Friday, October 31, 2008

Revision of Administrative Message 06-1119 on Canadian Softwood Lumber Agreement of 2006


This message is being sent to advise the trade on a change to the system requirements for filing the Canadian Softwood Lumber Export Permit number electronically on their entry summary transmission.

The Canada Softwood Export Permit number will now be required for informal entry types '11' and '12'.

The Canada Softwood Lumber Export Permit number will continue to be required for the following entry types:

• Consumption entry types: '01', '02', '03', '07'
• Warehouse entry types: '21', '22'
• Foreign Trade Zone entry type: '06'

The Canada Softwood Lumber Permit number will continue to be optional for the following entry types:

• Warehouse withdrawal entry types: '31', '32', '34', '38'
• Temporary importation bond (TIB): '23'

CBP in the near future will modify the ACS system to require the submission of the Canadian Softwood Lumber Export number for informal entry types. These changes will take approximately 3-4 weeks to complete.

Questions relating to CBP policy and procedures associated with the Canada Softwood Lumber Export Permit number should be directed to the Office of International Trade, attention Renee Chovanec at 202-863-6384.

Questions relating to the ABI system should be directed to your local client representative or to ACS, attention Tony Casucci at 703-650-3053.

Thursday, October 30, 2008

Customs Mum on 10+2

(Journal of Commerce Online – R.G.Edmonson)

Senior officials at Customs and Border Protection now are declining to predict when the agency's new security filing rule, known as 10+2, will be published.

The rule has been under review for months by the White House Office of Management and Budget. The delay has forced Customs officials to remain silent while OMB deliberates, and left members of the trade with nothing to do but speculate.

Deputy Commissioner Jayson Ahern told the agency’s annual trade symposium on Monday that he would not be reckless as he was in September, when he predicted in remarks to the National Customs Brokers and Forwarders Association of America that it would be a matter of days or weeks before OMB signed off on the rule.

Ahern insisted, however, that the rule, which will require importers and carriers to file security data with Customs that does not appear on a carrier’s bill of lading, was essential to Customs' security effort. Read more here.

Weathering the Weather

(Export Development Canada – Peter G. Hall)

Looking out the window isn’t much fun these days. It’s mighty stormy in the global economy, and every day seems a bit wilder. Getting a read on any storm is always tough at ground zero. But even the satellite scan is hard to interpret in today’s super-storm. What does the forecast call for?

Current turbulence was a long time in the making. Like overheated oceans that breed multiple cyclones, overheating in the economy has created multiple economic storms. The first big one was the collapse of U.S. housing markets in mid-2006. Broader weakening of the U.S. economy came next, followed closely by the related market turmoil that has embroiled the world’s financial institutions. Now, economic weakness is scudding across the globe, and the full effects lie ahead.

Economic signals suggest that better weather is still a long way off. Working off the excesses in the U.S. housing market could take another 18 months, let alone similar excesses in European markets. The IMF judges that we are at about the halfway point of the financial market debacle. Emerging markets are only just starting to feel the global storm’s effects, which will cool growth from the torrid pace of recent years. Global recovery won’t likely begin before early 2010.

The wild weather will hit 2009 hardest. Key economies are on the verge of recession, and worries about further-flung effects are mounting. EDC Economics’ Fall 2008 forecast sees world growth close to the IMF’s global recession tipping-point, at just 3.3% in 2009. That follows 3.8% this year, and close to 5% annually from 2004-07. Industrial countries will bear the brunt of the storm. Collectively, they will see just 1.2% growth, but performance could easily be a lot weaker.

Conditions have already deteriorated in Canada. In spite of strong domestic activity, a 5% drop in exports will reduce bottom-line growth to a very slim 0.9% this year. Growth will edge up slightly to 1.4% in 2009, but it will likely feel worse. Weakness will spill over into the domestic economy, while exports continue to slide, albeit more mildly. Not a pretty picture.

But things could be much worse, given U.S. weakness. Certain exporters, including the forestry, consumer goods and auto sectors, can tell a much bleaker story. Even so, exporters will get a timely boost from the sharply lower Canadian dollar, which may well undershoot our US $0.87 target. Key investments and a dose of good luck will help other sectors. Six new model lines will shore up auto exports in 2009, and Canada’s sought-after aerospace products will see solid growth. Add in growth of agri-food, energy and fertilizer shipments, and the story is far less grim.

Despite the storms, export opportunities are still manifold. Many emerging markets used the good times to clean up fiscal and monetary policy, and have stored up commodity windfalls for times like these. Sure, growth will slow, but will still well outperform the global average. And this will enable key infrastructure projects, mostly in emerging markets, to continue through difficult times.

The bottom line? Weathering the weather can mean cowering in the bunker and waiting the storm out. It can also mean searching for creative paths through the storm, perhaps in non-traditional routes. Those who do are likely to survive and thrive in the worst of times, and well beyond.

Wednesday, October 29, 2008

Electronic Certificates of Conformity Allowed for Imported Consumer Products

(World Trade Interactive)

The Consumer Product Safety Commission has indicated that importers and manufacturers can provide electronically the certificates of conformity that will be required for all consumer products beginning November 12.

In a list of frequently asked questions posted to the agency’s Web site, the CPSC staff said its opinion is that electronic certificates can be used to satisfy the Consumer Product Safety Improvement Act so long as the CPSC has reasonable access to the certificate electronically and it contains all of the required information. In addition, with respect to the requirement that each imported and domestic shipment be “accompanied” by the certificate, the CPSC staff believes that an electronic certificate is “accompanying” a shipment if (a) the certificate is identified by a unique identifier and can be accessed via a World Wide Web URL or other electronic means and (b) the URL or other electronic means and the unique identifier are created in advance and available with the shipment. The staff also believes that the requirement to “furnish” the certificate to distributors and retailers is satisfied if those entities are provided a reasonable means to access the certificate.

The FAQ notes that the above information is an unofficial description and interpretation of various features of the CPSIA and does not replace or supersede the statutory requirements of that law. The FAQ was prepared by CPSC staff and has not been reviewed or approved by, and may not necessarily reflect the views of, the CPSC. Some FAQs may be subject to change based on CPSC action.

Friday, October 24, 2008

U.S. Financial Crisis Will Delay Recovery of Housing, Lumber Markets until 2010

(Western Wood Products Association)

The historic downturn in lumber demand will likely extend another year until the American financial system and housing market can be repaired, according to a new lumber supply and demand forecast from Western Wood Products Association.

According to the lumber trade association, lumber demand is expected to drop 15% to 44.3 billion board feet this year, then fall another 3% to 43 billion board feet in 2009. In just three years, demand for lumber has plummeted by some 20 billion board feet – more than what Western mills produced in all of 2005.

Housing starts are forecast to reach just 993,000 in 2008 and decline again to 933,000 next year. Since new housing typically accounts for more than 40% of annual lumber demand, the more than 50% decline in starts from 2005 has been a body blow to lumber mills.

The volume of lumber used in new home construction is expected to total 11.8 billion board feet in 2008 – less than half of the 23.3 billion board feet used just two years earlier.

Production in the West should total almost 14 billion board feet this year, slipping to 13.6 billion board feet in 2009. That would be the lowest annual volume since 1982. Since 2005, output at Western mills has declined some 28%, or more than 5 billion board feet. Lumber production in the U.S. South is forecast to decline 9% to 15.2 billion board feet this year, then fall 2% next year.

The demand decline, coupled with unfriendly currency exchange rates and higher transportation costs, is taking its toll on lumber import volumes. Following a 19% decline in 2007, total imports this year are forecast to decrease 21% to 14.5 billion board feet. A 3.6% drop is predicted for 2009.

Canadian imports, which represent more than 90% of the volume of imported lumber, are expected to lose market share. Imports from north of the border should total 13.1 billion board feet this year, then fall 3% in 2009.

Non-Canadian lumber imports, mostly from Europe and Latin America, have also plummeted. Just 1.4 billion board feet is forecast to be imported from non-Canadian destinations in 2008, compared to 3.2 billion board feet shipped to the U.S. in 2005.

The WWPA forecast calls for housing markets and lumber demand to grow in 2010, but cautions that any recovery will be slow.

Thursday, October 23, 2008

Canadian Dollar’s Plunge Could Help Canada Weather Economic Slowdown

(The Canadian Press – Christine Owram)

Experts say the plunging loonie, now at its lowest level in more than three years, could help Canada weather a global economic slowdown by making exports more competitive but things will be tough.

Canada’s manufacturing sector suffered as the dollar soared above parity with the U.S. greenback last year for the first time in decades. The strong dollar made Canadian-produced goods relatively more expensive and hurt export-based industries, particularly the auto and forestry sectors, which have lost thousands of jobs in the last year.

One hope for Canadian exporters is that the loonie’s drop may soften the impact of a worldwide recession.

“It will help, but to the extent that the weak Canadian dollar is also a symptom of poor global economic growth, it’s more of a cushioning of the recession rather than a cure for it,’’ said Avery Shenfeld, a senior economist with CIBC World Markets. He said the Canadian economy is too tightly intertwined with its American counterpart – reeling from the continued financial meltdown – for the currency exchange rate to reverse its woes completely.

