January 16, 2009
The U.S. Department of Transportation signed an agreement with the state of Washington to improve efficiency along the border with Canada.
Freight carriers will be better able to deliver goods on schedule with more accurate and reliable travel information on border wait times, U.S. Transportation Secretary Mary E. Peters said.
The Cascade Gateway Project will provide border-crossing wait time and travel condition information through a variety of technologies, including sensors, to reduce congestion at four Washington ports of entry, Peace Arch, Pacific Highway, Lynden and Sumas.
“With accurate information, travelers and freight carriers will be able to choose the time and route that is most efficient and best meets their needs,” said Secretary Peters.
The project is one of three projects in the DOT's Transportation Border Congestion Relief Program, which is designed to facilitate and accelerate transportation-related capacity and operational improvements at border crossings.
The project will receive priority access, consistent with current law, to many of DOT's assistance programs, including loans and other innovative financing mechanisms, said Secretary Peters.
Food Safety Legislation: A Continuing Concern of the Canadian Government, Importers and Chinese Suppliers
Earlier in 2008, the Canadian government introduced legislation that would impose onerous requirements on companies that import consumer products from Chinese and other foreign suppliers. This legislation, referred to as the Consumer Products Safety Act, followed several recent high-profile recalls affecting toys, food, toothpaste and pharmaceuticals, many of which were imported from China. As a result of the proposed legislation, Chinese and other non-Canadian suppliers would have been faced with an increasing number of requests for detailed product information, including documentation of safety testing, from Canadian importers and distributors. Although the Consumer Products Safety Act, also referred to as Bill C-52, did not become law because of the recent Canadian election, the government's election platform indicates that protecting Canadians from unsafe imported products remains a high priority. Accordingly, the government is likely to re-introduce a bill in Parliament in the coming session.
Although it is unknown at this point whether the bill, when introduced, will be identical to or amended from what was originally put forward, prudence suggests that now may be a good opportunity for importers and their Chinese and other foreign suppliers that may be affected by the eventual legislation to consider how they may play a role in shaping the legal framework for such consumer product law. In the meantime, it may be wise for importers, manufacturers and suppliers and others potentially affected by the legislation to begin implementing compliance mechanisms so that when the legislation comes into effect, they will have established appropriate best practices and due diligence mechanisms to avoid any future liability.
Read the complete article here.
Canada and the 27-member European Union hope to launch full-scale negotiations on an ambitious trade liberalization agreement in May, International Trade Minister Stockwell Day said Thursday.
Day said he's confident Canada will meet the EU's principal demand – that provincial governments, under political pressure due to rising unemployment in Canada, will agree to open up their lucrative procurement programs to European bidders. European firms are particularly keen to gain the right to bid on major commuter rail projects.
“We don't think it's going to be difficult to give them that assurance,” Day told Canwest News Service after his meeting in Prague with Czech Industry Minister Martin Riman. “Whether we're talking provincially or federally we understand in Canada that we prosper because we are a trading nation. We produce more than we can consume, and if we can't trade then we're in trouble. Provinces, regardless of the political stripe of their government, recognize this.”
Canadian and EU officials have been engaged since last autumn in a “scoping” exercise launched by Prime Minister Stephen Harper and French President Nicolas Sarkozy, who held the EU presidency during the second half of 2008. They have been assessing the parameters of a deal which, according to a joint study, could generate a total of $32 billion in wealth for both parties by 2014. Read more here.
January 15, 2009
The [US] federal government … issued a long-awaited decision approving a new Detroit-Windsor border crossing system over the Detroit River. The Record of Decision, issued Jan. 14, by the Federal Highway Administration (FHWA), is the final environmental clearance for the Detroit River International Crossing (DRIC) Study for a proposed new border crossing system just north of Zug Island.
