GHY Tradelines

(Conference Board of Canada)

The financial prospects of Canadian manufacturers in three industries – chemicals, non-metallic mineral products, and plastics and rubber products – are improving.  Expanding industrial activity in North America has been a key driver of growth, but the ongoing development of new markets and innovative new products have also contributed to stronger performances.

These findings are from the Canadian Industrial Profile-Winter 2012, published by The Conference Board of Canada in association with the Business Development Bank of Canada (BDC).

“What we are seeing with BDC clients in these manufacturing sectors corroborates the conclusions of the industrial profiles: companies are in better financial health today than they were two years ago.  Also, a high percentage of new BDC loans to these companies was for the purpose of increasing their production capacity and improving their productivity.  That’s an encouraging sign,” said Pierre Cleroux, Vice-President, Economic Analysis, Business Development Bank of Canada.

“The market opportunities are there.  The performance of companies in the manufacturing sector will, however, depend on their leaders’ ability to identify and take advantage of these opportunities.  Because of the prevailing global competition, it is crucial for entrepreneurs to continue their efforts to offer innovative products, find new markets and introduce ways of improving their productivity.”

“The manufacturing sector in North America is growing, which bodes well for these three industries.  Much of their output supplies other industries and manufacturers.  However, with the Canadian dollar at parity, manufacturers will need to be innovative with their product offerings and where they are selling if they are to fully benefit from improving market conditions,” said Michael Burt, Director, Industrial Economic Trends, The Conference Board of Canada.

Plastic and Rubber Products Industry 
While dependent on construction activity and the manufacturing sector – notably motor vehicles – for much of its sales, the industry has found new markets both in terms of customers and products.  Technological development continues to broaden the potential uses of plastic as a substitute for other materials.  Moreover, Canadian firms are looking outside North America for growth opportunities.  Plastics companies are also partnering with chemical producers to develop and use bioplastics.  The industry’s improving performance will allow profitability to double in 2012, to $831 million.

Non-Metallic Mineral Products Industry 
Industry demand primarily comes from the Canadian construction industry.  The near-term outlook for the construction sector is mixed – residential construction remains solid, but government stimulus programs are coming to an end, which is dragging on non-residential expenditures.  As a result, the industry will experience only modest growth in 2012, but will improve progressively along with construction demand in the following years.

Chemicals Industry
Total output and employment will not return to its pre-recession production until 2013, but the industry is poised for steady growth throughout the next five years.  Rising demand for a variety of chemicals used in different manufacturing processes bodes well for the industry.  Emphasis on the development of advanced specialty chemicals will help the industry stay competitive since they often benefit from patent protection.

This edition of the Canadian Industrial Profile Service also includes outlooks for Pharmaceutical Products and Computer and Electronic Product Manufacturing.  Part of The Conference Board of Canada’s Industrial Economic Trends research, the service provides a five-year (2011-2015) production, revenue, cost and profitability forecast for six industries each quarter.  In all, outlooks for 23 industries are completed each year.

The publications are available at www.e-library.ca. BDC clients who wish to receive a copy of the profiles free of charge can contact their BDC account manager.
 

(Journal of Commerce Online – Mike King)

China plans to build the world’s largest cargo airport near Beijing in a $4.8 billion project due for completion in late 2017.

The new airport, which has not yet been named, will have an annual capacity of more than 130 million passengers and 5 million metric tons of cargo. Construction of the nine runways at a 6,600-acre site at Daxing, 30 miles south of Beijing, will begin this year. [The new mega-airport – tentatively to be named “Beijing Daxing International” – will be roughly the size of Bermuda. — Ed. note]

Beijing International Airport, the capital’s major air cargo hub, handled 1.7 million tons of cargo last year, up 10.7% year-over-year, according to preliminary figures from Airports Council International. The airport is the second largest by volume in China after Shanghai’s Pudong International Airport. Read more here.
 

(Eric Kulisch — American Shipper)

Extending the re-validation cycle for companies in the Customs-Trade Partnership Against Terrorism by a year will not adversely impact supply chain security, according to Shawn Beddows, the U.S. Customs official directly in charge of the program.

