Export Initiative to Emphasize Small Business

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

President’s program focuses SBA, Ex-Im Bank, other agencies on initiative

The federal government will step up its efforts to help U.S. exporters sell goods abroad, the White House said Thursday.

Several agencies will increase the number of trade missions and encourage foreign buyers to come to U.S. exhibitions, according to a report developed by the Export Promotion Cabinet, which includes the Secretaries of Commerce, State, Treasury, Agriculture and Labor and the heads of all the trade-related government agencies. The government will also be a commercial advocate for U.S. firms competing for international contracts and work to break down barriers to trade.

The report puts trade promotion for small and medium-sized enterprises at the top of the priority list. The Small Business Administration identified more than 2,000 potential exporters in its central contract registration. Read more here.

Officials Say Obama’s Plan to Boost Exports on Track

(Bridges Weekly)

U.S. President Barack Obama’s National Export Initiative (NEI) is on track to double U.S. exports over the next five years, trade officials in Washington announced Monday. Gary Locke, the U.S. Commerce Secretary pointed towards the 17% increase in exports from this time last year, rising to slightly over US$1 billion. In order to achieve the five year goal, U.S. exports would have to maintain a year on year increase of about 15%.

The encouraging indicators come from sources including the Commerce Department and the Export-Import Bank. The Obama administration says these data suggest the NEI will reach or exceed the intended goal.

Critics, however, say the data is not being portrayed accurately and have expressed doubts that the 15% growth rate can be maintained. That the base data year being used by the Obama administration is 2009, a year which saw a three year low for U.S. exports, they say. Read more here.

U.S. Takes China Trade Cases to WTO

(Industry Week – Agence France-Presse)

Trade tensions between the United States and China ratcheted up another notch on Sept. 15, as Washington called on the WTO to probe unfair Chinese trade practices. The United States asked the World Trade Organization to investigate China’s allegedly unfair treatment of U.S. steel and electronic payment providers, the first step toward sanctions.

“We are concerned that China is breaking its trade commitments to the United States and other WTO partners,” U.S. trade representative Ron Kirk said. Amid mounting U.S. anger about China’s trade policies, Kirk’s office said it would ask the WTO for “consultations” about Beijing’s policies, a step that could lead to sanctions. Read more here.

Manufacturing Growth Will Continue to Outpace Overall Economy Says Industry Group

(Industry Week)

MAPI predicts 6% growth overall in 2010 and 5% in 2011

While the pace of recovery in the general economy has clearly slowed, the deceleration is less visible in the manufacturing sector, according to the Manufacturers Alliance/MAPI.

“Despite less consumer spending growth in the second quarter, there was nevertheless some employment growth and modest wage increases. Also, the prolonged downturn and sluggish recovery have created pent-up demand for some durable goods, including sales of motor vehicles and appliances,” said Daniel J. Meckstroth, Chief Economist for the MAPI. “The inventory swing is greatest in manufacturing; exports are predominantly manufactured and benefitted from the fast global trade bounce back; and business investment in equipment rebounded much faster than consumer spending, thus making the pace of the industrial recovery stronger than that in the general economy.” Read more here.

Customs Notice 10-015: United States Loaded Freight Remaining On Board (FROB) Cargo

(CBSA)

1. Pursuant to Customs Notice 10-007, the purpose of this customs notice is to notify industry that the Canada Border Service Agency (CBSA) has reached a final resolution with regard to the grace period for Advance Commercial Information (ACI) transmission requirements for US-loaded FROB cargo. Based on a thorough analytical review of all information acquired, the following determinations are issued:

(a) The exemption for ACI notification of US-loaded FROB cargo is extended until December 31, 2010.

(b) Effective January 1, 2011, the CBSA will require ACI transmissions for US-loaded FROB cargo as per CBSA current policy.

2. Until the implementation date, marine carriers are encouraged to transit US-loaded FROB cargo information to the CBSA in order to achieve full compliance upon the full implementation date.

3. During the interim period, the CBSA will be in a position to provide guidance and assist its clients in meeting the ACI obligations related to US-loaded FROB set forth by this customs notice.

