Sunday, November 30, 2008

Canada Backpedals on Sharing Personal Database With U.S.

(The Canadian Press)

Ottawa has quietly dropped plans to let the United States house a database of personal information about Canadians who hold special driver’s licences aimed at better securing the border.

The move follows vocal criticism from federal and provincial privacy commissioners, who warned earlier this year the scheme could open the door to abuse of the sensitive data.

However, the office of federal Privacy Commissioner Jennifer Stoddart is still wary of the plan to share information on so-called enhanced driver’s licences with the United States, and stresses the passport is still the ideal travel document for Canadians.

“All in all, we are pleased to see that they listened to some of our recommendations, but we remain hopeful that they’ll heed to many of our other concerns,” said Anne-Marie Hayden, a spokeswoman for Stoddart.

As of next June under Washington’s Western Hemisphere Travel Initiative, all people entering the U.S. must have a passport or other secure documentation confirming citizenship and identity. Read more here.

Putting New Life in an Old Friendship

(Gordon D. Giffin — Toronto Star)

Fears of American protectionism are overblown and Canada can count on a willing partner when Obama enters the White House

The level of energy, enthusiasm and optimism created by the U.S. presidential election is stunning. Perhaps the most remarkable aspect of this phenomenon is that it extends far beyond the borders of the United States, through North America and throughout the globe.

While some degree of this anticipation and emotion is generated by the impending departure of a relatively unpopular administration, in substantial part it is a product of excitement and wonder at the prospect of an articulate, young, bright African American leading the world’s sole superpower. In fact, it is what the election outcome says about Americans to the rest of the world (and to ourselves) as much as what it portends about U.S. government policy that is so uplifting.

When the euphoria subsides – and it will – what does the election of Barack Obama actually mean for the future of the Canada-U.S. relationship? Pessimists hearken back to his comments about NAFTA in March during the Ohio primary or point to the historic canard that Democrats are by genetic makeup protectionist to predict that upper North America is in for a rocky patch.

I couldn’t disagree more. The leadership team being assembled by the new president is composed entirely of market-oriented, free trading global pragmatists. When the economic context permits, I predict the Obama team will be open to a 21st-century evolution of our trade relationship, rather than being diverted by a pointless renegotiation of a 20-year-old agreement. Think customs union, labour mobility and regulatory harmonization – not tinkering with NAFTA. Read the rest here.

Friday, November 28, 2008

New Technology to Identify Border Crossers

(Ray Spiteri — Sun Media/Welland Tribune)

U. S. Customs And Border Protection Agency Has Installed Radio Frequency Identification Technology At Area Border Crossings

New technology at Niagara’s four border crossings will reduce waiting times and result in a more secure environment, American customs officials say.

The U. S. Customs and Border Protection agency has installed radio frequency identification technology at the Rainbow, Queenston-Lewiston, Whirlpool and Peace bridges.

It will allow officers to identify U. S. State Department-issued passport cards, so-called “enhanced” driver’s licences and trusted traveller identification documents, such as NEXUS or FAST, before a driver reaches an inspection station.

When a traveller approaches the booth, the wireless technology captures a randomly assigned number from a chip embedded in the documents.

No personal data is contained or transmitted - the numerical identifier serves only as a pointer to gather information from the agency’s secure network and display it for a border officer.

“This will greatly reduce border wait times in that as the car approaches, the technology will already be on the officer’s screen as opposed to an officer having to type in an individual’s information,” CBP spokesman Kevin Corsaro said at the Peace Bridge Monday, where officials demonstrated how the technology works for the media. Read more here.

Cubans Seek More Trade with Canada

(The Canadian Press)

Cuba’s trade minister says the Caribbean nation is seeking more business with Canada to bolster his country’s economy during the global economic crisis.

Raul de la Nuez told The Canadian Press he hopes to boost the volume of trade between the two countries in the months ahead.

De la Nuez met this week with his Canadian counterpart, International Trade Minister Stockwell Day, as well as Agriculture Minister Gerry Ritz.

“I think that we have an opportunity to improve or to increase the volume of trade that today we have,” De la Nuez said.

“We think that the relationship between both countries is important to us, and I think during this meeting we had the opportunity to discuss some of these issues.”

A spokeswoman for Day says the two ministers spoke about Canada supplanting Spain as Cuba’s third-largest trading partner, and about the growing number of Canadian tourists vacationing there. Read more here.

Baltic Dry Index Teeters on Record Low

(Seatrade Asia)

On Thursday, the Baltic Dry Index, which measures dry bulk shipping rates on 40 routes across the world, sank 3.9% to 733 points, its seventh straight daily decline and its lowest level since January 1987. The index has plummeted 94% from its high in late May. Many are anticipating that in the next couple of weeks it could hit a record low.

Putting a brave face on the market, Kenneth Koo, group ceo and chairman of Hong Kong bulk owner Tai Chong Cheang Steamship, told Seatrade at a press conference earlier this week, that he hoped the current plunge would be a ‘short and sharp’ one. He said the market could be back up to manageable levels by Q2 next year. Read more here.

China Suspends Trade Customs Duty Deposit

(Outsourced Logistics)

China’s Ministry of Commerce and the General Administration of Customs jointly issued Announcement No.97 [2008] on November 21, 2008, under which the “actual payment” of customs duty deposit will be suspended with effect from December 1, 2008.

The new policy will affect 1,853 tariff items under the restricted exports category and 272 tariff items under the restricted light industry and textiles imports category. Category A and B processing trade enterprises will temporarily switch from “actual payment” to “nominal payment” of customs duty deposit, whereas Category C enterprises will continue with “actual payment.”

Some 17 tariff items of furniture products will be removed from the restricted category of processing trade.

Details of the announcement and lists of affected items are on the Ministry of Commerce’s webpage [in Chinese].

Current Account Surplus with Rest of the World Narrows to $5.6 Billion in Q3

(The Canadian Press)

Canada’s current account surplus with the rest of the world contracted to $5.6 billion in the third quarter of 2008 on a lower goods surplus and a slowdown in commodity price gains.

Statistics Canada also noted a higher investment income deficit during the period, as Canadian earnings on foreign direct investment fell. Cross- border direct investment flows strengthened, the agency said, with “notably large Canadian direct investment abroad and a resumption of foreign acquisition of Canadian companies.” Due to the turmoil in equity and credit markets, however, Canadian investors’ demand for foreign securities slowed and non-resident investors reduced holdings in Canadian stocks and bonds. Summary statistics and a link to the data file are on the Statistics Canada website at Statistics Canada website.

U.S. Auto Dealers Looking North of Border to Snap Up Used-Car Bargains

(Bruce Constantineau — Vancouver Sun)

Consumer confidence could hurt new-car sales in final quarter of fiscal year

Bargain-priced “slightly used” cars will become a hot commodity in Canada as price-conscious buyers scoop them up and U.S. car dealers — armed with a stronger currency — prowl the Canadian market for deals.

That's the prediction from Canadian car-pricing expert Paul Timeoto, who expects a falling dollar to stir the interest of U.S. dealers in Canadian vehicles.

“The prospect of U.S. dealers coming up here to buy is looming very strongly now,” said Timeoto, president of online car-pricing-data firm CarCostCanada.com. “The dollar has only been below 90 cents US for a few weeks so it may take a little while for them to pay attention to our market. But it won't take long.”

He noted that until recently, Canadian car dealers took advantage of a strong Canadian dollar to buy used cars — less than one year old — in the U.S. and resell them in Canada.

“Dealers went down there and literally brought them back by the truckload and Canadians saved a lot of money that way,” Timeoto said. “But that situation has dried up now and the reverse is likely to happen.” Read more.

Canadian Currency Depreciates on the Outlook for Global Growth

(Chris Fournier — Bloomberg)

Canada’s currency weakened as commodities, European stocks and U.S. equity-index futures fell, reflecting concern that global economic growth will slow.

“Risk aversion is dominating trading, whether we look at equities or commodity-based currencies,” said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto. “We can look at oil prices and all the other commodities declining and that’s adding some weight.”

The Canadian dollar weakened as much as 1 percent to C$1.2436 per U.S. dollar, from C$1.2316 yesterday. It traded at C$1.2388 at 8:07 a.m. in Toronto. One Canadian dollar buys 80.71 U.S. cents.

Political uncertainty is also weighing on Canada’s currency, according to Strauss. Promises by the country’s opposition parties to fight Prime Minister Stephen Harper’s proposed spending cuts may bring down the minority Conservative Party government.

Border Officers Feel Feds’ Bite

(Corey Larocque — Niagara Falls Review)

Cap on wage hikes covers this year, next two

Niagara’s border officers will feel the pinch as Ottawa tightens its belt by capping wage increases for federal public servants.

New legislation will limit increases to 1.5 per cent a year over this year and for the next two, Finance Minister Jim Flaherty said in Thursday’s economic and fiscal statement. Border officers learned last week the government was imposing the restraints.

“We pretty well had a gun to our head, so we had no choice,” said Fred Milligan, president of the Customs and Immigration Union local that represents 375 workers in Niagara Falls. There are about 200 workers in a different local in Fort Erie.

“It’s kind of hard to take. At the same time, we realize there are people out there who are losing their jobs,” Milligan said. “It seems every time something happens, we have to take the brunt of what’s going on.”

