Saturday, January 31, 2009
Canada’s International Trade Minister is optimistic that the U.S. may consider exempting Canadian products from the controversial “Buy American” provisions under consideration by President Barack Obama.
Stockwell Day talked to Canadian reporters in a conference call and told them general details of his meeting with U.S. trade representative Peter Allgeier at the economic forum in Davos, Switzerland.
“I’m cautiously optimistic that something can be worked out,” Day said Saturday.
“In no uncertain terms they’re telling us: ‘We hear you, we recognize you’ve got concerns with this, we’re doing some work. Keep talking to us and stay tuned.’” Read more here.
Canadian Finance Minister Jim Flaherty said Saturday any protectionist moves by the United States or other countries would meet resistance around the world but Canada would not erect trade barriers of its own.
“There is a clear consensus here that protectionism needs to be avoided, that protectionist is a direction we need not go,” Mr. Flaherty said during a conference call after a meeting with other finance ministers in Davos, Switzerland.
When asked what reaction any moves by Washington toward protectionism might provoke globally, Mr. Flaherty said: “They will be met by resistance by the finance ministers. That’s been a consistent message here.”
The issue took centre stage at the annual World Economic Forum meeting in the Swiss ski resort after the U.S. House of Representatives this week passed a $825-billion stimulus bill with so-called “Buy American” provisions.
The U.S. Senate is to begin debate Monday on its version of the stimulus bill, including a measure that expands the House language of “Buy American.”
The Obama administration said Friday it was reviewing its position on “Buy American” after trading partners sounded the alarm that it could shut out foreign-made steel and iron used for projects funded by the stimulus package -- or an even broader range of manufactured goods under the Senate version.
Canada, the top trading partner of the United States, every year exports about $6-billion worth of steel and iron to its southern neighbour. Read more here.
Friday, January 30, 2009
Canada’s economy continued its slide in November as the country’s economic output shrank by 0.7%, according to figures released Friday. Statistics Canada said slumping construction activity and an ailing manufacturing sector led an industrial race to the bottom in the month, the third one in four in which Canadian GDP contracted.
Canada’s national output shrank by 0.1% in October, offsetting a similar gain in September. In August, the Canadian economy slipped 0.3%, an indication that a financial slowdown had already hit Canada prior to the credit meltdown that really began in September.
The country’s goods producers were particularly hard hit in the second last month of the year, said Canada’s statistical agency. “Activity in the manufacturing sector continued to decline in November (-2.1%), reaching a level of activity nearly 4% below that recorded in the first half of 2008,” said Statistics Canada. Employment among these industries had already fallen 32,000, or 1.6%, compared December 2008 with the same month one year earlier. Here, a rising Canadian currency in the first part of 2008 played havoc with the sector’s ability to export products abroad.
Summary statistics and a link to the data files are on the Statistics Canada website.
Thursday, January 29, 2009
With the global economic downturn taking centre stage during this session of Parliament, the ministers responsible for the government’s financial and commercial portfolios are under intense pressure to help lead Canada through these turbulent times.
One of those is International Trade Minister Stockwell Day, who has spent the past two months travelling around the world trying to drum up business for the country, while telling anyone who is listening that Canada’s doors are open for business.
Mr. Day spoke to Embassy on Jan. 13 about his travels, the government’s trade policy for this coming session, and the importance of bilateral trade deals. Read the edited transcript here.
The federal budget presented yesterday by Finance Minister Jim Flaherty attempts to balance the short-term need to help Canadian families, regions, and sectors and the longer-term objective of taking advantage of the crisis to lay the foundation for a more competitive, greener economy in the future.
The budget is set in the context of, as it states, a “synchronized” global recession, the effects of which have come to Canada later than other countries and had a “shallower” impact.
But the uncertainty of the current situation is made clear, and the possibility of further contingency measures is hinted at if developments abroad—or in Canada—get worse.
The finance minister, therefore, has chosen in this highly economistic document to do just enough—belatedly, according to some, too much, according to others—to meet his government’s political requirements as well as Canada’s commitments made at November’s G-20 meeting in Washington. At that time, all assembled countries agreed to stimulate, wherever circumstances permitted, their economies by two per cent of their respective GDPs.
The budget makes it clear that the economic situation in Canada and abroad has deteriorated sharply since the government’s ill-received November Economic and Financial Statement. It accepts the judgments of international agencies and private sector economists’ that Canada has seen declining economic activity since the fourth quarter of 2008, and builds much of its spending and tax proposals on estimates of economic activity that are even lower than currently accepted.
It intimates, but doesn’t highlight, the fact that the U.S., Canada’s neighbour and dominant economic and trading partner, is in the early stages of a major economic meltdown where household, business, state, national and international debts will have to be reduced over the next two to three years. It acknowledges the continuing negative impact this will have on Canada and every other economy in the world, including the member states of the EU, China, India and other emerging as well as less- and least-developed countries. Read more here.
Proviso Limits Steel, Iron From Abroad
The stimulus bill passed by the House last night contains a controversial provision that would mostly bar foreign steel and iron from the infrastructure projects laid out by the $819 billion economic package.
A Senate version, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.
Proponents of expanding the “Buy American” provisions enacted during the Great Depression, including steel and iron manufacturers and labor unions, argue that it is the only way to ensure that the stimulus creates jobs at home and not overseas.
Opponents, including some of the biggest blue-chip names in American industry, say it amounts to a declaration of war against free trade. That, they say, could spark retaliation from abroad against U.S. companies and exacerbate the global financial crisis. Read more here.
Related: U.S. protectionism alarms PM.
Wednesday, January 28, 2009
There was a Notice of Ways and Means Motion to Amend the Customs Tariff, and Excise Tax Act relating to the Goods and Services Tax and Harmonized Sales Tax (GST/HST). This Notice is available in ANNEX 5 of the budget plan (following the Income Tax Act notice of ways and means motion).
Other measures related to customs and international trade include:
Border Infrastructure Investment
The government is providing up to $14.5 million for two bridges at two of the busiest U.S–Canada border crossings: the Blue Water Bridge in Sarnia and the Peace Bridge in Fort Erie.
It is also providing funding to modernize and expand border service facilities at Prescott, Ontario; and at Huntingdon, Kingsgate, and the Pacific Highway in British Columbia.
Tariff reductions for Machinery and Equipment
The budget proposes to permanently eliminate tariffs on a range of machinery and equipment. The reductions are effective for goods imported into Canada on or after January 28, 2009, and apply to 214 tariff items currently listed in the Schedule to the Customs Tariff.
Budget 2009 will also take steps to facilitate the movement of goods by improving the Customs Tariff rules respecting the treatment of temporarily imported cargo containers, and undertake consultations with respect to further liberalizing the use of these containers in Canada.
Further details of the 2009 Budget Plan are available here.
U.S. Customs and Border Protection plan to establish standard inspection protocol for fresh produce crossing the entire northern border with Canada beginning February 1, but growers-shippers in Canada don’t think it will affect their exports.
“We don’t anticipate any delays,” said Melanie Richer, senior manager of marketing and communications for the Canadian Produce Marketing Association, Ottawa, Ontario. “The change is to the risk management selection, which will now be computer-generated rather than manually by an officer.
“Before, officers at local ports would determine what was inspected,” said Erlinda Byrd, director of public affairs with the CBP. “It differed port to port. Now, we’re operating with more consistency port to port.”
The action results from a March 2007 by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service, which lifted the inspection exemption for Canadian-grown fruits and vegetables. In 1991, APHIS began charging fees for commercial vessels, trucks, loaded railcars and international air passengers from all countries except Canada….
The latest U.S. salmonella outbreak could spur food safety reform in Congress, but the process will be slow and consumers will remain at risk until the shattered regulatory regime can be fixed.
“Congress is poised to take early action on food safety legislation,” said Caroline Smith DeWall, a director of food safety at the nonprofit Center for Science in the Public Interest.
The peanut butter-linked salmonella outbreak “should create the incentive for Congress to act quickly to address the nation’s food safety problems,” she said.
The most popular reform proposals focus on giving the Food and Drug Administration more power and financial resources to be proactive; appointing an official full time to food safety; and having companies more involved in product safety.
Legislative ideas also have included combining 15 U.S. agencies that handle food safety into a single entity.
An estimated 76 million people in the United States get sick every year with foodborne illness and 5,000 die, according to the U.S. Centers for Disease Control and Prevention.
Top U.S. food companies, worried that more food scares may turn away customers and erode confidence in the food supply and FDA, have pushed for stronger food safety legislation. Read more here.
