Thursday, September 30, 2010

Despite G20 Pledge, Global Trade Friction Heating Up

(Globe and Mail – Kevin Carmichael)

The resolve of the Group of 20 countries to stare down trade barriers is wavering.

The G20 declared early in its fight against the financial crisis it would resist the impulse to placate domestic interests, vowing to resist protectionism. Officials recognized the self-defeating effect that tariff walls had during the Great Depression.

For the most part, the leaders of world’s major economies have remained true to their word. Global trade will increase 13.5% this year, according to the World Trade Organization, a feat that suggests shipping lanes have been left wide open.

Still, trade friction between some nations is building.

Lawmakers in the United States are scheduled to vote on legislation Wednesday that would allow companies to seek retribution for sales lost to international competitors that benefit from government manipulation of exchange rates. The bill is aimed squarely at China, which many unions and some companies blame for lost jobs, even though the country is the U.S.’s fastest-growing export market.

“We’ve had a trend towards more disputes, as compared to the sort of businesslike flow which we had for the two to three years preceding the crisis,” WTO director-general Pascal Lamy conceded last week, according to a report on Read more here.

India Protests Against US Trade Barriers at WTO

(Economic Times)

India at WTO today protested against escalating tariff and non-tariff barriers imposed by the on Indian goods and services including enhanced visa fee on Indian short-term services providers and the ban in Ohio on state outsourcing projects.

New Delhi cautioned the USA on its recent trade initiatives, particularly the Anti-Counterfeit Trade Agreement (ACTA), saying “they contribute collectively to undermining not only the (Trade related Intellectual Property Rights) agreement but the multilateral trading system as well in some measure.”

“The US, which is the undisputed leader of the global trade arena, needs to set the bar high for the other nations to emulate” instead of delaying compliance with trade rulings pronounced by the WTO’s dispute settlement body, it said. Read more here.

House Approves Two ‘Make it in America’ Provisions

(Sidley Austin LLP)

On September 15, the House of Representatives approved two bills aimed at bolstering U.S. manufacturing by requiring parts of the U.S. government to buy only U.S.-made products. Both bills would need to be approved by the Senate and signed by President Obama before they become law, but nonetheless signal a possible spate of “Buy American” legislation in the coming weeks.

The bills are:

1. The “Berry Amendment Extension Act,” which would require two agencies within the Department of Homeland Security to buy U.S.-made textiles, clothing, cotton and other related goods; and

2. The “Congressional Made in America Promise Act,” which requires goods and supplies used by Congress to be sourced in America, with limited exceptions.

The bills are part of the broader “Make it in America” legislative initiative launched by the Democratic leadership in Congress, which has been under increasing pressure to stimulate U.S. job creation and manufacturing. The initiative is still under development but could also include the consideration of a China currency bill and other pro-U.S. manufacturing legislation (the Foreign Manufacturers Legal Accountability Act, H.R. 4678/S.1606, has been mentioned as a possibility) in the few weeks – perhaps only days – left before Congress adjourns for the mid-term elections. Read more here.

WTO Calls on US to Cut Farm Subsidies

(AFP via

The World Trade Organization called on the United States on Wednesday to cut its farm subsidies, saying that they were so “considerable” that they could affect market prices. In a report analysing Washington’s policies since 2007, the trade body said that while promoting its exports, the United States should also reduce “distorting measures ... including ... support for agriculture.”

The WTO noted that support granted to the sector under the multi-billion-dollar 2008 Farm Act are mostly “linked to prices and or production.” Thanks to this support, “producers of cereals, oilseeds, and cotton are effectively insulated from market prices while sugar and dairy have market price support programmes,” said the WTO. “The large size of the agriculture sector means that the absolute amount of support is considerable, varies from one year to another depending on prices, and can affect world prices,” it added. Read more here.

NAFTA Trade Climbed 18% in July

(Journal of Commerce Online – Joseph Bonney)

Surface transported trade falls 12.3% from June to July

The value of trade moving by surface transportation between the U.S. and Canada and Mexico totaled $61.3 billion in July, an 18% increase from a year earlier, but the business declined from June to July, the U.S. Department of Transportation reported Thursday.

The value of surface transportation shipments between the U.S. and its NAFTA partners fell 12.3% in July from the previous month. The DOT’s Bureau of Trade Statistics noted that month-to-month changes can be affected by seasonal variations and other factors.

U.S.-Canada trade totaled $36.3 billion in July, up 17.1% from a year earlier. U.S. surface trade with Mexico totaled $24.9 billion, up 21.5% from July 2009. Read more here.

Railway Carloadings Up in July

(Statistics Canada)

The volume of cargo carried by Canadian railways rose in July, as both commodity loadings in Canada and traffic received from the United States increased.

Total freight traffic originating in Canada and received from the United States rose to 24.7 million metric tonnes, up 19.6% from July 2009. Compared with July 2009, freight loaded in Canada increased 17.4% to 22.3 million metric tonnes in July. The Canadian railway industry’s core transportation systems, non-intermodal and intermodal, both contributed to the rise in cargo loaded.

Non-intermodal freight loadings, which are typically carried in bulk or loaded in box cars, rose 18.5% to 19.9 million metric tonnes. The commodity groups with the largest increases in tonnage were iron ores and concentrates, potash and iron and steel (primary or semi-finished). In contrast, several commodity groups registered declines. Loadings of lumber led the way, followed by wood pulp and other cereal grains.

Intermodal freight loadings, transported through containers and trailers loaded onto flat cars, increased 8.3% to 2.3 million metric tonnes in July, compared with the same month the previous year.

Rail freight traffic coming from the United States rose to about 2.5 million metric tonnes in July, up 44.3% from July 2009. Non-intermodal freight transported from the United States contributed to the increase.

From a geographic perspective, 55.3% of the freight traffic originating in Canada was in the Western Division of Canada, with the remainder loaded in the Eastern Division. The Eastern and Western Divisions, for statistical purposes, are separated by an imaginary line running from Thunder Bay to Armstrong, Ontario. Freight loaded at Thunder Bay is included in the Western Division while loadings at Armstrong are reported in the Eastern Division. Read more

Canada Consumer Product Safety Act Consultation: Administrative Monetary Penalties

(International Law Office – Penny S Bonner and Martha A Healey, Ogilvy Renault LLP)

On August 25 2010 Health Canada announced another consultation on regulations under the proposed Canada Consumer Product Safety Act.