The Obama administration’s budget plan for fiscal year 2013 calls for a $5 million reduction in C-TPAT spending, with the money diverted instead to pay for frontline inspection operations. Most of the savings are to be achieved by scheduling follow-on verifications of trusted shippers’ supply chain security practices every four years, instead of three. […]

Another possible change to C-TPAT is the addition of an export component. CBP officials, acquiescing to private sector demands for a program that would make it easier to comply with the cargo security programs of foreign governments, in recent months have said they are contemplating a security program for exporters.

Customs is expected to consider several approaches for export verification, including flipping the C-TPAT import criteria to exports or using a security checklist that is equivalent to ones used by European Union governments for their Authorized Economic Operator programs. Read more here (subscription required).
 

(ST&R Trade Report)

European Union Trade Commissioner Karel de Gucht announced last week that the Anti-Counterfeiting Trade Agreement will be sent to the European Court of Justice for a ruling on whether the pact is “incompatible in any way with the EU’s fundamental rights and freedoms.” Recent weeks have seen tens of thousands protesting across Europe against ACTA, which opponents fear could result in censorship or other restrictions of civil liberties. Similar concerns in the United States appear to have all but doomed legislation seeking to strengthen online piracy enforcement efforts.

De Gucht noted that the European Commission has passed ACTA to national governments for ratification as well as to the European Parliament for debate and a vote, which is expected this summer. The European Council also adopted ACTA unanimously in December and authorized EU member states to sign it. Press sources note that while 22 of the 27 members have done so, the others have said they will not sign the agreement in its current form, and all members must sign for the EU as a whole to formally become a party.
 

(Industry Week – Agence France-Presse)

President Obama will launch a new enforcement center on Tuesday to more aggressively challenge “unfair” trade violations, including by China, a senior official said.

Obama, who vowed to create such an entity during his State of the Union address and who faces election-year pressure to be tough on Beijing, will establish the Interagency Trade Enforcement Agency by executive order.  The center will “significantly enhance the administration’s capabilities to aggressively challenge unfair trade practices around the world, including in China,” a White House official said on condition of anonymity.  “The president believes that we can’t wait to crack down on unfair trade violations and ensure a level playing field for American workers.” Read more here.
 

(Farmscape Online – Bruce Cochrane)

Canada’s Agriculture Minister says ending the restrictions imposed by U.S. Mandatory Country of Origin Labelling would benefit livestock producers on both side of the Canada-U.S. border.

Last November a World Trade Organization panel investigating complaints from Canada and Mexico ruled U.S. Mandatory Country of Origin Labelling is inconsistent with U.S. trade obligations.  The U.S. has until March 23rd to appeal that ruling.

M-COOL was discussed last week when Agriculture Minister Gerry Ritz met with U.S. Agriculture Secretary Tom Vilsack as part of an agricultural trade mission to Washington, DC.

Ritz says the labelling law has negatively impacted not only agriculture but the economies of the two countries as well. Read more here.
 

(STR Trade Report)

The Court of International Trade has again rejected an attempt by importers to classify gender- and age-based import tariffs as violating their constitutional right to equal protection. In Rack Room Shoes et al v. U.S., the CIT said there is nothing in the complaints brought in this test case “that can connect the tariff provisions and congressional action in a way to suggest with plausibility the existence of a governmental intent to discriminate.”

This case was brought after the Court of Appeals for the Federal Circuit ruled in February 2010 that the tariff provisions at issue are not discriminatory on their face and that importers challenging the constitutionality of these tariffs must do more than just show that they have a disparate impact on the associated purchasers. Read more here.
 

(Canada.com)

Earlier this year a man claimed he had used his iPad to cross the border from Canada into the United States. Border Protection later denied Martin Reisch’s story, explaining he had provided a birth certificate and driver’s licence in addition to a scan of his passport.

Whether the iPad helped him cross the border or not, the buzz around Reisch’s claim forced us to imagine a world in which a digital scan of government document is as legitimate as a printed copy. Read more here.
 