A round up of reactions to yesterday’s Conservative budget from various economists:
“The 2009 budget details put some meat on the bones of the details that were released earlier this week. A number of spending initiatives were announced across a broad cross section of industries, but perhaps the juiciest tidbit was the $20 billion tax cut promised to middle class Canadians. The government will also ramp up its involvement in financial markets. It will purchase more mortgages, and will start buying car leases. All in all, a lot of the details were known beforehand, ostensibly to mitigate the “sticker shock” of having to run a budget deficit for the first time in over a decade. These are exceptional times and the Department of Finance clearly sees the need for exceptional measures and in this case it means running a budget deficit until the economy gets some traction.”
— Charmaine Buskas, Senior Economics Strategist at TD Bank Financial Group
“The 2009 Canadian budget is chock-full of government spending and rather light on the side of tax cuts, but the truth is that domestic fiscal stimulus can only ease the pain of the global recession and credit crisis. This budget is palliative by necessity, but that is better than nothing. Arguably, the budget will enhance domestic financial stability, which is the most we can hope for right now. Ottawa has granted the Bank of Canada, Canadian Deposit Insurance Corporation (CDIC), and the Minister of Finance broadened authorities to respond to a banking crisis of the sort plaguing the U.S. and Europe. Hopefully, these authorities will not be tapped because Canadian banks are relatively strong. But setting up the mechanism for bank bailouts is prudent and in compliance with the G-20 Finance Ministers Agreement. On balance, the fiscal measures in this budget represent about 1.5%-to-2% of GDP in 2009. This is a large stimulus, but relative to the plans in the U.S. and China, it is relatively light and it should be. This budget is merely triage to help the hardest hit to bear the pain through temporary pain killers. At this stage, that’s about as much as Ottawa can do.”
— Sherry Cooper, Chief Economist at BMO Capital Markets
“Today’s budget is unlikely to have much of an impact on the Canadian dollar. The net new stimulus was largely as expected, and is more moderate than the expected U.S. package, which could total $825 billion over two years (3% of GDP). Even with the expected five-year string of deficits, Canada will still boast the lowest debt/GDP ratio among the major industrialized economies. The hefty new fiscal stimulus measures, largely flagged beforehand, should support domestic demand. In addition, Ottawa will need to crank up its net new borrowing in the year ahead, with a total financial requirement of more than $100 billion, a significant acceleration from the recent years of economic plenty. However, the big driver for bond yields (and also for the Canadian dollar) will continue to revolve around the much bigger issue of when global risk aversion will recede. That also applies for equity markets, which saw precious little in new measures in this year’s budget.”
— Douglas Porter, deputy chief economist at BMO Capital Markets
“This budget is unique, not so much because of its focus on policy but rather on politics. There is no surprise that the Conservative government delivered a budget that aims to deliver relief, in the form of tax cuts to individuals and corporations and stimulus for a broad number of sectors. After all, for this government to help stabilize and revive the economy through fiscal policy, it first needs to ensure that the budget is not defeated by the opposition parties and so it had to utilize a shotgun approach. All in all, badly needed spending on education, transportation, health, childcare, farming, the arts, tourism and recreation; support for mining, forestry, sustainable energy and agriculture; a reduction in taxes for individuals and businesses, small and large in the form of tax credits and cuts; better assistance to the unemployed and homeowners, is just what is needed right now to help stabilize the ailing Canadian economy. With the Bank of Canada’s monetary policy very accommodative, the government’s mandate was to deliver enough stimulus to restore confidence to consumers and businesses and encourage spending, which I think it has done, given the political tightrope it was walking.”
— Paul L. Vaillancourt, Director Portfolio Strategy Franklin Templeton Managed Investment Solutions
“As promised, the federal budget has clearly moved towards stimulus to the tune of about 1% of GDP in each of the next two years. A component of these initiatives is meant to directly address the credit tightening that is the primary cause of the weakening in growth not only in Canada but in the US (and the globe). The greater amount of funds allocated in today’s budget is meant to replace lost incomes resulting from falling employment both directly through tax cuts and indirectly by boosting hiring through infrastructure spending. The initiatives are relatively aggressive and consistent with a Canadian economy in recession (the budget document reflects the assumption of a drop in GDP growth of 0.8% in 2009.) The various measures have been well chosen to kick in relatively quickly though the risk remains, will it be fast enough? which is equivalent to about 2% of nominal GDP.”
— Paul Ferley, Assistant Chief Economist, RBC Economics Research
”It's clearly a document that tries to balance politics and policy. We think the level of stimulus is probably appropriate. I'm not a big believer in permenant tax cuts because their fiscal impact is ongoing. But at least there is a bit of stimulus there. I guess the most important this is they understand the need to provide cash spending right now. It has a lot of money for infrastructure. It's actually geared largely towards working Canadians. All in all, I think frankly it is a fairly judicious balance.”
Glen Hodgson, Senior Vice-President and Chief Economist at The Conference Board of Canada
“The Government of Canada is set to do a great deal of borrowing over the span of the next few years, and this will show up via additional bond issuance. Although this might normally increase the level of bond yields, we believe other factors are likely to dominate, including economic woes, rock-bottom central bank rates, and deflationary fears. All of these should keep yields down. Relative to other countries, Canada’s borrowing needs are but a trifle. And although the scale of bond issuance may be at a record high for Canada, the starting point – with a low debt-GDP ratio and an economy much larger than in the mid-1990s – should leave the Canadian bond market in relatively good stead.”
— Eric Lascelles, Chief Economics and Rates Strategist at TD Securities
Monday, January 26, 2009
The “10+2” importer security filing rule took effect as scheduled Jan. 26 after U.S. Customs and Border Protection confirmed that this rule would not be affected by a White House request for a 60-day delay of all pending regulations. As a result, importers and maritime cargo carriers must now submit additional cargo data to CBP before vessels are permitted entry into the country.
In a Jan. 20 memo White House Chief of Staff Rahm Emanuel asked all federal agencies to consider a 60-day extension of the effective date of any regulations that had been published but had not yet taken effect and to reopen for 30 days the comment period on any such rules.
CBP states that it decided not to comply with that request with respect to the 10+2 rule based in large part on the fact that its rulemaking process was procedurally adequate, that a 75-day public comment period had already been provided on the proposed rule and that the interim final rule is now subject to an additional six-month comment period. CBP added that the Jan. 26 effective date will allow it to work with industry on testing and improving the systems of this initiative during the structured review and delayed enforcement period that runs through Jan. 26, 2010.
The U.S. Department of Homeland Security confirmed Monday that it will not extend the effective date for new information requirements on maritime cargo destined for the United States. The Importer Security Filing and Additional Carrier Requirements interim final rule, scheduled to go into effect, January 26, now requires maritime cargo carriers and importers to submit additional data to U.S. Customs and Border Protection before vessels are permitted entry into the country.
The determination not to postpone the January 26 effective date was made after consideration of the factors set forth in the memorandum from the director of the Office of Management and Budget, “Implementation of Memorandum Concerning Regulatory Review,” dated January 21. The decision was based in large part on the fact that the rulemaking process was procedurally adequate; that a 75-day public comment period was already provided to respond to the Notice of Proposed Rulemaking; and, that this Interim Final Rule is now subject to an additional six-month public comment period. The January 26 effective date will also allow CBP to work with industry on testing and improving the systems of this important security initiative during the structured review and delayed enforcement period which ends a year later on January 26, 2010. CBP will continue to welcome input from the regulated industry.
The White House order to temporarily freeze regulations from the Bush administration that have not gone into effect is not likely to significantly impact the rollout of the Importer Security Filing, according to an expert on the federal government.
The ISF, commonly referred to as “10+2,” requires importers to electronically file 10 sets of cargo-centric data 24-hours prior to vessel loading overseas and carriers to subsequently file information on the status of containers in their custody. The interim final rule is scheduled to go into effect on Jan. 26, with a one-year grace period for enforcement.
Customs and Border Protection officials were waiting official word on Thursday about whether the program would be delayed. ISF program manager Richard DiNucci said at a “10+2” seminar in Baltimore that the agency is proceeding as planned until notified otherwise…. Read more here.
Sunday, January 25, 2009
The Department of Agriculture has announced various steps that will ease the new import declaration requirement under the amended Lacey Act. These changes address the scope of the declaration requirement, the timeframe for implementation, the definition of certain terms, effects on trade and industry, and enforcement issues.
(The USDA notice had been scheduled to be published in the Federal Register Jan. 23 but has been withdrawn for further review in light of a White House directive.)