The Canadian dollar closed Wednesday in North America on Wednesday at 79.70 cents US, down 2.69 cents from the previous close. It dropped another third of a cent in overseas trading early Thursday. The loonie – which hit its all-time high of 110.31 cents US almost a year ago, last November 7 – hasn’t been below 80 cents since mid-2005.

The Canadian dollar is considered a commodity currency, meaning the decline in the price of crude oil, metals and minerals due to shrinking global demand has been a major factor in the loonie’s fall. December crude contracts fell $5.43 Wednesday to settle at US$66.75, the lowest close for a front-month futures contract since June 13, 2007, when crude settled at $66.26.

TD Bank chief economist Don Drummond said his benchmark for the dollar is 85 cents US, because Canada’s economy is approximately 85% as productive as that of the United States. “We’ll deviate from that depending on whether commodity prices are above or below their trend,” Drummond said. Read more here.

New Safety Certification Requirement Will Affect Reimported Goods Too

(World Trade Interactive – Lauren Perez)

Do you source consumer goods from a global wholesaler? Do you export products from the U.S. for warehousing in Canada, perform pick ‘n pack operations there and subsequently reimport the goods? Do you source genuine consumer products abroad and import them into the U.S. to provide American consumers with competitive pricing on brand-name goods? If any of these situations describe your business operations, it may be nearly impossible for you to comply with the new safety certification requirements that take effect for regulated consumer products manufactured on or after November 12. And if you can’t, your products may not be permitted to enter or be distributed within the U.S.

As a part of its implementation of the Consumer Protection Safety Improvement Act signed by President Bush this summer, beginning November 12 the Consumer Product Safety Commission will require, as a condition of import and distribution within the U.S., that paper certificates of conformity accompany any regulated consumer product manufactured anywhere in the world. These certificates must be issued by the manufacturer, the importer AND the private labeler of each individual such article, as applicable. Each and every certificate must be based on actual product testing that is done either in-house or by an accredited third-party laboratory.

It is important to understand that this certification requirement will apply to each and every regulated consumer product: even if the products are sourced from global wholesalers and not manufacturers; even if domestically made products are warehoused in Canada for reimportation and the original producer is difficult to ascertain; even if hundreds or thousands of different products are stored and then picked and packed for consolidated shipment on a single truckload; and even if the importer and the manufacturer are in fact competitors and unlikely to have a direct relationship. The end result is that regulated goods will require at least one, usually two and sometimes three separate paper certificates of conformity in order to ever reach American consumers. Read the complete article here.

Hurry on EFTA Deal: Norway

(Embassy – Lee Berthiaume)

A Norwegian minister has encouraged Canada to “hurry” and implement a free trade deal whose intended coming-into-force date will likely be missed because of last week’s federal election.

“My feeling is all the time that we are in a hurry,” Tora Aasland, Norway’s minister for research and higher education, told Embassy on Monday. “So everything that happens that makes things take a long time is not very good.”

After almost 10 years of negotiations, Canada and the four countries that make up the European Free Trade Association – Norway, Iceland, Switzerland and Liechtenstein – signed a free trade agreement earlier this year.

The deal was approved by Parliament and implementing legislation was introduced just before the House rose for summer break. At that time, members of the Commons’ trade committee were studying the pending Canada-Colombia trade deal, and were angered when the government completed those negotiations before its study was complete.

As a result, opposition members ignored government attempts to make approving the EFTA implementing legislation the committee’s top priority, and it remained on the agenda for when Parliament resumed. The election call in September, however, effectively killed the implementing legislation, and it will have to be re-introduced whenever Parliament resumes in order to be ratified.

Ms. Aasland said she has full respect for the Canadian parliamentary process. “That could happen in my country too,” she said. “So we have to respect that. But I would like to express personally, on behalf of myself as a minister of research for Norway and also as part of the Norwegian government, we are in a hurry.” Read more here.

Restoring Confidence is Key

(Export Development Canada – Peter G. Hall)

News media must be ecstatic. In recent weeks, hardly a day has gone by but some major new event has hit the street. Bailouts, bankruptcies, stock market volatility and commodity prices in freefall have almost become commonplace, spurring a frenzied search for superlatives that adequately capture the unfolding story. What are we to make of the financial sector mayhem?

The chronology of recent events is well known. Concern about the broadening impact of the deteriorating U.S. sub-prime mortgage market crested in August, 2007. Prominent market watchers foresaw the demise of one large U.S. financial house, which occurred with the collapse of Bear Stearns in March, 2008. Following a quieter summer, September was a shocker. In rapid succession, Fannie Mae and Freddie Mac were seized on the 7th, Lehman declared bankruptcy on the 15th and AIG was taken over by the government on the 17th in an $85 billion bailout. The broader $700 billion U.S. bailout package was eventually approved, but not before stock markets punished the financial sector. The focus quickly shifted to Europe, with very similar results.

Most are taken aback by the speed of recent movements, which has affected confidence on a number of fronts. Internal worries about their deteriorating books led financial firms to hastily seek “rescue alliances” with steadier firms. Seeing this, market confidence ebbed, as evidenced in plunging equity values. Jitters about the stability of the financial system, together with personal wealth losses, soured broader public sentiment. And finally, recent developments have tested financial firms’ confidence in each other, as seen in the tightening of interbank lending.

Restoring confidence on all fronts is at the heart of the multiple coordinated policy actions undertaken in the past two months. While the size, speed and sums of these actions have come under criticism, they are critical to restoration of normalcy. The financial system in the past few years was much like a large reservoir, whose sluice gates were opened too wide, for too long. The flows were large, the rivers ran high and fast, and it was a wild ride. But all the while, the reservoir was steadily depleting. Water levels became perilously low, and we realized it too late.

One solution: shut the sluice gates, and allow the reservoir to replenish naturally. But that would take too long, drying up the rivers in the mean time. In financial speak, a repeat of past mistakes that proved very costly. The solution currently in progress is to fill up the reservoir as quickly as possible, enabling the resumption of normal flows. Given tight capital markets, low confidence and huge capital requirements, this is almost impossible for industry to do itself – public institutions alone have the wherewithal to replenish the system.

Will it work? Nobody knows for certain, because we’ve not really been down this road before. A rapid rebound is unlikely - but the large and ongoing public commitment to restoring the system is gradually rebuilding confidence. Banks are slowly gaining confidence in lending to each other, a necessary first step that should increase traction in the rest of the economy.

The bottom line? Confidence is currently about as low as it ever gets. But confidence rarely remains stuck in the basement, and the swift, significant and simultaneous policy actions now underway will in time quell our worst fears about the recent market turbulence.

APHIS Officials to Take a ‘Pragmatic Approach’ to New Lacey Act Declaration for Imported Plants and Plant Products

(International Trade Today)

The USDA’s Animal and Plant Health Inspection Service held a public meeting on October 14, 2008 to discuss the Lacey Act Amendment declaration requirement1 for imported plants and plant products that is scheduled to be enforced on a phased-in basis once the declaration can be filed electronically (approximately April 1, 2009).

Highlights of this meeting include the following statements by officials (note that some decisions on product exclusions may not be final):

Core Purpose of Lacey Act Amendments is to Stem Illegal Logging
The core purpose of the Lacey Act amendments is the prevention of illegal logging. It is not to ‘push the envelope or to hang people up on technicalities.’ (The Lacey Act amendments require an import declaration for plants and plant products that includes the scientific name of any plant, a description of the value, quantity, and the name of the country from where the plant was taken. If a plant species and/or country of origin cannot be determined, the plant declaration must include a list of possible plant species found in the product and/or a list of possible countries from which the plant originated.)

HTS Chapter 44 Wood and Chapter 6 Plants are the Focus of Act
HTS Chapter 44 (wood and articles of wood) and Chapter 6 (live trees, plants, bulbs, ornamental foliage, etc.) products are clearly the focus of the Lacey Act amendments, and are therefore the first product groups to be subject to enforcement of the declaration requirement.

Textile and Apparel Goods
The definition of common cultivars (a categorical exemption) is expected to include cotton, which would exempt cotton and its products from the declaration requirements. In addition, other plant-based textiles and their products are expected to be exempt from the declaration requirements.

Manuals, Hangtags, and Labels Accompanying Products
Manuals and instructions, labels, and hangtags, which accompany products, are not expected to require a declaration.

Plant-Based Plastics, Etc.
Plant-based plastics, polyethylene, adhesives, and cellulosic products are still under discussion, but are unlikely to require a declaration.

Personal Use Shipments
Officials are leaning toward exempting personal use shipments from the declaration requirements.

Re-Imported Products
Officials have not yet discussed the issue of whether re-imported products would be subject to the declaration requirement.

FTZ Shipments
The declaration would be required upon entry into the foreign trade zone.

T&E, FROB, IE Shipments
Transportation and Exportation (T&E) shipments, Foreign Cargo Remaining On Board (FROB), and Immediate Exportation (IE) shipments would not be subject to the declaration requirement as they are not “imported”.

Carnets have not been discussed yet, but officials are leaning toward not requiring a declaration for carnets.

Importers Should Wait for Electronic Option to File Declarations
Importers should not file any declarations until the electronic option is available. Once the electronic system is up and running, importers need to be ready to submit the declaration according to the product phase-in schedule. (Should it become apparent that the legacy Fish and Wildlife Service (FWS) electronic system will not be ready for the declaration until some months after April 2009, officials may have to reconsider the use of paper declarations.)