The intent of the proposed Administrative Monetary Penalties Regulations would be to provide details on how a penalty for a violation under the proposed act would be calculated, including ‘gravity factors’, weighting and penalty values. The regulations would:

• contain information classifying violations as minor, serious or very serious;

• identify how gravity factors of history and risk would be used to calculate the penalty; and

• provide for a range of penalties associated with the ‘total gravity values’.

This new consultation is the fourth such consultation launched by Health Canada over the last few months. Even though Health Canada is releasing consultation documents (as opposed to actual draft regulations), this activity shows a clear intent to move actively forward, or be seen to be moving forward, with draft regulations for the proposed act. In turn, this may be a sign that Health Canada will push swift passage of the proposed act once Parliament returns from the summer recess in September.

The consultation on the proposed Administrative Monetary Penalties Regulations is open for comment until November 7, 2010. Read more here.

Wednesday, September 29, 2010

Customs Withdraws First Sale Proposal

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

The formal notice withdrawing U.S. Customs and Border Protection’s January 2008 proposal to revoke the First Sale Rule will be published in [today’s] Federal Register. A copy of this notice can be found here.

CBP’s formal action withdrawing the proposed notice is directly related to our efforts. When this issue was brought to light a few months ago, our team acted immediately urging stakeholders on Capitol Hill as well as administration officials to insist that CBP formally withdraw its notice proposing elimination of first sale valuation. Read more here.

Brokers to Play Key Role in US Customs System

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

Account management to aggregate data for business

Customs brokers will play a key role in getting small and medium sized businesses into a Customs and Border Protection account management system, Commissioner Alan Bersin told members of the National Customs Brokers and Forwarders Association of America on Monday.

Bersin said handling the imports of the United States as millions of lines of separate entries was an outdated practice that Customs must change.

“We have to aggregate this data and approach it in a simplified fashion, and that’s what management by account is intended to accomplish,” Bersin said. “It strikes me that the customs broker is absolutely critical in making account management available to small and medium-sized businesses.

“It’s going to require that we collaborate and figure out how the customs broker can help perform the aggregating tasks that will be required,” Bersin said. “It is a new set of responsibilities but I think your association recognized from the beginning that this is an evolving profession.” Read more here.

China’s Rare Earth Exports Back on Track

(Japan Times)

China has resumed procedures to export rare earth metals to Japan after the bilateral dispute over the Senkaku Islands reportedly halted shipments of the critical materials, trading house sources said Wednesday. A Chinese mining company has restarted applications for exports and Chinese customs authorities have confirmed that cargo will be shipped once the procedures are completed, the sources said.

Separately, Chief Cabinet Secretary Yoshito Sengoku said that China may have started trying to repair ties with Japan, but more must be done to reduce the bilateral tension. “Currently, we are not in a win-win relationship. It is probably obvious to everyone,” the government’s top spokesman said at a news conference. “However, I presume that (China) has started making efforts to bring the situation back to zero (from negative).” Read more here.

Toy Makers Fight for Exemption from Rules

(New York Times – Andrew Martin)

Is a football mainly for children? What about a Halloween costume or a model train?

None of the above, manufacturers say, as a new federal crackdown on dangerous toys has left some in the industry crying foul and not wanting to play. The Consumer Product Safety Commission has been swamped with requests to exempt playthings from the new regulations, put in place after extensive toy recalls several years ago.

The Consumer Product Safety Improvement Act of 2008 gave the commission the job of defining a “children’s product” – which includes such things as toys, clothing and household goods – and eventually enforcing the act. But coming up with that definition has become so difficult that the commission has postponed votes three times. Another vote is scheduled for Wednesday, but it is unclear if the five commissioners – three Democrats and two Republicans – can reach an agreement this time. A spokesman for the commission declined to comment. Read more here.

United States’ ‘Deteriorating Infrastructure’ Causes Drag on Economic Growth

(Business Wire)

The US Chamber of Commerce has released what it calls the first-ever nationwide and state-by-state Transportation Performance Index which shows a significant decline over the last five years in how America’s transportation infrastructure is serving the needs of domestic commerce, international trade, and the overall US economy. The annual index is the first of its kind designed to look over time at how US transportation infrastructure is serving the needs of the US economy and business community.

“The performance of the nation’s transportation system is not keeping pace with the rate of growth of the demands on that system,” said Thomas J. Donohue, president and CEO of the US Chamber of Commerce. “As our economy recovers, the nation’s transportation infrastructure must be prepared to meet the projected growth in freight and population. In fact, a 10-point improvement in the new national transportation index could generate 3% more growth in the nation’s Gross Domestic Product. However, our index shows that from now through 2015 there will be a rapid decline in the performance of the system if we continue business as usual. Right now we’re on an unsustainable path.” Read more here.

Tuesday, September 28, 2010

EFCA Makes Taiwan a New Gateway to China

(Lexology – Jack J.T. Huang et al., Jones Day)

On June 29, 2010, Taiwan and China signed the Economic Cooperation Framework Agreement (“ECFA”), a landmark bilateral trade agreement that will make Taiwan a new gateway to China. The ECFA, which came into effect on September 12, 2010, is the latest, and the most significant, installment in a series of cross-strait agreements signed between Taiwan and China over the past few years to foster closer economic relationships between the two sides of the Taiwan Strait.

The ECFA seeks to provide a framework for Taiwan and China to gradually reduce tariffs on goods, remove non-tariff trade barriers, open up service sectors, and lift investment restrictions, thereby promoting closer cross-strait economic cooperation and interaction. The ECFA is essentially a free trade agreement (“FTA”), encouraged by the World Trade Organization (“WTO”) to be entered into among its members.