Union representatives learned last week of the government’s plan to limit raises in response to the global economic crisis.

“It would apply to all federal public servants,” said Niagara Falls MP Rob Nicholson, the Conservative justice minister. Read the rest here.

Thursday, November 27, 2008

Ailing FDA May Need a Major Overhaul, Officials and Groups Say

(Washington Post – Rob Stein)

The Obama administration will inherit a Food and Drug Administration widely seen as struggling to protect Americans from unsafe medication, contaminated food and a flood of questionable imports from China and other countries.

Shaken by a series of alarming failures, the FDA desperately needs an infusion of strong leadership, money, technology and personnel – and perhaps a major restructuring, say former officials, members of Congress, watchdog groups and various government reports.

“Everywhere you go, you hear the same chorus: The agency’s in trouble,” said David A. Kessler, who served as FDA commissioner under Presidents George H.W. Bush and Bill Clinton. “There’s a general perception the agency is suffering mightily.”

With nearly 11,000 employees and an annual budget of more than $2 billion, the FDA is charged with overseeing products that account for one-quarter of consumer spending in the United States, including over-the-counter and prescription medications, heart valves, stents and other medical devices, the blood supply, and food.

But morale within the FDA, along with its credibility outside, has plummeted as the agency has been stretched to keep pace with its responsibilities and riven by accusations of ideological bias, a tilt toward industry rather than consumers, and internal dissension. Read the rest here.

NAFTA Must Stay Intact, Outgoing U.S. Ambassador Warns Against Protectionism

(The Canadian Press – Lauren Krugel)

The outgoing U.S. ambassador to Canada says he expects the North American Free Trade Agreement to stay intact once the new Democratic administration takes power, despite worries earlier this year that the pact could be reopened under Barack Obama.

Obama, who is set to take office on January 20, had mused about reopening NAFTA during the presidential primaries, spurring a great deal of furor north of the border.

But any talk of tearing up the trade pact during was likely just “campaign rhetoric,” David Wilkins told a Calgary business audience Wednesday. Once the Obama administration “gets all the facts and figures, it understand that NAFTA is simply too beneficial to Canadians and Americans to try to unilaterally renegotiate our withdrawal and will continue to support it very strongly,” he said.

Wilkins, a staunch supporter of President George W. Bush., was appointed ambassador to Canada in June 2005. Addressing a luncheon hosted by Calgary Economic Development as part of his farewell tour, Wilkins touted Canada’s integral role in America’s energy security.

“It is Canada, not the Middle East, that is the United States’ No. 1 foreign supplier of oil, natural gas and uranium,” he said. “And in our troubled world, it’s a good thing to have our closest friend and ally producing and providing a major portion of our energy needs.”

Wilkins acknowledges environmental concerns over the oilsands need to be addressed. “I think it’s important for Canada and for Alberta to be proactive and to get its message out and to emphasize pro-environmental steps it’s taken up here,” he said. Read the rest here.

Speed of Recent Change Breathtaking

(Export Development Canada – Peter G. Hall)

The adage “one month does not a trend make” was shattered in October. The speed of change in key economic indicators was breathtaking, and wasn’t confined to single economies, industries or ideologies. Analysts’ views on the economy’s near-term path, disparate just weeks ago, now vary only on the severity of the downturn. The dust kicked up by the rapid change and resulting post-October volatility has clouded the economic line of sight significantly.

How swift were the changes? Consider stock markets. Octobers in the past would be hard to beat on the decline scale, but this one made the grade. To exceed the 17% beating the S&P 500 took last month, you have to go back to October of 1987, and prior to that, only May of 1940 and the Dirty Thirties compare. Indexes for most other large economies yield similar results. The TSX index, more influenced by commodities, has seen just three October-style drops since 1940.

Consider also commodities. They are well known for their volatility, but October was a standout. Oil prices have only experienced a one-month tumble greater than last month’s once in the past 25 years – when prices were in freefall in 1986, unwinding the oil price shocks of the 1970s. Base metals also had a rough month. Nickel prices were battered yet again, but the drops in zinc, and more alarmingly in copper–the most prescient base metal–were unprecedented in recent years.

Currencies also shifted radically. The trade-weighted US currency – which measures the greenback’s fluctuations against key trading-partner currencies, rose by 6.7% in October, the largest monthly gain recorded in at least 38 years. The jump reflects global flight to quality US assets during the month, rapid covering of short US dollar positions and foreign bank recapitalization activities. The drop in the Canadian dollar was likewise without precedent, and was even more pronounced at 11.7%, given the additional effect of lower commodity prices.

Other yet-unreleased October indicators will likely tell a similar tale. Confidence, which usually reflects concurrent economic behaviour, tumbled badly in the month. Pundits aren’t waiting for all the data, though. Forecasts are being revised downward swiftly. For example, the IMF has taken the highly unusual step of revising its October 2008 World Economic Outlook just days after its release. Most others are also scrambling to adjust their outlooks downward.

Speaking of speed, governments have vaulted into action. From bailouts of the financial sector to provisions of liquidity, interest rate cuts, statements of confidence and intent, and massive stimulus packages, governments around the world have wasted little time crafting and enacting policies to meet the challenges head-on. And more is expected before the dust settles.

The bottom line? The speed of change seen in October was alarming, and the effects are continuing. Further bad near-term economic news is almost a certainty, and as such, market volatility is likely to persist. There are no models that pinpoint economic behaviour in today’s environment, adding considerably to the challenge of forecasting. The current economic tumble is bad – but not bottomless. And we know we are now nearer to the economy’s true floor than we were two months ago. When October’s dust settles, the path to recovery will become clearer.

Wednesday, November 26, 2008

Commentary: Obama, NAFTA and Free Trade

(Forbes – Daniel Hemel)

New Mexico Governor Bill Richardson is a pro-free-trade Democrat. That renders him, in his own words, “an endangered species.” But if the Democratic free-trader is a rare bird that nests primarily in the deserts of the U.S. Southwest, that breed won a new lease on life this week.

On Monday, aides to Barack Obama confirmed that Richardson would be the president-elect’s selection for secretary of commerce. Unlike the appointment of New York Federal Reserve Bank Chief Timothy Geithner as Treasury secretary – which sent stocks soaring – news of the Richardson pick barely registered on Wall Street.

But the Richardson selection may be the clearest signal sent by Barack Obama so far regarding his economic policies. Despite Obama’s anti-trade rhetoric during the 2008 campaign, the choice of Richardson as commerce secretary means the president-elect is much less likely to follow a protectionist course.

What makes the Richardson pick so significant? Three reasons stand out. First, Richardson owes his political ascendancy to the North American Free Trade Agreement (NAFTA). Second, Richardson, whose own White House bid fizzled in early January, stood out from the rest of the Democratic pack as the most pro-free-trade candidate during the campaign. Third, Richardson’s remarks in recent months offer clear insights into his – and Obama’s – true views on trade. Read the rest here.

Vancouver Port Plans Big Spending for Expansion

(Journal of Commerce Online – Courtney Tower)

Port Metro Vancouver plans spending of just under C$1 billion to improve and expand operations between 2008 and 2018. The 10-year capital investment of $950 million, not including expected land acquisitions, is by the Vancouver Fraser Port Authority, known as Port Metro Vancouver, out of its own resources. The authority is owned by the Canadian government but gets no funds or subsidies from it.

Terminals and other cargo-related tenants of the port plan to spend an additional $3.2 billion on capital investments, in an overall spending plan by port tenants of $4.25 billion, according to a consultants’ report published Tuesday.

The report says some firms planning capital expenditures reported doing so “with the caveat that business continued to be ‘good.’ “That would mean that further investments depended on Port Metro Vancouver remaining competitive among the Ports of Seattle, Tacoma and Los Angeles.” Read the rest here.

Politics Are Slamming Our Trade Doors Shut

(Globe & Mail – Marcus Gee)

Everyone agrees that a retreat into trade protectionism after the Great Crash of 1929 helped bring on the Great Depression. Everyone agrees it would be disastrous to repeat that mistake today.

At the Asia-Pacific Economic Co-operation summit in Peru last weekend, U.S. President George W. Bush reminded other leaders that “global protectionism is a path to global ruin.” Prime Minister Stephen Harper agreed, arguing that lowering trade barriers is a key to getting the global economy moving again. “The world is entering an economic period unlike, and potentially as dangerous as, anything we have faced since 1929,” Mr. Harper said. “Now is the time for opening doors, not erecting walls.”

Fine sentiments, but what, exactly, is he prepared to do about it?

Ottawa has been touting its new free-trade deal with Colombia as an example of its free-trading credentials. Colombia? Come on. Canada’s two-way trade with Colombia amounts to $1.14-billion, about a third of our trade with Ohio in auto parts alone. We buy bananas, coffee and fuel from Colombia. They buy our lentils, wheat, beef and machinery. That’s not going to restart our engine. Nor is a recent trade deal with Peru.

The real prizes to be had in free trade lie not to the south in Latin America, but to the west across the Pacific in Asia. In negotiating deals there, Canada has been painfully slow off the mark. Read the rest here.

Lacey Act Amendments – Deadline to Comment on NPRM December 8, 2008

(IE Canada)

A Notice of Proposed Rule-Making (NPRM) with respect to implementation of amendments to the Lacey Act appeared in the U.S. Federal Register on October 8, 2008. Comments must be submitted by December 8, 2008.

