EU Criticises Protectionism among Trading Partners

(Europolitics – Chiade O’Shea)

The European Union has expressed concerns that its trading partners are using too many restrictive commercial measures, posing a threat to a speedy recovery from the financial and economic crisis. Trade Commissioner Karel De Gucht on 25 October called for an end to the practice.

“With the economic recovery still fragile, the world’s major economies must remove the trade restrictive measures that put a break on growth,” De Gucht said as he published a new report detailing the extent of these tariff and non-tariff barriers. The report, which De Gucht says is an important tool to monitor rises in protectionism, lays out over 300 restrictive trade measures taken by the European Union’s 30 top trade partners in the two years since the crisis began in 2008. They included so-called ‘classical trade barriers’ like import bans and tariff increases, but also the now infamous ‘non-tariff barriers’ such internal incentives to “buy national”. Read the complete report here.

EU Delays Green Barrier to Canada Oil Sands: Draft

(Reuters – Pete Harrison)

Europe has yielded to Canadian pressure by delaying possible green trade barriers to Canada’s highly polluting oil sands, but only for one year, a leaked document shows.

Canada has repeatedly warned that draft EU standards to promote greener fuels will harm the market for its oil sands – tar-like oil that is trapped in sediment and forms the world’s second-largest proven crude reserves after Saudi Arabia.

A recent draft of the European Union’s “fuel quality directive” calculates greenhouse gas emissions from myriad transport fuels, from hydrogen to diesel, but says oil sands will only be evaluated some time before December 31, 2011 – a year later than plans made as recently as June. All other fuels will be dealt with by the end of this year, with the aim of guiding industry on which fuels are best suited to the EU’s goal of cutting carbon emissions to one fifth below 1990 levels over the next decade.

The European Union and Canada are in the middle of free trade talks, and the issue of tar sands has become hot. Read more here.

U.S. Trade Policy Extremely Open, World Trade Organization Finds

(America.gov)

“The U.S. trade and investment regimes are among the most open in the world,” the World Trade Organization (WTO) Secretariat reported September 29 in its 10th review of the trade policies and practices of the United States.

“Like most other WTO Members, the United States very largely resisted pressures to respond to the global economic recession by tightening restrictions on imports,” the Secretariat reported in its executive summary. “The restraint shown by the United States helped forestall a worldwide slide into protectionism.”

Because surveillance of national trade policies is fundamentally important to the work of the WTO, the organization has established a trade policy review mechanism under which all WTO members are examined periodically. The frequency of each country’s review varies according to its share of world trade. The previous review of U.S. trade policies took place in 2008. Read more here.

“Consumer Safety” Bill Could Boomerang against U.S. Manufacturers

(National Center for Policy Analysis – Daniel Griswold and Sallie James, Cato Institute)

Barriers to trade can be straightforward and transparent, or can take the form of rules and regulations proposed in the name of protecting public health and safety but have a secondary effect of restricting trade. An example of such a nontariff barrier is legislation now before Congress called the Foreign Manufacturers Legal Accountability Act (FMLAA), say Daniel Griswold, director of the Center for Trade Policy Studies at the Cato Institute, and Sallie James, a trade policy analyst with the center.

The sponsors of the legislation claim that their principal goal is to protect American consumers from unsafe foreign products, but there are warning signs that the bill may be more about restricting trade than protecting the public.

• The FMLAA would require foreign producers selling goods in the U.S. market to designate a legal agent located in the United States who could be served papers in a product liability suit.

• By registering an agent, the foreign producer would agree to accept the jurisdiction of the state and federal courts of the state where the agent is located.

The concern raised by advocates of the legislation is that American consumers harmed by foreign products will not be able to collect damages if the foreign-based producer has no legal presence in the United States.

Americans damaged by faulty products, whether made abroad or domestically, should be able to seek compensation through the courts. But the approach advocated by supporters of the FMLAA would not solve the problem, say Griswold and James.

Read the original article here.

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 Forbes.com. 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.

WTO Says No to Hi-tech Duties in EU

(Industry Week – Agence France-Presse)

The World Trade Organization has backed the United States, Japan and Taiwan in their complaint against EU duties on high-technology products, according to a ruling published on August 16.

"Having found that the European Communities has acted inconsistently ... we recommend that the Dispute Settlement Body request the European Communities to bring the relevant measures into conformity with its obligations," the WTO panel of arbitrators said.

