News from Thompson Ahern: Weekly Updates

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending May 25, 2011 is now available on our website here.

CP Strike Threatens Port Metro Vancouver Bulk, Intermodal Shipments

(Journal of Commerce – Bill Mongelluzzo)

Containerized imports are starting to back up

Port Metro Vancouver remained fluid during the first two days of a strike that shut down Canadian Pacific Railway’s operations throughout Canada, but if the job action continues much longer both container and bulk shipments will be severely affected, a port executive said Thursday.

Vancouver, like other ports on the Pacific Coast of North America, is heavily dependent upon rail, said Peter Xotta, vice president of planning and operations at Canada’s largest port. Vancouver is served by CP, Canadian National Railway and BNSF Railway. The two Canadian rail carriers account for the vast majority of the port’s rail traffic, and they split the volume evenly. Read more here.

Canadian International Trade Tribunal Finds Injury: Stainless Steel Sinks from China

(MarketWatch)

The Canadian International Trade Tribunal today found that the dumping and subsidizing of certain stainless steel sinks from China had caused injury to the domestic industry. Anti-dumping and countervailing duties will therefore be collected by the Canada Border Services Agency on these goods. The complainants in this case were Novanni Stainless Inc. of Coldwater, Ontario, and Franke Kindred Canada Limited of Midland, Ontario.

The Tribunal will issue the reasons for its finding on June 8, 2012.

The Tribunal is an independent quasi-judicial body that reports to Parliament through the Minister of Finance. It hears cases on dumped and subsidized imports, safeguard complaints, complaints about federal government procurement and appeals of customs and excise tax rulings. When requested by the federal government, the Tribunal also provides advice on other economic, trade and tariff matters. 

EU Takes Action Against Argentina at WTO

(The Associate Press – Raf Casert)

The European Union on Friday started legal proceedings at the World Trade Organization against Argentina, claiming the South American country stifles imports to protect its own industry.

The EU, the world’s largest trading bloc, said that Argentina’s recent move to seize control of a division of Spanish energy company Repsol was indicative of the worsening business climate in the country that has been seeking to limit foreign imports for the past 7 years. EU Trade Commissioner Karel De Gucht said the situation in Argentina is “clearly getting worse” by the month, leaving him “no choice but to challenge Argentina’s protectionist import regime.” Read more here.

CP Rail Strike: Situation Update

CP freight rail service was shut down shortly after midnight Wednesday morning after the railway’s management failed to reach a new labour deal with 4,800 of its engineers, conductors, and freight traffic controllers by their strike deadline. The employees, who are represented by the Teamsters Canada Rail Conference (TCRC), walked off the job shortly thereafter.

An embargo application for shipments routing to and from CP Canadian locations is now in effect. This embargo applies to:

• All shipments originating in Canada which are billed to any Canadian or US destinations
• All shipments originating in the United States which are billed to any Canadian destinations
• The embargo can be rescinded at any time.

CP has expressed its willingness to participate in binding arbitration or negotiation period extensions. Both of these require consent of the union or action of the government and would allow CP to continue operating all Canadian rail traffic without disruption.

CP Intermodal Terminal Updates

CP advises that all terminals are open for container pickup and return.

Montreal - Lachine – picket line set up at entrance
Toronto - CP Vaughan – picket line set up at entrance
Toronto - CP Obico – no picket line at this time
Calgary - CP Calgary – picket line set up at entrance
Edmonton - CP Edmonton – picket line set up at entrance
Saskatoon – CP Saskatoon – no picket line at this time
Regina – CP Regina – no picket line at this time
Winnipeg – CP Winnipeg – picket line set up at entrance with limited delay
Vancouver - VIF – picket line set up at entrance
 

For up-to-date information on specific impacts to your shipments or other problem resolution inquiries, please contact your CP Customer Service Account Representative at 1-888-333-8111, selecting Option 1, then Option 1 again to enter your Personal Identification Number (PIN), then press the # sign. Using your PIN when you call bypasses the general queue and routes you directly to your assigned rep or to a backup in the event your rep is not available. If you do not have a PIN or have forgotten it, please send an email to your rep or CST2_cgy@cpr.ca and one will be sent to you for future use.

Go here for the latest CP Customer Bulletin.

Labour Minister Threatens Back-to-Work Bill if CP Strike Drags On

(Financial Post)

In the wake of Wednesday’s strike by locomotive engineers and conductors at Canadian Pacific Railway Ltd, the country’s second-biggest railroad, the labour minister issued a warning: Any work stoppage that threatens to have a “grave” impact on the economy is fair game for government action.

Ms. Raitt then backed that up with the threat of back-to-work legislation if the company and the Teamsters Canada Rail Conference don’t settle things on their own, and soon. Those around the bargaining table “have to be aware of the fact that the Canadian government will step in on the basis of the national economy and the greater public interest at some point. That’s not a secret.” Read more here.

How a CP Strike Affects Canada’s Supply Chain

(Janet Davison – CBC News)

When engineers and other workers at Canadian Pacific Railway walked off the job early Wednesday, they set off a strike that could affect coal mines, farms, auto manufacturing plants and maybe even the local Canadian Tire.