A copy of the NPRM is available on the United States Department of Agriculture website at here. This website also includes other useful information, including the transcript of a public meeting held on October 14, 2008 by the United States Animal and Plant Health Inspection Service (APHIS) to discuss implementation and answer questions regarding the new Lacey Act requirements.

The 2008 Farm Bill enacted in June 2008 expanded the Lacey Act to prohibit trade in products made from illegally harvested or traded plants and plant products, including trees. (The Lacey Act prohibits trade in wildlife, fish, and plants that have been illegally taken, possessed, transported or sold.) The amendments also established a new import declaration requirement for ALL plants and plant products imported into the United States, which must include the scientific name of any plant used to produce plant products, including the genus and species, and the country of harvest of the plant. This new import declaration is scheduled to be enforced on a phased-in basis once the declaration can be filed electronically (anticipated for April 1, 2009). Importers may file a paper declaration on a voluntary basis as of December 15, 2008.

A broad range of products is subject to the law, including furniture, paper, wood flooring, wine with corks, musical instruments, pharmaceutical products, textiles and wearing apparel, lipstick, cigarettes, dried soup, hairspray, umbrellas, boats, chewing gum, pots and pans with wooden handles, maple syrup and any product that comes with an instruction booklet or hang tags.

IE Canada would like to hear from those with concerns about implementation of the Lacey Act Amendments. If you wish to take advantage of this opportunity to comment on the Notice of Proposed Ruling Making. Please provide your comments to Amesika Baeta at abaeta@iecanada.com or (416) 595-5333, ext. 41 by Wednesday, December 3, 2008.

Importer Security Filing (10 + 2) Interim Final Rule: Compliance Period and Data Flexibility

(GHY International)

On November 25, 2008, U.S. Customs and Border Protection (Customs, CBP) published in the Federal Register an interim final rule regarding its Importer Security Filing and Additional Carrier Requirements program, commonly known as Importer Security Filing (ISF) or “10 + 2”. The rule requires importers and vessel carriers to electronically submit additional data items about imported cargo to Customs other than data currently submitted when making entry or manifesting ocean cargo destined for the U.S.

The interim final rule reflects certain changes from the proposed rule published in the Federal Register on January 2, 2008 which outlined the new additional data requirements, and explained other regulations related to the ISF program. One of the changes in the current rule deals with a one-year compliance period beginning on the effective date of the final rule. During this period, Customs says it will “show restraint in enforcing the rule.” Customs added that during this time importers must be found making “satisfactory progress toward compliance” and “a good faith effort to comply with the rule to the extent of their current ability.”

Customs is also allowing some flexibility in reporting certain data elements. Two of those data elements – the container stuffing location and the consolidator (stuffer) – are treated with timing flexibility and those elements may be reported at any time, as long as it is not later than 24 hours prior to arrival in a U.S. port. This differs slightly from the general rule which states that security filing data must be submitted to Customs no later than 24 hours before cargo loading at the foreign port of lading.

Customs also allows some flexibility in interpreting the range of acceptable responses for four elements in the ISF transmission. These four elements are the manufacturer (supplier), ship-to party, country of origin, and harmonized tariff (HTS) number. Imprecise submissions for these data elements submitted at the time of the ISF filing will be considered valid, depending on facts available to importers at the time, and pending further clarifying information. In the Federal Register notice, Customs gives examples of acceptable responses under this scenario. Customs also notes that there is no special timing flexibility with respect to reporting these four data elements.

Customs is accepting comments on or before June 1, 2009 related only to these six data elements for which Customs is providing some type of flexibility.

The effective date for the rule is January 26, 2009.

The full text of the interim final rule, including instructions on submitting comments, can be accessed online here or here (PDF form).

Tuesday, November 25, 2008

Manufacturers Welcome New 10+2 Rule

(Traffic World Online – Thomas L. Gallagher)

The National Association of Manufacturers welcomed changes in the U.S. Customs and Border Protection’s proposed 10+2 rule for cargo filing security.

Ten months after original publication of the proposal, the updated rule was approved November 6 by the White House Office of Management and Budget and now awaits Congressional acceptance likely before the end of the month.

The filing rule, popularly known as ‘10+2,’ will require importers and ocean carriers to provide 12 additional data elements that do not appear on the manifest. During the agency’s annual trade symposium in October, Deputy Commissioner Jayson Ahern said that the 10+2 data was fundamental to Customs’ supply-chain security strategy.

While it is much improved, according to NAM, “work still has to be done to create a final rule that works for both national security and U.S. manufacturers.”

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

Canada Needs to Counter Perception Country Is Weak on Security, Report Says

(The Canadian Press)

Canadian officials need to launch an aggressive public relations strategy to help deal with the perception the country is weak on security, a new report to be released Tuesday by Canadian International Council says. The report also urges the United States to work with Canada to speed the flow of legitimate trade and people across the border.

“Canada and the U.S. appear to be moving in the opposite direction with serious consequences at these challenging economic times,” said Michael Kergin, a former Canadian ambassador to the United States and author of the report. “The auto industry, currently facing unprecedented financial challenges, is an example of a sector which has been adversely affected by the layering of border measures.”

The report called for the establishment of a permanent joint border commission to address the economic consequences by the increased regulatory fees and security measures implemented after September 11, 2001.

The Canadian International Council was founded last year by Jim Balsillie, co-chief executive of BlackBerry inventor Research in Motion. The program’s areas of focus for 2008-2009 include China, border issues, Arctic sovereignty and security and energy.

Download “A New Bridge for Old Allies“ (20 pages PDF)
Read the Executive Summary

Homeland Security Criticized for Lax Oversight of Programs Worth

(GovExec.com – Katherine McIntire Peters)

Auditors with the Government Accountability Office have found that 45 of 48 major investment programs managed by the Homeland Security Department were not evaluated according to department policies, and 18 of those were not reviewed at all.

“Consequently, DHS has not identified and addressed cost, schedule and performance problems in many major investments,” GAO stated in a report (GAO-09-29) released on Thursday. Auditors found that at least 14 of the programs had experienced such issues.

Among the investments that did not receive mandatory oversight board evaluations was the Federal Emergency Management Agency’s Consolidated Alert and Warning System, a $1.6 billion program to update the Emergency Alerting System. Another was Customs and Border Protection’s Secure Freight Initiative, a $1.7 billion program designed to test the feasibility of scanning all U.S.-bound cargo containers at foreign seaports. Full story: here.

Canada Bides Time



(Video: Global TV • Story: Globe & Mail)

After saying a recession is imminent, Stephen Harper’s team appears content to put off any financial stimulus until budget time

Canadians will have to wait until the next federal budget before Ottawa delivers what Prime Minister Stephen Harper said could be an “unprecedented” fiscal stimulus package - a delay economists say the country can ill afford.

A spokesman for the Prime Minister’s Office said yesterday the government is still trying to determine what would be appropriate and is looking at 2009 budget measures rather than action outside of that.

“There is a desire to get it right, and a fair bit of analysis and due diligence work needs to go on before one acts,” spokesman Kory Teneycke said. Budgets are usually delivered around February.

He said the stimulus under consideration is something beyond Conservative efforts to accelerate a $33-billion, seven-year infrastructure fund the Tories rolled out in the 2006 and 2007 budgets. “It’s fair to say we are looking at additional measures.” Read more here.

Federal Employees Agree to ‘Tough Times’ Wage Deal

(Bill Curry — Globe and Mail)

Federal public servants moved to sidestep a politically charged showdown with the Conservative government yesterday, agreeing in principle to Ottawa’s take-it-or-leave-it final wage offer.

The deal offers more than 100,000 employees represented by the Public Service Alliance of Canada a 6.8-per-cent raise over four years. The union had been asking for more, but said Monday that times have changed.

The government threatened in last week’s Throne Speech to legislate a deal if necessary, and called on all departments to find savings. Also last week, Treasury Board President Vic Toews upset PSAC by publicizing an offer to federal employees, describing it as final.

Union leaders and Treasury Board officials worked through the weekend and came to an agreement late Sunday night, PSAC president John Gordon said.

“Given these tough economic times, we feel this is the responsible thing to do,” he said yesterday. Read the rest here.

Monday, November 24, 2008

Ontario Exports to Rise Moderately in 2009 after Double Digit Decline in 2008, Says EDC

(Export Development Canada)

Ontario’s export growth is expected to rise by a moderate 3% in 2009 after a forecasted 14% decline in 2008, according to a provincial export outlook by Export Development Canada (EDC).

‘Ontario will have a tough go through this year and 2009 given the importance of the auto and industrial goods sectors on its export picture, both of which are faltering under the province’s heavy connection to the U.S. economy,’ said Peter Hall, Vice-President of Economics and Chief Economist. ‘In 2009, while volumes are not expected to fully rebound, export revenues will get a slight boost from the weaker dollar.’

The motor vehicle sector accounts for approximately 37% of Ontario’s international exports. American light vehicle sales are forecast to remain below 13.5 million units over the next 18 months, and the resulting production cutbacks cause passenger car exports to drop 26% in 2008. Accordingly, exports of auto parts are forecast to decline 23% in 2008. In 2009, volume shipments of both cars and auto parts are forecast to increase by only 5%, but the value of these exports could increase moderately because of an expected weaker Canadian dollar. However, increased competition from international low-cost producers will curtail increases in auto parts producer prices.