The plaintiffs had accused the EU of violating the WTO's Information Technology Agreement by imposing duties on imports of products including television set-top boxes, flat-screen panels and printers with multiple functions. Read more here.

Canada Asks Moscow to Drop Trade Barriers

(Moscow Times)

Canada urged Russia and other G20 countries on Friday to unwind trade barriers erected during the financial crisis as part of a G20 pledge favoring free trade to support the global economic recovery.

Trade Minister Peter Van Loan said in an interview that leaders from the Group of 20 emerging and advanced economies meeting in Toronto should be held accountable for their promise not to adopt protectionist measures, endorsed at the Pittsburgh summit in September.

“So I hope there will be a commitment by countries that are appearing here who have instituted protectionist measures, such as Russia with their tariffs, to actually roll them back and adhere to those commitments,” Van Loan said.

When asked about measures taken by others, such as the European Union or the United States, Van Loan said it was more difficult to take countries to task over non-tariff trade obstacles. Read more here.

WTO Rules Against U.S. Ban on Chinese Poultry Products

(Domain-b)

China has won an interim ruling over the U.S. ban on Chinese poultry exports from World Trade Organisation, which ruled the American curbs on Chinese poultry were violating international trade laws, the China Daily reported [June 17].

The report said that the U.S. ban violated the WTO's Sanitary and Phytosanitary Measures that govern food safety measures in global trade, regulations on most-favoured-nation treatment and general elimination of quantitative restrictions under the WTO framework.

According to the report this was the first time that China had challenged U.S. laws.

It quoted a Chinese commerce ministry official as saying, that the U.S. was unlikely to attempt a similar ban next fiscal year, “for it will be regarded as open defiance of the latest WTO ruling.”

Argentina’s Delay in Dispatching Imports is Irritating Trade Partners

(MercoPress)

Since the controversial Argentine Interior Commerce Secretary Guillermo Moreno announced in an April 23 letter that he will examine overseas purchases to consider the competitiveness of the national market, products worth millions of dollars have been delayed at Argentina’s borders and ports.

Cargoes of cheeses from France, beer from Holland, pasta from Italy, canned pineapple from Indonesia, bell peppers from Peru, and candies from Brazil are among products being delayed, according to the Chamber of Importers, which represents about 300 companies, including local units of Chile’s SACI Falabella and France’s Carrefour SA.

Argentine import restrictions and an exchange rate policy that favored local industry enabled Argentina to build up a record trade surplus of 17 billion USD in 2009 on an overall trade of approximately 100 billion US dollars.

However reprisals could hurt Argentina’s 56 billion of annual exports, mostly food products, equivalent to 17% of GDP. Brazil and the European Union with 45% of Argentina’s exports have warned that such kind of limits are in violation of international treaties and liable to reprisals. Read more here.

Trade in Natural Resources and the Business Community: What Is at Stake?

(WTO – Adrian van den Hoven, and Anka Schild)

Trade in natural resources (e.g. energy, minerals, plants, animals and forestry) is an important and growing share of world trade; in value terms its share increased by 20% annually in the past ten years. Although the overheated situation on raw materials market of 2008 has disappeared, pressures will mount as economic activity starts up again, but also as a result of an expected 20% increase in the world population by 2025.

Although access to raw materials is crucial for the sound functioning of the world economy, the number of restrictions imposed on the export of natural resources has increased significantly over the past few years. An OECD Workshop on Raw Materials in October 2009 demonstrated that these restrictions distort the global market and have a negative impact on both developed and developing countries. The WTO is well placed to endorse a global response to this issue. It should promote free trade in natural resources by removing existing distortions and developing and administering rules and disciplines in support of open markets.

For industrial consumers, access to raw materials under non-discriminatory and market-based conditions is crucial for their competitiveness. Increasingly however, countries are pursuing strategic policies to secure access to raw material deposits worldwide, while at the same time restricting access to their domestic raw material markets at the expense of raw materials importers. This is for instance the case for highly specialised metals and minerals, such as rare earths, lithium and platinum group metals (platinum, palladium and rhodium). These materials are needed for the development of technologically sophisticated products, which are critical for low-carbon/‘green’ technologies. Read more here.

