Understanding Incoterms® 2010 & NAFTA Audit Workshops – Western Canada, November

• November 15, 2010 - Winnipeg - Delta Winnipeg Hotel
• November 16, 2010 - Calgary - Delta Calgary South Hotel
• November 17, 2010 - Vancouver - Blake, Cassels and Graydon LLP, 595 Burrand Street
AM Session - Incoterms® 2010: Both the New Changes and the Existing Terms

Effective January 1, 2011, Incoterms® 2000 will be replaced by Incoterms® 2010.

Incoterms® are extensively used in international sales contracts as they are widely recognized and understood commercially. They determine critical issues such as who will pay for the carriage of the goods, who will be responsible for customs clearance, and the point at which risk passes between the parties.

This hands-on workshop will cover topics such as: overview of the Incoterms rules, including the new changes; term-by-term analysis; useful definitions; and role in sales/purchasing contracts.
If you are sometimes presented with contracts that contain Incoterms® and you do not understand the full meaning of them, this is your chance to get up to speed on this important trade topic so you can minimize your company’s risks and obligations.

PM Session - NAFTA Audit

Most importers and exporters are eager to take advantage of the duty relief granted under the North American Free Trade Agreement (NAFTA), but remain unaware of the risks and liabilities associated with claiming the NAFTA tariff treatment. Many still do not know that more than 50% of NAFTA Certificates of Origin either contain errors which render them invalid or are not supported with the necessary documentary evidence. With NAFTA origin audit activity on the rise, more importers are being shocked by assessments of financial penalties and/or retroactive duty and GST, while some Canadian manufacturers and exporters are losing their competitive advantage in the North American market.

In this down to earth, easy to understand session, we’ll cover the following:

• What importers and exporters should expect during a NAFTA audit conducted by either the Canada or U.S. Customs Agencies.
• Learn from the mistakes of others – Common errors made on Certificates / Statements of Origin, and during NAFTA audits.
• Sharing NAFTA strategies used by manufacturers, exporters and importers.
• Do you really know how your Customs Broker is handling this issue? Are you at greater risk than you thought?

For agenda and registration please click 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.

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.

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.

USTR Confirms Sept. 1 Date for Eliminating Import Duty on Canadian Softwood Lumber

(World Trade Interactive)

The Office of the U.S. Trade Representative has issued a notice confirming that as of Sept. 1 it will stop collecting an additional 10% import duty on certain softwood lumber products from the Canadian provinces of Ontario, Quebec, Manitoba and Saskatchewan. The U.S. has collected this duty since April 2009 to remedy Canada’s breach of certain obligations under the 2006 Softwood Lumber Agreement. That step followed Ottawa’s refusal to comply with a February 2009 arbitral tribunal decision that Canada should collect this charge itself.

In recent months, however, the government of Canada had adopted measures to address the SLA violations and has agreed to collect the 10% export charge, effective with respect to softwood lumber products with a shipment date of Sept. 1 or later. Canada will collect this charge until the total of the amounts collected under the U.S. import duty and the Canadian export charge is equal to C$68 million. Because USTR has determined that these measures satisfactorily grant the rights of the U.S. under the SLA, it is removing the additional 10% import duty, effective with respect to imports with a shipment date of Sept. 1 or later.

NAFTA Chemical Case Goes Canada’s Way

(Embassy – Luke Eric Peterson)

Victory for Foreign Affairs over Chemtura may scare Dow off

The lawyers at the Department of Foreign Affairs and International Trade are not bragging about it – at least not to date – but they’ve just won an impressive victory in an $80 million-plus NAFTA lawsuit. Earlier this month, a panel of three arbitrators dismissed claims filed by the U.S. chemical company Chemtura under Chapter 11 of the North American Free Trade Agreement.

Chemtura had sought to hold Canada liable for financial losses related to the government’s phase-out of lindane, a hazardous agricultural chemical. However, the company failed to persuade arbitrators that government regulators acted without regard for scientific evidence or due process. In addition to kicking Chemtura’s claim to the curb, arbitrators also ordered the company to reimburse Canada for $3 million in legal costs and expenses.

While the feds will still be out of pocket for time devoted to defending the NAFTA lawsuit, the outcome is about as good as a government could hope for.