Imports of certain plants and plant products must be accompanied by import declaration containing the scientific name of the plant, the value of the importation, the quantity of the plant and the name of the country from where the plant was harvested. For paper and paperboard products containing recycled content the declaration must also include the average percent of recycled content regardless of species or country of harvest.
U.S. Customs and Border Protection is currently modifying the Automated Commercial System to collect this information and the USDA does not plan to begin enforcement of the declaration requirement until that process is completed, which CBP continues to anticipate will be no later than April 1, 2009.
However, in response to public comments, the USDA is extending the schedule of phased-in enforcement of the declaration requirement and has provided a list of products that fall within each phase, as follows.
• Present–March 2009 (phase I): plant import declaration form available on USDA Web site; domestic and international outreach will be conducted
• April 1–Sept. 30, 2009 (phase II): HTS headings 4401(fuel wood), 4403 (wood in the rough), 4404 (hoopwood; poles, piles, stakes), 4406 (railway or tramway sleepers), 4407 (wood sawn or chipped lengthwise), 4408 (sheets for veneering), 4409 (wood continuously shaped), 4417 (tools, tool handles, broom handles), and 4418 (builders’ joinery and carpentry of wood)
• Oct. 1, 2009–March 31, 2010 (phase III): in addition to phase II, HTS headings 4402 (wood charcoal), 4405 (wood wool [excelsior]), 4410 (particle board), 4411 (fiberboard of wood), 4412 (plywood, veneered panels), 4413 (densified wood), 4414 (wooden frames), 4415 (packing cases, boxes, crates, drums), 4416 (casks, barrels, vats, tubs), 4419 (tableware and kitchenware), 4420 (wood marquetry; caskets; statuettes), 4701 (mechanical wood pulp), 4702 (chemical wood pulp, dissolving), 4703 (chemical wood pulp, sulfate), 4704 (chemical wood pulp, sulfite), and 4705 (combination mechanical and chemical)
• April 1–Sept. 30, 2010 (phase IV): in addition to phase III, HTS headings 4421 (articles of wood, not elsewhere specified or included), 4801 (newsprint), 4802 (uncoated writing paper), 4803 (toilet or facial tissue stock), 4804 (uncoated kraft paper), 4805 (other uncoated paper and board), 4806 (vegetable parchment, etc.), 4807 (composite paper and board), 4808 (corrugated paper and board), 4809 (carbon paper), 4810 (coated paper and board), 4811 (paper coated, etc. other than 4803, 4809 or 4810), 9401.69 (seats with wooden frames), 9403.30 (wooden office furniture), 9403.40 (wooden kitchen furniture), 9403.50 (wooden bedroom furniture), 9403.60 (other wooden furniture), 9403.90.70 (wooden furniture parts)
The USDA is seeking comments by March 24 on (a) the products covered under phases III and IV, (b) whether any additional HTS chapters should be included in this schedule and (c) how the declaration requirement should be enforced with respect to products not listed in this schedule.
Scope of Affected Goods Narrowed
The USDA will only require a declaration for the product being imported and not for sundries that ordinarily accompany it, such as tags, labels, manuals and warranty cards.
In addition, the USDA will only enforce the declaration requirement for formal consumption entries (i.e., most commercial shipments). It does not currently intend to enforce the declaration requirement with respect to informal entries (i.e., most personal shipments), personal importations or mail (unless subject to formal entry), transportation and exportation entries, in-transit movements, carnet importations (i.e., merchandise or equipment that will be re-exported within a year) and foreign-trade zone and warehouse entries.
Thursday, January 22, 2009
The Harper government will run deficits over the next two years totalling $64-billion, a top official announced yesterday, also acknowledging it will take up to five years to return to balanced budgets.
A senior official said the Tories expect to run a $34-billion deficit in the fiscal year starting April 1 and a $30-billion shortfall in the year after. “At that point we will see deficits diminish and we forecast a return to surplus within five years.”
The Conservatives appear to be releasing projected deficit figures ahead of time to ensure the focus shifts to the stimulus spending measures when they release their budget on Jan. 27.
Outside forecasters have beat the government to the punch in recent weeks in delivering the gloomy news about Ottawa's fiscal future. Read more here.
Related: Senior government official scoops finance minister — Macleans blog.
The Bank of Canada is projecting a sharp recession that will see three quarters of economic contraction before growth returns in the second half of 2009.
In its update to its Monetary Policy Report, the central bank said it anticipates quarter-over-quarter contractions of 2.3 per cent in the fourth quarter of 2008, followed by a deeper drop of 4.8 per cent for the first three months of 2009 and a drop of one per cent in second quarter of this year.
However, the bank sees a rebound to positive activity by the third quarter of the year, when it forecasts two per cent growth and 3.5 per cent expansion in the last three months of the year.
The bank said the return of normal financial conditions, coupled with the stimulus coming from monetary and fiscal policies, should boost the growth of consumer spending in 2010, leading to growth for the year of 3.8 per cent. The recent depreciation in the Canadian dollar will also lend support to a recovery, it added.
“Excess supply will be gradually reduced, with the economy projected to return to balance by mid-2011,” the bank said. “The projected return to balance of the Canadian economy is faster than either of the recoveries following the 1981-82 and 1990-92 recessions.”
Bank of Canada governor Mark Carney said the recovery projected by the bank is milder than from an average recession due to “muted” recoveries expected in other economies around the world.
“We are comfortable with our forecast,” he told reporters at a news conference in Ottawa. Read more here.
D14-1-2, Disclosure of Normal Values, Export Prices, and Amounts of Subsidy Established Under the Special Import Measures Act to Importers
Available on the Canada Border Services Agency’s website here (PDF).
D14-1-4, Exchange Rate for Calculations Under the Special Import Measures Act and Regulations
Available on the Canada Border Services Agency’s website here (PDF).
Negotiations continue between the British Columbia Maritime Employers Association (BCMEA) and the International Longshore and Warehouse Union Local 514 (ILWU), who have been working for over three months towards a resolution.
The two parties met on Jan. 15, with the assistance of John Rooney, one of two federal mediators appointed to the discussions. At that time, the parties exchanged proposals and have agreed to meet on Jan. 23 at 9:30 a.m. “Further up-dates will be provided as significant events occur,” said Greg Vurdela, vice-president of marketing and information services for BCMEA. Read more here.
A White House order to federal agencies to halt work on pending regulations may affect the timing of Customs and Border Protection's Importer Security Filing or 10+2 ruler.
Early Wednesday, Chief of Staff Rahm Emanuel ordered agencies to stop pending rules until the new administration can make a “legal and policy review of each.”
“I think they’re trying to keep their options open on things like 10+2 and other rules that are not yet final. We’re working on getting a clarification from OMB,” said Ray Bucheger, a federal policy and legislative consultant with FBB Federal Relations in Washington. He said the new administration apparently wants to review the overall rule-making process rather than the Customs rule itself. Read more here.
If the past is a guide, Canadians can expect Congress to cede to protectionist pressures. While it now seems unlikely that the Obama administration will seek to reopen NAFTA, aggressive trade action by Congress in pursuing punitive measures against perceived Canadian subsidies and dumping practices could constitute serious threats to our economic interest. (The recent B.C. decision to lower stumpage fees will soon draw fire from Oregon and Montana.)
A related area for monitoring will be the administration's approach to managing our common border. The question for Canadians is clear: Can a better balance be achieved between effective security required to protect our citizens from terrorist or criminal actions and the need to facilitate the trade flows critical to our countries' competitiveness in the global marketplace?
It is encouraging that there was little mention of border issues during the presidential campaign. This suggests that Americans may be recovering from the trauma of the immediate post-9/11 period. The new Secretary of Homeland Security, Janet Napolitano, has made a welcome distinction between northern and southern borders, acknowledging that different measures may be required to deal with each.
This having been said, the border is becoming an increasingly serious obstacle to the free flow of commerce and people. Many of the benefits of the Smart Border Accord of 2001 have been rolled back as Congress accepted such restrictive measures as passport requirements at Canada-U.S. land borders, 100-per-cent screening by 2011 of containers entering the U.S. (despite prior inspection at Canadian ports of entry) and the Secure Fence Act replicating some of the tighter measures characterizing the U.S.-Mexican border.
Modernizing our borders should stand atop the agenda for Mr. Obama's visit to Ottawa. It is in both our interests to prevent our border from turning into a wall. As with the Smart Border Accord, two senior personal representatives might be mandated to submit recommendations for improving border infrastructure, clearance procedures and advance technologies. They should also examine how we might move toward establishing a common security perimeter. And they could call for a Permanent Joint Border Commission headed by cabinet-level officials to jointly manage the border.
