GHY Tradelines

(The Economist)

One cause for relief in the financial crisis is that, unlike in 1930s, the world has avoided a destructive protectionist war. The European Union has played its part by enforcing internal competition rules and promoting a multitude of free-trade deals. Last year it signed a pact with South Korea removing duties from most goods. It has just initialled a deal with Colombia and Peru. In theory at least, big trade accords are in the works with India, the Mercosur group, Canada, Malaysia and Singapore.

So the future of free trade is assured? Not quite. The battle in Europe between free traders (mostly in the north) and protectionists (mostly in the south) never ceases. One test will be the EU’s revision of trade concessions for developing countries known as the generalised system of preferences (GSP). The EU boasts that this is the world’s largest set of unilateral trade privileges for poor countries. It cuts or scraps tariffs on most products, helping 176 countries and territories. But the word is that next month the European Commission will propose halving this number. The cull could include such big exporters as Brazil, now seen as a competitor; oil- and gas-rich countries like Russia and Saudi Arabia that still get special treatment; better-off African countries, including South Africa; and the dependencies of rich countries, for instance Guam (America) and the Falklands (Britain). Read more here.

(Edmonton Journal)

Construction began Wednesday on a $16-million multi-tenant cargo facility at Edmonton International Airport, and more than half its space is already leased.

Edmonton Air Cargo Development Group Ltd. Partnership will own the building, which will open in early 2012. The facility will have 50,000 square feet of cargo-handling space, with the airport authority providing 22,000 square metres of aircraft-handling apron space. Read more here.

(STR/World Trade Interactive)

A recent report from the Department of Agriculture’s Economic Research Service concludes that reciprocal trade agreements increase agricultural trade between member countries and decrease trade between member and non-member countries. The report also finds that RTAs have been particularly effective at expanding agricultural trade and opening markets between developing countries.

RTAs include many types of agreements, such as preferential arrangements, free trade agreements, customs unions and common markets, in which members agree to open their markets to each other’s exports by lowering trade barriers. There were 186 RTAs in force in 2005, up from 50 in 1994, and the RTA share of world trade increased from 22% in 1975 to over 50% in 2005. Some economists believe RTAs can help promote market liberalization by exceeding World Trade Organization standards on non-tariff barriers, but others says that despite their positive effects RTAs can also distort trade, increase discrimination against non-member countries and lower overall economic welfare. The ERS study was intended to quantify such negative effects with respect to agricultural trade. Read more here.

(American Shipper)

China’s General Administration of Customs has agreed to allow U.S. Customs officers into the country this year to audit the supply chain security practices of 100 manufacturers or logistics providers involved in exporting goods to the United States, an agency official announced last week.

Officials from the two border control organizations will sign an action plan May 9-10 in Washington to better align their trusted shipper programs so that participating companies face fewer hurdles moving cargo out of U.S. ports to their final destination, Charles Stallworth, acting assistant commissioner for international affairs at Customs and Border Protection, told delegates at the annual Trade Symposium in Washington.

The first step of the agreement will allow CBP specialists to validate the shipping processes of 100 companies in China by the end of the year and conduct another 100 validations next year, he elaborated following a town hall session. Read more here.

(Export Development Canada – Peter G. Hall)

Losing 20% of anything you value is not fun. Whether it’s crops, staff members in your company, life savings or lunch money, the loss hurts. Recession stung the world by carving more than 20% from global exports. But after a two-year climb, export activity finally closed that gap in December 2010. Are all regions sharing in the rebound, or has it created clear winners and losers?

With few exceptions, the collapse in global exports was evenly distributed. Advanced economies fell 23% from peak to trough, while emerging economies weren’t far behind, registering a 19% tumble. Japan stood out, with a stunning 42% drop, while Latin America was down just 16%. All other regions were close to average. It’s perhaps a surprising result, given widespread talk about the relative strengths of different markets. Have relative strengths been more obvious in the rebound phase?

At first glance, export numbers seem skewed. Advanced economies are up 22% from the trough, and collectively remain 6% below the previous peak of export activity. At the same time, emerging economies surged by 37%, thanks to a 47% rise in Asia. But as in the downturn, Asia’s numbers were likely influenced by Japan’s offbeat 61% growth performance, and China’s continued increases in global market share. Asia’s pace is impressive, but probably not sustainable beyond the recovery. Read more or watch the video here.

