related: Province Editorial — “Pressure Points”

‘Time’s Up’ For Parity Pricing, Retailers Told

( Press)

U.S. goods remain 18% more expensive one year after dollars reached parity: study

Last year, when the Canadian dollar was nearing parity with American currency, Canadian retailers said they couldn’t create cross-border price parity overnight, that it would take time to adjust.

Well, a report from BMO Capital Markets yesterday said “time’s up,” with the Canadian dollar averaging 98.8 cents U.S. in the past year, yet the price gap remaining “extraordinarily large.”

The report, written by Douglas Porter, deputy chief economist for BMO Capital Markets, noted that a price comparison using a basket of various goods a year ago showed an average price gap of 24 per cent between Canada and the U.S.

Mr. Porter said a new comparison using the same sample of 17 items showed a differential of 18 per cent, with U.S. goods being cheaper. Adjusted for a Canadian dollar trading slightly below parity, the difference worked out to 16 per cent.

Products sold in Canada that made the most progress in coming closer to U.S. retail costs included automobiles, books and magazines.

“Those were the ones that everyone was focusing in on, really bringing pressure to bear on the sellers there,” Mr. Porter said in an interview.

Mr. Porter said some of the items in which significant progress has not been made are hardware, power tools and clothing. Why? Mr. Porter said one reason is retailers of these goods haven’t had their feet held to the fire as much as auto and booksellers.

Another factor, he said, is that U.S. retailers, for competitive reasons, have kept their prices low despite a falling dollar. As well, Mr. Porter said Canadian consumers have not been cutting spending as much as their U.S. counterparts, and this supports higher prices north of the border.

“I do believe this is as much a U.S. story as a Canadian story,” he said.

But Mr. Porter said Canadians would be wise to demand as competitive pricing as possible from merchants, given the inflationary threats that exist. Read more.

Related: Cross-Border Gap Persists

U.S. Senator Says Canada’s Oilsands Won’t be Penalized by Restrictions

(The Canadian Press)

Canada’s oilsands won’t be penalized by American legislation that prohibits the U.S. government from buying alternative fuels with higher greenhouse gas emissions than conventional sources, Senator Jeff Bingaman said Wednesday.

Bingaman, a Democrat who chairs the Senate Energy Committee, said he supports adopting a clarification like one in the House of Representatives that clearly exempts the oilsands.

Under that measure, restrictions wouldn’t apply to general U.S. purchases, only contracts drawn up specifically limiting a certain type of alternative, non-conventional fuel.

Extracting fuel from the oilsands is not a new technology anyway, said Bingaman.

And since Canadian oil is mingled with U.S. products, “it is hard to see how (restrictions) could be enforced against Canadian oilsands in any case,” he told a forum hosted by the Canadian American Business Council.

Canada has been worried that a major U.S. energy bill passed last year would affect future exports of crude from Alberta, which are expected to rise to three million barrels a day by 2015 from 1.3 million now.

The bill, which Bingaman helped write, prohibits the American government from buying alternative fuels that produce more emissions over the life of a project than other sources.

Environmentalists on both sides of the border support restrictions on the oilsands. They want Canada to slow development and take more steps to clean it up.

A coalition of groups, including the national Resources Defence Council, says Canada’s plans to address global warming will allow carbon dioxide emissions to triple by the year 2020.

The U.S. energy bill included restrictions over fear that the government’s purchasing power would be used to promote new technologies with worse emissions than current ones. Read the complete article.

The ABCs of ACE

U.S. Customs has updated three ACE Fact Sheets: ACE at a Glance; ACE Entry Summary and Accounts and Revenue at a Glance; and ACE Periodic Review. These can be found on the CBP website.

Additionally, CBP has updated its “ACE Portal Reports Dictionary” that’s designed to help users with the new cargo processing system. The reference document is to be used in conjunction with the ACE management reports tool. More information is available here.

The dictionary enables users to quickly understand the parameters of a report, making it easier to identify the appropriate report for a specific need. The more comfortable users become with running ACE reports, the more likely they will be able to utilize additional data elements to customize reports, which support daily business operations and are used to monitor trade compliance, CBP says.