Additional Information:

• APHIS’ proposed phase-in schedule (D/N APHIS-2008-0119) available at here (PDF).
• Lacey Act amendments “Hot Issues” page available here (PDF).
• Amended version of law (showing P.L. 110-236 amendments) available at here (PDF).
• APHIS PowerPoint presentation on notice (dated 10/06/08) available at here (PDF).
• APHIS genus/species “look up” guide available here.

Tuesday, October 21, 2008

New U.S. Custom and Border Protection Office Going Up in Great Falls

(Great Falls Tribune)

The city of Great Falls’ professional office park on the south east edge of the city will have a second tenant by spring.

A 10,000-square-foot building for U.S. Customs and Border Protection administrative offices is being built at 2108 21st Ave. S. The new office will be close to the new Social Security Administration office in the Medical Tech park.

The office will look similar to the Social Security building, said Van Rapp of SBC Archway, the private development company that owns both buildings. SBC Archway leases the property to the federal government.

New Mandatory CPSC Import Documentation Requirements

(Sandler, Travis & Rosenberg)

New import requirements for consumer goods will take effect Nov. 12 as a result of the Consumer Product Safety Improvement Act of 2008, which became law Aug. 14. Beginning on that date manufacturers and importers must certify in writing that products being imported for warehousing and/or consumption conform with the rules, bans, regulations or standards administered by the Consumer Product Safety Commission. This requirement applies to nearly all categories of consumer goods, including fabrics, wearing apparel, toys, jewelry, sporting goods, refrigerators, furniture, hazardous materials, all-terrain vehicles - even pharmaceuticals subject to child-resistant cap standards.

The new Certificates of Conformity:

1. must be based on a "reasonable" testing program

2. must be issued jointly/separately by 2 maybe 3 participants in the supply chain

3. must accompany the product or the shipment of the product

4. must be furnished to each distributor or retailer of the product

A separate certificate (or certificates) is required for each product in a container. If no certificate is issued, or if a false certificate is found to be on hand, the shipment may be refused admission and destroyed.

Certificates of conformity must include the full contact information of the manufacturer and importer, as well as the person maintaining records of the test results upon which the certification is based; must reference the specific standard to which the product is subject; and must indicate the place and date of manufacture. Read more here.

Monday, October 20, 2008

Automotive Declines as August Wholesale Trade Drops for First Time in 5 Months

(The Canadian Press)

Five straight monthly increases for Canadian wholesale trade ended in August, yet another “disappointing” sign that economic activity in the country is weakening, one analyst said Monday.

Wholesale sales activity declined 1.5% to $45.7 billion, primarily due to a drop in sales in the automotive sector, Statistics Canada reported, while sales excluding the automotive products sector rose 0.5%. After removing the impact of price changes, sales in volume terms were down 3.3%.

“Overall, the report was disappointing in the sense that it suggests that wholesale sales activity may become a drag on the Canadian economy in (the third quarter),” Millan Mulraine, economics strategist at TD Securities, wrote in a note to clients. “Moreover, with the favourable support from auto-related sales appearing to have come to an end, we expect Canadian wholesale activity to remain sluggish in the coming months as the weakness in domestic and U.S. demand take hold.”

Sales of automotive products fell 11.7% in August to $7 billion, offsetting gains over the two previous months. A 13.2% decline in motor vehicle sales was behind most of the drop, while sales of motor vehicle parts and accessories fell 5.8%. Much of the decline in motor vehicle sales was due to slowing demand for larger less fuel-efficient vehicles – truck imports fell 29% in August to their lowest level in over four years.

The increase outside of the automotive sector was in large part due to higher sales in the food, beverage and tobacco products and “other products” sectors, both of which gained 2.2% in August. Other products consist primarily of sales of agricultural fertilizers and supplies, chemicals, recycled materials and paper products.

Ontario wholesale sales dropped 6.5% after posting five consecutive monthly increases. Nearly all other provinces reported higher sales in August, with B.C. coming in with a 5.5% increase in wholesale trade.

A link to the data files is on the StatCan Website.

EDC/CAMESE Teleconference on Government Support for Exporters

(Export Development Corporation)

To bring mining suppliers up to date on sources of government support for exporters, EDC and CAMESE are working together to present a Webinar as the next in their successful series of teleconferences. Without leaving your office, you will be able to hear EDC, federal and provincial government representatives tell you how they can help you grow your business internationally.

The webinar will take place from 1 to 2pm (EST) on October 30, 2008.

Register online now at

Border Measures in U.S. Climate Policy Options

(Resource Investor – Gary Hufbauer & Jisun Kim)

U.S. climate-change policy seems likely to include border measures to address competitiveness concerns. This article warns against such measures, arguing that they will do little to protect U.S. industries, expose the U.S. to retaliatory trade restrictions, and significantly burden the global trading system. The U.S. would be better served by addressing its competitiveness concerns in international negotiations. Read the article at here.

New Edition of World Tariff Profiles Issued


The 2008 edition of World Tariff Profiles presents a comprehensive and updated compilation of the main tariff indicators for the WTO's members as well as for other countries and customs territories. Information is available on the WTO web site here.

Health Canada Reaffirms Safety of BPA for Use in Metal Food Packaging


North American Metal Packaging Alliance (NAMPA) working with Canadian government and infant formula manufacturers to develop industry code of practice for infant formula

[Friday]'s announcement by Health Canada regarding completion of its assessment of bisphenol A (BPA) offers reassurance to Canadians that the use of this chemical in the production of epoxy resins in metal food and beverage packaging presents no risk to consumers.

In issuing its decision, Health Canada released several proposed "risk management measures" as required elements of Canada's regulatory process, or Chemicals Management Plan, for BPA. Among the steps to be taken is the Canadian government's application of the ALARA principle, or "as low as reasonably achievable" levels, of BPA in infant formula products for newborns and children up to 18 months. While Health Canada clearly acknowledged that exposure to BPA among infants and young children currently is below levels found to show adverse effects in appropriate animal testing, its action was based on a desire to enhance the protection already afforded to this population group. Read more here. Additional information on this subject can be obtained at the NAMPA website.

Friday, October 17, 2008

Canadian Exports to Slow as China’s Explosive Growth Curtailed

(The Canadian Press – Ross Marowits)

Canadian exporters will increasingly feel the heat as China’s economy further slows under the weight of a global economic decline and tightening internal credit, industry experts said Thursday.

After enjoying years of stratospheric growth, China’s economic expansion is expected to slow to 8.4% in 2009. And while it’s a figure that most countries would die to have, for the world’s most populated country it would represent a drop from 11.8% growth 2007 when it accounted for a third of global economic growth.

Its economy is expected to increase by about 9.9% this year, while Canada’s GDP is estimated to grow by 0.9% this year, followed by 1.9% in 2009.

Stuart Bergman, director of economics for Export Development Canada, said a slowing global economy will weaken demand for Chinese goods and weigh on key Canadian exports such as pulp and paper, chemicals, fertilizer, machinery, telecom and metals. “It’s not like there’s any sector that will be hit real hard, it’s just that what we’re likely to see is maybe a slowdown in the growth rate,” Bergman said in an interview.

China has become Canada’s third-largest export market, replacing Japan, Statistics Canada reported in April. Exports to China accounted to nearly 20% of the total growth of Canada’s exports in 2007.

But much of that growth was the result of stronger prices in 2008, not increasing volume, Bergman said. Reduced Chinese demand will likely further depress commodity prices, especially in 2009. Read more here.

WTO Rules in Canada’s Favour in Ongoing EU Beef Ban Dispute

(The Canadian Press)

Today [Thursday] the World Trade Organization’s appeal body ruled in favour of Canada in an ongoing dispute with the European Union over the EU ban on imports of Canadian beef from cattle treated with growth hormones.

“Canadian beef is a symbol of excellence in the global marketplace and we are pleased that the World Trade Organization Appellate Body has confirmed that Canada is not in violation of any of its WTO obligations,” said Canadian Agriculture Minister Gerry Ritz. “This Government will ensure Canada-EU commercial relations remain strong and mutually beneficial while we continue to stand up for the interests of Canadian producers.”

Both Canada and the United States have consistently opposed the EU ban on the importation of beef from hormone-treated cattle since it was imposed in 1989. Both countries maintain that the EU has not been able to prove there are scientific reasons for a ban. In 1998, the WTO agreed with Canada and the United States on this matter and in 1999 it allowed both countries to retaliate by increasing duties on certain EU imports. Read more here and get the full Appellate Body Report here.

Revised: D10-14-55 Tariff Classification of Wood Flooring Products


This memorandum explains the Canada Border Services Agency’s administrative policy regarding the tariff classification of the following wood flooring products under chapters 44 and 45 of the Customs Tariff: plywood and veneer flooring, cork flooring, strip and plank flooring, assembled flooring panels and parquet flooring. The revised D-memo is available here (PDF).

End of an Era for Liner Conferences in Europe

(Journal of Commerce Online – Bruce Barnard)

Liner shipping conferences will be outlawed in Europe beginning at midnight Saturday, ushering in a new era of deregulation just as ocean carriers face slowing traffic growth and tumbling freight rates.

Beginning Saturday container shipping lines calling at European ports will be banned from discussing freight rates and other fees such as bunker and currency surcharges and from publishing common tariffs.

