New rules to test fumes in containers that arrive at Canadian ports have resulted in a huge backlog of containers for inspection, according to port authorities.
The Canada Border Services Agency now requires employees to test all marine containers for fumigants, including formaldehyde, which was added to the list in June. Since then, port authorities say many more containers have tested positive, meaning they’re too dangerous for inspectors to continue examining.
In the Port of Halifax, where thousands of containers arrive each week, every container that has arrived in the last three weeks and has been targeted for testing has come up positive.
“The Port Authority takes very seriously anything that causes delays in the supply chain and customers of the port are looking for consistency and reliability, and they’ve brought this matter to our attention,” said the Halifax port’s manager of business development, Patrick Bohan.
“We’re very concerned about it, and we urge CBSA to work to improve the process to basically minimize the delays in the process.”
At Maritime Ontario’s Dartmouth warehouse, dozens of containers are sitting idle while they are being aired out and ventilated with fans, which is done when an unacceptable level of fumigants is detected.
Current testing done by the CBSA checks for six common fumigants, now including formaldehyde – a chemical commonly found in glue and used in everything from cars to furniture. Some experts say formaldehyde is an allergen or skin irritant that can lead to cancer if people are exposed to very small amounts over long periods of time.
The CBSA said the health of its employees is its top priority. “At no time will the CBSA compromise the health and safety of its employees. CBSA has the appropriate measures in place to protect its employees from any possible exposure to hazardous chemicals,” the CBSA said in a statement.
The union representing port inspectors, however, said it believes the new tests may be coming up with false positives. “Our officers are very eager to see some of the hiccups, some of the problems, with testing be resolved so they can get back to doing more fully their job of protecting Canadians,” said Brett Evans, the branch president in Halifax.
The CBSA has said it is looking into new “highly sensitive detection technology” that may make the testing process more efficient.
The latest revisions of two papers including what could become the formulas for cutting tariffs and trade-distorting agricultural subsidies in a final deal were issued on 10 July 2008. They are the outcome of the latest discussions in negotiation groups and will be a focus of crucial talks combining these and some other subjects when a representative group of ministers meet in Geneva from 21 July.
The two documents are revisions of drafts previously circulated in July 2007, May and February 2008. They are the result of WTO member governments’ latest positions in the discussions since September 2007, one of the most intensive periods of negotiations since the Doha Round talks began in 2001.
They are agriculture negotiations chairperson Ambassador Crawford Falconer’s and non-agricultural market access (NAMA) chairperson Don Stephenson’s latest draft “modalities”.
Soaring oil prices have started to deliver more pain than gain for the Canadian economy, which has profited from the country’s energy exports, says a new report.
While it is true that oil exports have, in the words of Bank of Canada governor Mark Carney, made “Canada wealthier as a nation,” people are paying a price in terms of higher gasoline, electricity and heating charges, says Douglas Porter, deputy chief economist with the Bank of Montreal.
Porter said fuel prices have risen so much that energy is now consuming a record seven per cent of Canadian household spending and “looks poised to continue heading higher.”
But the big loser is Canadian industry, which is being hammered both from higher production costs and from the slowdown in the world and U.S. economies struggling to cope with the high fuel costs.
The auto sector has been particularly impacted, slicing U.S. auto sales to the lowest level since the recession of the early 1990s.
Since Canada produces twice as many vehicles per capita than the U.S. and most head south, lower demand in America disproportionately hurts the Canadian sector, says Porter. He estimated Canada has lost 30,000 auto jobs from its peak, most in Ontario.
“The received wisdom in recent years is that the Canadian economy benefits on net from higher oil prices, given the country’s status as a significant and growing net energy exporter,” he writes in a three-page report.
“There is a strong case to be made that the surge in oil prices crossed the tipping point this spring from providing some economic ballast for the domestic economy to acting as a heavy anchor.”
According to the analysis, the “tipping point” came when world oil prices hit the US$120-130 range and kept heading higher, destroying the illusion that the soaring prices were a temporary phenomenon.
The next U.S. president should shift American trade policy away from an emphasis on bilateral free trade agreements to bigger accords with the world’s leading economic powers, a new report from a centrist Democratic policy group said on Wednesday.
“The United States needs a new trade and financial strategy that reflects America’s commercial interests,” the Democratic Leadership Council said in “Winning in the World Economy (II),” a follow-up to the group’s 1985 policy paper on the same topic. “It should shift away from the FTA-focused approach of the Bush era, and focus instead on multilateral policy, targeting the largest markets and the growth sectors likely to lead America’s economy in the 2010s and the 2020s,” the DLC said.