Michael Kergin and Allan Gotlieb are senior advisers to the law firm Bennett Jones LLP, and former Canadian ambassadors to the United States.
Read the complete article here.
Wednesday, January 21, 2009
The president of Canada’s largest business association is calling for talks to improve the trade relationship with the United States now that there’s a new administration in the White House. Perrin Beatty, the president of the Canadian Chamber of Commerce, says the North American Free Trade Agreement took down some costs of cross-border trading but increased other costs.
Beatty made his comments to a Calgary business audience shortly before Barack Obama was sworn in as the new president of the United States.
Beatty said inspections, delays and taxes have driven up the cost of the North American industrial base and made both Canada and the United States less competitive internationally. He urged both countries to resist the temptation of moving toward protectionism during a time of recession. The former federal cabinet minister was also critical of inter-provincial trade barriers, saying there are restrictions in place within Canada that would be illegal in parts of Europe.
Canada’s merchandise trade surplus contracts
According to the latest numbers from Statistics Canada, this nation’s merchandise trade surplus fell to its lowest level since the early 1990s in the latest month, November 2008. The principal reason was a nearly 11% decline in the value of the Canadian dollar versus the U.S. greenback. This caused the price of imports to shoot up while export volumes declined due to the deepening recession south of the border.
The month-to-month change in Canada’s energy product exports in the latest period was -19.4%, but this was alleviated by energy imports being down an even greater 36.5%. Year-to-date automotive product exports were -21.3% in November as the level of U.S. auto sales fell to its lowest since 1983.
In other product areas, Canada has been making gains in foreign sales of gold coins, due to international demand in a time of economic uncertainty, and in wheat, due to a strong harvest. Commodities are priced in U.S. dollars and, therefore, the decline in value of the loonie has helped to support after-currency-conversion sales going to Canadian producers.
It should also be added that for a nation as trade-dependent as Canada, price, volume and currency swings make for a highly dynamic and confusing mix when it comes to analysing the trade picture.
More information and tables here. Summary Canadian statistics and links to the data files are on the Statistics Canada website.
The Honourable Stockwell Day, Canada’s Minister of International Trade and Minister for the Asia-Pacific Gateway, and Kamal Nath, India’s Minister of Commerce and Industry, today [Wednesday] announced that Canada and India have agreed to initiate exploratory discussions toward a comprehensive economic partnership agreement.
“We are committed to taking our economic partnership to the next level,” said Minister Nath. “The steps taken today will ensure we move toward opening doors for our respective business communities.”
“Minister Nath and I agreed that officials should now meet to begin talks on the possible parameters of a comprehensive trade agreement,” said Minister Day. “Our discussions here respond to the recommendations made by the Canada-India CEO Roundtable.”
At a bilateral meeting held this week, while acknowledging the substantial growth in bilateral trade, the ministers stressed the need to further tap the huge trade and investment potential that exists between the two countries, especially in the areas of infrastructure, agriculture and related activities, and industrial goods.
Both ministers acknowledged the progress made on the Canada-India Foreign Investment Promotion and Protection Agreement and emphasized the need for an early implementation of the Agreement. Minister Nath also stressed the need for a particular focus on facilitating greater engagement between small and medium enterprises of the two countries.
In 2007, two-way merchandise trade increased four percent to an all-time high of $3.74 billion.
Tuesday, January 20, 2009
1. Estimated Administrative Burden
On January 5, 2009, APHIS published a notice in the Federal Register requesting an extension of approval to collect information under the Lacey Act.
Under the US Paperwork Reduction Act, an executive agency must seek approval for any “information collection” (the objective is to minimize the amount of unnecessary paperwork imposed by the government). APHIS had previously sought and received emergency approval to collect information on its paper import declaration issued in early December 2008. Now it is seeking an extension of that approval for all purposes.
As a part of the extension request, APHIS is required to estimate the amount of administrative burden resulting from the requirement to file an import declaration, the number of anticipated respondents per year, and the average number of responses per respondent. In its notice, APHIS is seeking comments to assist them in evaluating the following:(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of our estimate of the burden of the information collection, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the information collection on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies, e.g., permitting electronic submission of responses.
We have clarified that the request for an extension applies to the import declaration requirement, writ large, and not/not only to the paper version of the import declaration. The estimates have been based in part on the presence of an electronic means of submitting this information. Comments are due on March 6, 2009.
2. Revise Implementation Plan Notice
We have learned that APHIS will be publishing shortly (January 16 expected date) another notice in the Federal Register setting out a revised implementation plan. This plan apparently takes into consideration comments received on APHIS’s initial Notice of October 8. Details of the plan are sketchy at this moment. However, we have been told the implementation phase-ins will now be 6 months apart (as opposed to 3 months), that the initially contemplated phase-in period will be 18 months (instead of 6 months), Chapter 6 has been dropped from initial stages of the implementation plan (the only products affected after exclusions were Christmas trees, which were considered low risk) and that the products will be identified to below the HTSUS Chapter level (to 4 and in some cases 6 digits).
Moreover, we understand that APHIS has given serious consideration to the “blanket” or accumulated declaration alternative and the use of common commerical terms, such as SFP and hem-fir, although these will not be addressed in the plan. The plan apparently is still to use the Fish and Wildlife Service legacy database for the collection of information. We have no information about integration of this system with existing CBP portals.
3. “Common Cultivar” and “Common Food Crop” Definitions
We have been advised that APHIS will not/not publish its definitions for “common cultivar” and “common food crop” for at least a few months, given that the definitions are not relevant to product categories implicated in the initial phases of the implementation plan, further reinforcing our information that Chapter 6 will be dropped from initial phases.
The Canadian government must start to engage the new Barack Obama administration at the highest level to make our border more open and secure via a concrete package of proposals.
The initiative should be done bilaterally, and not trilaterally along with Mexico through the Security and Prosperity Partnership. Our border issues are not the same. With Mexico the U. S. focus is on illegal immigration; with Canada it is on security.
Since Sept. 11, 2001, when security came to trump trade because of U. S. fears of another terrorist attack, the border has thickened. Canada-U. S. trade has stagnated and the growth of Canadian exports of goods to the United States in current dollars declined from $334.1-billion in 2000 to $331.4-billion in 2007. As a share of GDP, the decline was much more dramatic with exports of goods to the United States falling from 31% in 2000 to 21.6%. Read more here.
The diversion of container ships from Canada’s west coast Port Metro Vancouver has become “significant” as marathon collective bargaining continues between waterfront employers and union foremen.
Another in a series of day-long bargaining sessions between the British Columbia Maritime Employers Association and International Longshore and Warehouse Union Local 514 ended on January 9 with “some issues resolved – it was a positive thing, a cause for some optimism,” BCMEA Vice President Greg Vurdela said in an interview.
Talks were scheduled to resume on January 15 under federal mediation.While the bargaining has continued at a leisurely pace, with five and six days between meetings, the threat of a strike or lockout being called on three days’ notice has spurred nervous shipping lines to divert their vessels from Vancouver to regional rivals such as Tacoma and Seattle.
“Cargo in this atmosphere of uncertainty is clearly not coming to ports of British Columbia that would have been coming here,” Vurdela said. “That began in mid- to third-week- December, and it’s not just a few ships,” Vurdela said, without giving specific numbers. “It’s a significant number of ships, and it does have an economic impact.” Read more here.
Monday, January 19, 2009
On including Mexico: ‘Trilateralism when necessary, but not necessarily trilateralism’
From energy to the economy, oil to Afghanistan, Canada must become a “credible contributor” and not an “annoying diversion” to Barack Obama’s new administration, a major report is telling Prime Minister Stephen Harper.
And regardless of whether it is in his nature, Harper must strengthen relations by building a strong personal relationship with the popular new president, and should push for a yearly summit on North American issues, concludes the “blueprint for Canada-U.S. engagement” released Monday by Carleton University’s Norman Paterson School of International Affairs.
The result of months of research and consultations with major political, business and academic leaders from both countries, the wide-ranging plan urges first and foremost, “sustained co-operation” between the two countries in tackling the economic crisis. It also calls for joint action on combating greenhouse gas emissions while still meeting the continent’s oil and gas needs, speeding the flow of commerce across an increasingly thick and bureaucratic border, and better co-operation on the Arctic.
