GHY Tradelines

(The Financial Post – Eric Lam)

Canada’s economy jumped off the rails in the second quarter, posting the first quarterly decline since 2009 on significant weakness in exports and disruptions from natural disasters including wildfires in Alberta and the tsunami in Japan.

For the three months ended in June, Canada’s annualized GDP declined 0.4%, largely blamed on a 2.1% drop in export volume, Statistics Canada said in a report.

This is the first time the Canadian economy has posted a decline since a 3.7% drop in the second quarter of 2009. Annualized GDP for the first quarter has also been revised down to 3.6% from 3.9%.

By contrast, the U.S. economy still managed to grow 1.0% in the second quarter, despite being arguably in much worse shape than Canada.

Jim Flaherty, Federal Finance Minister, said the Canadian economy was still on track despite the poor second quarter results. Read more

Related: Canadian Raw Materials, Industrial Product Prices Down for Third Month (Globe & Mail)
 

(CVMA via CNW)

The release of two reports today by Foreign Affairs Minister, John Baird, summarizing consultations on the Shared Vision for Perimeter Security and Economic Competitiveness was most welcomed by member companies of the Canadian Vehicle Manufacturers’ Association as it accurately reflected the issues and concerns of not only Canada’s leading automobile manufacturers but also the broad range of small and medium businesses to individual Canadian citizens.

Since Prime Minister Harper and President Obama announced the joint Declaration kicking off this important initiative in February 2010, members of the CVMA – Chrysler, Ford and General Motors,  have undertaken to support the work of the Regulatory Cooperation Council and the Beyond the Border Working Group .  “Ultimately, it will make the North American auto industry even more efficient and consumers will benefit from vehicles that not only meet the most stringent and comprehensive safety and environmental standards in the world, but are also more affordable.

“These reports show real progress on a hugely important initiative that will have material benefits for our competitiveness and jobs in the auto industry,” said Mark Nantais, President.  He further said that, “the industry will now be looking forward to the action plans that will address our need for alignment of trusted trader customs facilitation programs and border crossing procedures and vehicle standards harmonization between Canada and the United States.”

(Adrian Humphreys — National Post)

Canadian businesses are pushing for greater security and economic integration with the United States while individual citizens caution against losing privacy and police independence, the government reported Monday.

Foreign Affairs Minister John Baird presented two reports on the government’s consultations with Canadians, promised in February after Stephen Harper, the Prime Minister, and U.S. President Barack Obama signed a declaration on integrating security and harmonizing trade rules.

“Improving the movement of goods and people across the border was the number one priority for Canada’s business, industry and trade sector,” the reports say.

“When it came to integrated cross-border law enforcement, there was more interest from individual Canadians than from groups and associations. Many of the submissions from individuals expressed concerns regarding joint law enforcement measures between the two countries.” Read more here.

Note: Copies of the reports released by DFAIT are available here.
 

(Richard Dunham — Hearst Newspapers)

Homeland Security Secretary Janet Napolitano said Tuesday she’s satisfied with the federal government’s security staffing along the Northern border.

At a breakfast meeting with reporters, Napolitano said that in addition to “manpower,” she would like to see a “greater reliance on technology, as well.”

The Obama administration’s top domestic security official said that personnel levels along the U.S.-Canada border are “mandated by Congress” and that she is satisfied “overall.” Read more here.
 

(John Gallagher — Detroit Free Press)

Anyone driving over the Ambassador Bridge knows that it often takes longer to get through customs than it does to cross the bridge itself.

One of the promises of Gov. Rick Snyder’s proposed New International Trade Crossing bridge is that those customs delays would be alleviated.

The reason: Customs inspections plazas on either end of the NITC bridge would be roughly five times bigger than existing plazas at the Ambassador Bridge, with more modern facilities and easier traffic flow.

For supporters, greater efficiency in customs inspection is a big selling point.

“We can’t inspect large trucks on site at the Ambassador Bridge, so we have to go to an off-site inspection area. So this would get all the inspection in the one location,” said Mark Butler, a spokesman for Transport Canada, a Canadian federal agency backing the NITC project. Read more here.
 

(Andrew Mayeda — Bloomberg)

The U.S. and Canada plan to harmonize regulations governing the most-heavily traded products, U.S. Ambassador to Canada David Jacobson said, one day after a report showed some Canadians are uneasy with the idea.