The export outlook for industrial goods sector, which accounts for 30% of Ontario’s international export picture, is forecast to decrease by 7% and 4% in 2008 and 2009, respectively. The highly cyclical nature of the chemicals and plastics segment of this sector and weakness in metals manufacturing will be the main reasons for the decline. Global demand for metal ores remains solid thanks to non-U.S. export destinations such as the U.K., Norway and China.

Although the second half of 2008 and 2009 will clearly be a very tough period, the evolving global supply chain presents opportunities for Ontario exporters, particularly manufacturers of high value-added intermediary and final goods. Mexican light vehicle production has been rising steadily over the years and presents an opportunity to tap into for auto parts suppliers. Larger parts suppliers such as Magna and Linamar continue to seek out joint ventures in fast-growing emerging markets.

Canadian exports are forecast to grow by 2% in 2008 before declining 1% in 2009. Nationally, economic growth is expected to grow by 0.9% in 2008 with a slight upturn to 1.4% in 2009. Internationally, EDC is forecasting a 3.8% growth rate in 2008 and 3.3% 2009. EDC’s Global Export Forecast is available here.

Canada Signs Free-Trade Agreement With Colombia



(Video: PMO • Story: CTV News)

Canadian Prime Minister Stephen Harper and Colombian President Alvaro Uribe signed a free trade agreement between the two countries while at the Asia-Pacific Economic Cooperation meeting in Lima Friday.
The move was first announced in June, after less than a year of negotiations. The accord will make access to markets easier for the $1.14 billion in annual bilateral trade between the two countries.

“In a time of global economic instability free trade is more important than ever,” Harper said in a statement.

“By expanding our trading relationship with Colombia, we are not only opening up new opportunities for Canadian businesses in a foreign market, we are also helping one of South America’s most historic democracies improve the human rights and security situation in their country.” Read more here.

Friday, November 21, 2008

Inflation Rate Eases to 2.6%

(CBC News)

Canada’s annual inflation rate eased to 2.6% in October, down from the 12-month increase of 3.4% seen in September. October’s slowdown was primarily a result of slower price increases for gasoline, but prices for food exerted stronger upward pressure on consumer prices, Statistics Canada said Friday.

For the month of October alone, on a seasonally unadjusted basis, consumer prices fell one per cent from September to October, the largest drop since June 1959. The seasonally adjusted figure is a drop of 0.5%.

Gasoline prices were a big factor in both the 12-month inflation rate and the one-month rate. From October 2007 to October 2008, gasoline prices increased 13.3% – compared with a 12-month change of 26.5% in September. However, in October alone, gasoline prices fell 13.4%, as worries over a global economic downturn sent energy prices sharply lower.

The Bank of Canada’s core rate of inflation – which factors out several volatile components – advanced 1.7% over the 12 months to October, identical to the rate posted in the previous two periods.

The seasonally adjusted monthly core index posted no growth from September to October, after increasing 0.2% from August to September.The 12-month inflation rate seen for October was less than the 3.1% annual increase that economists had been expecting to see. The softer-than-expected inflation report is expected to mean the Bank of Canada will be clear to keep reducing interest rates without fear of inflationary pressures.

“Today’s report reinforces the point that Canadian inflation is melting in real time,” said BMO Capital Markets economist Douglas Porter. “With notable weakness in a variety of core components adding to the deep dive in gasoline, the Bank of Canada has the all-clear signal to continue cutting rates,” he said in a commentary.

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

Minister Day Highlights Successful Visit to Latin America

(FAITC)

The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today highlighted a successful foreign visit, his first in his new portfolio.

“We have had a full schedule, and have accomplished a great deal in a short time,” said Minister Day, following the conclusion of the 20th annual Asia-Pacific Economic Cooperation (APEC) Ministerial Meeting.

Minister Day travelled to São Paulo, Brazil, on November 17 and 18 before travelling to Lima, Peru, on November 19 to attend the APEC meeting.

While in Brazil, Minister Day and Sergio Machado Rezende, Brazil’s Minister of Science and Technology, signed the Canada-Brazil Agreement on Science, Technology and Innovation Cooperation. Minister Day also witnessed the signing of an agreement between Canadian Light Source Inc. and the Brazilian Association of Synchrotron Light Technology, operator of the Brazilian Synchrotron Light Laboratory. The agreement will benefit both countries by developing one of the most valuable scientific tools for the investigation of new materials, biomedical samples, and biological and chemical processes.

At the APEC Ministerial Meeting, Minister Day underlined the importance of liberalizing and encouraging trade and investment, as set out in the Meeting’s agenda. Along with this program, Canada is also fully supportive of further reducing “behind-the-border” barriers.

Minister Day also addressed Canadian business leaders during his trip and underscored the importance of international cooperation during difficult economic times.

While in Peru, Minister Day is meeting with several of his counterparts, including those from the United States, Mexico, Australia, South Korea and New Zealand, to reiterate the importance of bilateral cooperation, as well as open trade and investment. He is also meeting with Peruvian Trade Minister Mercedes Aráoz Fernández to discuss next steps for the Canada-Peru Free Trade Agreement, as well as other issues, such as corporate social responsibility.

“Canada is a major player in the international extractive sector, and our companies have significant investments and operations in many regions around the world, including Peru,” said Minister Day. “Canadian companies realize that a commitment to corporate social responsibility is a commitment to their own success.”

APEC, which has 21 members, is the most important forum for economic cooperation in the Asia-Pacific region. Its members account for 54% of world GDP, 41% of world population and 42% of global merchandise trade. It brings together four of Canada’s top five trading partners, from both sides of the Pacific, and works to facilitate trade and investment in the region.

Canadian Corporations’ Pre-Crisis Profits Eclipse $77b in Q3

(The Canadian Press)

The economy may be in crisis but you’d never know it by third-quarter profits posted by Canadian corporations. Statistics Canada says Canadian corporations earned $77.3 billion in operating profits in the third quarter of 2008, 7.6% more than in from the second quarter.

The credit crunch and world financial crisis set in after quarterly profits in the non-financial sector grew 9.1% to $58.1 billion, while those in the financial sector increased 3.3% to $19.2 billion.

The agency attributes the results to the strong performance by oil-and-gas extractors and petroleum and coal manufacturers, and improved margins for other industry groups despite modest revenue growth.

Revenue growth slowed in the third quarter, but coupled with lower increases in expenses, the agency reports profits came in higher for 13 of 22 industry groups. Oil-and-gas extractors and petroleum and coal manufacturers led the way, earning $11.2 billion in operating profits, up 15.1%, as prices soared.

Summary statistics and a link to the data file are on the Statistics Canada website.
(International Herald Tribune – James Kanter)

European Union governments agreed Thursday to overhaul the way the trade bloc distributes tens of billions of euros in subsidies to farmers. But some said the measures did not go far enough and risked skewing markets.

The measures, which cover the period from now to 2013, are aimed at revamping a decades-old system in which farmers automatically earned money for farm products whether there was market demand or not. That system has been attacked at the World Trade Organization for making Europe less likely to import more competitive farm products from outside the bloc.

The measures represent the biggest reform of European farming policy in five years.

Even so, critics said the measures, which were hashed out Thursday morning after all-night talks in Brussels, were only a partial shift in policy rather than a wholesale reform of the €43 billion subsidy system.

“I regret what has been conceded in order to secure a deal which will lead to some new distortions in the short term,” said the British environment secretary, Hilary Benn. “We want to see further changes for the benefit of farmers, consumers and the environment and will continue to press for this.”

The Common Agricultural Policy absorbs more than 40% of the annual EU budget of more than €100 billion, or $125 billion, although the bloc’s 13 million farmers represent only about 3% of its population. Read the rest here.

Thursday, November 20, 2008

Japan’s Exports Fell the Most in Almost Seven Years



(Video: Associated Press • Story: Bloomberg)

Japan’s exports declined at the fastest pace in almost seven years in October as the intensifying global financial crisis stifled sales of cars and electronics.

Exports, the main engine of Japan’s economic growth in the past six years, fell 7.7% from a year earlier, the biggest drop since December 2001, the Finance Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted an 8% drop.

The Nikkei 225 Stock Average dropped 4.1% on concern exporters’ profits will deteriorate as the global slowdown spreads to Asia, where Japan’s shipments dropped last month for the first time in six years. Automakers Isuzu Motors Ltd. and Hino Motors Ltd. said today they plan to cut output in response to weaker overseas sales.

“We’re in store for even more depressing export news,” said Kyohei Morita, chief Japan economist at Barclays Capital in Tokyo. “Exports will heavily weigh on Japan’s economy as the impact of the global financial crisis deepens.”

The yen traded at 95.72 per dollar at 12:16 p.m. in Tokyo from 95.88 before the report was published. Japan’s currency has advanced 9.2% since September, eroding exporters’ earnings. Read the rest here.

Speech from the Throne: Expanding Investment & Trade

(Government of Canada)

Canada’s prosperity depends not just on meeting the challenges of today, but on building the dynamic economy that will create opportunities and better jobs for Canadians in the future. As one of our greatest hockey legends has observed, we need “to skate to where the puck is going to be, not to where it has been.”