The report comes as many supporters of Democratic presidential candidate Barack Obama are calling for a moratorium on new trade deals until what they view as problems with previous trade agreements are fixed. Groups such as the AFL-CIO labor federation, the Teamsters union and the United Steelworkers, as well as many small and medium-sized manufacturers, blame trade agreements for millions of lost U.S. manufacturing jobs.
Obama has promised to renegotiate the North American Free Trade Agreement to include stronger labor and environmental provisions, and has opposed Bush administration free trade deals with Colombia, South Korea and Panama. However, the first-term Illinois senator has not articulated a clear outline of what types of trade agreements he would pursue if elected president. In contrast, Republican presidential candidate John McCain has warned of the risks of reopening NAFTA and embraced the Bush administration’s bilateral free trade agenda. Read the complete article.
On July 3, 2008, the U.S. Court of International Trade (CIT) denied Totes-Isotoner Corporation’s (“Totes”) claim alleging that the Harmonized Tariff Schedule of the United States (HTSUS) violated the equal protection and due process clauses of the U.S. Constitution by setting higher duty rates on men’s gloves than women’s gloves.
In its opinion, a three judge panel of the CIT held that the mere classification of men’s gloves under a separate tariff heading does not violate the equal protection clause without proof that the government intended to discriminate on the basis of gender. As a result, the CIT dismissed the case for failure to state a claim.
The U.S. Constitution prohibits the government from denying any person the equal protection of the laws. Totes’ complaint alleged that imported men’s gloves are subject to 14% duty rate, while imported gloves for “other persons” are subject to a duty rate of 12.6%. Because these provisions provide for a higher duty rate for men’s gloves, Totes alleged that the HTSUS “discriminates” on the basis of gender.
In its decision, the CIT noted that to properly state a claim for violation of the equal protection clause based on gender, a plaintiff must allege that the government has engaged in gender-based discrimination that is not substantially related to important governmental objectives. To establish the government’s intent, the discrimination must either be evident on its face, or must result in unequal treatment of persons or property within the same class.
The CIT held that Totes’ complaint failed on both grounds since Totes’ complaint failed to establish that the gloves will actually be purchased for these purposes or that men will necessarily pay the allegedly discriminatory tax. In addition, the CIT held that because the duty is paid by importers the complaint failed to show how the different duty rates resulted in a discriminatory application of the tax.
Read the complete article, with link to the opinion here.
Dozens of business groups are opposing an emerging effort to reinstate the Continued Dumping and Subsidy Offset Act, or Byrd Amendment. This law, which was passed in 2000 and repealed in 2005 in response to an adverse ruling by the World Trade Organization, required U.S. Customs and Border Protection to distribute antidumping and countervailing duty revenues to affected domestic producers instead of depositing them into the general treasury.
Sen. Robert Byrd, D-W.V., is reportedly seeking support from his colleagues for a letter to Senate Majority Leader Harry Reid, D-Nev., that backs legislation reinstating the Byrd Amendment. The letter asserts that “a large number of American industries, associations, and their workers” are calling for such action because the repeal of the Byrd Amendment was “a terrible mistake” that was “never seriously contemplated by the Senate.” Putting the law back in place would help compensate U.S. companies and workers that face continued injurious dumping or subsidization even after an AD or CV duty order is imposed, the letter said. Among those who would benefit are producers of candles, catfish, cement, crawfish, furniture, bearings, garlic, hand tools, honey, mushrooms, pasta, raspberries, semiconductor chips, shrimp, steel, pipe, chemicals, fertilizers and enriched uranium.
On June 30, however, 27 trade associations sent a letter to Reid and Senate Minority Leader Mitch McConnell, R-Ky., arguing that a reinstatement of the Byrd Amendment would subject U.S. exports to substantial retaliation and undermine the United States’ ability to persuade other countries to comply with their international obligations. Click here for the complete article.
The Conference Board of Canada has released a report for the Government of Canada identifying the key issues facing the manufacturing sector in Canada and their impacts on labour market and skills requirements.
Accompanying this report are case studies that examine the impact of four innovative Sector Council programs aimed at overcoming specific labour market challenges in Canada’s apparel, wood manufacturing, plastics, and textiles industries.
More information, and a link to download the report, is available here.