Instead, carriers will negotiate rates individually with shippers, ending a system of collective rate-setting dating back to the first conference, the Calcutta Steam Traffic Conference, set up by British cargo lines in 1875.

The Far Eastern Freight Conference established a year later to cover the Asia-Europe trade, the world’s second-largest after the trans-Pacific, will close today along with scores of other rate-setting groups in trades with Africa, South America, the Indian sub-continent, the Middle East and Australasia. Some, including the Trans-Atlantic Conference Agreement, have already ceased operations. Read more here.

Related: The British International Freight Association (BIFA), the trade association for UK freight forwarders, has welcomed the end of liner conferences as “a new era for shipping and trade liberalization.” Read more here.

Thursday, October 16, 2008

Economic Crisis Could Help Re-Start Doha Trade Talks

(Journal of Commerce Online)

British Prime Minister Gordon Brown today called on leaders to use the global economic crisis as an opportunity to reform the world’s financial system, and to conclude long-stalled trade negotiations.

Brown said a global economic summit would aim to re-launch the Doha Round of World Trade Organization talks and could be held as soon as November or December involving the United States, European nations and emerging nations such as China and India.

Brown said that reforming the International Monetary Fund was "urgently needed so that we can restore confidence" in the global financial system.

“I believe there is scope for agreement in the next few days that we will have an international meeting to take common action...for very large and very radical changes," Brown told reporters in Brussels before meeting with other European leaders to discuss the financial crisis. “The IMF has got to be rebuilt as fit for purpose for the modern world. We need an early warning system for the world economy."

Manufacturing Sales Decline in August, Erase Previous Gains

(The Canadian Press)

The Canadian manufacturing sector is getting weaker and a prolonged slump in the United States threatens the industrial economies of Ontario and Quebec as well as resources-producing provinces in Western Canada, says a bank report released Thursday.

The TD Bank report said the economies of manufacturing-heavy provinces will likely shrink by one per cent in inflation-adjusted terms this year and fare only slightly better next year as exports of everything from autos and auto parts to lumber, machinery and furniture continue to get squeezed by the U.S. recession.

The TD report came after Statistics Canada reported that Canadian manufacturing sales declined 3.7% to $52 billion in August, erasing most of the gains from the previous two months.

The largest contributor to the decrease was the petroleum and coal products industry, where sales have fallen by nearly $1 billion in two months.

TD Bank said it expects a U.S. recession won't be short and will impact all parts of the Canadian economy – the industrial companies in central Canada as well as the grain, minerals and energy sectors of the West.

“With U.S. consumers only beginning to retrench in their spending and clean up their household balance sheets, it would be too optimistic to expect a sharp recovery in the next few quarters,” the TD report said.

Read the complete article here. Summary statistics and a link to the data files are on the Statistics Canada website at here.

Sampling of Foods for Melamine Testing: CFIA Guidance

(I.E.Canada – Keith Mussar)

CFIA has posted guidance for importers on how to sample food products containing dairy products or dairy derived ingredients for melamine testing. The guidance can be found here.

CFIA has recognized the following laboratories for the testing of melamine and cyanuric acid in food products containing milk or milk derived food ingredients:

Silliker JR Laboratories ULC, Burnaby, BC
Cathy Shevchuk Tel: 604-432-9311

Maxxam Analytics, Mississauga, ON
Ron Reddam Tel: 905-817-5746
Toll Free: 1-800-5636266 Ext. 5746

French Inquiries:
Maxxam Analytics, Ville St-Laurent, QC
Anne-Marie Beaulieu, Tel: 514-448-9001
Toll Free: 1-877-462-9926 Ext. 271

New Vehicle Platforms Buffer Hard Times

(Export Development Canada – Peter G. Hall)

In any economic slowdown, big-ticket purchases are the first target of penny-pinching consumers. Auto producers know this well, and are feeling the squeeze. Sales are down sharply in the U.S., by far the world’s largest auto market, raising serious questions about the industry’s prospects.

Spending on autos and auto parts accounts for about 4% of U.S. GDP. That’s a lot of economic clout in the world’s top economy – and a big drag on growth when markets head south. In September, vehicle sales were down 23% from year-ago levels, and falling. Second-quarter data show that the auto sector alone chopped 0.6% from economy-wide growth during the period, the fourth successive quarterly decline, and the deepest thus far. Is there more bad news in store?

The past few years hold valuable clues to the answer. Sales are estimated to have exceeded underlying demand for eight of the past ten years, thanks to the strong economy, easy credit conditions and consumers that were all too willing to spend. Moreover, easy payment terms helped to extend the sales cycle – normally about 8 years – by 6 additional years. During this time, the number of registered vehicles surpassed the population of driving age for the first time in U.S. history. In this light, the correction was overdue.

But the sharpness of the correction is unusual. Hold sales steady for the rest of the year, and the annual decline is over 14%, the largest single-year drop since 1980. Why? Tighter credit markets are putting an additional bite on sales, as financing costs have risen. Weaker company earnings have curtailed producer incentives, a big factor in the heady sales days. And declining resale values have put the bite on leasing activity, which was an affordable option for many consumers.

Rising oil prices have also played their part. American consumers are driving much less than they did last year, reducing the need for vehicles, and the depreciation on vehicles being used. High fuel prices are also spurring substitution toward more energy-efficient models, favouring imported brands over traditional North American cars and trucks. So far, the prognosis is not heartening.

But the rapid recoil of U.S. sales has a silver lining: the faster sales levels correct, the quicker the excesses of the past will be worked off. In fact, the market may already have bottomed out. At the current sales pace, excesses would be run down enough by mid-2009 to raise sales in the second half of the year, setting the stage for strong performance in the next two years. Although it still implies a decline in 2009, it’s more than can be said for the stressed U.S. housing market.

Canada’s auto sector is feeling the pain of current U.S. conditions, with unit production sustaining a double-digit decline this year. All things equal, 2009 would look quite similar. However, new products coming onstream will save the day. No less than six new models will be introduced or ramped up, enough to offset declines in established brands completely. Good timing, indeed.

The bottom line? The auto sector is always particularly vulnerable to the economic cycle, and this time around is no exception. U.S. sales will be slow for much of 2009, and Canada’s producers will be affected. Those attached to new products will fare better, and may even see growth.

Memorandum 3.3.1: Drop Shipments (GST/HST)

(Canada Revenue Agency)

This memorandum explains the “drop-shipment” rules under the Excise Tax Act governing transactions involving the transfer of goods by a registrant in Canada to another person in Canada on behalf of an unregistered non-resident for purposes of the GST/HST.

It also explains the mechanism of the flow-through of input tax credits for the tax paid by an unregistered non-resident on the importation of goods by the nonresident, and the non-resident rebate for installation services supplied in Canada to a non-resident.

Note: Effective January 1, 2008, the rate of GST is 5% and the rate of the HST is 13%. All references to GST/HST rates of 6% and 14% in this publication should be read as 5% and 13% respectively. For more information please refer to GST/HST Notice 226, GST/HST Rate Reduction in 2008.

This memorandum replaces the version dated February 2001. The revised D-Memo is available here.

Wednesday, October 15, 2008

U.S. Slowdown Hits Canada but No Recession Seen: Conference Board

(Video: AP • Text: The Canadian Press/Conference Board of Canada)

Canada faces weaker economic growth next year as the risks of a prolonged U.S. slowdown further weaken exports and feeble global growth impacts the resource sector, says the Conference Board of Canada.

The U.S. turmoil is holding Canada's projected economic growth for this year to 0.8%, the think-tank said Wednesday. But the country will avoid a recession, according to the Conference Board's autumn outlook.

“Living beside a troubled neighbour is taking its toll,” commented chief economist Glen Hodgson.

“Massive declines in the trade sector have shredded Canada's economic growth, and raw material prices have fallen off their peak levels. Still, the domestic economy has enough momentum to keep Canada out of a recession.”

Nevertheless, “signs of malaise are creeping into the outlook,” the Conference Board adds. “While the manufacturing sector continues to bleed jobs steadily, other sectors have also seen an erosion in the growth of jobs in recent months.”

Highlights from the Conference Board Report:

Turmoil in residential markets will hinder U.S. consumer spending until the second half of 2009. Still, real U.S. GDP growth will advance by 2 per cent this year before slipping to 1.7 per cent growth in 2009.

• Despite the massive banking sector bailout by the U.S. Treasury, the U.S. financial crisis adds downside risk to the forecast. U.S. households and businesses could retrench further and for longer than we have assumed in this outlook.

• Canadian auto exports are being hit hard. A real decline of 19 per cent is expected this year, in line with a steep drop-off in U.S. vehicle sales.

• While there is still momentum in Canada’s domestic economy, our near-term economic outlook has been revised down. Real GDP growth of only 0.8 per cent is forecast for 2008, followed by a modest 2.2 per cent gain in 2009.

• Job growth has waned recently—and not just in manufacturing. This, combined with lacklustre confidence, will take a bite out of the recent heated pace of consumer spending growth.

• Volatile commodity prices and waning confidence are holding back business investment decisions. Despite having fallen off from their summer peak, commodity prices will still post a 20 per cent gain for 2008.

Download the complete document here (free registration required)

Extension of the Retroactive Filing for the First Sale Declaration Requirement


The purpose of this notice is to extend the last filing date for retroactive First Sale Declarations which was effective, by law, August 20, 2008.