The Record of Decision is the last step under the National Environmental Policy Act (NEPA) to gain project approval, following four years of consultations, public hearings, traffic analyses, and environmental studies. The Record of Decision allows Michigan to begin right-of- way acquisition and construction planning for the proposed new bridge. Construction of a new border inspection plaza, bridge and interchange is scheduled to begin in 2010, with an official opening of the new crossing system planned for 2013…
…“This is a significant milestone,” said State Transportation Director Kirk T. Steudle. “Once built, the new crossing system will boost U.S. and Canadian trade by expanding the busiest trade corridor in the western hemisphere… This project is needed to transition the border crossing into a modern, multimodal network to securely move people and goods between the United States and Canada and make Southeast Michigan an even more prominent gateway for global commerce. We will be building the most modern border crossing system in the world.”…
The DRIC Study, a binational effort, was led by the Border Transportation Partnership, comprised of the FHWA, Transport Canada, MDOT and the Ontario Ministry of Transportation. The Border Transportation Partnership was formed in 2000 to provide for the safe, efficient and secure movement of people and goods across the U.S.-Canada border at the Detroit River to support the regional, state, provincial and national economies, and meet the civil and national defence and homeland security needs of the busiest trade corridor between the United States and Canada.
More information about the DRIC ... is available on the Border Transportation Partnership website.
The World Trade Organization has launched a new database on regional trade agreements (RTAs), containing all relevant documentation received by the WTO following notification that an RTA has been established.
The database, which is one of the requirements of the General Council's Transparency Decision on RTAs, contains all the notifications, links to the content of the relevant RTAs, legal provisions and information on the WTO’s assessments of the RTAs.
The database also contains more detailed information about the RTAs for which the WTO has prepared a “Factual Presentation” or a “factual abstract”. In these cases the following information is provided:
• the timetable agreed in the RTA for the reduction of tariffs as well as data on trade in goods and services for the relevant countries at the time that the RTA enters into force (this only applies to RTAs where the WTO has prepared a Factual Presentation)
• a list of key provisions contained in the RTAs as well as links to brief descriptions of these provisions in the Factual Presentation or factual abstract prepared by the WTO.
The database can be searched by country, region, legal provision, date of notification or entry into force of the RTA. Summary tables of all RTAs currently in force, containing various types of information, can be easily exported by users of the database. To access the database, please go to http://rtais.wto.org
Ontario and Quebec are set to take the biggest hit from the economic downturn in 2009, a BMO report on provincial economies says.
Ontario, teetering on the edge of recession, will finish 2009 with negative gross domestic product (GDP) growth of 2.3%, while Quebec will see its economy shrink by 1% this year, the report released Wednesday said. Ontario is expected to have finished 2008 with a 0.2% decline in GDP while BMO forecasts Quebec finished the year with a 0.2% GDP increase.
Manufacturing and export problems driven by crumbling U.S. demand are weighing heavily on both provinces, BMO economist Robert Kavcic wrote in the report. But, while the Quebec government is likely to keep its budget balanced in 2009 and 2010, Ontario is set to end a three-year run of balanced books with a $500 million slip into deficit territory.
“The challenges facing Central Canada are well documented-a manufacturing sector under siege amid plunging auto sales and a deep U.S. recession crimping export demand. Ontario's export sector has weighed heavily on growth, with real net exports negative for the first time on record dating back to 1981. As the downturn continues, Ontario's economy will contract further in 2009. Quebec, with its more favourable manufacturing mix, will fare slightly better,” Kavcic's report said.
The country as a whole is forecast to have finished 2008 with a 0.7% expansion in GDP, the report said. However the Canadian economy is forecast to contract this year by 1.3%, according to BMO.
Western Canada is also seeing a darker outlook, though not as bleak as that of Central Canada. Oil prices have fallen well below the break-even point for marginal oil sands projects, and tighter credit conditions have squeezed project financing, Kavcic said. Read the complete article here.
Confidence tumbled last fall on a number of fronts. Market turbulence, rising retail prices and economic weakening pummelled consumer and business confidence. Canadian exporters, on the front lines of the global slowdown, were big contributors to the growing sense of gloom.
EDC surveyed Canadian exporters last fall in the middle of the maelstrom that hit financial markets. Responses from 850 small, medium and large exporting firms were collected between mid-October and mid-November last year. Results show that the Trade Confidence Index (TCI) plunged to 61, a record low over the Index’s short history. Confidence last fell in 2001, but compared to this result, still remained at a relatively high level.