The Honourable John Baird, Minister of the Environment, and the Honourable Tony Clement, Minister of Health, today [Saturday] announced as part of Canada’s Chemicals Management Plan that eight new chemicals are now deemed to be toxic to human health, and one chemical is deemed toxic to the environment under the Canadian Environmental Protection Act (CEPA), 1999.
The Chemicals Management Plan was announced by Prime Minister Harper in December 2006, making Canada a world leader in assessing and regulating chemicals that are used in thousands of industrial and consumer products.
“When we announced the Chemicals Management Plan in 2006 we made it clear our goal was to protect the health of Canadians from harmful substances,” said Minister Clement. “We identified these substances as a priority for action a year ago and our final assessments have confirmed that eight of these substances are toxic to human health and one is toxic to the environment.”
“Protecting and preserving our environment goes hand in hand with protecting the health of Canadians,” said Minister Baird. “These conclusions are an important step in protecting Canadians and their environment from the long-term harmful effects of chemicals.”
These nine chemicals were part of a batch of 15 chemicals, which were identified last year as high priorities and underwent a full risk assessment.
“Toxic” substances in Batch 1 include: CHPD (Yellow Dye); 1,2-benzenediol and 1,4-benzenediol; Methyl- and ethyloxirane; Toluene diisocyanates (TDIs) – (3 substances); and Naphthalene.
As part of the assessment, information was collected and assessed to determine whether these substances pose a risk to Canadians’ health or the environment and if any further action may be needed to minimize possible risks. The Government required industry and other stakeholders to provide information on specific substances.
Information on this batch of chemicals will be posted in the July 5, 2008 edition of Canada Gazette, Part I, including the data which determined the toxicity of these nine chemicals, and is also available on the Chemical’s Management Web site.
Under the Chemicals Management Plan, the Government has announced a total of six batches of chemicals for assessment. The remaining five batches are still being assessed.
Customs’ proposed “10 + 2” rule would have a profound effect on importers’ operations. Here’s what to expect
If you’ve been thinking of Customs’ proposed importer Security Filing (ISF) rule as just another post-9/11 exercise in information gathering, think again.
On the face of it, the proposed rule—popularly known as “10 + 2” because it requires 10 data sets from importers and two additional sets from ocean carriers—is indeed about collecting information for security purposes. When it issued the proposal, U.S. Customs and Border Protection (CBP) said its aim was to learn more about imports and their origins, intermediate stops, and final destinations in order to screen cargo for security risks.
But data collection may be just the tip of the regulatory iceberg. Although the final rule has not yet been issued, most observers agree that 10 + 2 will lead to big changes in importers’ day-to-day operations as well as their supply chain relationships. Here’s a look at what may lie ahead, and what you can do now to be ready when the rule does take effect. Read the complete article.
A June 2008 report recently made public by the Department of Homeland Security’s Office of Inspector General praises U.S. Customs and Border Protection for its actions to secure the Automated Commercial Environment. The report, which has been redacted to remove certain sensitive information, states that the measures taken by CBP are designed to reduce the risks associated with the intentional and unintentional actions of ACE users that could potentially result in the loss and misuse of the data processed and stored by the system. For example, CBP has:
• enabled point-to-point encryption to protect the data transmitted through the ACE Secure Data Portal from unauthorized access;
• established a change control process to ensure that system and software configuration changes are reviewed, authorized and tested prior to being implemented;
• completed a privacy assessment that outlines what type of information is to be collected through ACE, why it is collected, how it is intended to be used and with whom it will be shared;
• implemented adequate physical controls to restrict ACE access to authorized personnel and reduce the potential risks of theft, destruction, sabotage or compromise of equipment; and
• implemented procedures to ensure that ACE sensitive data is backed up periodically and can be restored at an alternate recovery location in the event of emergency.
CBP has also committed to making further improvements to the security posture of ACE. For example, CBP said in response to the OIG report that by November 30 it plans to (a) develop, update and implement policies and procedures to ensure that a formalized user account management process for ACE is established to grant, monitor and disable user access at ports of entry and (b) improve the current process for providing users with administrator access to ACE, which the OIG said should be restricted to minimize the potential of misuse.
(Video: Associated Press/Text: U.S. Census Bureau)
Video: Fireworks lit up the sky over the South Dakota landmark Thursday night, kicking off a weekend of activities.