The First Sale Declaration Requirement requires that an importer of merchandise enter an "F" next to the declared value at the line level on CBP Form 7501, or the electronic filing equivalent, when the declared transaction value of the imported merchandise is determined on the basis of the price paid by the buyer in a sale occurring earlier than the last sale prior to the introduction of the merchandise into the United States. Due to the short notice to the public of the systemic implementation of this filing requirement, CBP allowed the trade a 30 day grace period to comply with the “First Sale” requirements. The grace period covered entries filed between August 20, 2008 and September 19, 2008. Filers were allowed to submit to the respective ports of entry were the entry summaries were filed, spreadsheets listing entry summary lines that need the “F” indicator. CBP would, in turn, make the correction to the entry summary line in the Automated Commercial System. The trade was asked to submit these desired corrections to CBP no later than September 26, 2008.

CBP has been mandated by Congress to collect this data for the International Trade Commission. In an effort to collect the best data available, CBP is extending the date for corrections (either to input “F” or remove “F”) to October 17, 2008. The period covered remains August 20, 2008 through September 19, 2008, during which filers may have not been operationally ready to due to system issues or legislative intent challenges.

Using spreadsheets is, by far, the most expedient method to ensure the data is correct. Again, the spreadsheet format may be used to either update a required "F" indicator or remove an "F" indicator which was erroneously entered.

Questions regarding this policy should be directed to Ms. Cynthia Whittenburg, Chief, Entry, Summary, and Drawback at (202) 863-6519 or email to

Analyst: Economic Crisis Hastens Need for 10 + 2

(HS Today – Phil Leggiere)

New report argues that economic conditions weaken case for 100 Percent cargo screening mandate

The pursuit of “perfect” 100% screening of all cargo, however well intentioned, may undermine a more realistic technologically and economically feasible focus on identifying and securing truly high-risk cargo, researcher James Jay Carafano of Heritage Foundation, a conservative think tank, argues in a new report titled Securing Global Supply Chains: 10 Plus 2 Container Security Ruling Needed. Instead, Carafano’s paper urges that the DHS “10 + 2” security initiative be implemented as soon as possible as a far more appropriate strategy for the economic and security situation confronting global shippers and consumers.

Technically called the Importer Security Filing (ISF) and Additional Carrier Requirements, 10 + 2 requires both importers and carriers to submit additional cargo information before the cargo is loaded on U.S.-bound vessels. This rule describes how importers will report 10 additional items of information on cargo shipped to the United States, while the carrier provides two more data sets.

As Carafano explains, “There are about 20 million sea-going shipping containers in the world that make about 200 million trips per year. In one of its first programs to enhance transportation security after 9/11, DHS established the Container Security Initiative (CSI). CSI evaluates data on each container bound for the United States and determines which might represent a potential risk that warrants further investigation. The U.S. works with other countries to inspect the high-risk containers before they are loaded on ships and sent to the United States. This efficient process requires physically scanning 2–3 percent of inbound containers. This has minimal impact of moving global trade, adds a valuable security deterrent, and enables DHS to focus its efforts on the most serious risks.”

The most important additions to the "10 + 2" reporting requirements, according to Carafano, include adding where the materials in the container are from and which conveyer is responsible for packing the container. These data points, he says, are invaluable for identifying potential sources of malicious activities that might attempt to place something harmful or dangerous in a container, for identifying entities that are not known and trusted and subsequently targeting them for inspection. Read more here.

Seaway Strike Averted

(Journal of Commerce Online – Courtney Tower)

A strike that threatened to shut down the St. Lawrence Seaway to international traffic has been averted after 445 employees of the Canadian part of the system agreed in principle to a new three-year contract.

"Agreement has been reached subject to ratification by the Canadian Auto Workers union members," Andrew Bogora, spokesman for the St. Lawrence Seaway Management Corp., said Tuesday.

It had taken the SLSMC and the CAW five days of talks in Montreal through October 10, and then what Bogora called "much of the weekend," to come to agreement. Bogora said he had no details of the agreement, but confirmed the two key issues important to either side involved management's plans to introduce new technology that could replace up to 150 workers. Read more here and here.

U.S. Joins EU in Banning Mercury Exports

(MarketWatch – PR NewsWire)

The U.S. just joined the European Union in setting a date certain to ban their mercury exports, thereby reducing the supply of commodity mercury into the world market. Environmental groups in the U.S. and around the world applauded the broad bi-partisan support of the legislation, which was introduced by Senators Barack Obama (D-IL) and Lisa Murkowski (R-AK) in the Senate, and in the House by Representative Tom Allen (D-ME).

"Neither mercury nor the fish we eat recognizes federal boundaries," Linda Greer, Director of the Health Program at NRDC, said. "Passage of this legislation banning the export of mercury is a great victory for the health of people in America and all over the world. It will curb the flow of mercury into global commerce, keeping it out of our tuna and other fish."

In independent actions taken in late September, the EU adopted a mercury export ban that takes effect in 2011, while earlier this month Congress passed legislation to ban U.S. mercury exports by 2013. U.S. President George Bush signed the legislation it into law yesterday.

The Mercury Market Minimization Act, S. 906, prohibits the sale of mercury by the U.S. government, bans exports of elemental mercury starting in 2010, prohibits the transfer of elemental mercury by Federal agencies and requires the Department of Energy (DOE) to designate and manage an elemental mercury long-term disposal facility.

The U.S. and the EU are among the top exporters of commodity mercury. Between 40 and 50% of the estimated 3,800 metric tons of annual global trade in mercury passes through the EU and the U.S. Neither the U.S. nor the EU mines mercury anymore. Instead, most mercury supplies come from recycling of mercury products such as thermostats, as well as decommissioned mercury-cell chlor-alkali plants. Excess mercury is sold on the world market by commodity brokers. Click here for the complete article.

Tuesday, October 14, 2008

Industrialized Economies Stall, but Fall in Commodity Prices Offers a ‘Ray of Hope’

(Video: Associated Press • Story: Industry Week)

In a report released on October 10, The Manufactures Alliance/MAPI forecasts the growth of total U.S. goods and services export demand to slow from 8.4% in 2008 to 7.3% in 2009. The latter is significantly below the previous quarterly forecast of 9.7% for 2009.

The study notes that major economies such as Germany, Japan, and France slipped into negative growth in the second quarter of 2008.

Gross domestic product (GDP) growth in non-U.S. industrialized countries, which include Canada, the Eurozone (plus Denmark, the United Kingdom, and Sweden), and Japan, is expected to register a tepid 0.6% during the fourth quarter of 2008, then accelerate slowly to 1.5% during the first quarter of 2009 and 1.7% during the second quarter of 2009. Contingent upon a recovery in the troubled U.S. economy, MAPI forecasts industrialized country growth to recover more fully to 2.1% during the third quarter of 2009 and 1.9% during the fourth quarter of 2009.

Aggregate developing country growth is expected to remain below 5% until the second half of 2009. Specifically, MAPI sees growth slowing from 4.8% during the third quarter of 2008 to 4.7% during the fourth quarter before accelerating modestly to 4.9% during the first and second quarters of 2009 and 5% during the last half of the year.

The report questions the sustainability of the current dollar appreciation in that it appears due almost entirely to emerging weakness in key trading partner nations as opposed to any positive economic, financial, or policy signals from the U.S. Read more here.

Monday, October 13, 2008

U.S. Stocks Soar in Biggest One-Day Gain Ever

(Video: France24 / AP • Story: Globe & Mail / AP)

Wall Street stormed back Monday from last week’s devastating losses, sending the Dow Jones industrials soaring a nearly inconceivable 938 points after major governments’ plans to support the global banking system reassured distraught investors.

The Dow by far outstripped its previous record for a one-day point gain, 499, reached during the waning days of the dot-com boom in 2000. All major indexes rose about 11 per cent.

The Wall Street surge will be good news for the Canadian stock market, which was closed Monday for the Canadian Thanksgiving holiday. Last week, the TSX lost more than 16 per cent of its value, one of the worst weeks ever for the Canadian market, on investor worries about falling commodity prices and a spreading economic recession. Read more here.

President Bush said Monday that his administration will work to implement measures to help banks gain access to capital, strengthen the financial system and unfreeze credit markets.

D11-6-7 Revised: Importers’ Dispute Resolution Process for Origin, Tariff Classification, and Value for Duty of Imported Goods


1. This memorandum supersedes Memorandum D11-6-7, Importers’ Dispute Resolution Process for Origin, Tariff Classification, and Value for Duty of Imported Goods, dated December 19, 2001.

2. This Memorandum has been revised to reflect organizational changes resulting from the implementation of the Canada Border Services Agency on December 12, 2003. The revision of this memorandum is part of an overall revision of the Memoranda D11-6 series.

3. This memorandum is revised as a result of the Paper Burden Reduction Initiative. The revisions are aimed at eliminating obsolete and duplicated requirements and modifying complex policies.

4. This memorandum has been revised to incorporate certain amendments to the Customs Act and its regulations. In addition, changes have been made to clarify policy or procedural issues that have arisen since the last revision to this memorandum.

View/Download the memorandum here (PDF).

Sunday, October 12, 2008

Profile of Canadian Importers 2002-2005

(Statistics Canada)

Data from the importer register are now available. Counts of importers are available by province, country of origin, importer size and industry.