“The most pressing bilateral issue is the need to rethink the architecture for managing North America’s common economic space,” write co-authors, Derek Burney, a former Canadian ambassador to the U.S. and the head of Harper’s transition team three years ago, and Paterson school director Fen Hampson. Read more here.
Peter Kent, Canada’s minister of state of foreign affairs for the Americas, said Friday free trade negotiations with the Central American Four (CA4) were progressing very well and could be finalized by February.
Negotiations with the CA4 – which is El Salvador, Guatemala, Honduras and Nicaragua – appear to be moving forward despite Canada’s concerns of electoral fraud in the Nicaraguan election of November 2008.
“The CA4 negotiations are proceeding at pace and we want to in February get through the last round. We do believe it’s possible to get through the last series of negotiations,” Mr. Kent, a former broadcast journalist elected to the House of Commons late last year, said via conference call in El Salvador after visits to Nicaragua and Guatamala. The minister did not visit Honduras.
Canada and the CA4 agreed to meet February 23-27 at the last round of negotiations in December.
Mr. Kent said Canada was trying to close the FTA negotiations with the CA4 to allow Canadian exporters to compete on level playing field with countries with FTAs in the region, principally the United States.
“Canadian businesses in the region have expressed some frustration that without these agreements, they don’t have that level playing field,” he said. Read more here.
World trade, a booming source of growth for most of the past five years, is suddenly shriveling, with exports declining in almost every country as the world endures a recession.
The decline in trade, which began last summer, accelerated after Lehman Brothers failed in mid-September. In the aftermath, credit became harder to obtain for importers and confidence waned among would-be buyers of many products.
That exports are down in almost every country shows both the international nature of the recession and the fact that it has been impossible for any country to export its way out of trouble. Nonetheless, there may be protectionist efforts in a number of countries this year, aimed at improving each country’s trade position at the expense of others.
China, the largest exporter in the world, reported in the past week that its December exports of $105.7 billion were down 3% from that month in 2007, following a 2% decline in November. Before that, China’s official export figures had shown double-digit percentage gains in every month since March 2002.
The United States, the second-largest exporter, said its November exports of $98.1 billion were down 4% from a year earlier. Germany, the third-biggest exporter, reported its exports in November were off 21% at $96.1 billion.
For the United States, it was the first year-over-year decline in exports since 2003. For Germany, it was the largest year-over-year fall since 1993. Read more here.
This memorandum (PDF) is revised to include the application process for remission orders.
Canadian exporters for the first time see their largest business partner, the United States, as their riskiest market, according to a survey run by the Export Development Corp.
The EDC, a government-owned corporation that provides loans and guarantees to exporters — more usually to emerging and otherwise risky markets — in a semi-annual report on exporters’ business confidence said there is “a growing sense of gloom.”
The index of overall export confidence in Canada has fallen from 66.1 to 61.0 in the past six months, the lowest level since reporting began in 2000, the EDC said. Canadian exports overall are expected to slide 5.1 percent this year. Read more here.
Friday, January 16, 2009
The U.S. Department of Transportation signed an agreement with the state of Washington to improve efficiency along the border with Canada.
Freight carriers will be better able to deliver goods on schedule with more accurate and reliable travel information on border wait times, U.S. Transportation Secretary Mary E. Peters said.
The Cascade Gateway Project will provide border-crossing wait time and travel condition information through a variety of technologies, including sensors, to reduce congestion at four Washington ports of entry, Peace Arch, Pacific Highway, Lynden and Sumas.
“With accurate information, travelers and freight carriers will be able to choose the time and route that is most efficient and best meets their needs,” said Secretary Peters.
The project is one of three projects in the DOT's Transportation Border Congestion Relief Program, which is designed to facilitate and accelerate transportation-related capacity and operational improvements at border crossings.
The project will receive priority access, consistent with current law, to many of DOT's assistance programs, including loans and other innovative financing mechanisms, said Secretary Peters.
Food Safety Legislation: A Continuing Concern of the Canadian Government, Importers and Chinese Suppliers
Earlier in 2008, the Canadian government introduced legislation that would impose onerous requirements on companies that import consumer products from Chinese and other foreign suppliers. This legislation, referred to as the Consumer Products Safety Act, followed several recent high-profile recalls affecting toys, food, toothpaste and pharmaceuticals, many of which were imported from China. As a result of the proposed legislation, Chinese and other non-Canadian suppliers would have been faced with an increasing number of requests for detailed product information, including documentation of safety testing, from Canadian importers and distributors. Although the Consumer Products Safety Act, also referred to as Bill C-52, did not become law because of the recent Canadian election, the government's election platform indicates that protecting Canadians from unsafe imported products remains a high priority. Accordingly, the government is likely to re-introduce a bill in Parliament in the coming session.
Although it is unknown at this point whether the bill, when introduced, will be identical to or amended from what was originally put forward, prudence suggests that now may be a good opportunity for importers and their Chinese and other foreign suppliers that may be affected by the eventual legislation to consider how they may play a role in shaping the legal framework for such consumer product law. In the meantime, it may be wise for importers, manufacturers and suppliers and others potentially affected by the legislation to begin implementing compliance mechanisms so that when the legislation comes into effect, they will have established appropriate best practices and due diligence mechanisms to avoid any future liability. Read the complete article here.
Canada and the 27-member European Union hope to launch full-scale negotiations on an ambitious trade liberalization agreement in May, International Trade Minister Stockwell Day said Thursday.
Day said he's confident Canada will meet the EU's principal demand – that provincial governments, under political pressure due to rising unemployment in Canada, will agree to open up their lucrative procurement programs to European bidders. European firms are particularly keen to gain the right to bid on major commuter rail projects.
“We don't think it's going to be difficult to give them that assurance,” Day told Canwest News Service after his meeting in Prague with Czech Industry Minister Martin Riman. “Whether we're talking provincially or federally we understand in Canada that we prosper because we are a trading nation. We produce more than we can consume, and if we can't trade then we're in trouble. Provinces, regardless of the political stripe of their government, recognize this.”
Canadian and EU officials have been engaged since last autumn in a “scoping” exercise launched by Prime Minister Stephen Harper and French President Nicolas Sarkozy, who held the EU presidency during the second half of 2008. They have been assessing the parameters of a deal which, according to a joint study, could generate a total of $32 billion in wealth for both parties by 2014. Read more here.
Thursday, January 15, 2009
The World Trade Organization has launched a new database on regional trade agreements (RTAs), containing all relevant documentation received by the WTO following notification that an RTA has been established.
The database, which is one of the requirements of the General Council's Transparency Decision on RTAs, contains all the notifications, links to the content of the relevant RTAs, legal provisions and information on the WTO’s assessments of the RTAs.
The database also contains more detailed information about the RTAs for which the WTO has prepared a “Factual Presentation” or a “factual abstract”. In these cases the following information is provided:• the timetable agreed in the RTA for the reduction of tariffs as well as data on trade in goods and services for the relevant countries at the time that the RTA enters into force (this only applies to RTAs where the WTO has prepared a Factual Presentation)• a list of key provisions contained in the RTAs as well as links to brief descriptions of these provisions in the Factual Presentation or factual abstract prepared by the WTO.
The database can be searched by country, region, legal provision, date of notification or entry into force of the RTA. Summary tables of all RTAs currently in force, containing various types of information, can be easily exported by users of the database. To access the database, please go to http://rtais.wto.org
Confidence tumbled last fall on a number of fronts. Market turbulence, rising retail prices and economic weakening pummelled consumer and business confidence. Canadian exporters, on the front lines of the global slowdown, were big contributors to the growing sense of gloom.
EDC surveyed Canadian exporters last fall in the middle of the maelstrom that hit financial markets. Responses from 850 small, medium and large exporting firms were collected between mid-October and mid-November last year. Results show that the Trade Confidence Index (TCI) plunged to 61, a record low over the Index’s short history. Confidence last fell in 2001, but compared to this result, still remained at a relatively high level.
All five components of the TCI fell in the latest survey. The largest single drop was in domestic sales prospects. Over the past five years, exporters were able to count on a strong domestic market to tide them through the relentless rise in the Canadian dollar. Last fall, that upbeat view of the domestic scene soured considerably. Just 28% of respondents – the lowest share ever by a wide margin – expected a near-term increase in domestic sales. Those surveyed were likewise very gloomy about the outlook for the domestic economy. Just 12% expected improvement, while those seeing worse conditions spiked to 57% of respondents, a new record by a wide margin.