The ECFA provides a mechanism pursuant to which Taiwan has an opportunity to be placed on par with, if not more favorably than, ASEAN and other countries having FTAs with China, with respect to exports to China. The Early Harvest List for Export Goods (Schedule 1 of the ECFA) seeks to progressively cut tariffs to zero within three years on hundreds of Taiwanese export goods to China (currently valued at US$13.84 billion per annum).

Read the complete article here.

Slow Road to Export Reform

(Lexology – John R. Liebman and Andrea Prohaska, McKenna Long & Aldridge)

It has been widely recognized for decades that U.S. export controls are in disrepair. Congress’ failure to reauthorize the law underpinning the Export Administration Regulations (“EAR”) has resulted in frail, disjointed authority to regulate dual-use items. Poor coordination between the U.S. State and Commerce Departments has created confusion over which agency has jurisdiction over what products; and overly stringent regulation of commercial items has stunted business and has arguably distracted from effective regulation of key military technologies. Yet, despite several past attempts at reform, including legislative initiatives beginning in the early ‘80s and President Clinton’s efforts to overhaul the system in the mid-’90s, we have made only marginal improvements. The repeated failure to successfully implement broad based reform has placed U.S. exporters at an increasing disadvantage in a world where cutting edge technologies are no longer the exclusive province of U.S. industry and many traditional foreign customers are turning to non-U.S. sources to avoid stifling export regulation issues. Read more here.

Port Authority, CN Sign Pact to Boost Efficiency, Move More Cargo

(Montreal Gazette)

The Montreal Port Authority and Canadian National Railway Co. said Monday they have signed a framework pact aimed at raising the port’s efficiency and boosting its share of cargo shipped between Europe and Ontario and the U.S. Midwest. CN will benefit by carrying more cargo onwards. Read more here.

U.S. Seeks NAFTA Panel for Mexico Dispute

(American Shipper)

The United States on Friday asked the North American Free Trade Agreement Free Trade Commission to set up a dispute settlement panel regarding Mexico’s decision not to move its “dolphin safe” labeling dispute from the World Trade Organization to NAFTA, as requested by the United States and as required by NAFTA’s Article 2005. Read more here.

Monday, September 27, 2010

Canadian Online Shopping Tops $15B a Year

(CBC News – The Canadian Press)

Canadians ordered $15.1 billion in goods and services on the internet last year, up from $12.8 billion in 2007. Statistics Canada attributed the increase to a rise in the number of online shoppers and a higher volume of orders.

The agency said 39% of Canadians aged 16 and over used the internet to place more than 95 million orders in 2009 – up from 32% and 70 million orders in 2007, when the survey was last conducted. [...]

The top 25% of online shoppers spent an average of $4,210 on internet purchases during 2009, accounting for almost half of total orders and more than three-quarters of their value. The most common types of online orders continued to be travel services; entertainment products such as concert tickets; books and magazines; and clothing, jewelry and accessories.

Read more here. Summary statistics and a link to the data file are on the Statistics Canada website here.

Food Inspectors Focused on Imports Before Report

(The Globe and Mail – Gloria Galloway)

The agency responsible for food safety in Canada says it started to improve surveillance of imported food even before an internal audit found two years ago that it was not doing a good job of monitoring what was coming into this country.

Cameron Prince, vice-president of operations at the Canadian Food Inspection Agency, said Friday that his organization has taken a number of steps to enhance its imported food program.

Dedicated teams of food inspectors have been established to look for contraband items in the marketplace, Mr. Prince said. Others have been regularly redirected from their usual jobs at Canadian processing plants to conduct “border blitzes,” he said. [...]

There’s a better tracking system in place so the agency knows what food has arrived in Canada and where it has gone. And 538 new front-line inspectors have been hired since 2005 – though Mr. Prince could not say how many of them have been dedicated to watching the imports. Read more here.

CMS and FDA Announce New Parallel Review Process for Medical Products

(Robert F. Church et al., Hogan Lovells)

On September 17, 2010, the Centers for Medicare and Medicaid Services (CMS) and the Food and Drug Administration (FDA) issued a notice describing a new, voluntary parallel review process under consideration by these agencies for medical products.1 Although still in the early stages of its development, it represents a potential opportunity for new technologies, particularly those that would face coverage challenges after FDA approval, to pursue affirmative coverage on a more expedited timetable than currently available. The agencies have provided some details about the parallel review process, and seek comments on a number of aspects of the contemplated parallel review process, which must be submitted by December 16, 2010. The agencies also discuss a small pilot program for the parallel review process. Read more here.

China Slaps Anti-Dumping Duties on US Chicken Imports


China will levy anti-dumping duties of up to 105% on imports of US chicken products, the government said on Sunday, in a move likely to ratchet up trade tensions between the two nations.

“The US chicken industry has dumped broiler products into the Chinese market and caused substantial damage to the domestic industry,” the commerce ministry said in a statement on its website. The duties take effect on Monday, it said.

China will slap anti-dumping levies of over 50% on up to 35 US chicken broiler exporters including Tyson Foods Inc, Keystone Foods LLC, Pilgrim’s Pride Corporation and Sanderson Farms Inc, the statement said. Levies of over 105% will be placed on imported chicken broilers, a type of chicken raised specifically for meat production, from all other US producers, it said. Read more here.

Ministers Announce Findings of Study on Trade Agreement Between Canada and India

(Minister of International Trade)

(The Honourable Peter Van Loan, Minister of International Trade, today [Friday] announced public release of the results of a joint study on the benefits of free trade between Canada and India. The Minister made the announcement in Ottawa together with India’s Minister of Commerce and Industry, Anand Sharma, following the First Annual Ministerial Dialogue on Trade and Investment.

“Minister Sharma and I welcomed and endorsed the Joint Study Group recommendation that negotiations should be initiated toward a substantive and ambitious trade agreement that would be to our countries’ mutual benefit,” said Minister Van Loan. “The agreement would help us meet our mutual goal of increasing bilateral trade to $15 billion annually within the next five years.”

The study shows that freer trade in goods and services between Canada and India could also increase Canada’s gross domestic product by at least US$6 billion, boost bilateral trade with India by 50 percent, and directly benefit Canadian sectors like forestry, energy and manufacturing.