4. Please direct any questions concerning this notice to:

Helene Porter
Manager, Commercial Unit
Advance Information and Programs Division
Pre-Border Programs Directorate, Programs Branch
Canada Border Services Agency

E-mail: Helene.Porter@cbsa.gc.ca, Telephone: 905-308-8556

CBP Continues to Ramp Up Enforcement with NAFTA-Related Audits

(Lexology – Arent Fox LLP)

Canada and Mexico are still account for a huge amount of imports ? over 25% of all imports entering the United States last year. And of course a large proportion of those imports are processed with claims that the product is eligible for NAFTA duty preference (zero or reduced duty rates and no mpf fees). Based on activity levels over the past year, it appears that Customs and Border Protection (CBP) is now more aggressively probing to see if those NAFTA claims are valid. For U.S. importers, this can mean some level of disruption to gather and present paperwork acceptable to CBP for past entries, as well as the potential for loss of NAFTA benefits (higher duty rates and mpf), enforcement actions, and penalties if NAFTA claims turn out to be incorrect or cannot be supported with sufficient backup to satisfy CBP.

Over the past few years, we have heard several pronouncements from CBP (as well as the Canadian and Mexican customs authorities) that more attention would be paid to verifying NAFTA origin claims. Anecdotal evidence indicates this has indeed occurred, with increased emphasis on validating NAFTA origin claims in a variety of ways. Read more here.

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 17, 2010 is now available on our website here

Customs Head Continues Ban on C-TPAT Eligibility For Non-Asset Based 3PLs

(Mark B. Solomon — DC Velocity)

CBP chief Bersin says agency’s C-TPAT resources are best allocated to companies with extensive international exposure, not 3PLs with primarily domestic operations.

U.S. Customs and Border Protection (CBP) has said it will continue its 17-month-long ban on allowing non-asset based third-party logistics service providers (3PLs) to join the Customs-Trade Partnership Against Terrorism (C-TPAT), one of the agency’s leading supply chain security initiatives.

In separate letters to a House lawmaker and to the Transportation Intermediaries Association (TIA), the group representing the 3PL industry, Customs Commissioner Alan D. Bersin, who took over CBP earlier this year as a recess appointment, laid out essentially the same message: that the agency’s C-TPAT resources are best allocated to validating companies with extensive international exposure, rather than to 3PLs whose operations are primarily domestic in nature.

Under C-TPAT, which was conceived following the 9/11 terrorist attacks, companies submit plans to CBP showing they have acceptable security measures in place across their supply chain. Those that pass a government audit receive expedited clearance of cargo entering U.S. commerce.

In January 2009, CBP denied eligibility to 3PLs that didn’t own any assets and who just did business in domestic U.S. commerce. Read more here.

Danish IC Companys to Pay More Customs Duty, CBSA

(IC Companys A/S via Fibre2fasion.com)

The CBSA in Canada has performed a customs audit of the value for duty employed by IC Companys Canada Inc. when importing goods into the Canadian market.

In this connection the CBSA has concluded that IC Companys has employed a too low value for duty. Consequently, the CBSA has imposed IC Companys Canada Inc. to increase both its future value for duty as well as its value for duty with retrospective application for 4 years as from 14 September 2010.

The increase of the value for duty for the past 4 years leads to a non-recurring cost of DKK 15 million [$2.7 million] and accrued interest of DKK 4 million [$724,000]. Both items are fully tax deductible upon recognition of taxable income and have a deductible value of DKK 4 million. The costs will be recognised in the consolidated accounts for the first quarter 2010/11.

IC Companys does not agree with the ruling from the CBSA and expects to appeal the case to the relevant authorities in Canada.

It is expected that the above-mentioned costs may be contained in the Group’s guidance for the financial year 2010/11 with an estimated operating profit in the region of DKK 320-360 million.

U.S. Commerce Department Proposes Significant Changes to Antidumping/Countervailing Duty Rules

(Lexology – Arent Fox LLP)

It was a long hot summer in Washington, DC, but that did not stop the U.S. Department of Commerce from quietly floating proposals that would significantly alter the landscape in administering U.S. antidumping and countervailing duty (AD/CVD) rules. Cloaked in the guise of enhancing U.S. “competitiveness” and supporting the National Export Initiative, these new proposals would make it more difficult for foreign companies, especially those based in so-called non-market economies (e.g., China) to avoid costly AD/CVD measures. The question is, how do these measures do anything to enhance U.S. exports? [...]