Just how those ripples might spread will depend in large part on how long the strike lasts, and the flexibility producers have in getting their goods to where they want them to go.

“Anything more than a few days starts to really hit,” says Bob Ballantyne, president of the Canadian Industrial Transportation Association, a national lobby group for Canada’s large shippers.

CP accounts for about 40 per cent of Canada’s rail activity, and Ballantyne says a strike “will have a very big impact if it lasts for any length of time.”

What’s more, it won’t just be shippers who feel the pinch. Read more here.

Canadian Business Eyeing Asia, Mexico, Brazil Like Never Before

(Canada NewsWire)

Yet mood for expansion rests on stable economic growth at home

Federal Finance Minister Jim Flaherty’s persistent coaxing of Canadian business to diversify international trade beyond the United States may be gaining traction as 71% of large, medium and small businesses in Canada project China or India to represent the largest increase in trade this year. Only eight per cent of businesses project the U.S. to be the fastest growing source of exports and imports in 2012.

According to a quarterly survey of Canadian business commissioned by UPS Canada and conducted by Leger Marketing, the business community’s positive outlook on growth is contingent on the continued stability of the Canadian economy. This optimism is also fuelling a boost in innovation, as nearly three quarters of respondents (71%) plan to launch a new product or upgrade an existing one in 2012. Canadian business is particularly bullish about global expansion with 62% of medium-to-large businesses identifying exporting as a competitive necessity.

“It’s very reassuring to see such a groundswell of optimism and ambition regarding global expansion among Canadian businesses as we move into the latter part of Q2,” said UPS Canada Director of Small Business Paul Gaspar. “But as we saw in February when the GDP numbers were released, the shift to go global is still somewhat tenuous.” Read more here.

CP Rail Workers on Strike

(Reuters)

Locomotive engineers and conductors at Canadian Pacific Railway Ltd went on strike early on Wednesday after failing to reach a contract agreement, shutting down freight operations on Canada’s second-biggest railroad.

The Canadian government indicated that it might step in to end the work stoppage, which it said could damage the country’s still-fragile economic recovery.

“The government is concerned about the national economic significance this will have, and we are prepared to act in the interest of the national economy,” Labor Minister Lisa Raitt said in a statement. Raitt will speak about the issue at 10 a.m. Read more here.

Carriers on Hook with Tanker Residue Rule, says Alliance

(Today’s Trucking)

The Canadian Trucking Alliance (CTA) has some questions and concerns regarding U.S. Customs and Border Protection (CBP) recent announcement that it will be requiring mandatory reporting of residue in tanker trailers entering the United States.

“Soft” enforcement will begin on September 29, 2012, CBP said, with full enforcement beginning on December 28,2012.

The CTA said that the agency has yet to explain what exactly “hard” or “soft” enforcement means and neither has it explained to the trading community how it should comply. Read more here.

‘The End of Cheap China’: A Review

(IndustryWeek – Steve Minter)

An inside look at how rapid economic development is changing China and its relations with America and the world.

China’s middle class now numbers more than 350 million people. By 2030, China is expected to have a middle class twice the size of that in the United States and Western Europe combined. 
 
The sheer size of China’s population, combined with the breathtaking rate of economic development in the country, in no small measure contributes to the difficulty Americans have in understanding what is going on in this distant colossus.

But Shaun Rein, who has lived in China since the late 1990s and runs China Market Research Group, says the rise of a second superpower makes it vital that Americans understand China. In his new book, “The End of Cheap China” (John Wiley & Sons 2012), he worries that “Fear mongering, misinformation and hysterics about China’s rise are hitting the American airwaves on a daily basis, clouding rational discourse.”

Rein argues China has become an “easy scapegoat” for the United States’ economic troubles. “It is far easier to blame China than to take responsibility for profligate spending by everyday Americans, poor oversight by regulators, irresponsible risk-taking by Wall Street financial institutions and a bickering political class.” Read more here.

Renewable Energy WTO Dispute Moves into Home Stretch

(Bridges Trade)

The degree to which countries can help support their burgeoning renewable energy sectors was again the subject of debate at the WTO this week, with Canada defending itself at a second dispute settlement hearing. Japan and the EU have brought two separate cases - DS412 and DS426, which are being heard together - against Canada over local content requirements in the province of Ontario’s feed-in tariff scheme.

Positions by the parties have not deviated significantly since the panel’s first hearing in March (see Bridges Trade BioRes, 28 March 2012). The opposing sides remain focused on whether the feed-in tariff scheme should be considered legitimate government procurement or an illegal subsidy. Oral statements, delivered on 15 May, delved into the details of the two positions, with each party expressing concern that arguments had not been advanced further.

There are two central questions that the panel is looking at to determine whether the scheme should be considered government procurement – and thus justified under WTO law. First, is the Ontario Power Authority (OPA) actually purchasing a good when it acquires energy from wind farms involved in the FIT scheme, or does it operate more as a fund or price support? Second, what criteria or benchmarks should be used to determine whether the purchase price by the OPA is above market value and thus confers a benefit? Read more here.