Foreign Companies Chafe at China’s Restrictions

(New York Times – Keith Bradsher)

Foreign companies doing business in China are increasingly feeling as if the deck is stacked against them. China has filed more than a dozen trade cases to limit imports, imposed a series of “buy Chinese” measures and limited exports of some minerals to force multinationals to move factories to China.

Foreign executives in China find themselves increasingly at odds with Chinese officials over these measures, which Westerners view as protectionist and intended to give an edge to Chinese companies. Surveys by Western chambers of commerce of executives show growing disenchantment in the last year and a sense that doing business in China, never easy, is growing harder.

Arriving in Hong Kong on Sunday evening at the start of a nine-day trade mission to China, including stops in Shanghai and Beijing, the American commerce secretary, Gary Locke, said that his agenda for discussions with Chinese officials included Western companies’ difficulties in the Chinese market. “There are some policies of the Chinese government that many countries have raised concerns about, including the United States,” Mr. Locke said at a press conference at Hong Kong International Airport. Read more here.

China Slows Down the Global Supply Chain

(Industry Week – David Blanchard)

China’s new import regulations could have an adverse effect on U.S. manufacturers

There’s a school of thought in some manufacturing circles that suggests that the loss of millions of manufacturing jobs over the past decade can be blamed largely, if not entirely, on China’s emergence as the world’s low-cost producer while flouting the global trade rules that other countries follow. China, for instance, “has consistently manipulated its currency to steal productive capacity from the United States,” observes Kevin Kearns, president of the U.S. Business and Industry Council. This currency manipulation has allowed China to “devastate America’s invaluable productive industries, addict the country to debt-fueled, bubble-created ‘growth’ and destabilize the global economy.” […]

In 2009, the Chinese government launched a series of anti-dumping investigations against the United States involving products such as automobiles, Adipic acid and chicken products, Slipek notes. “During the anti-dumping investigation process, a firm will face challenges importing into China, potentially resulting in detained shipments or demands for more information, thereby adding time and cost to supply chain cycles.” Read more here.

California Moves Toward Requiring Labels on All Fur-Bearing Garments

(World Trade Interactive)

The California State Assembly voted April 5 to require that all garments made with animal fur carry a label indicating the animal from which the fur was taken and the country of origin. If the measure (Assembly Bill 1656) is approved by the state Senate and signed by Gov. Arnold Schwarzenegger, California will join Delaware, New Jersey, New York, Massachusetts and Wisconsin on the list of states that have imposed such a requirement.

The federal Fur Products Labeling Act requires all garments made entirely or partly with fur to include a label disclosing various information, including the name of the animal from which the fur was taken and the country of origin if the product was imported. However, this requirement is waived if the cost of the fur trim used on a garment, or the selling price of a fur product, is $150 or less. This exemption does not apply if the product contains dog or cat fur. Furthermore, the Dog and Cat Protection Act of 2000 prohibits importing, exporting, selling, trading, advertising, transporting or distributing any products made with dog or cat fur.

The sponsors of the California bill noted that the $150 loophole in federal law disadvantages consumers that are allergic to fur or object to wearing it on ethical grounds.

Obama to Lift Arms Trade Rule That Targeted Foreigners, Dual-Nationals

(Carl Meyer — Embassy Magazine)

The Obama administration is moving to scrap a controversial rule that forced Canadian companies working on or handling American weapons technology to identify employees born in or holding citizenship from designated countries.

The decision has been well-received by Canadian officials as well as companies based here, who have been trying to work around the strict regulations for years—reportedly with mixed success.

"They're going to move in the same direction that Canada's looking for, for dealing with dual nationals and working on security-cleared materials," said Chris Hilton, director of communications for Public Works and Government Services Canada minister Rona Ambrose. "This is a big step for us."

On March 11, US President Barack Obama announced he is moving forward with his plan to reform US export controls. Part of that reform is said to include revisions to the International Traffic in Arms Regulations (ITAR). Read more here.

Trade Barriers May Be Easing

(World Bank)

Monitoring update on trade barriers during the crisis

Industry demands for import restrictions declined for the first time since the international economic crisis began in 2008, according to a new report from Chad P. Bown. New probes requested by domestic industries dropped 24% in the fourth quarter of 2009 from a year before, which could signal a turning point in protectionist sentiment. Still, 2009 finished on a sobering note, with 20% more requests for barriers than 2008. Those requests often led to new import restrictions, and 2009 saw 30% more new restrictions, mainly because of investigations begun earlier in the crisis. The trade barriers tracked in the study included policies that are considered potentially legal by the WTO, such as antidumping, safeguards, and anti-subsidy measures.