On this day in 1776, the Declaration of Independence was approved by the Continental Congress, setting the 13 colonies on the road to freedom as a sovereign nation. As always, this most American of holidays will be marked by parades, fireworks and backyard barbecues across the country.
2.5 million: In July 1776, the estimated number of people living in the newly independent nation. Source: Historical Statistics of the United States: Colonial Times to 1970.
304 million: The nation’s population on this July Fourth. Source: Population clock.
Fourth of July Cookouts More than 1 in 4: The chance that the hot dogs and pork sausages consumed on the Fourth of July originated in Iowa. The Hawkeye State was home to 17.6 million market hogs and pigs on March 1, 2008. This represents more than one-fourth of the nation’s total. North Carolina (9 million) and Minnesota (6.7 million) were the runners-up. Source: USDA National Agricultural Statistics Service.
6.8 billion pounds: Total production of cattle and calves in Texas in 2007. Chances are good that the beef hot dogs, steaks and burgers on your backyard grill came from the Lone Star State, which accounted for about one-sixth of the nation’s total production. And if the beef did not come from Texas, it very well may have come from Nebraska (4.7 billion pounds) or Kansas (4.1 billion pounds). Source: USDA National Agricultural Statistics Service.
6: Number of states in which the revenue from broiler chickens was $1 billion or greater between December 2006 and November 2007. There is a good chance that one of these states – Georgia, Arkansas, North Carolina, Alabama, Mississippi or Texas – is the source of your barbecued chicken. Source: USDA National Agricultural Statistics Service.
About 4 in 10: The odds that your side dish of baked beans originated from North Dakota, which produced 42% of the nation’s dry, edible beans in 2007. Another popular Fourth of July side dish is corn on the cob. Florida, California, Georgia and New York together accounted for 60% of the sweet corn produced nationally in 2007. Source: USDA National Agricultural Statistics Service.
Please Pass the Potato Salad: Potato salad and potato chips are popular food items at Fourth of July barbecues. More than half (52%) of the nation’s spuds were produced in Idaho or Washington state in 2007. Source: USDA National Agricultural Statistics Service.
More than three-fourths: Amount of the nation’s head lettuce production in 2007 that came from California. This lettuce may end up in your salad or on your burger. Source: USDA National Agricultural Statistics Service.
Nearly 3 in 4: The chances that the fresh tomatoes in your salad came from Florida or California, which combined accounted for 73% of U.S. tomato production last year. The ketchup on your burger or hot dog probably came from California, which accounted for 96% of processed tomato production in 2007. Source: USDA National Agricultural Statistics Service.
Georgia: The state that led the nation in watermelon production last year (1 billion pounds). Other leading producers of this popular Fourth of July dessert included California, Florida and Texas, each with more than 400 million pounds. Source: USDA National Agricultural Statistics Service.
More than 74 million: Number of Americans who said they have taken part in a barbecue during the previous year. It’s probably safe to assume a lot of these events took place on Independence Day. Source: Statistical Abstract of the United States: 2008, Table 1213.
Fireworks $207 million: The value of fireworks imported from China in 2007, representing the bulk of all U.S. fireworks imported ($217 million). U.S. exports of fireworks, by comparison, came to just $14.9 million in 2007, with Japan purchasing more than any other country ($3.8 million). Source: Foreign Trade Statistics.
$17.3 million: The value of U.S. manufacturers’ shipments of fireworks in 2002. Source: 2002 Economic Census.
Flags $4.7 million: In 2007, the dollar value of U.S. imports of American flags. The vast majority of this amount ($4.3 million) was for U.S. flags made in China. Source: Foreign Trade Statistics.
$2.4 million: Dollar value of U.S. flags exported in 2007. Mexico was the leading customer, purchasing $1.2 million worth. Source: Foreign Trade Statistics.
$349.2 million: Annual dollar value of shipments of fabricated flags, banners and similar emblems by the nation’s manufacturers, according to the latest published economic census data. Source: 2002 Economic Census.
Patriotic-Sounding Names 31: Number of places nationwide with “liberty” in their name. The most populous one as of July 1, 2006, is Liberty, Mo. (29,581). Iowa, with four, has more of these places than any other state: Libertyville, New Liberty, North Liberty and West Liberty.
• Thirty-one places are named “eagle” – after the majestic bird that serves as our national symbol. (Places include cities, towns, villages and census-designated places.) The most populous such place is Eagle Pass, Texas, with 26,401 residents.
• Twelve places have “independence” in their name. The most populous of these is Independence, Mo., with 109,400 residents.
