Canadian Farmers Challenge U.S. Labelling Requirements at WTO

(Bridges Weekly)

Canada is challenging the U.S.’s country-of-origin labelling (COOL) requirements for beef and pork at a meeting of the WTO’s Dispute Settlements Body (DSB). The Canadian government, backed by several business groups – including some from the U.S., claims that the implementation of COOL requirements is immensely costly forcing Canadian businesses to seek less money for their beef so as to absorb the cost of implementing the requirement. They maintain that COOL is a technical barrier to trade (TBT) and as such illegal under WTO law.

“The COOL measure is not intended to address health or safety concerns,” Canada said in its opening statement. “The objective of the COOL measure was to distort the conditions of competition in the U.S. market to favour U.S. cattle and hogs compared to imported livestock.”

The COOL act requires that consumers be informed of the country of origin of meat by a label on the sales package. To receive an “A” label, cattle must be born, raised, and slaughtered in the United States. Meat from cattle with a mixed life – for example, born and raised in Canada but slaughtered in the U.S. – must have a label indicating the mix. Read more here.

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

(CBSA)

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

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

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

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

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

4. Please direct any questions concerning this notice to:

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

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

CBP Continues to Ramp Up Enforcement with NAFTA-Related Audits

(Lexology – Arent Fox LLP)

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

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

News from Thompson Ahern: Weekly Updates

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending September 20, 2010 is now available on our website here

Danish IC Companys to Pay More Customs Duty, CBSA

(IC Companys A/S via Fibre2fasion.com)

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

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

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

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

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

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

(Lexology – Arent Fox LLP)

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

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

Japan Challenges Canadian Renewable Energy Incentives at WTO

(Bridges Weekly)

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

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

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

EU to Ratify First Free Trade Deal with Asian Partner

(New York Times – Stephen Castle)

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

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

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

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

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

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

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

U.S. Trade Deficit Rises in Q2

(CBC News – The Associated Press)

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

Trade: Canada’s Great Hope

(Export Development Canada – Peter G. Hall)

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

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

Read more and/or watch the video here.

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

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

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

Watered-down ACTA Approaching Conclusion

(Bridges Weekly)

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

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

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

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

Air Cargo Demand Set to Slow

(International Freighting Weekly – Katerina Kerr)

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

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

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

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

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

(Transport Intelligence – John Manners-Bell)

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

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

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

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

Lithium Battery Curbs Likely After UPS Crash

(Cargonews Asia)

Federal officials are poised to substantially tighten restrictions on transporting lithium batteries in U.S. cargo planes, according to people familiar with the details, after an apparent cargo fire resulted in the crash of a United Parcel Service (UPS) jet in Dubai, reported Dow Jones Newswires.

The move, which would affect nearly all U.S. cargo carriers, could also force manufacturers and distributors of consumer electronics to alter their packaging and documentation procedures. Lithium batteries are used in a wide array of electronic devices, such as cell phones and laptop computers.

The urgency of the new restrictions, which people familiar with the matter expect to be announced shortly, appear to be a response to signs that lithium batteries may have stoked the intense fire and dense smoke that filled the cockpit of the UPS Boeing 747 jumbo jet before it went down on September 3, while trying to return to Dubai International Airport. Read more here.

Canadian Food Producers ‘Burdened’ by Regulations: Survey

(Montreal Gazette – Sara Schmidt, Postmedia News)

Canadian producers think governments overreact to food safety incidences and overburden them with rules to prevent the spread of diseases on their farms, a newly released government survey has found.

Producers from British Columbia, Saskatchewan, Ontario, Quebec and Nova Scotia – representing a broad range of agricultural products – also delivered a blunt message to consumers about imports during 10 focus groups commissioned by Agriculture Canada. The sessions were held earlier this year to get their views on agricultural issues, including competitiveness, sustainability and food safety.

“Generally speaking, producers felt that bio-security regulations and protocols were putting an unnecessary burden on producers, particularly smaller ones,” according to a summary of the focus groups led by Ekos Research Associates Inc. “Those who were being most affected by these measures felt that governments and retail industry giants had overreacted in the face of Mad Cow and other food safety incidences, as well as bowing to pressure from the United States and other countries.” Read more here.

Container Traffic Growth to Slow, Claims Report

(International Freighting Weekly – Katerina Kerr)

Container traffic is expected to increase 12% this year, but will decline to half that in 2011, according to HSBC Global Research’s latest report. The research also projects an average rise of 17% in US$ per teu for this year, but only a 2% rise for 2011.