“Canada’s trade and investment partnership with India is on an exciting path, and an economic partnership agreement will further broaden and deepen that partnership,” said Minister Van Loan. “Our government has made India a key priority in Canada’s foreign and trade policy agenda.”
Prime Minister Stephen Harper and Prime Minister Manmohan Singh of India announced the establishment of the Ministerial Dialogue during Prime Minister Singh’s recent visit to Canada. That visit and last year’s visit to India by Prime Minister Harper have underlined both countries’ dedication to their bilateral relationship.

During their meeting, Ministers Van Loan and Sharma reviewed the progress of negotiations on a foreign investment promotion and protection agreement, which will stimulate increased investment flows between the two countries.

The ministers place a high value on the input of Canadian and Indian businesses, and look forward to the prompt establishment of an India-Canada Chief Executive Officer (CEO) forum. The forum was one of the initiatives discussed during Prime Minister Harper’s visit to India in November 2009.

The CEO forum will be made up of leading Canadian and Indian business representatives, who will provide advice on improving investment and trade between Canada and India. The CEO forum will regularize the India-Canada CEO round tables that have been taking place on the margins of ministerial visits. Later today, the ministers will participate in the third such round table, with key CEOs and business leaders, including Pierre Duhaime, President and CEO of SNC-Lavalin Group; Richard Legault, President and CEO of Brookfield Renewable Power; Hari Bhartia, President of the Confederation of Indian Industry, and Co-Chairman and Managing Director of Jubilant Organosys Ltd.; and Deep Kapuria, Chairman of Hi-Tech Gears Ltd.

“The Government of Canada is creating an environment that allows Canadian technological innovations and commercial expertise to reach more markets,” said Minister Van Loan. “Our government is committed to opening global markets, including India, for Canadian companies through an aggressive free trade agenda that includes promoting investment and fighting protectionism.”

For more information, please see the Canada-India Joint Study Group Report.

Demonstration in Support to our Support (CR/AS) Staff Members

(PR Net-USA)

On Monday, September 27, 2010, the members of the Customs and Immigration Union (CIU) will march in front of the Canada Border Services Agency (CBSA) Offices at 400, Place d’Youville in Montreal, Quebec between 7 and 9 am to support their fellow Sisters and Brothers Support Staff (CR and AS) members.

The Customs and Immigration Union has been aware since 2007 that a pilot project is taken place in Montreal, QC to address the issue of CR/AS job descriptions. It was brought about by the fact that there were 185 job descriptions that covered various support staff positions nationally. These descriptions have followed the now CBSA throughout its legacy evolution. Most of these job descriptions have been identified as inaccurate, improperly classified, obsolete, out-of-date and not reflective of duties performed by those members.

The Support Staff Community and CIU have been very frustrated with the slow approach and disregard apparent in this process. CIU has been approached by numerous CR/AS members seeking an expedient and fair resolve to their job description and classification issues. Many of these members feel this is also an equity issue due to the fact that it’s predominantly a female dominated group. CIU is looking into this as also being a Human Rights issue. Read more here.

Customs Agents Grab Counterfeit Detergent in Wash.

(Associated Press)

U.S. Customs and Border Protection officers have seized nearly 1,500 cartons of counterfeit laundry detergent that arrived in Seattle by ship from China.

Included were 5,000 boxes of detergent that resembled Tide and 3,600 bags that resembled the Ariel brand. In a statement, Customs says the products not only bore protected trademarked names, they falsely claimed they originated in the United States. Read more here.

Sunday, September 26, 2010

C-TPAT 2010 Partner Survey

(CIFFA eBulletin)

U.S. CBP has published a report of the results regarding their 2010 Member and Cost-Benefit Survey. The document can be downloaded here [164 pages].

CBSA Organization Structure


Canada Border Services Agency has released a final copy of their current organizational structure chart and contact list. (French version)

Saturday, September 25, 2010

The Weekly Scope: Technical Bulletins from GHY at a Glance

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending September 24, 2010 is now available on our website here.

Friday, September 24, 2010

Analyst Predicts Shortage of Containerships by 2012

(International Freighting Weekly – Mike King)

There could be a shortage of containerships by 2012 as the newbuilding orderbook approaches 10-year lows, according to new analysis by Macquarie Equities Research. In its latest Vital Signs shipping report, Macquarie found that the current boxship orderbook would produce a 10% increase in the global fleet’s size next year, falling to 6% growth in 2012.

“Based on our view that volumes will achieve minimum growth of 8% a year, we are potentially facing a shortage of capacity in 2012,” said the authors. “The orderbook as a percentage of the current fleet is approaching lows last seen in 2003, ahead of the last boom in containership profits.”

Alphaliner estimates that some 6.7% of the orderbook has been cancelled since the beginning of the global financial crisis in October 2008, while scrapping has also made a sizeable dent in capacity.

In 2009, only two new containership orders were placed and this year, the 55 vessels that have been ordered equates to just 2.2% of the existing fleet. Macquarie said: “Due to solid deliveries year-to-date, the orderbook has fallen to 26.4% of the cellular fleet from 36.1% in January and a peak of 64.2% in November 2007.” Read more here.

Canada Introduces Bill to Enact Panama Free Trade Agreement

(Bloomberg BusinessWeek – Theophilos Argitis)

Canadian Trade Minister Peter Van Loan introduced legislation today to implement the country’s free-trade agreement with Panama.

The trade agreement was signed in May, and will give Canadian companies access to the government procurement market in the Central American country, including the expansion of the Panama Canal, Van Loan said at the time.

Couriers Shift from Packages to Freight

(Air Cargo World)

A survey by the Messenger Courier Association of America (MCAA) said its members are changing from delivering letters and packages to becoming “key players in the global supply chain, a dramatic shift from their previous role”.

The MCAA members have migrated towards handling larger freight with 71% of respondents offering expedited freight delivery. Some 42% of members reported an increase in larger freight deliveries.

“This survey verifies what we’ve been hearing from our members – participating in the growing need for global deliveries has kept them viable and successful,” said Chris MacKrell, president of MCAA. “The majority of our members (53%) say their businesses are doing better than a year ago.