Prospects for export sales also took a large hit. Those who expected a decrease surged to just under a quarter of all respondents, while 39% expected an increase, down 8 percentage points in just six months. With export sales currently in recession, these results are not comforting. What is more, exporters’ gloomy domestic outlook was trumped by their pessimism about the global economy. Only 11% expected conditions to improve, while 64% foresaw a worsening situation.
Of all the TCI components, exporters were least jaded about international opportunities. The TCI score for this category hardly moved, thanks to the one-third of respondents who felt that near-term opportunities would get better. This is surprising in view of last fall’s economic and financial market turmoil, but it possibly reflects the success that exporters have experienced in recent years trading with non-traditional markets. Sales in these markets have risen at a double-digit pace, well ahead of the consistently meagre growth in sales to the United States.
The [US] federal government … issued a long-awaited decision approving a new Detroit-Windsor border crossing system over the Detroit River. The Record of Decision, issued Jan. 14, by the Federal Highway Administration (FHWA), is the final environmental clearance for the Detroit River International Crossing (DRIC) Study for a proposed new border crossing system just north of Zug Island.
The Record of Decision is the last step under the National Environmental Policy Act (NEPA) to gain project approval, following four years of consultations, public hearings, traffic analyses, and environmental studies. The Record of Decision allows Michigan to begin right-of- way acquisition and construction planning for the proposed new bridge. Construction of a new border inspection plaza, bridge and interchange is scheduled to begin in 2010, with an official opening of the new crossing system planned for 2013…
…“This is a significant milestone,” said State Transportation Director Kirk T. Steudle. “Once built, the new crossing system will boost U.S. and Canadian trade by expanding the busiest trade corridor in the western hemisphere… This project is needed to transition the border crossing into a modern, multimodal network to securely move people and goods between the United States and Canada and make Southeast Michigan an even more prominent gateway for global commerce. We will be building the most modern border crossing system in the world.”…
The DRIC Study, a binational effort, was led by the Border Transportation Partnership, comprised of the FHWA, Transport Canada, MDOT and the Ontario Ministry of Transportation. The Border Transportation Partnership was formed in 2000 to provide for the safe, efficient and secure movement of people and goods across the U.S.-Canada border at the Detroit River to support the regional, state, provincial and national economies, and meet the civil and national defence and homeland security needs of the busiest trade corridor between the United States and Canada.
More information about the DRIC ... is available on the Border Transportation Partnership website.
Ontario and Quebec are set to take the biggest hit from the economic downturn in 2009, a BMO report on provincial economies says.
Ontario, teetering on the edge of recession, will finish 2009 with negative gross domestic product (GDP) growth of 2.3%, while Quebec will see its economy shrink by 1% this year, the report released Wednesday said. Ontario is expected to have finished 2008 with a 0.2% decline in GDP while BMO forecasts Quebec finished the year with a 0.2% GDP increase.
Manufacturing and export problems driven by crumbling U.S. demand are weighing heavily on both provinces, BMO economist Robert Kavcic wrote in the report. But, while the Quebec government is likely to keep its budget balanced in 2009 and 2010, Ontario is set to end a three-year run of balanced books with a $500 million slip into deficit territory.
“The challenges facing Central Canada are well documented-a manufacturing sector under siege amid plunging auto sales and a deep U.S. recession crimping export demand. Ontario's export sector has weighed heavily on growth, with real net exports negative for the first time on record dating back to 1981. As the downturn continues, Ontario's economy will contract further in 2009. Quebec, with its more favourable manufacturing mix, will fare slightly better,” Kavcic's report said.
The country as a whole is forecast to have finished 2008 with a 0.7% expansion in GDP, the report said. However the Canadian economy is forecast to contract this year by 1.3%, according to BMO.
Western Canada is also seeing a darker outlook, though not as bleak as that of Central Canada. Oil prices have fallen well below the break-even point for marginal oil sands projects, and tighter credit conditions have squeezed project financing, Kavcic said. Read the complete article here.
Tuesday, January 13, 2009
We are pleased to bring you our latest ITIC report – Barriers at the Border: The Costs of Impediments to Business Mobility – which will be publicly released tomorrow [Wednesday]. This report explains how language differences, the shortage of Canadian foreign offices, and visa processing systems have negatively impacted trade, investment, and visits to Canada.
The analysis suggests that to alleviate the costs due to this lost economic activity, policy makers should reduce wait times for visas, increase the use of multi-entry visas, and expand outsourcing of visa processing. Also, some Canadian overseas offices should be expanded, especially in large, emerging economies where Canada has visa requirements, such as China, Russia, India, and Turkey. The resulting increased trade and investment flows would benefit the Canadian economy directly as well as indirectly, through reduced operating costs, productivity gains, and technology transfers.
To download the full report, go to http://www.conferenceboard.ca/ (registration required).
U.S. Customs and Border Protection announced today the C-TPAT Year in Review highlighting key accomplishments. In 2008, U.S. Customs and Border Protection’s Customs Trade Partnership Against Terrorism program met key member certification and validation requirements, created a new enrollment sector, conducted first-ever joint validations in China, and signed two additional mutual recognition arrangements.
“The world remains a dangerous place and we must keep improving and innovating C-TPAT to secure the global supply chain against acts of terrorism,” said Bradd Skinner, C-TPAT director. “The strength of the program is the collaboration that takes place between trade members, CBP supply chain specialists and colleagues at home and abroad to strengthen cargo security at every level. Collectively we must remain focused on adhering to the C-TPAT security criteria and creating a barrier which will be difficult for would-be terrorists to penetrate.” Read more here.
The Food and Drug Administration has announced the availability of a draft guidance document draft guidance document that provides general recommendations to importers on possible practices and procedures they may follow to increase the likelihood that the products they import are in compliance with applicable U.S. safety and security requirements. Comments are due by April 13.
According to the FDA, this guidance is intended for use by importers that initiate or cause the entry or attempted entry of foreign-sourced products or the reimportation of U.S.-made products for commercial purposes to help ensure that such products are safe and comply with applicable U.S. requirements.
In general, the recommendations advise importers to know the foreign firms with whom they do business and through which the products they purchase pass, understand the products they import and their vulnerabilities, understand the hazards that may be introduced during the product’s life cycle, and ensure that these hazards have been properly controlled and monitored. Importers should consider instituting practices to identify and minimize risk, put into place controls for known vulnerabilities (e.g., microbiological contamination or product defects), and monitor for other risks (e.g., counterfeiting or intentional contamination).
The FDA states that the good importer practices are broadly organized by four guiding principles: establishing a product safety management program, knowing the product and applicable U.S. requirements, verifying product and firm compliance with U.S. requirements throughout the supply chain and product life cycle, and taking corrective and preventive action when the imported product or firm is not compliant. The guidance suggests specific actions importers can take to accomplish each of these objectives.
(Minister of International Trade)
The Government of the United States of America today published its final regulations for U.S. country-of-origin labelling (COOL). The Government of Canada recognizes provisions in the final rule that will help to level the playing field for Canadian producers and will strengthen the integrated North American livestock industry.
“I am pleased that key issues raised by Canada are addressed in these measures,” said the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway. “Together with the provinces and industry, we will continue to assess the trade and market impact of this legislation. We have built a strong and durable trade relationship over the years with the United States and we must more than ever aggressively pursue this already robust relationship during these difficult economic times.”
“This government always stands up for Canadian livestock producers and that hard work is paying off as we protect and expand opportunities for our producers within the integrated North American beef industry,” said the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food. “These final regulations will help to address the concerns we’ve consistently raised with our American counterparts, and we will continue to work with the U.S. to prevent any unfair harm to our industry.”
“The bottom line is that the changes to the final rule will help to keep livestock trade moving throughout the integrated North American market and will benefit producers, consumers and processors,” added Minister Day.
The final regulations will allow for more flexibility on labelling requirements in the U.S. for meat from animals of American and Canadian origin that are brought together during a production run. Canada has repeatedly raised concerns that COOL could impose unfair costs, especially on Canadian livestock producers, by requiring the segregation of Canadian animals.
Most recently, Canada and the U.S. held formal consultations under the World Trade Organization regarding the adverse impact of the interim regulatory measures on Canadian livestock and meat producers. Canada will continue to monitor the situation and defend Canadian producers through discussions and representations to the U.S. at all levels.
The U.S. and Canada are each other’s largest agricultural trading partners. In 2007, bilateral agricultural trade totalled $32.3 billion.
A fourth straight month of declines in exports helped push down Canada’s trade surplus, to $1.3 billion in November from $2.3 billion the previous month, Statistics Canada said Tuesday.