(Bridges Weekly)

The WTO is, once again, facing a deadline for agreement in the long-struggling Doha Round. Delegates have been in negotiations since the beginning of the year with a view to reach key milestones by Easter in order to conclude the Round by the end of 2011. WTO Director-General Pascal Lamy has asked the chairs of the various negotiating groups to provide “documents” – which could be either new draft texts or reports on the state of play – which will be circulated among the membership on 21 April.

Geneva-based negotiators are waiting to hear the outcome of Lamy’s confessionals, one-on-one high level consultations, intended as a “reality check” to “gauge the gaps.” Many members were reportedly unaware that differences between their positions were “so large.” Lamy is also expected to comment on these confessionals in an introductory report by the Trade Negotiations Committee (TNC), which will accompany the 21 April documents. By requesting the documents prior to the Easter holiday, delegates are expected to use the time to reflect on options for moving forward.

However, many delegates and observers say they are feeling deeply disenchanted and have little hope for a conclusion of the Round, with some describing the situations as “bleak.” Attention is now focused on a meeting of the TNC, the highest negotiating body of the WTO, which Lamy is convening on 29 April. At this meeting – which will be preceded by a “green room” meeting amongst key delegates on 28 April – the director-general is expected to explore options for moving ahead. Read more here.

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending April 21, 2011 is now available on our website here.

(World Trade Interactive)

A statutory requirement for 100% scanning of all inbound cargo containers by July 2012 could be suspended under a bill introduced April 14 by Sens. Susan Collins, R-Maine, and Patty Murray, D-Wash. The measure would also reauthorize and increase funding for the Customs-Trade Partnership Against Terrorism, the Container Security Initiative and the Automated Targeting System.

According to a joint press release from the two senators, who co-sponsored the original Security and Accountability For Every (SAFE) Port Act of 2005, the SAFE Port Reauthorization Act of 2011 includes the following provisions.

100% Scanning
The bill allows the Department of Homeland Security to waive the requirement to scan all U.S.-bound cargo containers by non-intrusive imaging equipment and radiation detection equipment at a foreign port if DHS certifies to Congress that the following conditions are being met: (1) C-TPAT revalidations are occurring at least once every four years, (2) CSI has been implemented and is in operation at all high-risk foreign ports, (3) 100% of cargo containers originating outside the U.S. undergo a screening to identify high-risk containers, (4) 100% of the containers identified as high-risk are scanned or searched before entering the U.S., and (5) the additional data elements required under section 203 to identify high-risk cargo have improved the capabilities of the ATS based on empirical evidence of seizures of illegal narcotics and dangerous material.

C-TPAT Benefits
New benefits would be provided for C-TPAT participation, including voluntary security training for all participants and an information sharing mechanism on maritime and port security threats for Tier 3 members. However, the bill would also authorize U.S. Customs and Border Protection to conduct unannounced inspections in response to previously identified deficiencies in security measures and supply chain security practices.

Port Security Grants
The bill would authorize $300 million per year for five years to be allocated under risk-based port security grants.

Mutual Recognition
Thirty days before entering into a mutual recognition arrangement with another country regarding its supply chain security program, DHS would have to notify Congress and determine that the foreign program provides a level of security equivalent to that of C-TPAT.

(Reuters Canada – Michael Martina)

Foreign companies bidding for public projects in China, valued at $1 trillion a year, face a sharply tilted playing field, a European Union business lobby said Wednesday, citing favoritism and corruption as influencing the award of contracts.

A study by the European Union Chamber of Commerce in China said that foreign companies suffer from delayed information about new projects, tenders announced via obscure channels, and unfair awarding and appeals processes.

Such complaints are nothing new in China, where multinationals have long seen difficulties such as intellectual property theft and unclear regulations as the price for competing in the world’s second-biggest economy. But fair bidding for public projects has taken on new urgency as China embarks on a massive spending binge on strategic industries such as high-speed rail and nuclear power that could equal $1.5 trillion over five years.

Major concerns for companies, the report said, include the challenge of finding out about tenders on time and the need to alter bids based on standards that vary by municipality. Read more here.