The Troubling Truth about Free Trade

(Jim Stanford – Globe & Mail)

As soon as it won its coveted majority, the Harper government put the pedal to the metal on the trade front, with a stampede of new free-trade deals. The Department of Foreign Affairs and International Trade currently lists 18 different deals in play, ranging from puny (Panama and Jordan) to gargantuan (Europe, Japan and India).

Anyone who stands in the way of this juggernaut clearly must oppose trade in general. At least that’s how the Conservatives portray the issue, attempting to brand its New Democratic opponents as economically illiterate dinosaurs.

There’s a big difference, however, between signing free-trade pacts and actually doing something about trade. Canada’s trade performance deteriorated badly over the past decade. The quantity of goods and services shipped abroad is seven percentage points lower than when the Harper government took office, lower even than back in 2000. And what we do export increasingly consists of raw resources (especially oil). Our once-impressive trade surplus has melted into deficit. Despite accelerating petroleum sales, we’re running up international red ink at the rate of 3 per cent of GDP per year. Read more here.

EU Trade Pact Positive Move

(Livio Di Matteo – Winnipeg Free Press)

Canada is negotiating the Comprehensive Economic and Trade Agreement with the European Union. The recent stirrings of public debate over what the CETA might mean for municipal public procurement in Canada, or drug prices, brings back memories of the Canada-U.S. Free Trade Agreement of the 1980s. [...]

Will the CETA have an impact on Canada’s economy? The answer is yes, but the effects should be largely positive. One can expect that, like the FTA, there will be economic adjustment that generates winners and losers, but that over the long term, there will be economic growth and employment generated from diversifying our trade. Moreover, reducing our dependence on the U.S. market will actually create greater economic stability for our economy. Read more here.

China Rejects US Solar Dumping Ruling

(AP/CBC)

China’s government on Friday rejected a U.S. antidumping ruling against its makers of solar power equipment and Chinese manufacturers warned possible higher tariffs might hurt efforts to promote clean energy.

The conflict has worsened U.S.-Chinese trade tensions. The two governments have pledged to cooperate in developing renewable energy but accuse each other of violating free-trade pledges by subsidizing their own manufacturers.

“The U.S. ruling is unfair, and the Chinese side expresses its extreme dissatisfaction,” said a Commerce Ministry spokesman, Shen Danyang, in a statement. Read more here.

Related: Canadian Solar CEO: Disappointed By US Anti-Dumping Tariff (WSJ)

G8 Summit: Stephen Harper Says Free Trade an Alternative to Austerity, Cutbacks

(Lee-Anne Goodman – The Canadian Press)

Leaders of the Group of Eight countries focused their attention on the European fiscal crisis on Saturday, with Prime Minister Stephen Harper arguing there are ways to resurrect teetering economies that involve neither devastating austerity measures nor massive stimulus spending.

“It doesn’t have to be an either/or situation; trade, for example, is a way to cultivate growth,” a senior Canadian government official said at the G8 summit, being held for the first time at this lush, leafy presidential retreat tucked away in the scenic Blue Ridge Mountains.

“Free trade deals create jobs and stimulate growth and don’t involve government spending a lot of money.” Read more here.

Related:

Harper to Eurozone: Stimulus Alone Won’t Save You (Toronto Sun)

Obama Touts 'Emerging Consensus' on Reviving Europe's Economy (Globe & Mail)

Nashville Politician Lamar Alexander Fights to Keep Guitars Out of Border Agents' Hands

(Randy Boswell – Postmedia News)

A U.S. senator has made it his mission to save country music in Canada this summer from nitpicking, guitar-snatching U.S. government agents who might try to enforce a “confusing” American law that targets products made of wood from endangered tree species around the world.

Republican Sen. Lamar Alexander is the senior federal lawmaker from Tennessee - its capital, Nashville, far better known as Music City and for its Grand Ole Opry than for being home to the state legislature. […]

“I don't want the musicians from Nashville who are flying to Canada to perform this summer to worry about the government seizing their guitars,” Alexander said in a statement issued Friday, adding that he is working with Democratic Sen. Ron Wyden of Oregon to address the “unintended” consequences of new U.S. legislation the two of them co-sponsored in 2008. Read more here.

The U.S. Should Settle More Trade Cases

(Globe & Mail Editorial)

A defeat of the United States at the World Trade Organization on Wednesday, in which the U.S. was found to have discriminated against Mexican tuna fishermen, is an example of a characteristic failure by American trade authorities to negotiate such disputes – which is what the WTO procedure was designed to encourage – even with one of its two NAFTA partners.

Consequently, the decision is favourable to both Mexico and Canada. It is a less happy result for dolphins. Importers of Mexican tuna have not been allowed to label their products as “dolphin safe.” In the eastern tropical Pacific Ocean, dolphins are in the habit of swimming in close proximity to tuna, and when Mexican fishermen use purse seine nets to catch tuna, they often catch dolphins, too. But the WTO found that other tuna-fishing methods used in other areas of the world’s oceans may be comparably dangerous for dolphins.

Predictably, some economic libertarians are pleased by the WTO decision, while environmentalists and economic nationalists are outraged. Read more here.