Economists said the November surplus was far below the $3-billion surplus they had been forecasting.
Exports for November dropped by 6.8% to $39.2 billion, due to falling prices and lower volumes. Statistics Canada said it was the lowest total for exports since January 2008. While prices for exports declined, the volume of exports decreased 1.8%. Statistics Canada said a 15% decline in prices for energy exports were the major factor that led to the overall drop in exports. Energy exports were down for a fifth straight month, falling more than 19% in November to $8.4 billion.
Imports for November fell by 4.8% on price and volume reductions, to $38 billion.
Canada’s trade surplus with its top trading partner, the United States, fell to $4.5 billion, the lowest level since May 1999. Exports to the United States were off by more than seven per cent to $28.9 billion, largely the result of a decline in energy products. The decrease in exports outpaced a 3.7% drop in imports.
Imports from countries other than the United States declined by 6.6%, due to falling imports of crude petroleum, while exports decreased five per cent. Canada’s trade deficit with all countries except the United States narrowed for the second consecutive month, to $3.2 billion.
“The drop in import volumes in October and November outpaced the decline in export volumes,” said Royal Bank economist Dawn Desjardins. “We expect that the combination of the financial market crisis and deepening U.S. recession will continue to curtail export demand with import demand likely to weaken with Canada’s economy having slipped into recession late last year.” RBC said it sees the Canadian economy contracting at an annualized pace of 2.5% for the fourth quarter of 2008.
Summary statistics and a link to the data files are on the Statistics Canada website. Export and import price indexes are here.
Monday, January 12, 2009
The top nine challenges in ’09 for global supply chains
Importers and exporters may face significant unexpected costs and increased disruptions in 2009 if they do not properly address challenges to their supply chains, sourcing strategies and the flow of working capital. Some of these are hangovers from 2008’s economic turbulence, while others are just starting to develop. But the outlook isn’t all bad. There also are some promising opportunities.
Below are nine trends that will challenge multinational businesses for at least the next 12 months…
New import challenges: The amended Lacey Act
The U.S. is now the first country in the world to prohibit the import, export, sale or trade in illegally harvested wood and wood products. An amendment to the 108-year-old Lacey Act will require detailed reporting (scientific name, quantity, value and country) of any plant matter incorporated into an imported product brought into the United States. This law broadly covers plants used in processing, no matter how miniscule the amount and no matter how far removed from the harvesting of the plant. The amendment could have significant consequences for U.S. importers who will be subject to new data reporting requirements. The specific scope of what items are covered under the amendment is still being defined, with Congress acting to reduce the burden on trade. For example, plant matter used in the creation of shipping labels and manuals may not have to be reported. The first phase of enforcement is expected to begin in April. Violations of the Lacey Act provisions are expected to be prosecuted through either civil or criminal enforcement actions.
Read the complete article here.
The Department of Agriculture today [Monday] announced details of the final regulation for the mandatory country of origin labeling (COOL) program required by the 2002 and 2008 farm bills.
The full text of the final rule will be published in the January 15 Federal Register and become effective on March 16.
The rule covers muscle cuts and ground beef, lamb, chicken, goat and pork; wild and farm-raised fish and shellfish; perishable agricultural commodities (fresh and frozen fruits and vegetables); macadamia nuts; pecans; ginseng, and peanuts.
The rule prescribes specific criteria that must be met for a covered commodity to bear a “United States country of origin” declaration.
The rule also contains provisions for labeling covered commodities of foreign origin; meat products from multiple origins; ground meat products, as well as commingled covered commodities.
Fish and shellfish must carry labels specifying their method of production, “wild” or “farm-raised.” Read more here and click here to read the text of the final rule.
Transport Canada is embarking on a “due diligence” analysis concerning future infrastructure investments for marine gateways and other transportation entities (e.g. road, rail, intermodal) related to the projected movement of freight to / from the centre of Canada and the U.S. Mid-West (The North American Heartland), and offshore markets.
We are requesting your participation in a web-based questionnaire to help Transport Canada better understand the decision making process in determining ports of call. Your participation as a shipper/receiver will provide us with insights on the critical drivers of your choice. This study will also help inform Transport Canada on what type of future Canadian investments are needed, as ports in Canada, U.S. and Mexico increasingly compete for supplying transportation services to the North American Heartland.
You can access the English version of the survey here and the French version here.
(Journal of Commerce Online – Courtney Tower)
Diversion of container ships from Canada’s west coast Port of Vancouver have become “significant” as marathon collective bargaining continues between waterfront employers and union foremen.
Another in a series of day-long bargaining sessions between the British Columbia Maritime Employers Association and International Longshore and Warehouse Union Local 514 ended Friday with “some issues resolved – it was a positive thing, a cause for some optimism,” BCMEA Vice President Greg Vurdela said in an interview.
Talks are scheduled to resume January 15 under federal mediation.While the bargaining has continued at a leisurely pace, with five and six days between meetings, the threat of a strike or lockout being called on three days’ notice has spurred nervous shipping lines to divert their vessels from Vancouver to regional rivals such as Tacoma and Seattle, Washington. Read more here.
The Consumer Product Safety Commission has recently issued the following guidance on new requirements under the Consumer Product Safety Improvement Act that will take effect February 10. Manufacturers, importers and retailers are expected to comply with these requirements.
Beginning February 10 children’s products cannot be sold in the U.S. if they contain more than 600 parts per million total lead, even if they were manufactured before that date. The total lead limit will drop to 300 ppm on August 14, 2009.
Certain children’s products manufactured on or after February 10 cannot be sold in the U.S. if they contain more than 0.1% of certain phthalates or if they fail to meet new mandatory standards for toys.
Importers and domestic manufacturers must certify that children’s products made after February 10 comply with all new safety standards and the lead ban. Sellers of used children’s products, such as thrift stores and consignment stores, are not required to certify that those products meet the new lead limits, phthalates standard or new toy standards.
More information from the CPSC here.
The busiest U.S.-Canada truck crossing suffered a sharp decline in traffic in December, and for all of 2008.
The Ambassador Bridge linking Detroit and Windsor, Ontario, had 181,938 truck crossings in December, down 17.9 percent on-year, the Public Border Operators Association reported.
Crossings totaled 2,885,047 for all of 2008, off 15.1 percent from 2007.
The second-busiest link, the Blue Water Bridge, 60 miles downriver from Detroit-Windsor, had 98,449 crossings in December, a decrease of 11.87 percent from a year ago. For the year, traffic fell 2.45 percent to 1.57 million trucks. Read more here.
The International Trade Commission has posted to its website its annual compendium of U.S. merchandise trade data
This publication provides a comprehensive review of U.S. trade performance, focusing on changes in exports, imports and trade balances of key natural resource, agricultural and manufacturing industries. It also examines market and economic factors influencing trends in U.S. trade with other major industrialized countries, what the U.S. exported to China and six other major trading partners and what it imported in return, and how increasing energy prices affected U.S. trade. Trade data for 2003-2007 for over 250 industry/commodity groups is included as well.
Canada’s busy West Coast ports are already feeling the impact of a possible strike by ship and dock foremen belonging to Local 514 of the International Longshoremen and Warehouse Union (ILWU) of Canada.
Roughly 425 workers at ports in B.C.’s Lower Mainland, Vancouver Island and Prince Rupert have voted to strike unless the union, the British Columbia Maritime Employers Association (BCMEA) and two federally-appointed mediators are able to negotiate new labour contracts.
The union’s latest proposal, made over the weekend, is being considered by the BCMEA, which had promised to respond to the proposal by Friday at the latest.
“Yes, absolutely there has been an impact on the ports,” said Peter Xotta, vice-president of business development for Port Metro Vancouver. Read more here.
Prime Minister Stephen Harper will pitch his government’s proposal for a Canada-U.S. climate-change accord and urge greater economic co-operation to revive the North American economy when Barack Obama travels to Canada in his first foreign trip as U.S. president.
Mr. Obama is expected to address Parliament when he visits Ottawa. The high-profile visit of the new president - who is enormously popular among Canadians and throughout the world - will give Mr. Harper an opportunity to highlight Canada’s importance to the United States as both a strategic and economic partner at the outset of Mr. Obama’s term in office.
It will also allow the Democratic president to convey the message that the U.S. is prepared to work more effectively with its allies to confront common problems.
“This is the beginning of an initiative by the president, to be followed around the world by our new secretary of state, that we’re back in the mode of listening to our friends and co-ordinating with our friends, as opposed to sitting in Washington and instructing our friends,” Gordon Giffin, a former U.S. ambassador to Ottawa, said yesterday. Read more here.