For more information, contact Marketing and Client Services (toll-free 1-800-294-5583; To enquire about the concepts, methods or data quality of this release, contact Sharon Nevins (613-951-9798), International Trade Division.

USDA Proposes Phased-in Implementation of New Lacey Act Declaration Requirement for Imported Goods

(Sandler, Travis & Rosenberg, P.A.)

Importers of most goods subject to the new declaration requirement under the amended Lacey Act will no longer need to comply with the December 15 statutory deadline under a new proposal from the Department of Agriculture. The USDA is proposing to begin a phased-in enforcement around April 1, 2009, but most importers would not have to comply until at least July 1, 2009. The proposal appears to respond to the concerns that both industry and federal agencies have expressed about their ability to meet the impending compliance deadline. The USDA has also provided more details about the products that are and are not subject to this requirement.

Under the 2008 Farm Bill, importers of plants or plant products, including wood and wood products, must submit upon entry a declaration that includes the genus and species of the plant(s) used, the value and quantity of the importation and the country of origin of the imported product. U.S. Customs and Border Protection is currently developing an electronic system that will collect this information, and the USDA states that it intends to begin enforcement of the declaration requirement once that process is completed (currently anticipated around April 1, 2009). In addition, the USDA has proposed the following enforcement schedule:

• From the present to March 31, 2009, the USDA will make available on its Web site a paper declaration form that will be accepted after December 15. The department will also conduct domestic and international outreach concerning the declaration requirement. There will be no prosecutions during this time for failing to complete the paper declaration form; however, any person who submits a form containing false information may be prosecuted.

• Beginning April 1, 2009, (or as soon thereafter as an electronic system to collect the required declarations is available), the USDA will enforce the declaration requirement for HTSUS chapters 44 (wood and articles thereof) and 6 (live trees, plants, bulbs, cut flowers, ornamental foliage, etc.).

• Beginning July 1, 2009 (approximate), the USDA will enforce the declaration requirement for the above chapters as well as chapters 47 (wood pulp), 48 (paper and articles thereof), 92 (musical instruments) and 94 (furniture).

• After September 2009 there will be phased-in enforcement for additional chapters, including (but not limited to) 12 (oil seeds, miscellaneous grains, seeds, fruits, plants, etc.), 13 (gums, lacs, resins, vegetable saps, extracts, etc.), 14 (vegetable plaiting materials and products not elsewhere specified or included), 45 (cork and articles thereof), 46 (basket ware and wickerwork), 66 (umbrellas, walking sticks, riding crops), 82 (tools), 93 (guns), 95 (toys, games and sporting equipment), 96 (brooms, pencils and buttons) and 97 (works of art). A specific phase-in schedule for these chapters will be announced later.

The USDA states that the scope of products that will require a declaration under the Lacey Act amendments is broad and includes certain live plants (not to be replanted), plant parts, lumber, wood pulp, paper and paperboard, and products containing certain plant material or products, which may include certain furniture, tools, umbrellas, sporting goods, printed matter, musical instruments, products manufactured from plant-based resins and textiles. The department has indicated that it does not believe it has the authority to set a de minimis standard under which products with only trace amounts of covered plants or plant products would be excluded from the declaration requirement.

There are three categorical exemptions from the new declaration requirement, including common cultivars (except trees) and common food crops. The USDA and the Interior Department are currently working on a joint rulemaking that will define these terms.

The USDA is accepting public comments on its implementation of the declaration requirement, including the above enforcement schedule, by Dec. 8. In addition, the USDA will host a public meeting on these issues Oct. 14 in Washington, D.C. Additional meetings are likely to be held this winter near key port locations and will be announced at a later date.

ST&R is closely following all issues concerning the Lacey Act amendments and can help you understand how it applies to your company’s products and operations. For more information, including assistance in preparing comments on the USDA’s proposal, please contact:

Edward Steiner, Washington, D.C.
Tel: (202) 216-9307 • Fax: (202) 842-2247

Saturday, October 11, 2008

Commodity Verification/Scanning Due to the Current Melamine Issue

(Canadian Food Inspection Agency)

Notice from CFIA:

It appears there is some confusion regarding the importation of those products suspected to be associated with the current issue with melamine.

In an effort to streamline the processing of entries for the verification of commodities being scanned as a result of the current melamine issue, it would be of great assistance if the following procedures are carried out:

1) ensure you are verifying the AIRS requirements prior to submitting entries, to ensure you are using the right service option for products requiring ISC approval.

2) fax all documentation for those commodities to the ISC prior to transmitting your EDI
3) be sure to include the brand names for these commodities on your documentation.

Import Systems Unit Import Control Division
Canadian Food Inspection Agency
159 Cleopatra Drive
Ottawa ON K1A 0Y9

Friday, October 10, 2008

‘Major Global Downturn’ Says IMF

(BBC News)

The world economy is entering a major downturn in the biggest financial crisis since the 1930s, said the International Monetary Fund (IMF). In a hard-hitting report, the IMF warned the global economy was facing its most dangerous crisis for 70 years.

World economic growth will slow substantially this year, and only pick up modestly later in 2009, it said.

It warned the challenge for governments would be to stabilise economies while keeping a lid on inflation.

In its latest bi-annual World Economic Outlook report, the IMF said global economic growth would slow to 3.9% this year and then to just 3% in 2009 - its lowest level since 2002.

The IMF said the global financial crisis, which started with the collapse in US sub-prime mortgages in August 2007, had worsened in the past six months – and had entered a “tumultuous new phase” in September.

In its report, the IMF said that after four years of strong global growth led by emerging and developed economies, the world’s economy was now heading into a major downturn led by leading industrialised nations. Read more here.

Thursday, October 9, 2008

CFIA Unable to Test All Imports from China for Melamine

( – Sarah Schmidt, Canwest News Service)

Milk-derived ingredients swept up in the tainted milk scandal in China have been imported to Canada this year, but there’s no way to know whether they were contaminated with melamine before being consumed in processed foods.

In addition to small amounts of cocoa powder, casein derivatives and whey protein, 36,052 kilograms of casein worth about $320,000 was shipped to Canada in the first seven months of this year, according to Statistics Canada based on data provided by the Canada Border Services Agency.

The Chinese government last month acknowledged infant formula sold in China was contaminated with melamine, which left four babies dead and thousands ill. The scandal has since widened to include milk-derived ingredients.

As a result, the Canadian Food Inspection Agency last month decided to track down 2008 imports of milk-derived ingredients to test for melamine contamination. But the agency only found a few records of interest – two small shipments of casein, totalling 125 kilograms. And by the time the agency found the importers, it was too late to test for adulteration. Click here for the complete article.

Risk Awareness

(Supply Chain Standard)

Managing a supply chain is a risky business and the longer the supply chain the riskier it gets. According to a new report from analysts Aberdeen Group entitled Supply Chain Risk Management – building a resilient global supply chain, over the past year, 58% of companies have suffered financial losses as a result of supply chain disruptions.

Some of the key areas of concern are logistics congestion and capacity, risk profile of suppliers, fuel prices and the risk profile of a country. A very high percentage of companies (99%) in the study group reported supply chain disruption in the last twelve months, but not all companies suffer to the same extent and it really comes down to how a company prepares and responds to disruption – being pro-active, rather than reactive is essential.

Agility in responding to a disruption to supply can only be achieved if the right processes are already in place. A company that can quickly identify when a problem occurs and has planned for an appropriate response is more likely to limit the damage caused by the disruption. So, working closely with supply chain partners could be the difference between success and financial disaster. The Executive Summary of the report can be found here.

Customs Duty and International Trade Course, Toronto

(IE Canada)

November 24-26, 2008
Toronto Airport Marriott Hotel, 901 Dixon Road

This course is a one-stop shop for your international trade and customs needs. As rigorous new Canadian and U.S. government procedures for importers, exporters, carriers, customs brokers and freight forwarders are being implemented, complying with all the requirements will be critical to ensure the speedy arrival of your goods.

Security and compliance are top priorities for trade and customs professionals. Supply chain security and accountability spells new responsibilities for importers and exporters. How are you and your colleagues managing these new responsibilities?

This three-day intensive course is designed to provide a basic understanding of the rules that govern the international trade of goods and services. By taking the course you will be in a better position to assess the risks and exploit the opportunities in international trade (including NAFTA, WTO and FTAA).

Register today to guarantee your place at this course. For a full course brochure, click here, or call Jesse Arsenault at 416-595-5333 ext. 37.

CBP Issues Agenda for 2008 Trade Symposium

(International Trade Law News)

U.S. Customs and Border Protection has issued the draft agenda for the sold-out 2008 Trade Symposium that will be held at the end of this month in Washington, DC. The program will feature the following breakout sessions:

• TSA Air Cargo Screening Programs – TSA’s 100% Air Cargo Screening and Certified Cargo Screening Program (CCSP): Listen to TSA and CBP discuss collaboration on TSA air cargo screening programs and initiatives designed to meet the 9/11 bill mandate to screen 100% of cargo on passenger planes.

• C-TPAT Security Best Practices and Lessons Learned – Don’t Let This Happen To You: Through case studies hear lessons learned from C-TPAT member security breaches.

• Implementing Importer Security Filing Implementation (ISF) – Hear from CBP experts on steps you need to take to meet the implementation requirements. Hear from ATDI participants and CBP as they discuss their implementation experience and answer more detailed and technical questions.