Building a more dynamic economy will require new ideas and new investment. Our Government understands that advances in science and technology are essential to strengthen the competitiveness of Canada’s economy. Our Government will start at home, working with industry to apply the best Canadian scientific and technological know-how to create innovative business solutions. It will invest in new world-class research facilities.

Our Government will also expand the opportunities for Canadian firms to benefit from foreign investment and knowledge, while taking steps to safeguard consumers and our national security. Our Government will proceed with legislation to modernize our competition and investment laws, implementing many of the recommendations of the Competition Policy Review Panel.

Cultural creativity and innovation are vital not only to a lively Canadian cultural life, but also to Canada’s economic future. Our Government will proceed with legislation to modernize Canada’s copyright laws and ensure stronger protection for intellectual property.

Both investment and trade matter to Canada’s prosperity. Our Government is committed to seeking out new opportunities for Canadians and to promoting global prosperity through free trade. It will work with the new administration in the United States in addressing shared challenges, especially during the current economic downturn, and seek opportunities to enhance North American competitiveness. New trade agreements will be pursued in Asia and the Americas, as well as with the European Union, to open markets for Canadian firms. Our Government will proceed with legislation to ratify the results of trade negotiations that have been concluded with the European Free Trade Association, Peru, Colombia and Jordan.

Our Government will continue to invest in expanding gateways on our Atlantic and Pacific coasts, and in vital border corridors such as the Detroit River International Crossing, to ensure that Canadian goods and services can reach markets in Europe, Asia and the United States.

Better positioning Canada to compete for investment and market opportunities will require action at home. A fragmented regulatory environment for internal trade and commerce has for too long restricted the flow of labour and investment across the country. Our Government will work with the provinces to remove barriers to internal trade, investment and labour mobility by 2010.

Links to additional themes, and the full speech, are here. The Official Opposition response can be found here.

‘Modest’ Deficits Predicted for Next 3 Years: Budget Officer

(CBC News)

Canada is unlikely to avoid the effects of an expected global recession and faces the possibility of a deficit for the next three budgets, says a report by Canada’s independent parliamentary budget officer.

Kevin Page gave the sobering outlook on Thursday morning in his first fiscal and economic assessment of the country. “While the year-to-date fiscal results, as well as all of our projection scenarios, suggest a modest surplus in 2008-09, it will be some time before the implications for revenues of the recent financial market turmoil are known,” the report says. “As a result, a deficit for this fiscal year is a distinct possibility.”

The report also projects “modest deficits” of $3.9 billion in 2009-10 and $1.4 billion in 2010-11, with a return to modest surpluses of $1.6 billion in 2011-12 and $3 billion in 2012-13.

The parliamentary budget office’s analysis is based on current government plans, assuming there are no major fiscal policy changes.

Page briefed members of Parliament behind closed doors about his report on recent economic developments, employment trends, federal expenditure and taxing decisions before releasing it to the public.

Page and his staff spent the last couple of months crunching numbers and consulting with 18 different private sector financial institutions and watchers, looking for what they are calling the “consensus” view of the economy. They then conducted their own analysis. The goal was to provide parliamentarians with an assessment of the economy from non-politicians.

The report comes a week before Finance Minister Jim Flaherty delivers the government’s economic update. It also comes a day after the government delivered a throne speech suggesting the country may have to run a deficit.

The parliamentary budget officer is a new post, first promised by the Tories in their 2006 election platform to provide an “independent” source of information to MPs on economic policy.

Obama Picks Napolitano as Homeland Security Secretary

(HS Today – Mickey McCarter)

Arizona governor brings border security, immigration experience Arizona Gov. Janet Napolitano may become the next secretary of homeland security, according to various news reports.

The transition team of president-elect Barack Obama is vetting the governor for the position, Democratic sources say, after which she would undergo confirmation by the U.S. Senate if she accepts the job.

Napolitano leads a border state that has received its share of national attention in the past several years. A stretch of the border near Tucscon has served as the initial site for the Secure Border Initiative-Network (SBInet), which has drawn considerable attention to border security efforts in her state.

The governor has sometimes supported initiatives by the U.S. Department of Homeland Security and sometimes opposed them. In July 2007, she signed a state law requiring employers in Arizona to use the E-Verify employment eligibility verification system to ensure none of their employees were illegal immigrants. But in June 2008, she agreed to solidify Arizona’s stance against the REAL ID Act, which requires all states to upgrade their driver’s licenses to include biometric measures that make them more secure. Read more here.

NAFTA Trade Rose 4.5% in 2007

(Transport Topics)

Trade among the United States, Canada and Mexico set a record in gaining 4.5% in 2007 from a year earlier, the Department of Transportation said Wednesday. Trade among the North American Free Trade Agreement partners topped $909 billion for the year, as freight weighing nearly 606 million tons was transported through U.S. land borders, airports, and seaports to and from Canada and Mexico.

Truck trade – by far the largest modal component – rose to $555 billion, from $534 billion in 2006, DOT said. Rail trade rose to $138 billion from $129 billion year-over-year, while air, pipeline, and water transport rose incrementally at lower levels.

The value of freight shipments among the three grew at an average annual rate of 8.5% per year between 2002 and 2007. U.S. freight shipments with Mexico rose 8.4% annually, while trade with Canada grew 8.6% per year.

About 90% of U.S. trade among NAFTA partners moves by land.

2009 Customs Tariff in MS Access: CBSA

(CBSA)

A downloadable Microsoft Access version of the 2009 Customs Tariff is available on the CBSA website here (zip file).

New HTS Online Reference Tool: CBP

(CBP)

At the September TSN, the ITC demonstrated their new HTS Online Reference Tool. The USITC is happy to announce that the new HTS Online Reference Tool now available online for preview viewing at here.

This new reference tool allows users to jump from an item to the related chapter 99 item showing temporary and seasonal rates when needed. It links to Customs Classification Rulings at the 10-digit level so users can see that directly, as well as trade data on the item. It allows searches, including by CAS numbers. It has a thesaurus feature which allows searches by modern terms for products.

You are invited to try out the HTS Online Reference Tool. The ITC is interested in your impressions. Please send comments or suggestions to David.lundy@usitc.gov.

Wednesday, November 19, 2008

Foreign Affairs Issues to Watch this Session

(Embassy – Jeff Davis & Lee Berthiaume)

Since becoming the government in 2006, the Conservatives have pushed an aggressive free trade agenda, which is expected to increase with the death of Doha a few months ago. However, there have been questions about the government’s choice of partners for talks.

Over the past two-and-a-half years, negotiations with Jordan, Peru, Colombia, Panama, the Caribbean Community and the Dominican Republic were launched or are waiting to be started. The majority of these, including Jordan and Colombia, were widely regarded as more politically motivated then being of great economic benefit to Canada. Colombia in particular prompted sharp criticism from opposition parties and civil society groups.

The government did manage to conclude talks with Jordan, Peru, the European Free Trade Association – composed of Iceland, Norway, Switzerland, and Liechtenstein – and Colombia before Parliament broke for the summer and election.

However, only the EFTA deal has made its way through Parliament, and even then, implementing legislation will have to be introduced and passed before the agreement comes into effect.

While the majority of these deals will pass uncontested, parliamentarians will likely try to throw some stumbling blocks at the government to stop the Colombia deal. And if the government doesn’t act to start making the EFTA agreement law soon, there could be grumbling coming from the Europeans.

Also on the trade front is the new Canada-European Union Trade and Investment Enhancement Agreement, launched just weeks ago at the Canada-EU Summit in Quebec city. This new deal, certainly still in its infancy and years from completion, has not yet been debated in the House and could come up for a great deal of discussion this session.


Also on the books are several negotiations that have stretched on for years. Canada and South Korea are still far apart because of auto and beef industry concerns, while the Canada-Singapore and Canada-Central America Four deals are stalled.


In terms of new deals, the government has not yet signalled its next target, though it has pledged to move forcefully. It will also be a strong advocate for increased trade liberalization at a time when the world is looking to hunker down. Still, Canada seems to have an easier time talking trade deals than finishing talks, especially when it comes to difficult negotiations.


One question mark is Canada’s new trade minister. While David Emerson had a solid background in business and was said to be the main influence behind shaping Canada’s trade and investment policies, Stockwell Day is a relatively unknown quantity on the file. With a new administration south of the border, Mr. Day has perhaps been put in this position for the solid American connections he made during his time as minister of public safety.


But under Mr. Emerson, Canada identified India, China and other emerging economies as major priorities and moved its resources away from Europe and Africa in favour of Latin America and Asia. Will this trend continue? Read the complete article.

First RFID Technology Upgrades Complete: CBP

(CBP)

U.S. Customs and Border Protection announced that technology upgrades are complete at the Pacific Highway and Peace Arch border crossings with Canada, and at the Mariposa and DeConcini ports of entry in Nogales, Ariz. These locations mark the start for new Radio Frequency Identification technology deployments at 354 vehicle primary lanes in northern and southern border ports that account for 95% of all cross-border travel into the U.S.