In fact, the victory could signal a set-back for another NAFTA claim which has been looming in the shadows. In early 2009, a subsidiary of the Dow Chemical Company set in motion a similar NAFTA Chapter 11 claim. As was first revealed in these pages, Dow wants Canadian taxpayers to compensate them for losses arising out of provincial bans on cosmetic lawn pesticides. Read more here.

Candy Makers Go After Obama over Impasse on Mexican Tariffs

(The Hill – Mike Lillis)

The nation’s candy makers this week slammed Washington policymakers for failing to settle a trade dispute with one of their most lucrative export markets: Mexico.

The impasse, the National Confectioners Association warned Friday, will ding the industry with a 20 percent tax on tens of millions of dollars worth of chewing gum and chocolate products heading south of the border. “Dozens of U.S. gum and chocolate makers large and small will immediately feel the effects of these duties,” NCA President Larry Graham said in a statement.

The concerns come in response this week’s announcement by the Mexican government that it would expand the number of products subject to new border taxes – a move designed to pressure the U.S. to allow Mexican long-haul trucks on U.S. roadways. Read more here.

Mexico May Rotate Tariffs on U.S. Goods in Dispute

(The Associated Press)

Mexico may rotate punitive tariffs on U.S. goods from one set of products to another until the Unites States resolves a dispute over access for Mexican trucks. While the number of total products may not change, individual goods could be added or removed from the list of 99 items subject to tariffs announced this week. Economy Secretary Bruno Ferrari said Thursday Mexico “would not hesitate” to take such steps.

Current tariffs range from 5% to 15% on products like cheese, fruits, juices, wine, toilet paper and some pork products.

The tariffs are a response to the cancellation of a pilot program allowing some Mexican trucks to transport goods into the U.S. under the North American Free Trade Agreement.

Mexico Is Said to Plan Tariffs on U.S. Pork, Oranges in Trucking Dispute

(Bloomberg – Jens Erik Gould)

Mexico will impose import tariffs on pork, oranges and other U.S. goods because of the U.S. government’s failure to restore a program allowing Mexican trucks to operate north of the border, a Mexican official said.

The new U.S. goods subject to tariffs also include grapefruit, pistachios, chewing gum, cheese and ketchup, said the official, who declined to be identified because he wasn’t authorized to speak on the subject. The U.S. National Pork Producers Council also said in an e-mailed statement that pork will be added to the list of products facing tariffs.

Mexico’s government is waiting for the U.S. to propose a resolution to the standoff, which started when the U.S. Congress ended a pilot program allowing Mexican trucks to deliver goods in the U.S. Mexico responded in March 2009 by putting tariffs of 10% to 45% on U.S. goods including vegetables, wine, juices, sunglasses and toothpaste. Now, authorities are imposing a second round of tariffs covering more goods. Read more here.

Update: A list of tariff items covered by the second round of punitive tariffs can be viewed here (translated from the original release issued in Spanish by the Mexican Secretaria de Gobernacion).

May NAFTA Trade Posts Record Gain from Previous Year

(The Trucker – Kevin Jones)

Trade using surface transportation between the United States and its North American Free Trade Agreement (NAFTA) partners Canada and Mexico was 39.5% higher in May 2010 than in May 2009, reaching $66.8 billion, according to the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation. The 39.5% increase was the largest percentage year-over-year increase in total U.S.-NAFTA surface trade on record, going back to April 1994. May was the third month in the last four with a record percentage year-over-year increase.

However, the value of U.S. surface transportation trade with Canada and Mexico in May 2010 remained 9.9% below the May 2008 level despite the 2009-2010 increase, BTS, a part of the Research and Innovative Technology Administration, reported.

North American surface freight value rose 1.5% in May 2010 from April 2010. Month-to-month changes can be affected by seasonal variations and other factors, BTS noted. Read more here.

Mexico Looks for Proposal to End Trucking Dispute

(Journal of Commerce Online – William B. Cassidy)

Without progress on cross-border trucking, punitive tariffs could be expanded

Mexico may expand the list of U.S. products facing billions of dollars in punitive tariffs unless the Obama administration proposes a cross-border trucking program. A Mexican government official told The Wall Street Journal Thursday that Mexico wants more than the revival of the pilot project killed by Congress last year. “If we don’t see a concrete proposal from the U.S. in the next few weeks, Mexico will exercise its legal rights,” the unnamed official told the financial newspaper.