A detailed listing of the proposals can be found here. Read more here.

Japan Challenges Canadian Renewable Energy Incentives at WTO

(Bridges Weekly)

Japan launched dispute settlement proceedings against Canada at the World Trade Organization on September 13 by saying that the province of Ontario’s green energy plan unfairly pressures its producers of clean power to buy hardware from local manufacturers.

Specifically, Japan is challenging Ontario’s Feed-in Tariff Program (FIT), which enables the province to subsidise electricity operators that use renewable energy produced using stringent local content requirements. The “made-in-Ontario” requirement demands that up to 60% of all green energy project inputs be manufactured in the province as it strives to create local jobs. [...]

But Japan says the local-content provisions breach portions of the General Agreement on Tariffs and Trade (GATT), and fall under the definition of a “prohibited subsidy.” It has asked for “consultations” with Canada under the WTO process, the first stage of a formal trade dispute. Read more here.

EU to Ratify First Free Trade Deal with Asian Partner

(New York Times – Stephen Castle)

The European Union agreed Thursday to sign a sweeping new free trade agreement with South Korea – its first with an Asian trade partner – after Italy removed objections that had threatened to block the deal.

Politicians and officials welcomed the announcement as an important signal for free trade and proof that protectionist pressures are being resisted, despite the uncertainty in the global economy.

“This the first generation of bilateral trade agreements which will bind Europe and Asia together in an ever-closer economic bond,” said Steven Vanackere, vice prime minister and foreign minister of Belgium, which holds the EU’s rotating presidency. “This is a very big step in opening markets in Asia for our companies.” Read more here.

Senator Says He Will Hold Up Food Safety Bill

(FoodNavigator.com – Caroline Scott-Thomas)

Senator Tom Coburn (R-OK) has said he intends to hold up food safety legislation that has been stalled in the Senate since last November, as there is no indication of how it would be funded. “Without paying for this bill, at best we are just passing it for a press release, and at worse, we shackle the FDA with unfunded mandates,” Coburn said in a document published on his website on Wednesday.

Supporters of the Food Safety Modernization Act have been pushing to get the bill on the Senate’s agenda as soon as possible, particularly in the wake of the nationwide egg recall that has sickened at least 1,500 people. They claim that the bill is necessary to strengthen the Food and Drug Administration (FDA), giving it authority to order recalls, and requiring better recordkeeping from food manufacturing facilities. Read more here.

Announced Overhaul of U.S. Export Control Regime Likely to Impact Canadian Businesses

(Mondaq – Cliff Sosnow et al., Blake, Cassels & Graydon LLP)

On August 31, 2010, President Obama announced that the U.S. government is in the process of making significant changes to its system for the control of exports from the United States. Some of these changes may be significant for Canadian companies, particularly those that import goods from the U.S. whether for domestic consumption or as an input into goods that are subsequently exported from Canada. While these changes are yet to be implemented, Canadian companies would be well advised to closely monitor any developments and consider the potential impact on their operations.

The U.S., like Canada, maintains a system of export control. Certain goods and technology require a permit in order to be legally exported. These rules are for the purpose of controlling the movement of military goods, “dual use” items (items that could have both military and civilian applications) and materials for use in nuclear proliferation, among other sensitive goods and technologies. These rules can be complicated. For instance, items subject to export controls may fall under one of two lists, each of which is administered by different bodies within the U.S. government – the Munitions List (USML) administered by the U.S. Department of State or the Commerce Control List (CCL) administered by the U.S. Commerce Department – and the requirements imposed on exporters may differ depending on which list the item falls under. As the U.S. government notes, this has resulted in, among other things, ambiguity in jurisdiction, delays in issuance of licences, disparate licensing requirements and redundancies, etc. Read more here.

U.S. Trade Deficit Rises in Q2

(CBC News – The Associated Press)

Americans’ stronger appetites for imported goods, especially cars and computers, lifted the broadest measure of the U.S. trade deficit in the second quarter to its highest point since late 2008. The Commerce Department said the current account trade deficit grew to $123.3 billion US in the April-to-June period, a 12.9% increase from the first quarter. Read more here.