HSBC recorded a 20% rise in container volumes in the second quarter this year, with traffic in July up 11% on last year to 12.7 million teu, but 2% below figures for July 2008.

It said: “Globally, demand remains strong on intra-Asian trades, and recently had been particularly strong on Asia-Europe. Freight rates charged by container lines such as Maersk – which recently upgraded guidance – are up around 30%, year to date, globally, owing to healthy demand and supply-side discipline.” Read more here.

EU About to Simplify VAT Collection Rules in Relation to Centralized Customs Clearance?

(Lexology – Erik de Bie, Greenberg Traurig LLP)

The European Commission circulated a document for consultation to parties concerned in the context of a preparation of a possible legislative proposal on the simplification of VAT collection procedures in relation to centralized customs clearance. Bearing in mind the growing demand of companies to organize EU customs clearance cross-border, this is an important consultation. The current VAT rules do not provide clear and efficient solutions for centralized customs clearance. To facilitate the developments in the customs arena, it is crucial that the European Commission and the EU Member States implement a solution soon.

What is the problem? The Modernized Customs Code allows the customs authorities to authorize importers to declare and pay customs duties to the customs office that is competent for such importer, independent from where the goods are physically imported and where they are transported to within the EU. Read more here.

Truckload Demand, Pricing Seen Still Rising

(Journal of Commerce Online – William B. Cassidy)

Surveys show tight truckload capacity boosting rates 5% or more

Truckload carriers are reporting increasing demand for freight services and higher rates this month, a sign there may still be life in trucking’s fall peak season. Surveys by investment firm Longbow Research and Transport Capital Partners show truckload rates rising and capacity tightening since mid-August.

Longbow’s weekly Truckload Barometer, which measures demand and capacity, rose 10.5% from the previous week Sept. 14, its fourth consecutive increase. The index is up 40% since mid-August, Longbow said, despite other indications that the economy and international shipping and imports are slowing. Read more here.

Buy American, The Sequel? New Canada-U.S. Trade Battle Looms Ahead

(Lee-Anne Goodman — The Canadian Press)

Seven months after the Buy American resolution, Canadian manufacturers are poised to become ensnared in yet another protectionist piece of U.S. legislation even though the Chinese are the intended target.

Gary Doer, Canada’s ambassador to the United States, is sending a letter this week to congressional leaders, urging them to consider the impact on the Canada-U.S. trade relationship if the Foreign Manufacturers Legal Accountability Act passes Congress in the weeks to come. “As we are each other’s largest trading partner, Canada is concerned this legislation seeks to solve a problem that does not exist,” Doer wrote. “It could instead result in unintended consequences of unduly burdening our bilateral trade.”

The act, currently before the U.S. House of Representatives, is aimed at ensuring that the foreign manufacturers of defective protects can be served with legal papers. It was the result of the Chinese drywall fiasco that has damaged some U.S. homes and made homeowners sick; consequently, it isn’t expected to face many hurdles in Congress.

The act is part of a “Make It In America” initiative by nervous Democrats who are hoping it will score them points in what’s known as the Rust Belt, a manufacturing-heavy region of the Midwest and northeastern United States where exasperation about the widening trade deficit is off the charts. Rust Belt Democrats are vulnerable to defeat in the November mid-term elections less than eight weeks away. Read more here.

New Figures Show Patchy Canadian Economic Recovery

(Reuters – David Ljunggren)

In another signal of a patchy economic recovery in Canada, industrial capacity use rose in the second quarter of 2010 – the fourth consecutive increase – but remained well below recent peaks. Statistics Canada said on Tuesday that industries operated at 76.0% of total capacity, up from the revised 74.4% in the first quarter, and slightly higher than the 75.8% expected by market operators.

The economic recession had helped cut capacity utilization to a record low of 68.1% in the second quarter of 2009. That said, the rate is well below its recent high of 83.1% in the first quarter of 2007.

Read more here.Statistics for industrial capacity utilization rates, and a link to the data file, are on the Statistics Canada website here. Labour productivity statistics, and links to the data files can be found here.

Ground Transportation Costs Increase in First Half of 2010: Report

(Canadian Transportation & Logistics)

Results published by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian shippers increased slightly during the first six months of 2010.

Overall freight costs increased by 1.8% from December to June. Base rates, which exclude the impact of fuel surcharges assessed by carriers, also increased by 2.2%. Average fuel surcharges decreased marginally from 14.7% of base rates to 13.4%, which buffered the effect of the increasing base rates.