Those rights, the official said, include expanding the retaliatory tariffs. Mexico imposed punitive tariffs on $2.4 billion worth of U.S. goods when Congress and the White House shut down a Bush-era test of cross-border trucking. The tariffs ranged from 10% to 45% and affected 90 products. Mexico is the second-largest export market for the U.S., receiving 12% of U.S. exports in 2009. Almost half of Mexico’s imports are sourced from the U.S. An expansion of the retaliatory tariffs could hit agricultural exports such as corn, rice and beans, the Council on Hemispheric Affairs said in a recent report. Read more here.

Resisting Protectionism, Promoting Free Trade on Eve of G-8 and G-20 Summits

(Minister of International Trade)

International Trade Minister Peter Van Loan tells American Chamber of Commerce in Canada focus on economy is key to recovery

The Honourable Peter Van Loan, Minister of International Trade, today [Tuesday] called for increased focus on free and open trade, pointing to the Canada-United States relationship as an example of a free trade success story. The Minister delivered this message to the American Chamber of Commerce in Canada in advance of the G-8 and G-20 summits about to take place in Muskoka and Toronto.

“Canada believes that lasting economic recovery – not just in North America, but around the world – depends on free trade, not protectionism,” said Minister Van Loan. “This is the message we will be delivering to our existing and future trade partners at the upcoming G-20 meeting.”

In his remarks, Minister Van Loan highlighted Canada’s leadership in driving the free trade agenda and opening markets to Canadian businesses and Canadian workers, pointing to the continuing economic recovery as proof that the plan is working.

“Our government’s aggressive free trade agenda, coupled with decisive implementation of the Economic Action Plan, has generated results for Canada’s economic recovery,” said Minister Van Loan. “Our commitment to free trade, to fighting protectionism and to opening doors to new opportunities continues to fuel our economy and create jobs for Canadians at home and abroad. The Canada-United States trade relationship is an example of how partners can benefit from opening their borders to trade.”

The North American Free Trade Agreement has contributed to significant growth in trade and foreign direct investment in North America. Merchandise trade among Canada, Mexico and the United States has doubled since the agreement came into force, reaching $798.5 billion in 2009. It is now one of the largest free trade areas in the world, with some 448 million consumers.

While the Canada-United States trade relationship remains by far Canada’s most significant, Canada is moving to secure access to key markets around the world. In less than four years, the Government of Canada has built on the success of NAFTA by concluding new free trade agreements with Colombia, Peru, Jordan, Panama and the European Free Trade Association: Iceland, Liechtenstein, Norway and Switzerland.

Calderon Calls for Closer Ties with Canada, U.S.

(AFP – Michel Comte)

Mexican President Felipe Calderon on Thursday called for greater North American integration to compete with other trading blocs, at a time when Mexico-Canada bilateral relations are at a low point.

“Integration is key to restoring strong sustained growth in North America,” Calderon said in a speech to Canada’s parliament. “Mexico is a country in transformation,” he said. “That makes us a more valuable neighbor and a strategic partner for the future of North America’s prosperity.”

“Therein lies the importance of Canada and Mexico working together. We need more integration, not isolation, nor protectionism.”

Calderon’s trip comes on the heels of a visit to Washington last week where he and US President Barack Obama grappled with contentious border and immigration issues, along with the problem of drug wars in Mexico and the market for Mexican drugs in the United States. Read more here.

U.S.-Mexico Trucking Dispute Placing American Jobs at Risk

(Gary Shapiro — Huffington Post)

When Mexico’s President Felipe Calderon visits the White House on May 19, I hope President Obama takes time to mend the deteriorating U.S.-Mexico relationship, which recently soured over a trucking dispute.

Last year, the Obama Administration responded to union requests that reversed several years of policy and blocked Mexican long-haul trucks from crossing the U.S. border. The Administration’s ruse of truck safety flew in the face of a total lack of evidence and years of peaceful trade. Mexico responded quickly...exercising legal rights under longstanding agreements by slapping high tariffs on $2.4 billion worth of American products. These tariffs hurt many American producers, including farmers and manufacturers.