Friday, January 9, 2009
Barack Obama should implement a broad range of measures to expand international trade and help jump-start U.S. economic growth, the U.S. Chamber of Commerce said today.
In its annual State of American Business report, Chamber President and Chief Executive Thomas J. Donohue outlined the group’s new trade agenda:
• Completing the Doha Round of WTO-sponsored trade talks;
• Improving the Trade Adjustment Assistance program to simplify eligibility for displaced workers;
• Doubling federal spending on programs that help small U.S. exporters;
• Ratifying new free-trade agreements, including pending pacts with Colombia, Panama and South Korea;
• Strengthening intellectual property regulation;
• Reaffirming support for the Foreign Investment and National Security Act of 2007;
• Pursuing bilateral investment treaties with China, India, Brazil, and Russia;
• Modernizing U.S. export controls;
• Ending the failed U.S. trade embargo against Cuba.
Read more here.
A trade association representing U.S. textile and apparel importers has called on the incoming Obama administration to eliminate tariffs on such goods, avoid discriminatory treatment of imports and improve the transparency of trade policymaking in this sector. The U.S. Association of Importers of Textiles and Apparel stated in a recent white paper that the January 1 removal of the remaining quotas on imports from China signals “a transformative moment” that “compels a complete re-thinking of apparel trade policy.” The group’s recommendations include the following.
• Eliminating tariffs – Both quotas and high tariffs on textile and apparel products have imposed a costly burden, particularly on consumers with low incomes. Now that quotas have been scrapped, and given the ongoing economic downturn, the elimination of tariffs “must be a top priority.”
• Avoiding discriminatory treatment – The discriminatory treatment of imported textiles and apparel that has marked decades of trade agreements and unilateral preference programs should be discontinued in favor of “simple, user-friendly and uniform rules premised on real business practices.” Apparel products should no longer be excluded from development programs such as the Generalized System of Preferences. The domestic textile industry should be required to follow the rules (e.g., standing to bring trade remedy cases) set forth in U.S. trade laws.
Read more here.
Thursday, January 8, 2009
Few believe that the standard New Year greeting applies to things economic. The shellshock of last fall’s seismic financial and economic shifts has worn off, and turned into abject pessimism about the near-term future. Bleak stuff to start the year with. What should we be prepared for?
Global growth will be much slower. This is already guaranteed by sharply weaker late-2008 activity, as it has flattened momentum heading into 2009. Forecasts have been scaled back radically, and will come under further scrutiny as the final numbers for 2008 are released.
But there’s more bad news in store. Expect to see harsh headlines, and on a number of fronts. First, the slow, steady global slowdown has reached emerging markets, but aggregated economic data are still murky. The decidedly downward direction of recent data movements suggests that we are in for some sobering GDP releases in the coming months. What is more, as the reality of slower activity sets in, the adjustment process is sure to weigh further on economic growth. Read more here.
U.S. Customs and Border Protection announced today [Wednesday] a schedule for information sessions to provide the trade community with an opportunity to learn more about the new Importer Security Filing and Additional Carrier Requirements (a.k.a. ISF/”10+2”) interim final rule. These events are intended to give the importing and filing community a basic understanding of how to fulfill the new requirements.
The following cities are scheduled for January 2009:
• Oakland, CA - Wednesday January 14, 2009, Registration
• Baltimore, MD - Thursday January 22, 2009, Registration
• Philadelphia, PA - Friday January 23,2009, Registration
• Charleston, SC - Wednesday January 28, 2009, Registration
• Savannah, GA - Thursday January 29, 2009, Registration
Dates for Houston, TX; Boston, MA; Miami/Port Everglades, FL; Long Beach, CA; Chicago, IL; and Norfolk, VA will be announced in the near future.
Space is limited so please pre-register using the CBP on-line registration (see links above). Specific event information with location details and further instructions will be emailed to registrants after completion of the on-line registration process.
Customs and Border Protection has issued a bulletin providing carriers with guidance to ensure compliance with advance manifest filing for vessels that are diverted to Los Angeles-Long Beach in the United States in the event of a longshore labor disruption at ports in western Canada.
Contract negotiations are scheduled to continue later this week between the British Columbia Maritime Employers’ Association and dock foremen represented by the International Longshore and Warehouse Union. A strike or lockout could occur by January 12.
Customs stated that if a carrier drops a Canadian first port of call, and comes directly to the U.S. with Canadian-destination cargo that has not been subjected to 24-hour advance manifest filing, a carrier must notify CBP at the designated first port of arrival as soon as it realizes it is not going to make the foreign port of call. Read more here.
The American Trucking Associations (ATA) released the ATA Certified Cargo Security Professional Resource Guidebook, which provides a detailed synopsis of motor carrier security from pick up to delivery.
Developed by the Security Council of American Trucking Associations, the 186-page Guidebook helps readers evaluate and manage risk and trucking security, whether physical security en route and at a facility, personnel, or information and computer security. The Certified Cargo Security Professional (CCSP) guidebook covers investigations in the logistics environment, emergency disaster management, federal security regulations for hazardous materials transportation, cross-border security, intermodal security, and food security.
In addition, the Guidebook is the study resource for the CCSP Certification examination administered through ATA and recognized by the North American Transportation Management Institute. The CCSP Certification is a specialty credential that denotes a level of knowledge and skill in the design, implementation and administration of security protection in the cargo/transportation industry.
“Eighty percent of all communities in the U.S. rely solely on trucks for the products and goods they receive, including food, books, clothing, electronics, automobiles, and medical supplies,” said ATA President and CEO Bill Graves. “Securing the transportation infrastructure and supply chain against potential acts of cargo theft, natural disaster, organized crime, and even terrorism is a critical piece of the homeland security effort. ATA established the CCSP Certification and accompanying CCSP Resource Guidebook to address this vital need by expanding and unifying our industry's approach to security.”
The Guidebook, part of the ATA Business Solutions line of products, events, services, can be purchased at here or by calling (866) 821-3468.
(Embassy – Jeff Davis)
As Canadians rang in the new year, the government rolled out a series of stringent new regulatory controls governing what can – and cannot – be labelled a product of Canada. And while the government says the new rules aim simply to better protect and inform Canadian consumers, some see this as a protectionist move aimed to counteract similar country of origin labelling rules recently enacted in the United States.
Under the new regime, which came into effect December 31, a food product can only be labelled "Product in Canada" if all or virtually all of its contents, as well as processing and labour, are Canadian. A few exceptions are permitted for minor ingredients such as spices, additives and vitamins, but foreign content is not to exceed two per cent.
The new regulations set the bar much higher than the previous law, which dated back to the 1980s. Under the old regime, a food product could be labelled "Made in Canada" if 51% of its production costs were incurred in Canada.
"Our new guidelines are designed to redefine Canadian food content labels to better reflect the true origins of products in today's global marketplace," said Prime Minister Stephen Harper when announcing the new regulations in May. "Our government is tightening the definitions of these familiar labels so Canadians know exactly what they're getting, and get exactly what they want."
The new regulatory regime also changed the rules regarding products labelled "Made in Canada." Now, the made-in-Canada statement must be qualified by adding "from domestic and imported ingredients" or "from imported ingredients."
The new regulations are not mandatory, which means companies can choose not to identify where a product comes from. However, if they want to identify something as a product of Canada, for example if they feel it will increase sales, they must abide by the new rules. Read more here.
Wednesday, January 7, 2009
The U.S. Bureau of Customs and Border Protection (CBP) has a message for non–asset-based third-party logistics service providers (3PLs) that want to join the Customs-Trade Partnership Against Terrorism (CTPAT): Prove you belong.
Effective January 1, 3PLs will not be considered for C-TPAT participation if they do not own aircraft, warehouses, vehicles, or other transportation assets. Entities that only provide services in domestic commerce will also be excluded. The reason, CBP says, is that those companies are “unable to enhance supply chain security throughout the international supply chain” and thus do not qualify for C-TPAT enrollment. (Under C-TPAT, companies submit plans to CBP that show they have tight security measures in place throughout their supply chains. Those that pass an audit of their security standards and procedures receive expedited clearance for cargo entering U.S. commerce.)
As part of the implementation process, CBP has launched an online “C-TPAT enrollment sector” that gives 3PLs an opportunity to demonstrate that they meet the criteria for acceptance into the program. Each applicant must pass an initial review. After it clears that hurdle, it must then undergo a second and more rigorous screening to determine if it passes muster. Read more here.