“An important component of that success is the industry’s shifting role as a key player in the global supply chain. That contrasts with the old-fashioned view of our industry as one consisting of mom and pop companies delivering letters.”

The shift is supported by increasingly sophisticated technology noted Mackrell: “Seventy-five percent of respondents told us that their communications’ systems were integrated into their business systems and 93% accept orders via the internet. An increasing number (24%) are able to capture data directly from customers’ websites.”

Key industry sectors served by MCAA members are medical, banking, pharmaceutical, high-tech, 3PLs and government. The survey indicated that most of his members have over 20 years’ industry experience.

U.S. Companies Take Up Transloading to Streamline Supply Chains

(Procurement Leaders)

U.S. retailers and manufacturers are increasingly turning to transloading to optimise their supply chains, a new report reveals.

There is a substantial increase in the practice of transloading on the West Coast over direct shipping to the Midwest via intermodal rail, according to The Journal of Commerce.

The report explains that, by repacking inbound container shipments into larger domestic containers, shippers save on inland transportation costs and gain more inventory flexibility. Read more here.

Thursday, September 23, 2010

CBSA Trade Compliance Verification Priorities

(Baker McKenzie LLP)

The Canada Border Services Agency (CBSA) recently published a list of products that will be the focus of the CBSA’s post-entry compliance verification programs (commonly referred to as audits) for the federal government’s 2010-2011 fiscal year. The areas of increased audit activity for each compliance verification program are as follows:

Tariff classification:
• Furniture parts
• Gloves
• Organic surface-active agents – soap and other than soap
• Stone vs. articles of stone
• Reclaimed rubber

Origin verification:
• Juice products
• Mattress upholstery
• Electric Generators
• Tools, implements, cutlery, spoons, and forks, of base metal; and parts

Valuation verification:
• Light-duty automotive goods

Under the Customs Act, the CBSA may conduct post-entry verification reviews of importers to ensure compliance with respect to the determination and reporting of the proper value, origin, and tariff classification of imported goods.

The CBSA conducts different types of audits for different purposes. The areas identified above were selected due to a perceived risk in an industry or by commodity as determined by the CBSA. Importers of goods in other sectors should not feel complacent, since the CBSA also conducts verification audits to measure compliance rates to determine industry or sectors that will be targeted in the future. Consequently, importers of goods other than those identified above may still be subject to audits in the current government fiscal year.

The CBSA conducts many post-entry verifications by way of a “desk audit”, whereby the importer is asked to supply customs accounting documents for a sample of importation transactions, as chosen by the CBSA, that have occurred during a selected audit period. Under certain circumstances, the CBSA may arrange an on-site visit to the importer’s premises, if needed.

In a typical desk audit where no site visit is required, the CBSA will generally provide the importer with 30 days in which to supply the requisite accounting documents. Once the CBSA officer begins conducting the audit, it is not uncommon for importers to receive additional requests for further information or clarification regarding the transactions chosen for review. Once the audit is complete, the CBSA will typically issue an interim finding letter and provide the importer with an opportunity to respond to the CBSA’s initial findings. The CBSA will then issue a final letter indicating its findings and will also issue formal determinations, known as Detailed Adjustment Statements, for any transactions determined by the CBSA to be in error. Under section 60 of the Customs Act, importers have a legal right to appeal the CBSA’s value, origin, and tariff classification determinations they believe are incorrect.

Source: Baker McKenzie LLP

Canada’s EU Trade Talks Could Fall Apart

(Financial Post – Danielle Goldfarb and Louis Thériault)

Negotiators need to take the offensive in opening Canada to EU trade

Canadian and European Union negotiators have made stunning progress toward a comprehensive Canada–EU trade agreement in the past year and a half. But the entire agreement could fall apart if narrow interests prevail, costing Canada access to a wider range of trade opportunities than most of us can imagine.

The EU wants to go big in this deal – and it is ready to go home without an agreement if only a narrow deal is on offer. But Canadian public discussion on the issue – when it exists at all – is dominated by a narrow approach. Some voices, for example, want to keep EU products, such as cheese, out of Canada; or they do not want to allow EU companies to provide services to Canadians. Media coverage tends to be narrowly focused on Canada’s exports of products to the EU. And many businesses seem unaware that we are even negotiating a deal, let alone a wide-ranging one.

In reality, the stakes in this negotiation are enormous. If there is no deal, Canadians will lose out on freer access to a deep and wide range of trade opportunities that dwarf the widely reported $35-billion in annual Canadian product exports to the EU. Read more here.

Chinese Imports Didn’t Cause Job Woes: Report

(The Vancouver Sun – Paul Vieira, Postmedia News)

Cheap Chinese imports cannot be singled out as a “culprit” for employment woes in Canadian manufacturing in the last decade, says a report to be released today on the importance of trade to Canada's economy.

Research from a Toronto think-tank said data indicate a “very mild” relationship between growth in Chinese imports in a specific sector to job losses during the 2002-2008 period.

A stronger Canadian currency – which rose after a prolonged period of weakness – was likely a bigger factor in determining employment levels in manufacturing, says
the report from the Institute for Competitiveness and Prosperity. Read more here.

Wednesday, September 22, 2010

Pre-Clear Border Shipping

(National Post – Michael Hart)

For nearly a century, Canadian and American officials have worked together to reduce the divide created by their common border. Until 9/11, their efforts were crowned with increasing success; after 9/11, security concerns thickened the border and undermined the benefits that Canadians and Americans had come to expect from what Sir Winston Churchill once characterized as the world’s longest undefended border.

This downward spiral need not, and should not, continue. Modern technology allows the two governments to return to the successful trajectory of the past by pre-clearing as many people and goods as possible before they arrive at the physical border. Clearance at the physical border limits the amount of information and time required for inspectors to make informed decisions about risk and compliance. Satisfying all clearance requirements at the border can also delay travellers and shippers, lead to traffic congestion, add to the cost of doing business across the border, and chill discretionary trade, investment and travel.

A well-functioning border is critical to commerce in the integrated North American economy. The days are long gone when the norm was a carrier crossing the border loaded with finished products destined for retail shelves. Today, that carrier is usually part of a time-sensitive supply chain, loaded with inputs and components destined for further operations in the other country. The hidden tax of new data and of processing requirements adds significantly to production costs, undermining the competitiveness of North American producers, particularly those whose products cross the border several times during production.