“Facilitating the generation of ACE management reports allows the trade community and CBP to base decisions on national trend analysis rather than individual transactions,” said Lou Samenfink, executive director of the CBP Cargo Systems Program Office “Using the reports dictionary as a support tool will help ensure that ACE provides meaningful and useful reports.” This is consistent with the CBP modernization vision of ensuring that the agency implements an account-based approach to information analysis via the ACE Secure Data Portal.

The dictionary has several user-friendly features to help quickly locate reports, including a catalog of reports as they are listed in the ACE portal. Users are also able to locate a particular report by clicking the report name listed in the table of contents, searching for a word or phrase via a built-in search feature and referencing the index for a specific data element.

Quick Links: Dictionary for Carriers (54 pages); Dictionary for Importers (281 pages)

Wednesday, June 11, 2008

Industrial Capacity Utilization Rates, First Quarter 2008

(Statistics Canada)

Canadian industries significantly reduced their use of production capacity in the first quarter, pushing the rate to its lowest level in 15 years. Most of the sectors that make up the industrial group, particularly the automotive sector, contributed to the decline. Only the oil and gas extraction sector posted an increase in capacity utilization.

In the first quarter, industries operated at 79.8% of their capacity compared with 81.8% in the fourth quarter of 2007. The current rate is 7.3 points below the peak of 87.1% reached in the fourth quarter of 2000.

The industrial capacity utilization rate is the ratio of an industry's actual output to its estimated potential output. For this release, the rates have been revised back to the first quarter of 2006 to reflect the revised source data.

Significant reduction in the rate for the manufacturing sector

In the manufacturing sector, every major group except for leather products posted a reduction in capacity use. The rate fell from 80.3% to 77.2% in the first quarter and, for the first time since 2001, fell below the 80% mark. The biggest contributors to the rate's decline were the transportation equipment industries; wood products; plastics and rubber products; and non-metallic mineral products manufacturing industries. Summary statistics and a link to the data table at the Statistics Canada website.

Tuesday, June 10, 2008

Customs Protests Could Mean Long Waits This Summer

(Phil Couvrette — Canwest News Service)

Drivers could face long and galling lineups at border crossings this summer as customs officers involved in a contract dispute guarantee their pressure tactics, currently targeting truckers and commercial vehicles, will “get worse,” a union official said.

There are fears that the backlog will increase wait times for vacationers and that the havoc might even extend to airport border crossings.

Customs excise union vice-president Jean-Pierre Fortin says the last offer from the Canada Border Services Agency is a “slap in the face” and “ridiculous.” Fortin says border officers have been applying pressure tactics on commercial traffic at various locations across the country. Border guards have been taking more time to process trucks as they try to clear customs.

“The employer is trying to provoke our people,” Fortin said. “Our people were so shocked by the offer that they’ve already started using pressure tactics, we’re trying to calm things down.

“Truckers have been targeted and (protesting officers) guaranteed it would get worse.”

Pressure tactics have been used on commercial traffic in various large border crossings across the country including Fort Erie, Ont., Niagara Falls, Sarnia, Ont. and in New Brunswick. So far the West has been largely spared, but Fortin said it was likely the movement would extend to major border crossings such as those south of Vancouver.

“I’m sure that’s going to escalate, as the frustrations grow,” said Dan Leibel, who represents the union in southern British Columbia. “I’m feeling frustrated myself.”

Leibel said he suspects several guards have probably already started their own personal protests, “some directed at commercial traffic, some at other travellers, daily shoppers.

“My estimation is that it’s going to get very ugly,” he said. “I think you’re going to see small pockets of rebellion from our members, not instructed by the union but taking it upon themselves. Several people will maybe muster together the troops and say ‘let’s do something about this’.” He suspects this would most likely happen in places where they would have the most impact and “would get noticed.”

While the union isn’t currently in a legal strike situation, this would likely follow in the fall, Fortin said. The protest movement could extend to ports and airports as well.

As of June 21 customs officers will have been without a contract for a year, Fortin said. Read the complete article.