The two countries will release more details over the next several weeks on the “first tranche” of industries where conflicting regulations will be harmonized, Jacobson said in an Aug. 30 interview with Bloomberg News. He didn’t elaborate on specific products.

“It’s fair to say that we want to focus on areas where there is more trade, because the more trade that we focus on, the more jobs that we’re going to create in this process,” Jacobson said.

The effort will focus on streamlining “dumb” regulations that are “different because they’re different,” said Jacobson, 59, who took office as ambassador in October 2009. Read more here.
 

The CBSA has advised that the eManifest Portal is available as of Monday, August 29th.

A message from CBSA regarding the eManifest Portal is as follows:

I take great pleasure in being able to inform you today that the eManifest Portal will be accessible from the Canada Border Services Agency’s (CBSA) Web site as of Monday, August 29, 2011.

As you know, the eManifest Portal will provide the trade community with an alternative method to the Electronic Data Interchange (EDI) options for the advance transmission of commercial information to the CBSA.

This first iteration of the eManifest Portal has been designed for highway carriers. The carrier’s authorized representative must apply for a Shared Secret to register for the eManifest Portal the first time and establish an eManifest Portal Business Account. Application instructions have been available on the Web site for several months and, to date, the CBSA has received nearly 500 applications. Now that the Portal is up and running, the CBSA will begin issuing Shared Secrets to all highway carrier applicants.

With all Manifest transmission methods (EDI and eManifest Portal) now available, the CBSA will be announcing in the coming weeks the start date of the 18-month implementation timeline for highway carriers.

I encourage you to share this information with your membership and to remind them to visit the eManifest pages of the CBSA Web site regularly, view the on-line highway carrier presentation, and subscribe to the eManifest RSS news feed to keep abreast of important updates on eManifest implementation.

We have all worked very hard to achieve this milestone in the implementation of the eManifest initiative and I thank you for your valuable input and continued support.

Bruna Rados
Director General, eManifest and Major Projects Directorate
Canada Border Services Agency

GHY offers solutions to facilitate compliance with CBSA’s eManifest requirements.

Contact us for more information about how we can help.
 
 

(The Toronto Star – Les Whittington)

Ontario’s economic health and millions of jobs will be on the table this fall when Prime Minister Stephen Harper sits down with U.S. President Barack Obama to talk about unclogging the United States-Canada border.

Many see the expected high-level talks as the last, best hope to protect the world’s biggest two-way trading relationship from being slowly strangled by security measures that have been multiplying ever since the terrorist incidents on Sept. 11, 2001.

The Harper-Obama meeting will follow up on a session at the White House in February in which the two leaders agreed to open negotiations on improving joint security and trade operations. The far-reaching pact — entitled Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness — conjured up radical changes in Canada-U.S. relations.

It envisioned a security perimeter encircling Canada and the U.S. anchored by jointly managed border facilities, shared intelligence and an integrated Canada-U.S. entry-exit system. And it called for measures to speed the flow of legitimate travellers and commercial goods.

While information from the secret bilateral negotiations has been limited, observers on the Canadian side of the border are not anticipating the kind of major, historic breakthrough in Canada-U.S. dealings envisioned in the marching orders negotiators were handed in February. Read more here.
 

(PRWeb)

During a time of worldwide recession, U.S. food importers, most of them small businesses, will soon find themselves unexpectedly impacted by additional costs caused by FDA’s new fees for “re-examining” imported foods. According to Benjamin England at FDAImports.com, starting October 1, 2011, FDA will charge food importers $224 per hour to “re-examine” imported food shipments suspected of a food safety violation– potentially costing importers thousands of dollars per entry. As per its Federal Register notice, this new fee will create a tax-like burden on food importers, most of whom are small businesses, according to FDA.

American consumers will certainly feel the effect of these new fees as well. Food importing and distribution has a small price margin, especially compared to other commodities, such as cosmetics or dietary supplements. Thus, the importers are likely to pass these new expenses onto their purchaser, who will ultimately pass it on to consumers. According to Benjamin L. England, Founder and CEO of FDAImports.com, “these fees amount to a hidden food tax on American consumers. This is no small thing as roughly 20% of the U.S. food supply is imported, including 70% of seafood and 35% of fresh produce.” Read more here.
 

(CBC News)

British Columbians have voted to scrap the province’s controversial harmonized sales tax, according to the results of a binding, province-wide referendum. Elections B.C. announced on Friday morning that 54.73% of the 1.6 million British Columbians who cast a ballot in the mail-in referendum voted to get rid of the tax and 45.27% voted to keep it.