Pre-clearance will offer such users a system that is more cost-effective than one that relies almost exclusively on inspection and verification at the physical border. It will also provide border officials with more reliable and timely information to make prudent risk assessments. Read more here.

Canadian International Trade Tribunal Looks at Imports of Chinese Steel Grating

(Canadian Press)

A Canadian trade body is looking at whether imports of steel grating from China have been illegally subsidized and are hurting the Canadian steel industry. The Canadian International Trade Tribunal announced Tuesday it has begun a preliminary injury inquiry into a complaint by Fisher & Ludlow of Burlington, Ont., that it has been hurt by dumping and subsidizing of Chinese steel.

The tribunal is expected to issue a preliminary ruling on the complaint by Dec. 20. If a final ruling affirms the complaint and finds that Canadian companies have been hurt, the federal government can impose anti-dumping and anti-subsidy duties. Dumping occurs when a product is sold below fair-market value in the target country. Read more here.

Administration Receives Recommendations on How to Double Exports in Five Years

(World Trade Interactive)

The Export Promotion Cabinet, a group consisting of the heads of various federal departments and agencies with trade functions, provided to President Obama Sept. 16 a report with recommendations on how the U.S. can double its exports within five years, as called for by the president’s National Export Initiative. The report states that this is an ambitious goal that “will only happen if U.S. companies, farmers and small and medium-sized enterprises – the engines of economic growth – receive the encouragement and support they need as they seek new markets for their goods and services.”

The report identifies a number of steps that have already been taken, such as organizing more trade missions to and from the U.S. and increasing loan approvals that support export shipments, but focuses on the following recommendations for future action. Read more here.

Trans-Pacific Spot Rates Fall to Five-Month Low

(The Journal of Commerce – Bill Mongelluzzo)

Spot freight rates in eastbound trans-Pacific trade lanes declined last week to their lowest point since May as carriers expand capacity faster than the growth in cargo volume.

The Shanghai Containerized Freight Index average spot rate to the U.S. West Coast in the week ending Sept. 17 fell 2.9 percent from the week before to $2,493 per 40-foot container. That was down $74 from the previous week, the steepest one-week decline in the Shanghai Shipping Exchange index this year. That marked the 11th straight week that the spot rate declined, and it hit the lowest point since May 7. Read more here.

Survival of the Fittest Supply Chains

(Industry Week – David Blanchard)

Probably nobody knows exactly how many suppliers make up the global supply chain, but according to one recent estimate, there are nearly 5 million unique suppliers in use by Fortune 1000 companies. Based on its multi-year analysis of suppliers to the Fortune 1000, CVM Solutions says that roughly 310,000 (6%) suppliers were used by two or more companies in 2009. And that number is down 15% from 366,000 in 2008.

“The overall number of relevant and highly used suppliers is significantly smaller than many believed,” says Mike Anguiano, chairman of CVM Solutions, a provider of supplier management solutions. “We also noticed that, despite the disappearance of certain suppliers, a new crop of suppliers were being added. This trend leads us to believe that there is a Darwinian effect occurring in the supply chain as Fortune 1000 companies cut weaker suppliers and replace them with stronger ones.” Read more here.

Passenger Train Between U.S., Vancouver Could Halt Over Customs Fee

(The Canadian Press)

A passenger train running between Portland, Ore., and Vancouver could be cancelled because the Canadian government wants $550,000 a year for extra customs services.

Paula Hammond, transportation secretary for Washington state, said Ottawa wants her department to pay the fee to cover additional border staffing for the evening Amtrak Cascades train.

That doesn't make sense, she said, because that second daily train has brought nearly $12 million in economic benefits to British Columbia in the year it's been operating. Read more here.

Tuesday, September 21, 2010

The Case for an Integrated Trade Compliance Strategy – October 19

79th Annual Conference & Trade Show – October 18-20, 2010
Delta Meadowvale Conference Centre, 6750 Mississauga Rd., Toronto Airport

The Case for an Integrated Trade Compliance Strategy – October 19, 2:00 p.m.

Canadian importers and exporters are rapidly diversifying their global supply chains and markets in search of a competitive edge and increased margins. The new trade reality is a complex mix of origins, production locations, and destinations for finished goods. A pro-active and diligent approach to managing regulatory obligations is necessary to ensure the enterprise is compliant at all stages of the sourcing, production, and sales cycles. This session will unpack the case for involvement and visibility of trade activities across the operations, finance, business development, executive, and board levels, and provide ideas on how to make such an integrated approach a reality.

Reynold Martens, Executive Vice President, GHY International

For more information on the program or to register, please click here: here.

EDC Business Volumes in Emerging Markets Up 28% over 2009

(Canada NewsWire)

Export Development Canada (EDC) today [Monday] announced that its business volumes in emerging markets reached $10.8 billion (all figures Canadian) in the first half of 2010, an increase of $2.4 billion, or 28%, over the same period last year.

“Emerging markets attracted Canadian exporters and investors looking for the best opportunities for growth during the first half, a positive trend for Canadian trade,” said Eric Siegel, President and CEO of EDC. “While some of this increase is influenced by continued slow growth in the U.S., EDC is encouraged because the types of transactions we’re seeing demonstrates a longer-term interest in emerging market business.”

Mr. Siegel added that EDC’s total business volume for the first half ending June 30, 2010 was $37.5 billion compared to $38.2 billion for the same period last year. Total business volume represents the sum of transactions supported throughout all of EDC’s business lines, including financing, guarantees, insurance, bonding and others.

“EDC’S business volumes are on par with the same period last year and on track to meet our forecast for year-end. These volumes are driven by Canadian companies expanding their relationships abroad, a positive trend as we slowly emerge from the global recession,” Mr. Siegel said. Read more here.

U.S. Exits Longest Recession Since World War II

(Industry Week – Andrew Beatty, Agence France-Presse)

According to the National Bureau of Economic Research, the U.S. economy exited recession in June 2009. The announcement was made on Sept. 20. More than eight million jobs were lost in the slump that was triggered by dodgy Wall Street mortgage investments.