Reopening the U.S. border to Mexican long-haul trucks would lift the excessive tariffs placed on U.S. products. Such action would contribute greatly toward achieving President Obama’s pledge to double exports in the next five years. It would also help save and create some 25,000 U.S. jobs affected by the trading relationship… Read more here.

Note: Mr. Shapiro is President & CEO of the Consumer Electronics Association

Businesses Seek Resolution to Mexican Trucking Dispute; DOT Promises Proposal Soon

(World Trade Interactive)

A coalition of more than 100 companies and business and trade groups sent a letter recently to President Obama asking him to help resolve a long-running dispute with Mexico over the cross-border trucking provisions of NAFTA. The letter claimed that the $2.4 billion worth of retaliatory sanctions Mexico imposed against U.S. exports in 2009 in response to Congress’ termination of a pilot trucking program have cost the U.S. about 25,000 jobs. In addition, the letter said, many affected companies will not be able to endure the tariffs much longer, meaning that “more jobs will soon be lost.”

The coalition noted that a May 19 visit to the White House by Mexican President Felipe Calderon “will be an opportune time to finalize a resolution” to the trucking dispute. Transportation Secretary Ray LaHood held out hope that progress could be made at that meeting when he told a Senate committee last week that the administration is “very close” to announcing a plan that will apparently include restarting the pilot program. LaHood made a similar claim earlier this year. Read more here.

Big Stakes in Canada-Europe Trade Talks, but Little Attention

(The Canadian Press – Julian Beltrame)

It may well be the biggest and most important trade negotiation that most Canadians have never heard of.

While most of the news out of Europe of late has had to do with the Greek debt crisis and an ash-spewing volcano in Iceland, about 60 Canadian officials have been huddled in contentious trade talks with their European counterparts – at least video images of their counterparts – in what used to be Ottawa’s city hall by the Rideau.

There have been no demonstrators in front of the building denouncing a sell-off of Canadian sovereignty, and hardly a mention in the media or the House of Commons. But if you listen to the critics, what is at stake is in some ways more troubling than the Canada-U.S. free trade talks of the late 1980s – over which an election was fought – or the NAFTA deal that followed.

“What we want is the most ambitious trade agreement we’ve ever had,” federal Trade Minister Peter van Loan said in an interview with The Canadian Press. “We’re looking for something that is deeper and broader than even NAFTA, and this is with the world’s largest economy.”

The two sides are now in the third round of talks, with two more planned. If all goes well, Van Loan hopes to see ink on the Comprehensive Economic and Trade Agreement or CETA by late next year. Read more here.

Rep. DeFazio Urges Repeal of Mexican Trucks Program

(Transport Topics)

Letter co-signed by 78 members of Congress cites safety issues, addresses retaliatory tariffs

Rep. Peter DeFazio (D-Ore.) sent a bipartisan letter signed by 78 Members of Congress Wednesday to Transportation Secretary Ray LaHood and U.S. Trade Representative Ron Kirk, asking that they consider repealing the program that opens U.S. roadways to Mexican trucks. The program, suspended since early last year under the Obama administration, was begun under the Bush administration under the provisions of the 1993 North American Free Trade Agreement.

But Mexico “has no meaningful system for commercial driver’s licenses, drug testing or hours of service. . . . [NAFTA] is a trade agreement that threatens the safety of the American public,” DeFazio wrote.

DeFazio chairs the House Transportation and Infrastructure Committee’s highways and transit subcommittee. The letter was also signed by Rep. James Oberstar (D-Minn.), who chairs the full committee. Read more here.

Obama and Free Trade: Q&A With Jagdish Bhagwati

(ReasonTV)



Free trade is never more necessary - or vulnerable - than in times of economic distress. The current global downturn is no exception. Protectionist barriers have shot up all over the world, including the United States.

Last year, Congress killed a pilot program allowing Mexican trucks to transport goods across America and included Buy America provisions in the stimulus bill banning foreign steel and iron from infrastructure projects funded by the legislation.

More disturbingly, President Barack Obama, after chiding Congress for flirting with protectionism, initiated his own ill-advised affair by imposing a 35 percent tariff on cheap Chinese tires.