• CBP Trade Strategy – CBP Trade Strategy and What It Means To Your Business: Review with OT leadership the strategy in detail and discuss strategies planned to implement its goals and how they may impact your business.

• Import Safety Working Group and ISA – President’s Import Safety Action Plan One Year Later: Review CBP’s progress on implementing the plan provisions and hear about PGA program progress related to the action plan. Review progress made in ITDS and experience in piloting the ISA-Product Safety initiative.

• USDA/CBP Agriculture Mission CBP – Prevent Agriculture Related Remedial Actions: Get a progress report on implementation of the Joint Agency Task Force initiatives. Review case studies of Ag-related remedial measures and what you should know to prevent them.

• Upcoming ACE changes – Discuss in detail upcoming ACE functionality and schedule for an understanding of the impact on the trade community.

• ISA Best Practices for Compliance – Importer Self-Assessment, The Path to Facilitation: A discussion of best practices in a competitive environment.

• IPR Initiatives and Trade Facilitation – A discussion of issues surrounding IPR enforcement and future initiatives. Working with the trade to balance enforcement and facilitation.

NAM Supports Modernized Export Controls

(Industry Week – Adrienne Selko)

New rule allows U.S. manufacturers to transfer technology, items and personnel license-free within their own corporate families

The National Association of Manufacturers (NAM) last week showed its support for a new export control procedure for Intra-Company Transfers or “ICT” – exports from one part of a company to another part of the same company located abroad.

“The Intra-Company Transfer exception has been the NAM’s number one dual-use export controls modernization priority,” said NAM President John Engler. “We have led the effort and have worked tirelessly with the Department of Commerce to facilitate the creation of the new exception in a way that improves national security while simultaneously spurring technological innovation, especially in the high tech sector.

“This new exception will allow U.S. manufacturers to transfer technology, items and personnel license-free within their own corporate families, eliminating the need for thousands of individual export licenses,” said Engler. “Trade from one part of a corporate family to another part is very secure, and needs to be treated differently from transactions involving overseas purchasers. Read more here.

Wednesday, October 8, 2008

Carriers Beware – You Could Face Long-Term Suspension of C-TPAT Designation Unless Every U.S. Bound Trailer Has Certified Security Seal

(Canadian Trucking Alliance)

The Canadian Trucking Alliance (CTA) is warning all C-TPAT carriers that their designation as a secure, low-risk business could be lost for a considerable period of time for something as simple as not having a certified seal on every trailer entering the United States, which is a condition of C-TPAT membership. CTA has become aware of what may be a growing number of carriers who have found themselves in this situation without any prior warning.

On the one hand, the seal requirement seems simple enough, but in the real world, where there are different drivers, and different types of trailers, loaded at different customer premises, by different people, it is easy for things to fall through the cracks despite a carrier’s best intentions. When C-TPAT shippers load a carrier’s trailer, the shipper is supposed to be responsible for affixing the seal. If they don’t and the driver doesn’t catch it, the carrier is held responsible. And, the penalties can be severe – loss of C-TPAT status for one to five years as reported to CTA. Carriers may not even know they have a problem. Notification of suspension from C-TPAT arrives by mail to the carrier. But even then no explanation for the suspension is given.

“We do not dispute the fact that if you are going to be in the C-TPAT program you must abide by its rules; but a policy of one strike and you’re out of the program for a year or more, without prior warning seems draconian. It’s hard to rationalize that the penalties fit the crime in these cases,” says David Bradley, CEO of Canadian Trucking Alliance.

“The vast majority of C-TPAT carriers are diligent in doing everything they reasonably can to ensure that every trailer heading southbound has a C-TPAT seal affixed. However, with so many trailers in service and so many customers and situations to deal with on any given day even the best management plans are not failsafe. Carriers cannot physically inspect every single trailer, or ensure that their drivers inspect every trailer, before departure from a shipper’s premises, for example, but the carrier is the only party it seems that is held liable,” he said.

CTA is hopeful that the US Customs and Border Protection agency (USCBP) which administers the C-TPAT program will be amenable to discussing a system of progressive discipline like those that exist for truck safety compliance, starting with warning letters for minor infractions and increasing penalties for continued non-compliance. The most severe penalties would be reserved for habitual non-compliance.

“The carrier may not even know it has a problem until it’s too late,” says Bradley. “Carriers don’t want to lose their C-TPAT designation. Loss of the low-risk identifier for even a short period of time could be the death-knell of a company, especially if you are serving an industry like automotive.”

Seaway Workers Near Strike Deadline

(American Shipper – Chris Dupin)

Workers who operate Canadian locks on the St. Lawrence Seaway have authorized their union to strike on 72 hours’ notice at any time after October 10 if a new contract is not reached.

The workers, who belong to Canadian Autoworkers Union, operate 13 of the 19 locks on the Seaway – five between Montreal and Lake Ontario as well as the eight locks in the Welland Canal. U.S. workers operate two locks between Montreal and Ontario as well as four locks at Sault Ste. Marie on the St. Mary’s Falls Canal that links Lake Huron to Lake Superior.

The canal is run jointly by the U.S. Saint Lawrence Seaway Development Corp. and the Canadian St. Lawrence Seaway Management Corp. (SLSMC).

The Canadian agency is optimistic that a strike can be avoided. Andrew Bogora, communications officer for the Canadian management corporation, said negotiations are to resume Monday. But if a strike did occur, he said it would completely halt movement of “salties” in and out of Lake Ontario as well as ships using the Welland Canal to move between Lake Erie and Lake Ontario.

Ships operating on the Upper Lakes, such as the carriers that bring iron ore from the Mesabi Range to steel mills along Lake Michigan and Lake Erie, would not be disrupted by a strike. Read the complete article here and more about how it could slow grain exports headed east from Canada’s main Prairie growing region and pressure prices here and here.

Japanese Business Sentiment Turns Negative for First Time in 5 Years

(Video: CNBC • Story: International Herald Tribune)

Large Japanese manufacturers turned pessimistic in September for the first time in five years and prepared to tighten their budgets for capital spending as the financial crisis cut into their export markets, a survey from the Bank of Japan showed Wednesday.

The Tankan, an index that tracks sentiment among big manufacturers, slipped to -3 in September from 5 in June, compared with economists’ expectations for a fall to -2.

The survey turned negative shortly before the Japanese economy entered its previous two recessions, and the September reading suggested that Japan was again on track for a recession.
The survey also indicated that the upheaval on Wall Street was stifling global economic growth, although analysts said many companies might have responded to the survey before Lehman Brothers, the U.S. investment bank, collapsed on Sept. 15, shattering confidence in the world’s financial system. Click here for the complete article.

The Diversification Dividend

(Export Development Canada – Peter G. Hall)

Everybody knows that Canada is a trading nation. Compare the share of trade to total economic output, and Canada ranks close to the top among large industrialized economies. But take away trade with our number one customer, the U.S. economy, and we’re not much of a trading nation at all. In fact, we are really a North American economy, with a limited stake in the rest of the world. What would Canadian trade activity look like if we were truly a diversified trading nation?

Canada’s trade intensity – exports and imports as a share of the total economy – was 70% in 2007. This compares with 29% in the U.S., 34% in Japan and 56% in the U.K. Trade is a larger share of output in continental Europe, where Germany is a standout at 87%. But while intensity in other locales is rising, Canada has steadily slipped in recent years, from 85% in 2000. The reason? Growth in exports to the U.S. wilted as the Canadian dollar surged. In contrast, growth in non-U.S. exports was sustained, and hit a double-digit pace last year – diversification did happen – but it was still too small a share of overall activity to significantly impact total performance.

Imagine a radically different trade profile – a scenario where the U.S. market was still dominant, but a smaller share of the pie, where large, industrialized countries had moderately less share, and where key emerging markets took up a reasonably larger share of the remaining space. Conservative growth assumptions – allowing for economic growth plus modest market share gains – produce an eye-opening overall result. In place of the 2.8% average growth seen in the last 5 years, Canadian merchandise exports would have expanded by over 7% annually. While actual growth slowed to 2.1% in 2007, diversification would have stayed the above-7% pace.

Canada’s provinces would likewise have cashed in on the bonanza. Those with the most to gain are Ontario and Nova Scotia, where growth averaged -0.4% and 0.5% in the past 5 years, respectively. With the altered shares, Ontario would have expanded by 6.6%, and Nova Scotia by 5.3%. Even those with less to gain would have fared well. Saskatchewan would have grown by 14%, as opposed to the 12% that actually occurred.

The results by industry are also inspiring. Take beleaguered auto sector exports, down 6.7% in 2007, and weathering a 24% drop thus far this year. Spread our products around the world, and the picture is radically different. Exports would have increased by 1.4% last year, and would be on track for a smaller drop of 17% this year. The same goes for machinery and equipment, which would cash in on torrid rates of investment in key emerging markets. Instead of tepid 2.4% growth last year, the sector would have seen 8%, and this year, -2.6% would shift to 2%. And given the voracious appetite of emerging markets, primary goods producers would also have fared better.

All good in theory, but is it achievable? For the Canadian economy, not overnight. But certain individual businesses are already there. Those with a globally diversified sales model are today experiencing growth well ahead of industry averages, even in very stressed parts of the economy.

The bottom line? Diversification is paying its practitioners handsome dividends, even in today’s slowing global market. And given longer-term growth prospects, the dividends won’t be fleeting.