“We are very pleased to announce our first vicinity RFID-enabled land ports of entry, and we thank the border communities for their patience during construction,” said Assistant Commissioner Field Operations Thomas Winkowski. “The option of using an RFID-enabled travel document offers more efficient processing for travelers while meeting CBP’s goal of securing the borders.”

The upgrades, which include new software, hardware, and the deployment of vicinity RFID technology, are being implemented as part of the Western Hemisphere Travel Initiative. WHTI, a plan to implement the statutory mandates of the Intelligence Reform and Terrorism Prevention Act of 2004 and a 9/11 Commission recommendation, requires U.S. and Canadian citizens to present secure documentation that confirms identity and citizenship when entering or re-entering the United States from within the Western Hemisphere. WHTI will be implemented on June 1, 2009 at land and seaports.

The technology works in tandem with new vicinity RFID-enabled documents, designed for use at our nation’s land and sea ports of entry. These documents include State Department-issued passport cards, CBP’s trusted traveler program (NEXUS, SENTRI and FAST) cards, and enhanced driver’s licenses that are currently available in Washington and New York State. When read by CBP, an RFID chip embedded in these documents transmits a unique number to a secure database as the traveler’s vehicle approaches the border, enabling CBP officers to verify the traveler’s identity and citizenship more quickly than ever. No personally identifiable information is stored on the chip or transmitted when the RFID chip is read. Facilitative technologies, such as RFID, provide CBP officers the ability to remain more attentive and vigilant during the inspection process, focusing more time and attention on travelers, with less time spent performing manual data entry queries.

CBP encourages individuals to apply for the new high-tech documents now to ensure that they have appropriate travel documents when WHTI goes into effect on June 1, 2009. Travelers can go to the Western Hemisphere Travel Initiative Web site (http://www.GetYouHome.gov) for more information.

Tuesday, November 18, 2008

CBP Conducts Second Round of C-TPAT Validations in China

(CBP)

China, United States cooperation continues to validate 15 C-TPAT companies

U.S. Customs and Border Protection and China Customs concluded a second round of joint supply chain security validation visits this week.

Supply chain specialists assigned to the Customs Trade Partnership Against Terrorism Program supported this effort which involved validating 15 C-TPAT companies and their manufacturing facilities located in China. China Customs officials conducted the validations with the support of C-TPAT specialists. This effort follows on several joint validations conducted with China Customs in March of this year.

Prior to commencing the joint validations, CBP met with China Customs counterparts to provide technical assistance regarding supply chain security procedures and to share experiences and best practices regarding conducting supply chain security evaluations.

According to C-TPAT Director Bradd Skinner, “This second round of joint validation visits is an important accomplishment and an indication of our increased working relationship with China Customs to secure international commerce.” Mr. Skinner also added that “This effort will increase the level of security of importations into the United States as well as lead to fewer exams which will benefit C-TPAT importers and their business partners in China. We look forward to continuing this important bi-lateral cooperation next year.”
(CBP)

CBP has developed a new brochure (4 pages PDF) to generally explain the benefits of C-TPAT for members and non-members.

Europe and U.S. Move Toward Cooperation with China on Product Safety

(International Herald Tribune – Stephen Castle)

The European Union and the United States on Monday sought to bind China into international controls on product safety when the three trading partners discussed consumer scares ranging from contaminated Chinese milk to dangerous toys.

At a meeting in Brussels, Beijing officials signed a new agreement with the EU promising to strengthen the exchange of information over faulty products, improve the ability to trace dangerous goods, and increase cooperation in taking them out of circulation.

Meglena Kuneva, the EU consumer protection commissioner, said the accord “provides for more transparency, better monitoring and new possibilities for joint surveillance.” …Read the complete article here.

Commodity Boom, Plummeting Import Prices Drive Canadian Income Gains

(CEP News – Sean McKibbon)

As commodity prices rose and import prices fell between 2003 and 2007, Canada saw unprecedented, countrywide gains in purchasing power, a new report from Statistics Canada says.

“During this five-year period, real gross domestic income (GDI) per capita in Canada, increased at an annual average rate of 2.9%. At the same time, real gross domestic product (GDP) per capita rose at an annual average rate of 1.7%,” the statistical agency reported Tuesday. Every province except Prince Edward Island and Ontario saw GDI gains outstrip GDP growth.

“The combination of falling import prices and rising commodity export prices led to a widespread sharing of benefits from terms of trade improvements across Canada, something that had not occurred in the last 25 years,” the report said.

For most provinces, the decline in import prices was more of a contributor to terms of trade improvements than the increase in export prices, Statistics Canada said. Canadian import prices dropped on average 2.6% per year in the period, while export prices rose about 1% per year.

In Ontario, export prices fell more slowly than import prices. Prince Edward Island’s terms of trade worsened as export prices fell and import prices grew.

Quebec, Manitoba, Alberta and British Columbia saw export prices rise, while import prices fell. In Newfoundland and Labrador, Nova Scotia, New Brunswick and Saskatchewan, export prices grew faster than import prices, leading to terms of trade improvements, Statistics Canada said.

“While individual provinces experienced differing import and export price changes, the impact has generally been the same, improved terms of trade. In the case of Newfoundland and Labrador, the terms of trade driven trading gain accounted for 5.6 percentage points of the 9.5% average annual growth in real GDI per capita from 2003 to 2007,” Statistics Canada reported.

The report sounds a warning note, saying that although swift declines in oil prices hurt oil-producing provinces, that deterioration was offset by terms of trade improvements in oil importing provinces. But in this most recent commodities boom, trading gains were an important source of real income growth for most provinces, Statistics Canada said.

Commodities dominated the exports of a number of provinces. On average, from 2003 to 2007, energy products in Newfoundland and Labrador accounted for 69.4% of exports by value. Prince Edward Island’s agriculture and fishing products accounted for 68% of its exports. In Alberta, energy commodities accounted for 69% of exports, while, in British Columbia, 40.5% of exports were forestry products.

[The research paper The resource boom: Impacts on provincial purchasing power is available in the Insights on the Canadian Economy Research Paper Series (11-624-MIE2008021, free) on the Statistics Canada website.]

Monday, November 17, 2008

Government of Canada Holds Employment Insurance Premium Rate at Lowest Level in 15 Years

(Finance Canada)

The Honourable Jim Flaherty, Minister of Finance, and the Honourable Diane Finley, Minister of Human Resources and Skills Development, today welcomed the Canada Employment Insurance Commission’s decision to hold the Employment Insurance (EI) premium rate for 2009 unchanged at $1.73, its lowest level in 15 years.

In considering the rate decision, Minister Finley said: “Our Government will ensure that the program continues to be there for Canadian workers when they need it. We will also act on our commitment to improve the governance and management of the EI Account.”

The Chief Actuary has calculated the maximum insurable earnings (MIE) for 2009 as being $42,300, up from $41,100 in 2008. The MIE is the income level up to which earnings are insured and on which premiums are paid by employees and employers. This in turn determines the maximum weekly EI benefits. The MIE is calculated according to a formula set out in the Employment Insurance Act that indexes the MIE to growth in the average industrial wage.

Employers pay 1.4 times the employee rate. The 2009 EI premium rate for Quebec will be $1.38. This is lower than in the rest of Canada because Quebec finances its own parental benefits.

To learn more about the EI program, please visit the Human Resources and Skills Development Canada websote.

Border Guards Find Gun Training Tough

(Richard Brennan — Toronto Star)

Canada’s border guards have been struggling to meet firearms training requirements, with 12 per cent failing the three-week certification course on the first try, according to internal government documents.

Their union complains the course is compressed into too short a time period, and that the RCMP-based standards are more stringent than those of other police forces across the country, say documents obtained by the Toronto Star through the federal Access to Information law.

“You have to appreciate the fact when (RCMP) recruits go to Depot in Regina, they are there for 16 weeks and that the training they receive for firearms is spread out,” Ron Moran, president of the Customs Excise Union, told the Star yesterday.

Moran said that compares with three weeks of training for border guards, many of whom have never held a gun in their lives.

The training course requires proficiency with a firearm at 25 metres, whereas the distance is 15 metres for other police forces across the country, Moran said.

A Canada Border Services Agency spokesperson said the training standards are set high to ensure the safety of the agency’s staff and the public.

“Candidates are allowed two attempts to pass the course,” Tracie LeBlanc noted by email. “Participants who do not successfully complete the duty firearm course on their first attempt receive feedback and guidance to help them prepare for their next qualification attempt.”

In a controversial move, the Conservative government announced $101 million to be spent over two years in its 2006 budget to begin arming Canada’s 4,800 border guards. The process is expected to take 10 years to complete at an estimated cost of $1 billion.

While the failure rate for the training program was about one in four when the program first started, it is now down to about 12 per cent, compared with a 2 per cent failure rate at the Ontario Police College, the Canada Border Services Agency documents show. Read the complete article.

“Boring” Canada’s Financial Tips for the World

(Department of Finance)

The following guest column by the Honourable Jim Flaherty, Minister of Finance, appeared in today’s Financial Times. In it, Minister Flaherty outlines Canada’s five-point plan to restore stability to the international financial system.

“The financial crisis that began 14 months ago in the US has intensified and spread around the world, threatening to roll back economic progress that has been made over the past two decades. Governments have been responding in a co-ordinated fashion and will continue this work in the lead-up to the summit of the Group of 20 leading economies.