Trade: Canada’s Great Hope

(Export Development Canada – Peter G. Hall)

Gloom abounds in the world economy, and with good reason. Surviving the current episode is critical, but growth eventually will recover, and hopes for longer-term prosperity will brighten. Strategies for success in the coming growth cycle are already being crafted. Is Canada well-placed to succeed?

Canada’s economic challenges don’t end when recovery begins. At that point, market watchers will no doubt say in unison, “The long run is now”. Ageing of the population is no longer tomorrow’s issue, as Canada, for the first time ever, soon moves to the point where potential retirees outnumber young labour force entrants. Low trend investment threatens to further hobble recovery, and Canada’s poor productivity record won’t help. What makes these challenges more serious is that they affect the key building blocks of the economy: labour, capital and productivity. Future constraints on all three elements have led to estimates of potential growth that pale in comparison to recent experience.

Read more and/or watch the video here.

What Are the HST Place of Supply Rules for Customs Brokers’ Services?

(Trade Lawyers Blog Cyndee Todgham Cherniak, Lang Michener LLP)

On February 25, 2010, the Department of Finance released a News Release about what will be the harmonized sales tax (“HST”) place of supply rules and shortly thereafter the Canada Revenue Agency released a GST/HST Notice setting out their administrative position. On April 30, 2010, the Department of Finance released Draft Regulations in respect of Place of Supply of Property and Services (the “Draft Regulations”). There is a separate HST place of supply rule for customs brokerage services. Read more here.

Watered-down ACTA Approaching Conclusion

(Bridges Weekly)

Controversial multi-country negotiations on an “Anti-Counterfeiting Trade Agreement” are within striking distance of conclusion, according to a leaked draft text.

The secrecy surrounding the talks took another hit this week when Knowledge Ecology International, a Washington-based non-governmental organisation, posted the draft on its website, along with a note stating that the United States was alone among participating governments in opposing the draft’s release.

While the secrecy has steadily eroded, with regularly leaked draft texts and greater support for transparency among the dozen-odd mostly industrialised countries taking part in the talks, the prospective agreement has continued to draw fire for other reasons.

Critics have charged that the terms being considered go well beyond what is necessary to target counterfeiting, and would create new intellectual property protections that surpass existing multilateral rules and upset the carefully constructed balance in the WTO’s agreement on intellectual property. They worry that if an accord entered into force, it could threaten internet freedom, access to technology, and the availability of affordable medicine in poor countries. Read more here.

Air Cargo Demand Set to Slow

(International Freighting Weekly – Katerina Kerr)

Rapid rebound from recession can’t be maintained, claims IATA

International air cargo traffic growth will slow over the second half of 2010 and into 2011, following the sector’s rapid rebound from recession, according to the International Air Transport Association (IATA).

“Uncertainties are rising about the economic outlook with talk of a ‘double-dip’, but current conditions in cargo markets remain positive,” says IATA in its third-quarter Cargo E-Chartbook report. “Air freight has entered a slower phase of expansion, but the pace of growth in both volumes and yields remains above trend. Revenues have been growing strongly and, in many regions, cargo profitability is back to pre-recession levels.

“The environment will get more difficult. Even without a ‘double-dip’, demand will slow and new capacity will put pressure on load factors and yields.” Read more here.

What Are the Supply Chain Implications for a High Cost China?

(Transport Intelligence – John Manners-Bell)

One dominant theme emerging from the World Economic Forum event in Tianjin is the anticipated rise of Chinese manufacturing costs and its implication for supply chains.

The last twenty years have seen China develop into the world’s foremost manufacturing location. Multinationals have developed global supply chains to supply the world’s rich consumer markets in the West, with production underpinned by low cost labour strategies.

However these strategies are likely to become increasingly unsustainable as costs in China rise, compounded by uncertainty over the prospects of the renminbi. Policy makers in China have consequently seen the necessity to re-focus its economic development policy around technological innovation which will see labour costs become less important.

This is obviously a pragmatic response by the Chinese government and follows the well trodden path of many other formerly developing nations. It is also part of China’s new assertiveness on the world stage as it moves from component supplier to Original Equipment Manufacturer in its own right... Read more here.