Link to the report here.

Canada Resumes Pork Exports to China

(PR–USA.net)

Canada concluded a certification agreement to allow Canadian pork exports to China to resume. This agreement is the final step required to effectively lift the ban that was imposed last year due to concerns over H1N1. The Chinese market is important to Canada. In 2008, Canadian pork exports to China totalled $47 million. China has been identified by Canada Pork International as a priority market in its export market development strategy.

“This news is welcomed by Canada’s pork industry,” says Edouard Asnong, President of Canada Pork International. “The federal government has worked tirelessly to reopen this important market for our products. The development comes after many high-level interventions from Canadian government officials.”

Bans on imports of pork and swine from countries with human or animal cases of H1N1 do not comply with international standards. The World Health Organization, the Food and Agriculture Organization and the World Organization for Animal Health (OIE) all agree no additional trade restrictions should be imposed on pork that has passed veterinary inspection. Influenza is not a food-borne illness and does not affect pork safety. Read more here.

Cost of Compliance: U.S. Laws Present Taxation Nightmare

(Globe & Mail – David Milstead)

Ecotex Healthcare Linen Service Inc. operated in the United States in the mid-1990s, before the weak Canadian dollar drove it back north of the border. When shifting fortunes for the loonie opened up new possibilities outside of Canada, Ecotex CEO Randy Bartsch knew one of the steps he needed to take was to get U.S. tax advice. Plenty of it.

“Every different local county, state, city and town have different tax rates,” said the head of the Abbotsford, B.C.-based company, which ultimately re-entered the United States through a 2008 acquisition of a business in Tacoma, Wash. “In some places, it can be 4.93%, and across the street, which is also across the county line, it could be 5.19%.”

While Ecotex knew what it was getting into, many other Canadian businesses are caught off guard by the complexity of the U.S. tax system, with its 7,000-plus taxing jurisdictions, Canadian chartered accountants say.

And while Ecotex was clearly going to be paying the U.S. taxman, by dint of owning and operating laundry facilities in that country, many Canadian businesses that have U.S. sales but no physical presence in the United States think they’re off the hook.
That’s not necessarily so.

It all adds up to a nightmarish spider-web of tax rules and regulations that can easily entrap Canadian entrepreneurs. At a minimum, it makes the United States, a country with a reputation for cost-cutting, an expensive place to do business. Read more here.

Obama’s Emphasis on Trade Opens Door to Ease Border Issues

(Barbara Yaffe — Vancouver Sun)

A 2007 study points out that more than seven million U.S. jobs depend on trade with Canada

If Barack Obama’s intention is to create jobs for Americans by boosting trade, he’ll have to start paying more attention to the beleaguered Canada-U.S. border.

Obama’s jobs message, outlined in a recent State of the Union address to Congress, suggests Canada may finally have the opening it needs to take its long-standing case for easing border bottlenecks to Washington.

An article by American researcher Kathryn Friedman, appearing in the latest issue of the Canadian political journal Policy Options, urges stakeholders on both sides of the border to begin lobbying D.C. policy-makers, reminding them that “the Canada-U.S. economic relationship . . . is the lifeline for continued prosperity.”

Friedman, deputy director of the University of Buffalo Regional Institute, says it’s time for the two countries to devise a joint governing structure for the 49th parallel, “perhaps one modelled upon Norad,” which supervises continental air defence.

“The global recession provides an opportunity to link recovery of the United States and President Obama’s legacy to border policy,” writes Friedman. Read more here.

Editorial: Barrier on Main Street

(Globe and Mail)

“Buy American” policies are lamentably alive and well, and somewhat strengthened, in a new $154-billion (U.S.) stimulus bill that was passed by the House of Representatives on Wednesday. The White House should press for the relevant clauses to be removed, so that it is not passed with this protectionist element by the Senate next year. Canada needs to lobby harder.

Once the Jobs for Main Street Act of 2010 reaches the desk of Barack Obama, it would be too much to hope that the President will veto the whole bill for the sake of friendship with Canada or free-trade principles, or indeed for the convenience of integrated North American supply chains. If it is going to be amended, that will have to happen in the Senate. Read more here.