In addition, overall freight costs for June trended upward, increasing 1.9% when compared to May and 3.2% compared to April. Read more here.

WEF Report Brands Brazil’s Transport Infrastructure ‘Appalling’

(Transport Intelligence – John Manners-Bell)

Canada ranks 10^th in survey

Ahead of its Annual Meeting of the New Champions 2010 in Tianjin, China, the World Economic Forum has published its Global Competitiveness Report 2010-2011.

Switzerland tops the overall rankings whilst the United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd), after already ceding the top place to Switzerland last year. [Canada ranks 10th, see here.]

The report takes into account a wide range of different factors in assessing the level of each country’s competitiveness. The most relevant from a logistics perspective is ‘infrastructure’, although of course more generalised factors such as, ‘goods market efficiency’, ‘macroeconomic environment’ and ‘technological readiness’ have an indirect impact on the sector. Read more here.

Ex-Asia Rates May Be Stabilizing

(Aircargo World)

UK analyst Drewry Shipping Consultants, which monitors airfreight rates as well as the container shipping sector, says prices ex-Shanghai may have levelled off in August following three months of decreases.

The Drewry Air Freight Price Index, published in the company’s monthly Freight Shipper Insight publication, fell by 10.1% in July against June, despite a continuing increase in volumes out of Asia.

“Base rates have been falling for all destinations we track from Shanghai (London Heathrow, Moscow Domodedovo, Prague, JFK and Los Angeles) since April, although higher fuel and security surcharges mitigated those declines in May,” spokesman Simon Heaney said.

CFIA: Extended Hours for U.S. Meat Importers re: Inspection Notifications

(CFIA)

Further to our Notice of January 5, 2010 regarding the advance notification of the status of meat shipments from the USA and the distribution of MCAP Import Inspection Reports, we would like to advise you that CFIA is extending the hours of service for the availability of the toll-free number for requesting these reports.

Effective September 7, 2010 for shipments targeted for inspection, registered meat establishment staff can contact the CFIA Meat Import Control and Data Information Centre (MICDIC) in Ottawa at 1-877-682-5191 during the following hours:

Monday to Friday: from 08:00 to 20:00 ET
Saturday and Sunday: from 09:00 to 14:00 ET

If you have any questions regarding this procedure please contact the CFIA Meat Import Specialist in your area.

CBSA: Port Closures and Reduced Hours of Operation

(CBSA)

The Canada Border Services Agency (CBSA) provides service at over 1200 locations across Canada.

All government programs are reviewed on a regular basis to ensure they are effective and efficient and that they respond to the priorities of Canadians. This ensures that funding is allocated to programs that are a high priority for Canadians and produce results.

Last year, as part of the Strategic Review process, the CBSA reviewed its services at smaller Ports of Entry (POE) across the country to ensure they are operating as efficiently and cost-effectively as possible. As a result, the CBSA decided to close three underused POEs and to reduce hours at four POEs. These changes will take effect April 1, 2011.

These changes will allow the CBSA to focus on its core role and to focus more resources on areas that promote the health, security and safety of Canadians. The CBSA does not anticipate any job losses to result from these changes.

The three POEs identified for closure are:

Jamieson’s Line, Quebec
This POE sees an average of 12 travellers a day and no commercial vehicles. There is a 24/7 POE 10 km away (Herdman).

Franklin Centre, Quebec
This POE sees an average of 56 travellers a day and three commercial vehicles. There is a 24/7 POE 16 km away (Herdman).

Big Beaver, Saskatchewan
This POE sees an average of five travellers a day and no commercial vehicles. Coronach, which has the same hours of service as Big Beaver, is 28 km distant. There is also a 24/7 POE 55 km away (Regway).

The four POEs identified for reduced hours of operation are:

Morses Line, Quebec
This POE sees an average of 84 travellers a day. The hours of service will be reduced to 8 a.m. to 4 p.m. from the current 8 a.m. to midnight. There is a 24/7 POE 13 km away (St-Armand/Philipsburg).

East Pinnacle, Quebec
This POE sees an average of 58 travellers a day. The hours of service will be reduced to 8 a.m. to 4 p.m. from the current 8 a.m. to midnight. There is a 24/7 POE 34 km away (St-Armand/Philipsburg).

Glen Sutton, Quebec
This POE sees an average of 37 travellers a day. The hours of service will be reduced to 8 a.m. to 4 p.m. from the current 24/7. There is a 24/7 POE 11.5 km away (Abercorn).

Kenora, Ontario
This inland POE sees an average of 4 travellers a day. Specific reduced hours have not yet been established.