• Nine places adopted the name “freedom.” Freedom, Calif., with 6,000 residents, has the largest population among these.
• There is one place named “patriot” – Patriot, Ind., with a population of 192.
• And what could be more fitting than spending the Fourth of July in a place called “America”? There are five such places in the country, with the most populous being American Fork, Utah, population 25,596. Sources: Population estimates and American FactFinder.
The British are Coming! $107.2 billion: Dollar value of trade last year between the United States and the United Kingdom, making the British, our adversary in 1776, our sixth-leading trading partner today. Sources: Foreign Trade Statistics.
Open any Canadian newspaper these days, and you are likely to hear about layoffs, shutdowns, and other gloomy pronouncements among Canada’s exporters. Energy exporters and parts of the agri-food sector are largely exempt from this talk. Most other industries are struggling, thanks to slower demand and a high currency. But some in these stressed sectors are bucking the trend.
Canada’s gloomy export picture reflects our high exposure to the world’s largest economies, which are slowing rapidly. Other markets have yet to experience the brunt of the slowdown, but even when they do, growth rates there will still, in general, be much higher. Exporters targeting the higher-growth markets are already racking up very impressive numbers.
How impressive? While total exports are down 0.5% thus far in 2008, at the same time exports to twenty of Canada’s top fifty export destinations are averaging 34% growth. What is more, this marks an acceleration from average annual growth of 20% in the past four years. True, these markets account for just 6% of total exports, but exporters with a piece of this action are smiling. Admittedly, energy and agri-food exports are a large part of this success story. Both sectors are benefiting from higher world prices. The agri-food sector is also seeing growth in the volume of shipments, owing in large part to rising wealth in emerging markets. But industries further along the value chain are also prospering. Machinery, aerospace and pharmaceuticals exports, which together sum to more than twice the value of energy exports to these markets, thus far in 2008 have surged by a striking 77%. Growth is strong in each of these sub-sectors, but is led by a quadrupling of aerospace product exports. What is more, much of this is an increase in physical shipments, as global competition has generally minimized price increases in these sectors.
Not surprisingly, the 20-country list includes the BRIC countries – Brazil, Russia, India and China. These countries are strategically important not just because of rapid current growth but because of their immense longer-term potential. While shipping commodities to these markets is important, gaining a foothold further along the value chain is key to securing future export growth as these economies grow wealthier. Current progress is good. So far this year, total exports are up 20%. Further along the chain, growth is triple that pace, at 63%, and the share of total Canadian exports is 12% and rising. Solid performance, all things considered.
Also in the list are key Gulf Cooperation Council countries. These are critical players in the global infrastructure boom, and present great near-term export potential. Exports to Saudi Arabia and the UAE are booming, up 67% so far this year. That’s an acceleration from average growth in the mid-20% range in the last four years. Moreover, Canadian exporters are shipping a broad range of goods to these two countries, with over a quarter of current shipments in higher value-added products. Much more is possible, given prospects for this region in the coming years.
The bottom line? There is gloom to spare in the world economy these days. But there are key growth opportunities now that will extend beyond the slow times. They may take us out of our traditional comfort zone, but the rewards are already proving that it’s worth it.
The Department of Foreign Affairs and International Trade has released The State of Tradereport, which is a comprehensive document that reviews and analyzes the key developments in Canada’s international trade and investment performance against the background of economic trends at home and abroad.
The entire 86 page report in PDF form can be downloaded here.
Authority says it has work to do before even thinking about long-term gain
The Halifax Port Authority is concentrating on getting over the short-term pain before it turns its attention to long-term gain, says authority president and CEO Karen Oldfield.
“We are so focused on getting our volumes up, increasing our business through the port, we are not even looking at 2009,” she said Thursday after the authority’s annual meeting.
The port, like several others across North America, will show a continued decrease in container cargo when six-month figures are released in July. Ms. Oldfield would not say how big a decline she expects, but James Foote, CN’s executive vice-president of sales and marketing, estimated its volumes through the port are down about 15 per cent.
“We are looking very, very short term. Long-term prospects are excellent. Short term, we are in choppy water and we are working really hard at every aspect of the business — the reefers (refrigerated cargo), retail, every little place that we can find commodities that go into boxes that go across our port. That’s where we are,” Ms. Oldfield said.