All five components of the TCI fell in the latest survey. The largest single drop was in domestic sales prospects. Over the past five years, exporters were able to count on a strong domestic market to tide them through the relentless rise in the Canadian dollar. Last fall, that upbeat view of the domestic scene soured considerably. Just 28% of respondents – the lowest share ever by a wide margin – expected a near-term increase in domestic sales. Those surveyed were likewise very gloomy about the outlook for the domestic economy. Just 12% expected improvement, while those seeing worse conditions spiked to 57% of respondents, a new record by a wide margin.
Prospects for export sales also took a large hit. Those who expected a decrease surged to just under a quarter of all respondents, while 39% expected an increase, down 8 percentage points in just six months. With export sales currently in recession, these results are not comforting. What is more, exporters’ gloomy domestic outlook was trumped by their pessimism about the global economy. Only 11% expected conditions to improve, while 64% foresaw a worsening situation.
Of all the TCI components, exporters were least jaded about international opportunities. The TCI score for this category hardly moved, thanks to the one-third of respondents who felt that near-term opportunities would get better. This is surprising in view of last fall’s economic and financial market turmoil, but it possibly reflects the success that exporters have experienced in recent years trading with non-traditional markets. Sales in these markets have risen at a double-digit pace, well ahead of the consistently meagre growth in sales to the United States.
January 13, 2009
We are pleased to bring you our latest ITIC report – Barriers at the Border: The Costs of Impediments to Business Mobility – which will be publicly released tomorrow [Wednesday]. This report explains how language differences, the shortage of Canadian foreign offices, and visa processing systems have negatively impacted trade, investment, and visits to Canada.
The analysis suggests that to alleviate the costs due to this lost economic activity, policy makers should reduce wait times for visas, increase the use of multi-entry visas, and expand outsourcing of visa processing. Also, some Canadian overseas offices should be expanded, especially in large, emerging economies where Canada has visa requirements, such as China, Russia, India, and Turkey. The resulting increased trade and investment flows would benefit the Canadian economy directly as well as indirectly, through reduced operating costs, productivity gains, and technology transfers.
To download the full report, go to http://www.conferenceboard.ca/ (registration required).
U.S. Customs and Border Protection announced today the C-TPAT Year in Review highlighting key accomplishments. In 2008, U.S. Customs and Border Protection’s Customs Trade Partnership Against Terrorism program met key member certification and validation requirements, created a new enrollment sector, conducted first-ever joint validations in China, and signed two additional mutual recognition arrangements.
“The world remains a dangerous place and we must keep improving and innovating C-TPAT to secure the global supply chain against acts of terrorism,” said Bradd Skinner, C-TPAT director. “The strength of the program is the collaboration that takes place between trade members, CBP supply chain specialists and colleagues at home and abroad to strengthen cargo security at every level. Collectively we must remain focused on adhering to the C-TPAT security criteria and creating a barrier which will be difficult for would-be terrorists to penetrate.” Read more here.
Asian automakers say they are reevaluating their U.S. supply chains out of concern for possibly disruption through bankruptcies in the wake of a sharp drop in auto sales and the financial problems at General Motors and Chrysler. “The supply base is a big concern,” John Mendel, vice president of automotive operations for American Honda said January 12.
But 2009 is expected to be an incredibly bad year, with U.S. auto sales forecast to fall by up to three million vehicles to between 10.5 and 12 million units. And that follows an 18% drop in 2008 sales in the sharpest decline in 29 years.
Suppliers are already heavily stressed following years of plant closures and restructuring at the Detroit Three. And those production cuts are only expected to accelerate as General Motors and Chrysler downsize in exchange for billions in government loans and Ford slashes costs in order to avoid needing government loans.
The loss of some suppliers is likely inevitable considering such a sudden drop off in demand, Mendel said on the sidelines of the Detroit auto show. “The bigger concern are not the small suppliers but the big ones – Visteon, Magna, Delphi, Lear – who do massive amounts of business with everyone,” he told said. “An interruption in that base could be very difficult to come around.” Read more here.