President Barack Obama said the end of the “Great Recession” would come as little solace to the millions of people who are still out of work. “Even though economists may say that the recession officially ended last year, obviously for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, it’s still very real for them.”

The NBER underscored that slow pace of recovery as it issued a statement that confirmed: “The recession lasted 18 months, which makes it the longest of any recession since World War II. Read more here.

Canada-EU Trade Talks Need Wider Focus on Services: Report

( – Stefania Moretti)

Canada is at the bargaining table with European Union trade officials and the stakes are much higher than many would think, according to a new report by the Conference Board of Canada. That’s because Canada’s trade with the EU is grossly underestimated, the think-tank said.

Conventional trade analysis paints a narrow picture of the trade relationship, focusing mostly on hard goods trade and largely missing the service trade. Ignoring the value-added supply chain could leave Canada in a defensive position, essentially closing the door to substantial trade growth, it said.

“The entire agreement could fall apart if this narrow approach prevails, costing us better access to a broad range of long-term economic opportunities,” Danielle Goldfarb, associate director of the Conference Board’s international trade and investment centre, said in a release.

The report, entitled “Canada’s ‘Missing’ Trade with the European Union,” uses Research In Motion’s BlackBerry to illustrate the benefits of integrative trade. Designed in Waterloo, Ont., the BlackBerry is made of parts from companies all over the globe and assembled in either Hungary or Mexico. On top of manufacturing hardware for maximum returns, RIM also collects subscription fees from wireless carriers all over the world. The multilayer linkages make RIM an extremely sustainable profit model.

Yet traditional trade data would only consider a BlackBerry sale to an Asian consumer as an export from Hungary, entirely missing Canada, which accounts for a sizable portion of the collected revenue. Read more here.

When Everybody Exports, Nobody Wins

(Bloomberg BusinessWeek – Simon Kennedy)

Japan’s yen intervention may be a bad omen for global trade

On Sept. 15, Japan sold yen for dollars to slow the yen’s climb to a 15-year high against the dollar. Japan decided to take on the market to protect its exporters from the devastating impact of the super-yen. It’s a logical move, from Japan’s point of view. Yet it exposes a flaw at the heart of the current global recovery effort: The world’s major industrial economies can’t all export their way to prosperity.

Governments from Tokyo to Washington are counting on exports to keep their economies growing at a time of painfully high jobless rates and record budget deficits. The danger is that the race to hand companies such as Hitachi and Boeing an edge in the international marketplace will lead to a series of currency devaluations and protectionist measures that threaten global growth – a reprise of the 1930s-era beggar-thy-neighbor trade policies that worsened a global depression. Read more here.

DHS Recommends Clear Goals for Importer Self Assessment

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

Self-policing program lacks performance measures, says Inspector General

Customs and Border Protection has not clearly defined the purpose of its Importer Self Assessment, the Department of Homeland Security’s Inspector General said on Monday.

The report of the inspector general’s audit showed that Customs had not established performance measures or operating procedures for employees managing the program. Nor had it verified the effectiveness of applicants’ internal controls before admitting them to the program. Read more here.

Leading Third-Party Logistics Providers (3PLs) Guide

(PR Net-USA)

The 18th edition of the leading third-party logistics providers guide, Who’s Who in Logistics, has just been released. The new edition, in two volumes - The Americas and International, has been expanded with in-depth profiles of 273 3PLs.

New 3PLs added this year include: Con-way Multimodal, enVista, Fidelitone Logistics, GLOVIS, Hercules Logistics & Forwarding, IMPERIAL Logistics, ITG GmbH Internationale Spedition + Logistik, Odyssey Logistics, OOCL Logistics, Pantos Logistics, Qingdao Smart Cargo International Services, Sataria Group, Shangdong Jiayi Logistics, Topocean Group, Universal Traffic Service, Wared Logistics, and WLG.

Of the 3PLs profiled, over 73% are private versus publicly traded companies. Who’s Who in Logistics profiles individual 3PL financial information, key personnel, information technology, and service capabilities. In addition, editorial evaluations, case studies and important news events are reported. Information is presented in sufficient detail to allow companies to quickly evaluate providers for logistics outsourcing initiatives. Read more here.

Monday, September 20, 2010

ITC Report on Eliminating Duties on 735 More Drug Products

(World Trade Interactive)

The International Trade Commission released Sept. 16 results of its investigation into the potential elimination of duties on an additional 735 pharmaceutical products and chemical intermediates that are used primarily for the production of pharmaceuticals. These products would be added to the HTSUS Pharmaceutical Appendix, which was created as part of the Uruguay Round Agreements and already covers approximately 9,500 products. The U.S. and 21 other major trading countries agreed during the Uruguay Round to eliminate duties on pharmaceuticals and to periodically conduct reviews to identify additional products to be covered by the initiative.

The ITC’s report provides a summary description of the products contained in the existing Pharmaceutical Appendix as well as the proposed modifications, an explanation of the relationship between the various elements in the Appendix and the HTSUS, and an estimate of current U.S. imports and, where possible, exports of the products included in the existing Pharmaceutical Appendix and the proposed additions.

WTO Confident of 9.5% Growth in Trade Despite Crisis in EU

(The Financial Express – Ronojoy Banerjee)

The World Trade Organisation is confident of maintaining the predicted 9.5% plus growth in world trade, organisation’s deputy director-general Alejandro Jara told FE in an interview. Jara said that despite the economic crisis brewing in the European Union and its subsequent impact on world trade, overall merchandise trade would grow at a very healthy rate. “Looking at the year so far, our experts feel that it (world trade) is going to grow around 9.5%-10%,” he said. WTO director-general Pascal Lamy had said in March that after a “dismal” year 2009 when world trade dipped 12%, it would grow at a healthy rate of 9.5% in 2010. Read more here.

Canada to Bolster Latin American Relations

(The Globe and Mail)

Canada will continue to bolster relationships in Latin America through more free-trade agreements and the support of Canadian companies doing business there, Canada’s trade minister said Friday.