Paul DuVoisin, the port’s commercial director based in the New York / New Jersey area, told the annual meeting that international shipping lines expect to see a turnaround in 2009. Imports into North America, particularly into the U.S., have dropped significantly this past year, a decrease attributed to factors such as the mortgage crisis. Household furnishings account for a large percentage of imports.
Ms. Oldfield said it is difficult to predict when Halifax will begin to see a cargo upsurge but she is optimistic about short-term prospects. Read the complete article.
The Honourable Jim Flaherty, Minister of Finance, today [June 27] proposed changes to the Income Tax Act for Canadian businesses with foreign affiliates and those that report earnings in a foreign currency.
“Our government is committed to creating a corporate tax system that is both fair and internationally competitive,” said Minister Flaherty. “The proposals I am announcing today will improve the tax system and will assist Canadian businesses in complying with the tax law.”
Foreign Affiliates Bill C-28, the second Budget 2007 implementation bill, provided substantial tax relief for Canadian businesses, including the historic corporate income tax rate reductions announced in the 2007 Economic Statement. In addition, the bill, which received Royal Assent on December 14, 2007, implemented a number of amendments to the Income Tax Act relating to foreign affiliates.
Included in the bill were provisions which allow taxpayers to elect retroactive application of some of these foreign affiliate amendments. However, in response to concerns that the deadline for filing these elections is too tight – for example, a taxpayer with a December 31, 2007 year-end must file these elections by June 30, 2008 – the Government is proposing to extend the filing deadline for these elections by 18 months. These proposals are set out in more detail in the attached annex.
Functional Currency Tax Reporting Bill C-28 also included amendments to the Act that implemented the Budget 2006 proposal to introduce functional currency tax reporting rules. In response to representations from stakeholders concerning the amended rules, the Government is proposing several technical revisions. The revisions, which are described in detail in the attached annex, include:
• Extending the deadline to elect functional currency tax reporting to October 31, 2008;
• Amending the definition of “functional currency” to address concerns about its practical application to the situations of certain taxpayers; and
• Introducing symmetry in foreign exchange rate calculations used in the reporting of assets and debt obligations.
Minister Flaherty indicated that the Government will introduce legislation at an early opportunity to implement these proposed technical changes to the Income Tax Act. Further details can be obtained at the Dept. of Finance website.
At the recent annual meeting of the Canadian pallet association, a Canadian government representative spoke on the anticipated removal of the ISPM-15 exemption for shipments of pallets and wood packaging between the United States and Canada. Under the original solid wood packaging laws, trans-border shipments had been exempt due to the contiguous nature of the forests. Concerned about the spread of pests, such as the emerald ash borer (EAB), the U.S. government has worked with Canadian officials to enact ISPM requirements for trans-border movements.
Jean-Luc Poupart, a Canadian government official, announced that a consultation document would be sent out to stakeholders in mid-June. It would include a proposed timeline for eliminating the exemption over the next few years.
According to Poupart, the proposal will likely involve Phase 1, a one-year adjustment period to begin Jan. 1, 2009. This would be followed by Phase 2, an informed compliance period, beginning Jan. 1, 2010. During Phase 2, violations would be reported to the violator, without penalties being imposed. Phase 3, commencing Jan. 1, 2011, would see full enforcement for all wood packaging, except dunnage. Dunnage would remain in an informed compliance position for an additional 8 months. Phase 4, effective Sept. 1, 2011, would see full enforcement of solid wood packaging and dunnage.
The U.S. Animal Plant & Health Inspection Service concluded that trans-border ISPM compliance is necessary to provide adequate protection from invasive species. U.S. officials and scientists are also considering a domestic requirement to harmonize regulations across state borders.
The National Wooden Pallet & Container Association (NWPCA) continues to support both a domestic and trans-border ISPM requirement to harmonize regulations, stop the spread of pests, and take away a major selling point of alternative materials. Many large players continue to support these measures, seeing them as inevitable. Some smaller pallet and lumber companies are concerned that they will not be able to afford the cost to comply. Read the complete article.
After the unexpected contraction of Canada’s real gross domestic product in the first quarter of this 2008, it now appears that the economy will post “relatively slow economic growth, but positive economic growth” overall for the year, Federal Finance Minister Jim Flaherty said Monday.
“We’re on track to accomplish that this year …although obviously, the economy has slowed down,” Mr. Flaherty said in an interview after Statistics Canada reported that the GDP rebounded 0.4 per cent in April after declines in February and March.