The Food and Drug Administration has announced the availability of a draft guidance document draft guidance document that provides general recommendations to importers on possible practices and procedures they may follow to increase the likelihood that the products they import are in compliance with applicable U.S. safety and security requirements. Comments are due by April 13.
According to the FDA, this guidance is intended for use by importers that initiate or cause the entry or attempted entry of foreign-sourced products or the reimportation of U.S.-made products for commercial purposes to help ensure that such products are safe and comply with applicable U.S. requirements.
In general, the recommendations advise importers to know the foreign firms with whom they do business and through which the products they purchase pass, understand the products they import and their vulnerabilities, understand the hazards that may be introduced during the product’s life cycle, and ensure that these hazards have been properly controlled and monitored. Importers should consider instituting practices to identify and minimize risk, put into place controls for known vulnerabilities (e.g., microbiological contamination or product defects), and monitor for other risks (e.g., counterfeiting or intentional contamination).
The FDA states that the good importer practices are broadly organized by four guiding principles: establishing a product safety management program, knowing the product and applicable U.S. requirements, verifying product and firm compliance with U.S. requirements throughout the supply chain and product life cycle, and taking corrective and preventive action when the imported product or firm is not compliant. The guidance suggests specific actions importers can take to accomplish each of these objectives.
The Government of the United States of America today published its final regulations for U.S. country-of-origin labelling (COOL). The Government of Canada recognizes provisions in the final rule that will help to level the playing field for Canadian producers and will strengthen the integrated North American livestock industry.
“I am pleased that key issues raised by Canada are addressed in these measures,” said the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway. “Together with the provinces and industry, we will continue to assess the trade and market impact of this legislation. We have built a strong and durable trade relationship over the years with the United States and we must more than ever aggressively pursue this already robust relationship during these difficult economic times.”
“This government always stands up for Canadian livestock producers and that hard work is paying off as we protect and expand opportunities for our producers within the integrated North American beef industry,” said the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food. “These final regulations will help to address the concerns we’ve consistently raised with our American counterparts, and we will continue to work with the U.S. to prevent any unfair harm to our industry.”
“The bottom line is that the changes to the final rule will help to keep livestock trade moving throughout the integrated North American market and will benefit producers, consumers and processors,” added Minister Day.
The final regulations will allow for more flexibility on labelling requirements in the U.S. for meat from animals of American and Canadian origin that are brought together during a production run. Canada has repeatedly raised concerns that COOL could impose unfair costs, especially on Canadian livestock producers, by requiring the segregation of Canadian animals.
Most recently, Canada and the U.S. held formal consultations under the World Trade Organization regarding the adverse impact of the interim regulatory measures on Canadian livestock and meat producers. Canada will continue to monitor the situation and defend Canadian producers through discussions and representations to the U.S. at all levels.
The U.S. and Canada are each other’s largest agricultural trading partners. In 2007, bilateral agricultural trade totalled $32.3 billion.
A fourth straight month of declines in exports helped push down Canada’s trade surplus, to $1.3 billion in November from $2.3 billion the previous month, Statistics Canada said Tuesday.
Economists said the November surplus was far below the $3-billion surplus they had been forecasting.
Exports for November dropped by 6.8% to $39.2 billion, due to falling prices and lower volumes. Statistics Canada said it was the lowest total for exports since January 2008. While prices for exports declined, the volume of exports decreased 1.8%. Statistics Canada said a 15% decline in prices for energy exports were the major factor that led to the overall drop in exports. Energy exports were down for a fifth straight month, falling more than 19% in November to $8.4 billion.
Imports for November fell by 4.8% on price and volume reductions, to $38 billion.
Canada’s trade surplus with its top trading partner, the United States, fell to $4.5 billion, the lowest level since May 1999. Exports to the United States were off by more than seven per cent to $28.9 billion, largely the result of a decline in energy products. The decrease in exports outpaced a 3.7% drop in imports.