“Few countries are as dependent on trade or as integrated into the global financial system as Canada. Yet our financial sector continues to weather the turbulence better than many other countries. This did not happen by chance. Canadians by nature are prudent and our financial system has been characterised as unexciting. Canada’s regulatory regime ensures that stability and efficiency are balanced. As a result, Canadian taxpayers have not had their money put at risk in response to this crisis. If Canada’s financial system is boring, perhaps the world needs to be more like Canada.

“Before we examine grand designs for global regulatory regimes, we need to recognise that good regulation begins at home. Effective national regulatory regimes could have prevented this crisis and must be our first line of defence against any future one. We all need to draw lessons from those systems that worked well and apply them to our national regulatory regimes.

“First, we need to regulate all pools of capital that rely on leverage. The crisis has demonstrated the devastating impact that unregulated entities can have. Transparency requirements must be the price of admission to global markets. Different financial services may have different regulatory requirements, but we need to bring them all under a regulatory umbrella.

“Second, capital and liquidity buffers need to be large enough to handle big shocks. Moreover, regulators must restrain overall use of leverage. Some have criticised high Canadian capital requirements for banks as being too conservative. But the strong balance sheets of Canada’s banks through this period speak for themselves.

“Third, it is not enough for regulation to look at individual institutions. It needs to look at the system as a whole. Risks that may appear sensible in isolation can be unsustainable from a systemic perspective. This systemic vantage point must be used to mitigate any tendency to underestimate risk when times are good. This requires co-ordination across the government, central bank and regulatory agencies.

“Fourth, we need to make market infrastructure more transparent and resilient. Non-transparent over-the-counter trades and naked short-selling reduced the stability of the system.

“This crisis has demonstrated that even countries with strong financial systems can feel the effects of inadequate regulatory regimes elsewhere. Countries may hesitate to impose new requirements on their own institutions if these measures will create a competitive disadvantage. This points to the importance of the fifth step: strengthening international co-ordination, review and surveillance to create a better second line of defence. Canada was a pioneer of the joint International Monetary Fund-World Bank financial sector assessment program. This independent review of domestic financial systems should be mandatory and public. We need to strengthen the role of international colleges of supervisors to ensure better understanding of systemic risks and to co-ordinate national actions. We need IMF surveillance with teeth. Countries must live up to their responsibilities to support global financial stability and growth. Nowhere is this more important than in correcting global imbalances through appropriate exchange rate and macroeconomic policies to support growth.

“The process of how we make decisions is equally important. In two decades of unprecedented growth, we have seen the emergence of dynamic new economic players that must be full participants at the global table. Canada took one of the largest share cuts of any country in the recent IMF reform exercise to ensure that emerging economies are better represented. This broader range of voices must be heard in other venues such as the Financial Stability Forum.

“Together, these reforms must ensure that incentives are aligned to support stability and that resilience is built into the financial system.

“The open market system did not fail in this crisis. However, some forgot Adam Smith’s maxim that the invisible hand needs to be supported by an appropriate legal and regulatory framework. We need to work together to strengthen those frameworks, and that work must begin at home.”

Enhanced Driver’s Licence or National Identity Card?

(Andrew Clement & Colin Bennett — Toronto Star)

In the name of thrift and convenience, Canadian governments are opening the door to a privacy-threatening ID scheme imposed by the United States in the misguided pursuit of “secure” borders. Currently, the Ontario government is pushing through legislation – Bill 85, the Photo Card Act – that would “enhance” the provincial driver’s licence to meet U.S. demands.

As part of the Bush administration’s war on terror, Canadians entering the U.S. will soon need to show a passport or equivalent document in compliance with the Western Hemisphere Travel Initiative. The U.S. has already put this requirement into effect for air travel and in June 2009 it will cover all land and water crossings.

In anticipation of this and to facilitate “the efficient and secure flow of cross-border travel and commerce,” several Canadian provinces are instituting enhanced driver’s licences (EDL). Enhancing a licence in accordance with standards set by the U.S. Department of Homeland Security involves including a citizenship indicator, an optical character recognition zone and a radio-frequency identification (RFID) chip.

With these features, an EDL can serve as an alternative to a Canadian passport at an American border. Promoted as cheaper and more convenient than a passport, such a licence initially appear to be a good deal. A closer examination reveals several flaws with this approach.

One of the most serious problems with EDLs is the requirement to adopt a particularly insecure form of chip – the EPC Gen 2. Over stiff opposition from the “smart card” industry as well as civil liberties organizations, Homeland Security has insisted on a type of chip that is notoriously privacy-invasive in its potential. The chip on the card will hold a unique personal identification number that anyone in the vicinity (at least 10 metres) can read with commercially available equipment and link to any other information the person may have about the card holder.

It is ironic that while some jurisdictions require the disabling of similar RFIDs in consumer items at point of purchase, there appears to be no effective way for individuals to do likewise with a card many will carry all the time. There has been no visible progress in developing less invasive features, such as a switch that would allow cardholders to turn the chip off until they want it read, or the option to request an EDL without a chip and only the optical character zone for machine reading. Read the rest here.

Sunday, November 16, 2008

Auto Industry Divided Over Specifics of Aid, But Agrees Canada Needs to Help

(The Canadian Press)

As North American auto manufacturers plead with governments for even a fraction of the help they’ve given the foundering financial sector, industry players and analysts are divided over what form any potential aid should take.

But there is widespread agreement that Canada can’t ignore the issue or it runs the risk of being shut out of talks between the Big Three automakers and the U.S. government, leading to further job losses in this country.

“I think the Canadian government needs to be at the table now so it doesn’t get excluded, so it can have some impact on the outcome,” said Bill Pochiluk, president of West Chester, Pa.-based AutomotiveCompass.

“The costs of not helping are enormous.”

North American automakers - including Ford, General Motors and Chrysler - are reeling from the combined effects of slumping U.S. demand for their products and frozen credit markets.

The Detroit Three have said they need loan guarantees to help tide over the sector until demand in the U.S. recovers for North American-produced vehicles.

On Friday, Federal Industry Minister Tony Clement said he was investigating the possibility of a joint Canada-U.S. bailout of North America’s ailing auto industry.

The Ontario MP, newly named to an economic portfolio, said he’ll be on what he called a fact-finding mission this week to Detroit and Washington and a common cross-border aid package is on the table.

No decisions have been made about a joint effort with the U.S. to help automakers, Clement said Sunday on CTV’s “Question Period.”

“Car sales in Canada are still going up and up, but of course when 90 per cent of what you assemble gets exported to the United States, we are prey to trends that are very obvious in the U.S.A. right now,” he said.

“I think it’s prudent of me just to, in the first instance, get a sense of what is going on in the United States, what are they proposing for the American Congress, and then obviously that will be part, not the whole part, but part of what we can consider as the situation here in Canada.”

In Canada, the federal Conservatives have long rejected direct intervention in the auto sector, but Finance Minister Jim Flaherty said recently he may be willing to invest what he calls “transformational money” in auto plants with viable prospects. Read the complete article here.

Saturday, November 15, 2008

Harper Says G20 Declaration Should Give ‘Hope’

(Video: Associated Press • Story: CTV News)



Prime Minister Stephen Harper is optimistic that members of the G20 have made a plan of attack for the struggling global economy that will give ‘hope’ to people worldwide.

“The declaration should give us all hope, and I would hope it would give the markets some reassurance,” the prime minister said at a news conference in Washington on Saturday.

The leaders of the world’s largest 20 economies met in Washington this weekend to discuss the world financial crisis. On Saturday, they issued a declaration outlining the steps they intend to take to get the global economy back on track.

Some of their agreed-upon resolutions included:

• developing government spending plans to stimulate the economy;

• having more open and better-monitored financial markets;

• developing an early warning system to detect and prevent future economic crises;

• establishing a college of supervisors, to be made up of financial regulators from around the world; and,

• increased liquidity to developing countries who need credit to ensure financial growth.

Harper said there was “a nearly unanimous accord” on the major subjects among the G20 leaders, and that Canada would do its part in upholding its responsibilities in the agreed-upon resolutions. Read the complete article.

Oil – A Vacation From U.S. $100/barrel… For Now

(Carter Group — ScotiaMcLeod)

With Europe, Asia and Japan assumed to be in a synchronized recession for the first time in 60 years, the forecasts for demand of crude oil are literally changing by the minute. These revisions though are entirely focussed on the next year and not the next decade. The myopic view of traders and speculators being what it is, the entire global energy market is being deeply discounted. Wholesale gasoline prices in New York have collapsed by 60% from early September’s record setting prices. Crude oil is less than half of what it was in July and energy stocks as a group have roughly taken the same kind of dramatic haircut.

Given the precipitous drop in prices and the ongoing challenges facing corporate borrowers, we can’t help but wonder how many of the expansion and exploration projects currently in the works will soon be shelved as oil companies adopt a more cautious approach to planned expenditures. These days the markets are swiftly punishing large corporations that follow-thru with takeovers or expensive projects on the books (witness the flogging of Teck Cominco’s shares recently). The expected return on any big oil company’s infrastructure investment looks remarkably different with $60/barrel oil rather than $100/barrel oil. Using Steven Forbes $35/barrel estimate, most infrastructure investments would seem guaranteed money-losers.