Planners of New U.S.-Canada Bridge Eye Legal Fight

(Journal of Commerce Online – Courtney Tower)

The owners of the busiest commercial bridge crossing linking the United States and Canada say they’ll sue if their plan for a new span is not approved by government authorities.

Following a rejection by the Michigan legislature, Dan Stamper, president of Detroit International Bridge Co., owner of the Ambassador Bridge, said in an interview that with or without approvals from U.S. and Canadian officials, he would move ahead with plans to construct a new, six-lane twin span.

“We are going to build that bridge,” he said.

If Washington and Ottawa push ahead with their own plans for a new publicly-owned bridge two miles from the Ambassador, Stamper promised to sue to block the project.

New bridges are needed to ease congestion and delays at the 80-year old Ambassador, a critical link for nearly US$75 billion in U.S. exports and $63 billion in imports moving in the Detroit-Windsor, Ont. corridor each year, or 25% of an annual total $562 billion in U.S.-Canada trade.

A long stand-off in the Michigan legislature ended last week with the failure of a Republican-led attempt to cut off funding for preparatory work for a publicly-owned Detroit River International Crossing, in the making since 2004. That work now can proceed. Read the complete article.

Zoellick Faults G-7, Calls for New Order

(Wall Street Journal)

World Bank President Robert Zoellick called Monday for expanding the Group of Seven industrialized nations to include major developing countries, saying the current world leadership structure is ill-equipped to deal with global crises.

“The G-7 is not working. We need a better group for a different time,” he said.
Laying out a broad vision for a “new multilateralism,” Mr. Zoellick pushed for greater cooperation in everything from financial and economic issues to energy and trade. “Just as the crisis has been international because of interconnectedness, the reforms will need to be multilateral,” he said.

The new approach “must build toward a sense of shared responsibility for the health of the global political economy,” he said in a speech here to the Peterson Institute for International Economics. “This means, chiefly and critically, that it must involve those with a major stake in that economy, those willing to share in the responsibilities along with the benefits of maintaining it.”

Speaking in the run-up to the G-7 summit and fall meetings of the World Bank and International Monetary Fund later in the week, Mr. Zoellick said the G-7 is unwieldy and has put a priority on “ceremony over policy.”

The G-7 should be doubled in size to include rising powers such as China, Russia, Saudi Arabia, Brazil, India, Mexico and South Africa, Mr. Zoellick said. Along with the G-7 countries of the U.S., U.K., France, Germany, Italy, Japan and Canada, the new group would account for over 70% of the world’s gross domestic product, 62% of its energy production, as well as the biggest greenhouse-gas emitters and development-aid donors.

Instead of becoming merely a G-14, the new “steering group” would have a more flexible makeup and coordinate more actively with public and private institutions, he said. Read more here.

Tuesday, October 7, 2008

Security Criteria for Third Party Logistics Providers (3PL)

(CBP via CSCB)

New C-TPAT Security Criteria for Third Party Logistics Providers is in effect as of January 1, 2009. 3PLs need to meet specific criteria to participate in C-TPAT.

Third Party Logistics Provider Eligibility Requirements

In order to be eligible for participation in the C-TPAT program, the 3PL must:

1. Be directly involved in the handling and management of the cargo throughout any point in the international supply chain, from point of stuffing, up to the first U.S. port of arrival. Entities which only provide domestic services and are not engaged in cross border activities are not eligible.

2. Manage and execute these particular logistics functions using its own transportation, consolidation and/or warehousing assets and resources, on behalf of the client company.

3. Does not allow subcontracting of service beyond a second party other than to other CTPAT members (does not allow the practice of “double brokering”, that is, the 3PL may contract with a service provider, but may not allow that contractor to further subcontract the actual provision of this service).

4. Be licensed and/or bonded by the Federal Maritime Commission, Transportation Security Administration, U.S. Customs and Border Protection, or the Department of Transportation.

5. Maintain a staffed office within the United States.

Note: Non asset-based 3PL’s who perform duties such as quoting, booking, routing, and auditing (these type of 3PL may posses only desks, computers, and freight industry expertise) but do not own warehousing facilities, vehicles, aircraft, or any other transportation assets, are excluded from C-TPAT enrollment as they are unable to enhance supply chain security throughout the international supply chain.

Minimum Security Criteria for Third Party Logistics Providers

For minimum security criteria for 3PL providers, visit the CBP website here. The implementation plan for 3PL providers can be viewed here.

Export Rules Eased on Foreign-Made Goods with U.S.-Origin Components

(World Trade Interactive)

The Bureau of Industry and Security has revised its regulations on export controls for foreign-made items that incorporate controlled U.S.-origin goods (the de minimis rules). According to the BIS, this rule changes the de minimis calculation for foreign-produced hardware that is bundled with U.S.-origin software, clarifies the definition of “incorporate” as it is applied to the de minimis rules and the medical statement of understanding, removes the requirement to submit a one-time report for foreign-made software that incorporates U.S.-origin software, and revises the “Steps for Using the EAR” and General Prohibition Two with regard to the de minimis rules. This interim final rule is effective as of Oct. 1 and comments on it are due by Dec. 1. Read the complete article.

Spam, Still Mystery Meat, Escapes Food-Label Rules

(Bloomberg – Alan Bjerga and Tony C. Dreibus)

U.S. rules requiring meat and fresh produce to be labeled by national origin are falling short of lawmakers’ aims, leaving shoppers in the dark about where mixed vegetables, steaks and Spam come from, some lawmakers say.

Six years after being adopted by Congress, country-of-origin labeling [took effect last week]. Concern about unsafe imports from China and Canada helped overcome food industry efforts to delay the measures. They will cost companies $2.5 billion in the first year, with retailers spending more to market beef, pork and lamb, the U.S. Department of Agriculture says.

Industry groups say expenses will be even higher.

Some lawmakers and consumer advocates say loopholes will let meatpackers blur the distinction between foreign and domestic meat. Mixed vegetables are exempt from the requirements, as are processed foods ranging from roasted peanuts to Spam, the canned luncheon meat made by Hormel Foods Corp. More regulations may be needed, the lawmakers say. Click here for the complete article.

Cdn Bank Economists Foresee Little Growth: ‘Different from a Typical Recession’

(Canadian Business – David Friend, The Canadian Press)

Economists from Canada’s Big Five banks are expecting little or no growth in the near future – and they warned Monday the domestic economic gloom could become much deeper.

The word “recession” wouldn’t describe the deep structural problems affecting everything from the U.S. housing sector to the Canadian oil industry, said Bank of Nova Scotia chief economist Warren Jestin.

“I think you have to invent a new word to describe what we’re in now,” he said after the banks presented their perspectives at the Economic Club. “It’s being driven through the financial markets into the real economy. All of those things suggest that it’s entirely different than what you might expect from a typical recession.”

Bank of Montreal economist Doug Porter said commodity prices will continue to take a beating over the next year, dragging Western Canada’s economy down with them.

“You’re going to be seeing Western Canada come back down to the rest of us with a thud, especially if commodity prices keep doing what they’ve done in the last three months,” he said. “It’s almost as if the markets are pricing in a much harder landing for commodity prices. I think that’s reasonable if you don’t get some thawing in the credit markets relatively soon.”

The early morning meeting in Toronto’s Bay Street financial district appeared prescient, beginning shortly before Canada’s biggest stock market opened with a startlingly steep fall, dropping almost 1,200 points to its lowest level in three years as commodity prices tumbled.

Porter said the direction of Canada’s economy depends on whether the financial-sector troubles in the United States start to settle down. “At this point, if this kind of volatility keeps up, I think we’re looking at a much more serious downturn than the mild recession that most of us are talking about,” he said. “Over the next month, that’s what bears watching.”

The cautious outlook was echoed by Don Drummond of TD Bank, who said the Canadian economy won’t see any growth until late 2009. Drummond told the Economic Club audience that even at that point there will be only a gradual recovery. “I think the credit system is going to be mucked up for quite some time, even if it improves somewhat,” he said. Read the complete article.

Monday, October 6, 2008

Implementation of Mandatory AES

(American Shipper – Eric Kulisch)

The U.S. Census Bureau today will begin implementing rules for mandatory electronic filing of export information by U.S. exporters and freight forwarders.

The export documentation must be filed prior to loading or departure, depending on the mode of transport.

The Commerce Department agency in early June issued the final regulation requiring all shippers’ export declarations for shipments valued at $2,500 or above to be filed via its Automated Export System. The rules went into effect on July 2 and now companies will be monitored for their compliance.

The Census Bureau uses the information to compile the nation’s trade statistics and U.S. Customs and Border Protection uses it to enforce export control laws.

The regulation increases civil and criminal penalties for those who fail to file or do so inaccurately, but questions remain about how those penalties will be meted out. Maximum civil penalties are $10,000 per violation for failure to file and up to $1,000 for making false statements. Criminal penalties can reach $10,000 and up to five years in prison. How the penalty range will be applied for first, second and third violations and other situations is still unclear. Read the complete article. More on the final rule here.

Note: Under the new rule, paper Shippers Export Declarations will be eliminated and all SEDs must now be transmitted electronically. The SED will now be referred to as an Electronic Export Information or EEI. U.S. Census Bureau offers the AES Direct system, for exporters to file electronically.