Imports from countries other than the United States declined by 6.6%, due to falling imports of crude petroleum, while exports decreased five per cent. Canada’s trade deficit with all countries except the United States narrowed for the second consecutive month, to $3.2 billion.
“The drop in import volumes in October and November outpaced the decline in export volumes,” said Royal Bank economist Dawn Desjardins. “We expect that the combination of the financial market crisis and deepening U.S. recession will continue to curtail export demand with import demand likely to weaken with Canada’s economy having slipped into recession late last year.” RBC said it sees the Canadian economy contracting at an annualized pace of 2.5% for the fourth quarter of 2008.
Summary statistics and a link to the data files are on the Statistics Canada website. Export and import price indexes are here.
The global slowdown is taking a big bite out of Canada’s exports and the data scheduled for release today should show the steep decline is continuing.
The culprits for the poor performance are lower energy prices, weak automotive sales and declining exports to the United States.
WHAT ARE THE EXPECTATIONS?
Canada’s international merchandise trade surplus for November is forecast at $3-billion, compared with $3.8-billion in October, according to a survey of economists by Bloomberg.
But it could even be worse. “We look for Canada’s merchandise trade balance to narrow to $2.5-billion in November, hovering around decade lows,” said Michael Gregory, a senior economist with BMO Nesbitt Burns Inc. “This should set the stage in the first quarter for the first current account deficit in a decade.” (The current account deficit combines the balance of trade with money flows from dividends and income.) Read more here.
January 12, 2009
The top nine challenges in ’09 for global supply chains
Importers and exporters may face significant unexpected costs and increased disruptions in 2009 if they do not properly address challenges to their supply chains, sourcing strategies and the flow of working capital. Some of these are hangovers from 2008’s economic turbulence, while others are just starting to develop. But the outlook isn’t all bad. There also are some promising opportunities.
Below are nine trends that will challenge multinational businesses for at least the next 12 months…
New import challenges: The amended Lacey Act
The U.S. is now the first country in the world to prohibit the import, export, sale or trade in illegally harvested wood and wood products. An amendment to the 108-year-old Lacey Act will require detailed reporting (scientific name, quantity, value and country) of any plant matter incorporated into an imported product brought into the United States. This law broadly covers plants used in processing, no matter how miniscule the amount and no matter how far removed from the harvesting of the plant. The amendment could have significant consequences for U.S. importers who will be subject to new data reporting requirements. The specific scope of what items are covered under the amendment is still being defined, with Congress acting to reduce the burden on trade. For example, plant matter used in the creation of shipping labels and manuals may not have to be reported. The first phase of enforcement is expected to begin in April. Violations of the Lacey Act provisions are expected to be prosecuted through either civil or criminal enforcement actions.
Read the complete article here.
Transport Canada is embarking on a “due diligence” analysis concerning future infrastructure investments for marine gateways and other transportation entities (e.g. road, rail, intermodal) related to the projected movement of freight to / from the centre of Canada and the U.S. Mid-West (The North American Heartland), and offshore markets.
We are requesting your participation in a web-based questionnaire to help Transport Canada better understand the decision making process in determining ports of call. Your participation as a shipper/receiver will provide us with insights on the critical drivers of your choice. This study will also help inform Transport Canada on what type of future Canadian investments are needed, as ports in Canada, U.S. and Mexico increasingly compete for supplying transportation services to the North American Heartland.
You can access the English version of the survey here and the French version here.
The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, has made his first visit to the United States, in advance of President-elect Barack Obama taking office on January 20, 2009.
“We have built a strong and durable trade relationship with the United States over the years and we must continue to aggressively pursue this already robust relationship, especially during these difficult economic times,” said Minister Day. “California is Canada’s fourth-largest market in the world. In 2007, Canada exported $25.2 billion in goods and services to California, which is twice the level of exports to China, India, Brazil and Russia combined ($13.7 billion). There is no doubt that California is a major market for Canadian goods and services. I came here to further strengthen links and promote opportunities for Canadian business.”