B.C. Finance Minister Kevin Falcon said the government will now move to reinstate the PST with all of its previous exemptions. The transition is expected to take at least 18 months he said.

Falcon said eliminating the HST and reinstating the PST will cost the province more than $3 billion, but the province has a plan already in place to manage the change. “This is step backwards, but it is a manageable step backwards,” said Falcon after the results of the referendum were announced on Friday.

The province will enter into negotiations with the federal government on repaying the $1.6 billion it was given when the tax came into effect, he said. There will be costs in setting up a provincial sales tax collection agency and businesses will need time to transition back to the PST, he said. Read more here.
 

(Canadian Manufacturing)

A white paper from Supply & Demand Chain Executive offers procurement professionals some approaches to take to avoid the pitfalls of counterfeit parts entering their supply chains.

The white paper, called Fighting the Fakes, describes the scope of the problem and how industry is reacting. In particular it looks at the electronic sector and how one company, L-3 Communications, tackled the issue.

Counterfeit and fraudulent goods, says the white paper, cost businesses in the U.S. more than US$200 billion per year and result in the loss of 250,000 U.S. jobs, reports the Federal Bureau of Investigations.

But it’s not just the economic impact. Inferior or counterfeit goods also pose risks to health and safety. In the electronics sector, which is still grappling with the issue, its losses are at US$ 10 billion per year. Read more here.
 

(CBSA)

1. This notice is issued to provide information on what the Canada Border Services Agency (CBSA) considers to be permissible point-to-point movement of domestic goods within Canada by foreign-based conveyances and operators, a practice also known as cabotage.

2. As a general rule, only Canadian operators driving Canadian vehicles are permitted to make point-to-point deliveries of domestic goods in Canada. However, Chapter 98 of Canada’s Custom Tariff does permit foreign-based, non-duty-paid conveyances to be used for certain point-to-point deliveries within Canada. Read more »

(American Enterprise Institute for Public Policy Research – Claude Barfield)

The title is harsh, but the goal is benign-save, or at least extract, the world trading system from the Doha Development Round of trade negotiations that has now dragged on for a decade without success. To achieve this end, the round should formally be ended.

Over the past several years, the possibility of a grand bargain that would produce major trade liberalization in manufacturing, services and agriculture has steadily diminished and has now disappeared. As this piece is written during the “dog days” of August, trade ministers and bureaucrats from World Trade Organization member states are engaged in a final desperate drive to come up with a face-saving “mini-package,” or Early Harvest, of trade concessions to present at a climactic meeting of WTO ministers in December. The goal of the package is to salvage benefits for the world’s poorest countries such as tariff-free, quota-free trade with developed countries, drastic reduction in subsidies for cotton, exemptions from major services trade liberalization, and trade facilitation programs such as logistical aid to move goods from farm and factory to air-and seaports.

The prospects for even a small package are dismal. The United States, through its ambassador to the WTO, Michael Punke, stated in July that a “so-called Early Harvest package is not happening and is not going to happen.” Punke urged WTO negotiators not to spend more time on this effort, but rather concentrate in the lead up to the December Ministerial on issues that look beyond the current Doha stalemate and forward to the future of the WTO itself. Punke is halfway to a sensible position-but unfortunately, he and the Obama administration stopped short of biting the bullet by calling for a definitive end to the Doha Round. Read more here.
 

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending August 26, 2011 is now available on our website here.
 

(Hong Kong Trade Development Council)

Singapore’s Asian Shippers Council chairman John Lu says “container lines are out of capacity reduction options and are falling back into tough competition over rates that will push some to the brink of bankruptcy”.

The dire forecast follows a slew of ultra-large containership orders by shipping lines, resulting in ship capacity outpacing demand from retailers and manufacturers, reported Newark’s Journal of Commerce. “This time it will be very bad. I think the market will collapse.

“They’ve invested a lot, but we’ve got overcapacity already with more capacity coming in, and we’ve got financial turmoil in Europe and the US and on the stock markets,” said Mr Lu. “Last year they created an artificial market with slow steaming to push rates up, but the higher it went the further it had to crash and now it has crashed.”

“This is what happens when lines work as a cartel. It’s not a free market, they don’t look at the long-term, and this is what happens. This is why the situation repeats itself time and again,” Mr Lu said.

The report said that according to Mr Lu, the carriers can try to add more surcharges and possibly attract smaller shippers through the Internet.
 