“One month doesn’t make a trend, of course, but it’s more in line with what the forecasters, including ourselves, were anticipating.”
Mr. Flaherty said the first quarter’s 0.3 per cent drop in the GDP “was a concern – but it was explainable, on analysis, by the factors affecting the auto industry, particularly a strike at a parts plant in the United States.”
Mr. Flaherty said the Statscan report, which showed that manufacturing production rose by 1.9 per cent in April and that the retail sector was up by 0.6 per cent, “reflects strong economic fundamentals in Canada …I am particularly encouraged by continuing consumer confidence in Canada.”
Mr. Flaherty declined to say whether he believes the Canadian economy now has enough momentum to avoid a technical recession – which economists define as two consecutive quarters of negative growth.
“I don’t do that, other than what private sector forecasters say.”
However, several economists said Monday that it appears that the Canadian economy will eke out modest growth in the second quarter and for the balance of this year.
Statscan on Monday cited increases in manufacturing, and wholesale and retail trade in April, offsetting declines in construction, oil and gas extraction and exploration. Read more.
As Canada celebrates its birthday, only a slim majority of citizens feel the country is “moving in the right track,” according to a new poll for Canwest News Service and Global National.
Fifty-six per cent of respondents in the Ipsos Reid poll said Canada was on the right path, while 44 per cent felt the nation was “headed in the wrong direction.”
“It’s not an enthusiastic country at the moment,” said John Wright, Ipsos Reid’s senior vice-president. “But it’s not the end of the world and it certainly isn’t a time when people are panicking.”
The poll also measured Canadians’ attitudes toward the economy and the need for an election. “You have to judge the mood of a country a little bit like the mood of an individual,” Wright said, explaining the multiple topics. “Sometimes your stomach’s not feeling well but your head’s clear.”
Sixty-five per cent of Canadians surveyed believed the economy’s condition to be “very good” or “good,” but that number is down six percentage points since May.
And while Ontario and Atlantic Canada appear to be the most pessimistic, with respondents who feel the economy’s state is “poor” hovering at 40 and 38 per cent respectively, symptoms of unease are being seen across the country, said Wright.
“Even in places where you would have an expectation that things were going really well, such as in Alberta and where the oil patch is, it’s even there where some anxiety is rising up.” Twenty-two per cent of Albertans polled said the economy was in “poor” condition. Read more.
The global economy has clearly decoupled from the US and world growth remains close to 4 per cent in spite of the absence of any increases in domestic US demand. Continued expansion abroad, especially in the emerging market economies, has in fact cushioned the slowdown and so far prevented recession in the US. Hence we are also experiencing the first episode in history of reverse coupling, in which the rest of the world pulls the US forward rather than the opposite.
The most striking feature of the current global economic situation is that the US is the only major country that is seriously contemplating recession and that has adopted aggressive expansionary policies to combat that risk. Most other countries are more worried about inflation than slower growth. Many are experiencing reduced growth, to be sure, but part of their slowing is a natural cyclical reaction to four years of near-record global expansion, at more than 4½ per cent from 2004 to 2007, and the need to focus on price stability. The additional losses because of the housing and credit crises in the US amount only to a couple of 10ths of 1 per cent in most areas, including Europe and Japan. It will reach a full percentage point or more only in the fastest growers such as China, where expansion will remain near 10 per cent. Many of these cuts are in fact welcome as their central banks are tightening monetary policy rather than easing it.
Global growth is thus still likely to approach 4 per cent in both 2008 and 2009 in spite of the sharp slowdown in its largest single economy. The emerging market economies, which now account for half of world output calculated at purchasing power parity exchange rates by the International Monetary Fund, are still expanding at 6-7 per cent. Even the nearest neighbours of the US – Canada and Mexico – are nowhere near recession and have altered their policies much less forcefully. In spite of the international transmission of substantial financial as well as real economic shocks from the US, the traditional relationship where “the world catches cold when the US sneezes” no longer holds.
The second striking feature is the reverse coupling of the global economy. Over the past two quarters, the US has recorded positive growth at an annual rate of 0.8 per cent (in spite of the pronouncements of many observers that recession had already set in). Its “net exports of goods and services”, the gross domestic product equivalent of the current account balance, have strengthened at an annual rate of almost 1 per cent of GDP during that period. Hence the totality of recent US expansion has been provided by the strengthening of its trade balance. Domestic demand has been falling but the US has been saved from recession by the rest of the world. Read the complete article.