Building on Canada and California’s strong collaboration in the area of research and development, Minister Day participated in a round table with research leaders at the University of California to discuss the Canada-California Strategic Innovation Partnership (CCSIP) program. The Minister expressed his desire to foster greater collaborative R&D between Canada and California. Click here for the complete press release.
(Journal of Commerce Online – Courtney Tower)
Diversion of container ships from Canada’s west coast Port of Vancouver have become “significant” as marathon collective bargaining continues between waterfront employers and union foremen.
Another in a series of day-long bargaining sessions between the British Columbia Maritime Employers Association and International Longshore and Warehouse Union Local 514 ended Friday with “some issues resolved – it was a positive thing, a cause for some optimism,” BCMEA Vice President Greg Vurdela said in an interview.
Talks are scheduled to resume January 15 under federal mediation.While the bargaining has continued at a leisurely pace, with five and six days between meetings, the threat of a strike or lockout being called on three days’ notice has spurred nervous shipping lines to divert their vessels from Vancouver to regional rivals such as Tacoma and Seattle, Washington. Read more here.
The busiest U.S.-Canada truck crossing suffered a sharp decline in traffic in December, and for all of 2008.
The Ambassador Bridge linking Detroit and Windsor, Ontario, had 181,938 truck crossings in December, down 17.9 percent on-year, the Public Border Operators Association reported.
Crossings totaled 2,885,047 for all of 2008, off 15.1 percent from 2007.
The second-busiest link, the Blue Water Bridge, 60 miles downriver from Detroit-Windsor, had 98,449 crossings in December, a decrease of 11.87 percent from a year ago. For the year, traffic fell 2.45 percent to 1.57 million trucks. Read more here.
Michigan Governor Jennifer Granholm has signed into law a bill exempting Canadian cross-border trucking companies and auto parts manufacturers that do not have a permanent establishment in the state, from having to pay the Michigan Business Tax (MBT).
The bill was approved by both the Michigan Senate and the House of Representatives in a pre-Christmas marathon, make or break session.
According to the Ontario Trucking Association (OTA), which led the fight on behalf of Ontario truckers, the MBT (which is a gross receipts tax) could have cost Ontario trucking companies who operate into, out of or through the state, around US$1,000 per truck per year, had the bill not passed. The OTA estimates that Ontario trucking companies would have been on the hook for at least US$40 million per year. About three-quarters of Ontario-US trade (by value) moves by truck. Read more here.
Canada’s busy West Coast ports are already feeling the impact of a possible strike by ship and dock foremen belonging to Local 514 of the International Longshoremen and Warehouse Union (ILWU) of Canada.
Roughly 425 workers at ports in B.C.’s Lower Mainland, Vancouver Island and Prince Rupert have voted to strike unless the union, the British Columbia Maritime Employers Association (BCMEA) and two federally-appointed mediators are able to negotiate new labour contracts.
The union’s latest proposal, made over the weekend, is being considered by the BCMEA, which had promised to respond to the proposal by Friday at the latest.
“Yes, absolutely there has been an impact on the ports,” said Peter Xotta, vice-president of business development for Port Metro Vancouver. Read more here.
Prime Minister Stephen Harper will pitch his government’s proposal for a Canada-U.S. climate-change accord and urge greater economic co-operation to revive the North American economy when Barack Obama travels to Canada in his first foreign trip as U.S. president.
Mr. Obama is expected to address Parliament when he visits Ottawa. The high-profile visit of the new president - who is enormously popular among Canadians and throughout the world - will give Mr. Harper an opportunity to highlight Canada’s importance to the United States as both a strategic and economic partner at the outset of Mr. Obama’s term in office.
It will also allow the Democratic president to convey the message that the U.S. is prepared to work more effectively with its allies to confront common problems.
“This is the beginning of an initiative by the president, to be followed around the world by our new secretary of state, that we’re back in the mode of listening to our friends and co-ordinating with our friends, as opposed to sitting in Washington and instructing our friends,” Gordon Giffin, a former U.S. ambassador to Ottawa, said yesterday. Read more here.