If the world manages to avoid an all-out trade war of the kind that helped trigger the Great Depression after the U.S. imposed the Smoot-Hawley tariffs in 1930, it will be in no small part due to the efforts of one man: Jagdish N. Bhagwati, an ebullient and irreverent 76-year-old professor of economics at Columbia University.

Bhagwati has done more than perhaps any other person alive to advance the cause of unfettered global trade. A native of India, Bhagwati immigrated to the United States in the late 60s after a brief stint on the Indian Planning Commission, where he learned first-hand the insanity of an economic approach that tried to modernize a country by cutting it off from world trade.

Since then, he has devoted his efforts, both in academia and in the popular press, to showing that there is no better way of improving the lot of both advanced countries and the developing world than through free trade. His path-breaking contributions to trade theory have put him on the short list for a Nobel Prize in economics.

Though a dogged trade advocate, Bhagwati is anything but dogmatic. He is a free spirit who draws intellectual inspiration from many disparate ideological camps. A self-avowed liberal, he is also something of a Gandhian social progressive, though Gandhi himself supported economic autarky. Bhagwati works with numerous Third World NGOs on a host of human rights issues. Yet he has no problem taking on these groups — or his famous student, Nobel laureate Paul Krugman — when they question the benefits of trade.

In fact, he devoted his 2004 magnum opus, In Defense of Globalization, to a point-by-point rebuttal of these critics. Although he doesnt vote Republican because he dislikes the party's nationalistic jingoism, he readily declares that Democrats pose a far bigger threat to international exchange than Republicans.

DFAIT Consultations on NAFTA Regulatory Cooperation

(DFAIT)

The Department of Foreign Affairs and International Trade (DFAIT) is requesting input on areas for increased cooperation amongst Canada, the U.S. and Mexico to reduce “significant regulatory-based differences” that hamper Canadian competitiveness. A copy of the Notice published in the Canada Gazette is available here.

Interested parties have until May 26, 2010 to file submissions with DFAIT identifying opportunities to reduce significant barriers in a range of areas including: standards, technical regulations, and conformity assessment procedures for industrial and agricultural products, as well as sanitary and phytosanitary measures.

Revised D-Memoranda: NAFTA Rules of Origin

(CBSA)

Memorandum D11-5-1 NAFTA Rules of Origin

• The title of this memorandum has been changed from NAFTA Rules of Origin Regulations to NAFTA Rules of Origin.

• This memorandum has been revised to reflect recent amendments to the NAFTA Rules of Origin Regulations as a result of the modifications to the Harmonized Commodity Description and Coding System which came into force on January 1, 2007. These amendments make a number of changes to the numbering of headings, subheadings or tariff items. They are technical in nature and do not represent a change in policy.

• Also, this revised memorandum will provide a stable link to the official version of the NAFTA Rules of Origin Regulations. The NAFTA Rules of Origin Regulations are no longer fully excerpted in this memorandum.

• These Regulations, amending the NAFTA Rules of Origin Regulations as a result of the modifications to the Harmonized Commodity Description and Coding System, came into force on September 1, 2009.

Memorandum D11-5-2 NAFTA – Specific Rules of Origin

• The title of this memorandum has been changed from NAFTA Rules of Origin Regulations – Amendments to Schedule I – Specific Rules of Origin to NAFTA – Specific Rules of Origin.

• This memorandum has been revised to provide a stable link to the official version of the NAFTA Rules of Origin Regulations – Schedule I – Specific Rules of Origin. The NAFTA line-by-line rules are no longer fully excerpted in this memorandum.

• Amendments to the Schedule I – Specific Rules of Origin have been made to reflect modifications to the Harmonized Commodity Description and Coding System (HS) which came into force on January 1, 2007, and a liberalization of the rules of origin by the three NAFTA Parties.

• Changes to the numbering of headings, subheadings or tariff items to reflect modifications to the HS are technical in nature and do not affect the origin of goods. The changes to reflect the liberalization of the rules of origin act to ease the origin requirements for herbs and spices, petroleum, leather, certain textiles and apparel, aluminium, diesel engines, gas turbines and parts, valves, electric transformers, primary cells and batteries, telephonics, televisions, locomotives and parts, medical appliances and parts, and other instruments.