(Industry Week – Josh Cable)

Prior to the March disaster in Japan, Xirallic – a popular pigment that gives cars a pearly shine – was manufactured at just one factory in the world.

Production of the pigment, which is made by German chemical company Merck KGaA, took place at a factory in Onahama, Japan, 57 kilometers south of the Fukushima Daiichi nuclear-power plant. The damaged pigment plant had to close, causing some automakers to temporarily restrict orders on vehicles in certain shades of black, red and other colors.

The plant resumed production in June, and Merck plans to add a production line in Germany. But the factory’s temporary closure is a perfect example of why the term “supply chain disruption” became a permanent part of the manufacturing vocabulary after the crisis.

And it highlights the need for manufacturers to rethink their supply chain strategies in a climate of instability, a new PwC report warns. Read more here.
 

(World Trade Interactive)

The Transportation Security Administration has issued a correction to its Aug. 18 final rule finalizing and making two amendments to a September 2009 interim final rule on air cargo screening.

The final rule contained the language “on airport” in certain regulatory provisions, and TSA states that this language may be interpreted to not allow an aircraft operator or a foreign air carrier to screen cargo off airport, thus requiring them to become a certified cargo screening facility to screen cargo off airport for transport on passenger aircraft.

TSA is now correcting the final rule by removing the “on airport” language and thus clarifying that an aircraft operator or foreign air carrier does not have to become a CCSF to screen cargo off airport for transport on a passenger aircraft.
 

(Export Development Canada – Peter G. Hall)

High oil prices seem to have become a fact of life. Many have grudgingly advised that we had better get used to it, and move on. Analysis repeatedly cites insatiable emerging market demand and limited accessible supplies as key factors. It’s tough, if not impossible to refute these arguments, but similar reasoning in the early 1970s led to wacky forecasts. Are today’s triple-digit projections reasonable?

A strange fact of modern analysis is that familiarity can breed complacency. If a price, or any other data point persists for awhile, sometimes months, weeks, or even days, it seems to be quickly embraced as the new reality, one of the family. Until the next shift, that is. A quick update of the analysis, and we have yet another new reality. Over the past 20 years or more, this has been repeated, both on upside and downside movements for a variety of economic indicators.

Crude oil prices have shown that they can drift from fundamentals for awhile and convince even seasoned, specialized analysts that the world has indeed changed, redefining fundamental levels. Witness the price plunge to $10 per barrel in late 1998, when respected analysts pondered the industry’s future when prices reached $5 per barrel. Laughable now, but serious chatter then. Ten years later it was the polar opposite: predictions of $200-plus oil and the end of globalisation. Read more or watch the video here.
 

(Canadian Transportation & Logistics)

TransCore’s Canadian Freight Index for July was down 22% month-over-month, but had a 3% increase year-over-year. For the last five years, July has experienced a decrease from June levels; however, July 2011 had the biggest decline in volumes since July 2007.

Equipment postings in July dropped from the increases of the past two months. Capacity was also down 10% from July 2010 and at the lowest recorded level for the month of July in more than five years. With lower volumes in load availability, the equipment-to-loads ratio saw an increase in July, reaching levels not seen since January of this year.
 

(World Trade Interactive)

The Department of Transportation’s National Highway Traffic Safety Administration has issued a final rule making the following amendments to its regulations pertaining to registered importers of motor vehicles not originally manufactured to comply with all applicable federal motor vehicle safety standards.

• NHTSA may deny applications for registration from entities that have been convicted of a crime related to the importation, purchase or sale of a motor vehicle or motor vehicle equipment and may revoke existing registrations held by such entities.

• An RI must certify that it destroyed or exported nonconforming motor vehicle equipment removed from a vehicle during conformance modifications.

• New requirements for motor vehicles imported under import eligibility petitions are being established, a clearer definition of the term “model year” for import eligibility purposes is being adopted, and import eligibility petitions are being required to include the type classification and gross vehicle weight rating of the subject vehicle.

• Several amendments that add citations to provisions that can be used as a basis for the non-automatic suspension of an RI registration are being adopted, redundant text is being deleted from another provision, and several sections are being revised to include NHTSA’s current mailing address.

These changes will become effective as of Sept. 26. Petitions for reconsideration must be received no later than Oct. 11. Such petitions must contain a brief statement of the complaint and an explanation as to why compliance with the final rule is not practicable, is unreasonable or is not in the public interest.