Although you wouldn’t know it by looking at this week’s market prices for crude oil, the global energy supply crunch has not gone away. This is an important factor for any investor willing to look beyond the next 12 months. The International Energy Agency was doing its best to deliver a wake-up call during this week’s World Energy Outlook from London, but it doesn’t seem to be finding much luck with getting policy makers to listen (or care).

Canadian Border Sales Show Slight Decrease

(Andrew Pentol — DFNI Online)

Year-on-year sales at Canadian border stores registered a small decrease in the month of August, with sales falling in the Ontario and Prairies regions

Canada’s border store retailers recorded a slight decrease in trading results during August 2008, according to the Canadian Border Services Agency. Year-on-year sales decreased by 1.4% to C$19.1m ($15.6m) and regional sales decreases were also registered at Ontario and Prairies provinces.

The Frontier Duty Free Association (FDFA), which represents Canadian border store operators, attributed the decrease in sales to congestion at land border crossings with the US as a result of tighter security checks, confusion over identification requirements, high petrol prices, the effects of the global economic downturn in the US and the decline of traveller numbers from the US to Canada. Read more here.

Canada’s Trade Surplus Shrinks by $1.1 Billion in September

(StatsCan via Exchange Market Post)

Canada’s trade surplus with the world decreased to $4.5 billion in September from $5.6 billion in August, as exports declined and imports rose. This marks the lowest trade surplus since January 2008.

Canadian exports declined for the second consecutive month, dropping 1.0% to $42.5 billion. The movement was isolated to a drop in prices as volumes remained flat. The retreat was led by industrial goods and materials, automotive products, and energy products.

Canada’s imports increased 1.9% in September to $38.0 billion, as both prices and volumes increased. September’s gain marked the fifth increase in six months following a 5.7% decline in August.

Exports to the United States declined for the second consecutive month as imports remained relatively unchanged at $23.7 billion. Exports fell 1.3% to $32.1 billion, largely due to energy products and automotive products. As a result, the trade surplus with the United States contracted to $8.3 billion in September from $8.7 billion in August.
Exports to countries other than the United States remained flat at $10.4 billion, while imports from these countries collectively increased 5.5%. Consequently, Canada’s trade deficit with countries other than the United States expanded to $3.8 billion in September from $3.1 billion in August.

Widespread price declines push export values down

Exports of industrial goods and materials fell for the second consecutive month, decreasing 1.9% to $9.9 billion, as a result of declining prices as volumes edged up. This was the first export price drop in 2008 for a sector that has experienced high commodity prices. Reduced exports to Japan and the United States pushed copper down.

Exports of automotive products fell 3.4% to $5.1 billion, the eighth decline in 12 months. The fall in exports was driven by volume as prices have been on the rise since March 2008. A production plant shutdown and low vehicle sales in the United States were two of the main factors leading to lower exports of trucks and passenger autos in September. Read more here.

Friday, November 14, 2008

DHS Announces Security Standards for Rail Systems

(Department of Homeland Security)

The U.S. Department of Homeland Security (DHS) announced today [Thursday] regulations aimed at strengthening the security of the nation’s freight and passenger rail systems and reducing the risk associated with the transportation of security-sensitive materials.

“By striking a sensible balance of security guidelines with certain regulatory requirements, we’re enabling the rail and chemical industries to be stronger partners,” said Homeland Security Secretary Michael Chertoff. “The results are sound security measures without excessively burdening owners and operators.”

The Rail Security final rule will require freight and passenger rail carriers to designate rail security coordinators and report significant security concerns to the Transportation Security Administration (TSA). The rule also will codify TSA’s broad inspection authority. For freight rail, the rule will ensure the positive handoff of security-sensitive materials as well as establish security protocols for custody transfers of security-sensitive material rail cars between receivers of these materials that are located in high threat urban areas, shippers of these materials, and rail carriers.

To raise the level of security in the freight rail transportation sector ahead of the final rule, both TSA and the U.S. Department of Transportation (DOT) developed security action items, along with the freight rail industry, to reduce the risk associated with the transportation of Poisonous by Inhalation (PIH) materials. These measures have resulted in an overall risk reduction of more than 60 percent, well above the target reduction of 50 percent. PIH materials are potentially harmful and include essential chemicals like chlorine and anhydrous ammonia. PIH materials represent less than one percent of all hazardous materials rail shipments.The freight rail provisions of the rule will address the transport of security-sensitive materials by rail, from start to finish, including shipment handoffs, secure areas for transfers, and reporting of shipment locations to TSA.

The Rail Security final rule has been sent to the Federal Register for publication and is currently available at the TSA website.

All Chinese Food Imports Containing Dairy Held Up at U.S. Border

(Washington Post)

The Food and Drug Administration has begun stopping imports of Chinese dairy and dairy-based products from entering the country in an effort to keep out food contaminated with the industrial chemical melamine.

Melamine is the chemical at the heart of the Chinese infant formula scandal that has killed at least two infants and sickened more than 50,000. Scraps of melamine, which is used to make plastic and fertilizer, were added to milk as a way of boosting the milk's protein content in order to pass quality tests. The same thing was done with wheat gluten, which was then used to make pet food and sparked a wave of recalls last year after thousands of pets died.

FDA officials, who had been spot checking markets for melamine-tainted foods and recalling select products, said they expanded their import advisory in part because of intelligence from overseas counterparts.

No need to panic and throw out all the food in your house that is made with milk powder, at least not yet.

Under the hold and test policy initiated Thursday, FDA stops products at the border, then requires the importer to test it and prove it doesn't have melamine before allowing it to be distributed

You can read the full import alert here.

U.S. Department of Commerce Preliminarily Finds Dumping of Citric Acid and Citrate Salts from China and Canada

(Flex-News)

The U.S. Department of Commerce today [Thursday] announced its affirmative preliminary determinations in the antidumping investigations of citric acid and certain citrate salts from China and Canada.

Commerce preliminarily determined that Chinese and Canadian exporters have sold citric acid and citrate salts in the United States at 119.41%, 156.87%, and 20.88% below normal value, respectively. Citric acid and citrate salts are used in various food and beverage products including carbonated and non-carbonated drinks, and frozen foods, as well as laundry detergents and household cleaning products.

“Ensuring the economic competitiveness of the United States is especially critical for our manufacturers,” said Assistant Secretary for Import Administration David Spooner. “The Administration will continue to aggressively enforce our antidumping laws and implement appropriate remedies based on the facts presented in each case.”

Read the complete article.

Air Freight in Canada

(MarketWatch)

Research and Markets has announced the addition of the "Air Freight in Canada" report to their offering.

The Air Freight in Canada industry profile is an essential resource for top-level data and analysis covering the air freight industry. It includes detailed data on market size and segmentation, plus textual and graphical analysis of the key trends and competitive landscape, leading companies and demographic information.

Scope

• Contains an executive summary and data on value, volume and/or segmentation
• Provides textual analysis of the industry's recent performance and future prospects
• Incorporates in-depth five forces competitive environment analysis and scorecards
• Includes a five-year forecast of the industry
• The leading companies are profiled with supporting key financial metrics
• Supported by the key macroeconomic and demographic data affecting the market

Highlights

• Detailed information is included on market size, measured by value and/or volume
• Five forces scorecards provide an accessible yet in depth view of the market's competitive landscape

Trucking Chief Says ‘Bring on 2009’

(Canadian Trucking Alliance)

Shippers should consider locking in capacity now in anticipation of recovery

It may take the better part of 2009, at least, for the North American economy to stabilize and begin to recover. But according to the CEO of the Canadian Trucking Alliance, David Bradley, when it does, the demand for trucking services will likely outweigh the supply. At that point, truck rates, which have been hammered during the past 18 months, will be under upward pressure again.

“It’s been a tough year for everyone, motor carriers and shippers, and this has resulted in downward pressure on freight rates in 2008. But shippers would be advised to partner with carriers now to lock-in capacity for when things do inevitably start to come back, which we hope will be sometime in 2009,” he said. “Some shippers get it and are now entering into multiyear agreements with carriers.”

The major problem facing truckers over the past year, or more, has been one of over-capacity – too many trucks for the level of freight being generated by the economy. “Most carriers experienced softer freight demand in 2008, though some sectors of the industry and some regions of the country have, like the economy, been harder hit,” he said. “It doesn’t matter where you operate, all carriers faced a major challenge this year with sky-rocketing diesel fuel prices and a slowing economy. Obviously, the appreciation in the value of the Canadian dollar and slump in the U.S. economy continued to have a profound negative impact on the Central Canadian economies and therefore on the volume of freight, especially in southbound freight to the U.S. which had been the underpinning of industry growth for the past 20 years.” In many traffic lanes, both international and domestic, there were simply too many trucks chasing the freight.

However, according to Bradley, the trucking industry across North America has been shedding capacity. “Carriers have been reducing their fleet sizes, getting rid of trucks and not buying new ones. Many trucking companies have left the market; either because they decided they’d had enough, or they couldn’t get sufficient credit and/or they went bankrupt. Tighter credit has also made it more difficult for people to enter the marketplace. While there will continue to be tough sledding in 2009 – reflecting current global economic concerns and, as always, punctuated by a chronic long-term labour shortage – capacity of trucking services will be that much lower when things do turn the corner,” he said.

Read the complete press release.