The federal government is in free-trade talks with many countries in the region, including Guatemala and Honduras, and will table a bill this fall for an FTA with Panama, Peter Van Loan said in a speech to a Toronto audience. Canada has strengthened ties with the region in recent years, and more Canadian companies are expanding there because of its high growth potential and geographic proximity.

“These countries are aggressively moving forward, embracing science, technology and innovation as never before, and reaching out to the world for business opportunities,” he said. Panama, he added, is a key market because of its “unique place in the global trading system,” where expansion plans for the canal are generating opportunities for Canadian companies.

EPA Sets Out New Import Restrictions on 25 Chemical Substances

(World Trade Interactive)

The Environmental Protection Agency has issued significant new use rules under the Toxic Substances Control Act for 25 chemical substances that were the subject of premanufacture notices. This action requires persons who intend to import, manufacture or process any of these 25 chemical substances for an activity that is designated as a significant new use by this rule to notify EPA at least 90 days before commencing that activity. This notification will provide EPA with the opportunity to evaluate the intended use and, if necessary, to prohibit or limit that activity before it occurs.

This rule will become effective as of Nov. 20. Written adverse or critical comments, or notice of intent to submit adverse or critical comments, on one or more of these SNURs must be received on or before Oct. 30.

Food Safety Legislation Won’t Mend Regulatory Divide

(Chicago Tribune – P.J. Huffstutter and Andrew Zajac)

Next week’s Senate hearing on the Iowa egg recalls could shed new light on the confusing separation of powers between the FDA and the USDA. As lawmakers prepare for hearings into the largest egg recall in U.S. history, food safety advocates say the congressional probe could give momentum to a long-delayed measure that would enhance the power of the Food and Drug Administration.

If passed, say policymakers, the FDA Food Safety Modernization Act could be the first major step toward streamlining the often unwieldy food safety system.

Lawmakers will grapple with the circumstances surrounding the recall this week in a congressional probe of the outbreak of salmonella enteritidis that has sickened more than 1,500 people. Read more here.

U.S. Can’t Kick the Protectionist Habit

(The Montreal Gazette)

Economists keep on showing that “protectionism” does the opposite of protecting a whole economy, but powerful interests in the United States keep turning to protective measures of narrow benefit every time they think they can get away with it.

Campaigns to “Make it in America” and “Buy America” cropped up swiftly after the economic meltdown of 2008. Exporters to the U.S. – including Canada, the U.S.’s main trading partner – protested furiously, pointing out that for the economy overall, proliferating protective barriers only exacerbate a downturn, and could even push the world into a full-blown and protracted recession. Cooler heads finally prevailed and a government procurement agreement went a long way to resolving the Buy American problem.

But the U.S. economy is still struggling, especially in the Rust Belt of the Midwest and northeast. And Americans have not given up on protectionism. The latest scheme is the Foreign Manufacturers Legal Accountability Act. It comes as no surprise that the bill is sponsored by a Democrat from Ohio who’s fearful about November’s congressional elections. Read more here.

West Canadian Ports Vie for China Trade

(Shanghai Daily)

Two small west coast Canadian cities are vying to become key players for China’s North American logistic needs, citing an advantage of faster delivery time to the American heartland and a sound and stable business environment, reported the Shanghai Daily.

Over the past few years under the Asia Pacific Gateway and Corridor programme, a US$2.8 billion initiative launched in 2006 involving the participation of the Canadian federal government, as well as those at the provincial and municipal levels, the northern British Columbia cities of Prince George and Prince Rupert have emerged as increasingly important parts of the process.

Created by the ruling Conservative Party government, the programme involved a radical transformation of traditional mode-specific transport framework of private carriers to a more integrated approach to establish the most efficient transport network to best serve global supply chains between Asia and North America.

Following a few years of heavy investment and infrastructure construction, the pieces are now in place for both Prince George and Prince Rupert to make a significant logistical difference. Read more here.

Canada’s Data Undisputed on Damages Following COOL

(Country Guide)

The U.S. government hasn’t challenged Canada’s “economic evidence” of the harm caused by mandatory country-of-origin labelling (COOL), but blames “market participants” rather than COOL itself, Canada’s cattle agency reports.

Attending the first round of oral hearings in a challenge of U.S. COOL by Canada and Mexico at a World Trade Organization (WTO) dispute settlement panel, the Canadian Cattlemen’s Association said Canada’s team was solid in its preparations and professional in refuting the U.S. team’s “creative suggestions.” “We correctly anticipated the arguments the U.S. would use to defend COOL and while there were no surprises, it is clear that the U.S. intends to defend this trade barrier vigorously,” CCA president Travis Toews said in a release Friday.

According to the CCA, Washington’s defense of COOL at the dispute settlement body’s hearings in Geneva, Switzerland was to claim that COOL is designed to inform consumers, not restrict trade, and that it hasn’t directly caused any segregation or other negative impact on Canadian cattle. Canada retorted that the market reaction to COOL was “not only predictable but in fact the intended outcome of COOL’s proponents,” the CCA said. Read more here.

Saturday, September 18, 2010

Canadian Farmers Challenge U.S. Labelling Requirements at WTO

(Bridges Weekly)

Canada is challenging the U.S.’s country-of-origin labelling (COOL) requirements for beef and pork at a meeting of the WTO’s Dispute Settlements Body (DSB). The Canadian government, backed by several business groups – including some from the U.S., claims that the implementation of COOL requirements is immensely costly forcing Canadian businesses to seek less money for their beef so as to absorb the cost of implementing the requirement. They maintain that COOL is a technical barrier to trade (TBT) and as such illegal under WTO law.

“The COOL measure is not intended to address health or safety concerns,” Canada said in its opening statement. “The objective of the COOL measure was to distort the conditions of competition in the U.S. market to favour U.S. cattle and hogs compared to imported livestock.”

The COOL act requires that consumers be informed of the country of origin of meat by a label on the sales package. To receive an “A” label, cattle must be born, raised, and slaughtered in the United States. Meat from cattle with a mixed life – for example, born and raised in Canada but slaughtered in the U.S. – must have a label indicating the mix. Read more here.