(International Freighting Weekly – David Badger)

Twenty-nine countries threaten retaliation unless emissions trading scheme is abandoned

A group of 29 countries… put pressure on the EU to abandon its emissions trading scheme (ETS), threatening retaliation and raising the risk of a trade war. The countries, include the U.S., Russia, China and India, agreed to adopt “a basket of measures”, permitting each to choose “the actions that it finds most effective” to counteract the ETS”, said Valery Okulov, Russia’s deputy transportation minister, following a two-day meeting in Moscow.

The European scheme, which took effect on 1 January, legally requires all flights landing at any EU airport to take part in an emissions trading system to offset the carbon produced by its journey. Read more here.
 

(Chemical Watch)

The U.S. Office of Management and Budget (OMB) has concluded its review of the hazard communication standard submitted by the Occupational Health and Safety Administration (OSHA) last October.  The standard will see the start of implementation of the Globally Harmonized System (GHS) of classification and labelling of chemicals in the U.S.

OSHA now has to incorporate comments made by OMB into a final document which will be published in the Federal Register in the coming weeks.

The OMB conclusion can be accessed here and the Rule is available here.
 

(CBSA)

This memorandum was formerly titled “Valuation for Duty Regulations”. No changes have been made to these Regulations; however, it now includes a hyperlink to these Regulations in a new Guidelines and General Information section and also includes new references to sources of the Canada Border Services Agency’s (CBSA) information.
 

An updated list of recently published government memoranda, notices, regulations and decisions for the week ending February 24, 2011 is now available on our website here.

(Alison Crawford — CBC News)

Knockoff makeup has caused allergic reactions and posed bacterial threat, says industry

It started with purses and sunglasses.

Now Canadians are buying counterfeit makeup, perfume, shampoo and other health and beauty products the RCMP warns could endanger the public. In the last six months, the RCMP in the Toronto area has seized tens of millions of dollars worth of knockoff goods.

“We’ve estimated that counterfeiters would quadruple their money on a load of counterfeit goods. And that’s a conservative estimate,” said RCMP Insp. Todd Gilmore. He said almost half of all knockoff goods seized are health and beauty products that people apply to their hair and skin or rub around their eyes, nose and mouth.

“Counterfeiters have no regard for your health and safety. They just want to maximize their profits. Who knows how this was produced.” Read more here

Related: Should Border Agents be Able to Seize Counterfeit Goods? (Online CBC Poll)
 

The Food and Drug Administration (FDA) has issued an interim final rule (IFR) and draft guidance for industry amending FDA’s existing regulation on maintaining records about sources and recipients of food (FSMA Section 101). FDA also published an update to its Guidance for Industry: Questions and Answers Regarding Establishment and Maintenance of Records (Edition 4), to ensure the guidance is consistent with the new FSMA requirements.

• Interim Final Rule: Establishment, Maintenance, and Availability of Records: Amendment to Record

• Draft Guidance for Industry: FDA Records Access Authority Under Sections 414 and 704 of the Federal Food, Drug, & Cosmetic Act

• Guidance for Industry: Questions and Answers Regarding Establishment and Maintenance of Records By Persons Who Manufacture, Process, Pack, Transport, Distribute, Receive, Hold, or Import Food (Edition 5)
 

(ST&R Trade Report)

The Department of Agriculture’s Animal and Plant Health Inspection Service has made several improvements to its Phytosanitary Certificate and Issuance Tracking system. PCIT was created in 2005 to automate the issuance of phytosanitary certificates for agricultural commodities exported to foreign countries. In fiscal year 2011, APHIS and state and county governments issued more than 530,000 export certificates for individuals and businesses through the PCIT system.

APHIS states that in the coming months PCIT will begin automatically transferring phytosanitary certificates to foreign countries receiving U.S. exports, reducing previous delays associated with paperwork verification. In addition, APHIS is expanding the availability of user-printed phytosanitary certificates, eliminating the need for users to pay for shipped documents.
 

(CBC News)

Operating profits at Canadian corporations increased nine per cent to $71.4 billion at the end of 2011, Statistics Canada reported Thursday.

Canada’s data agency said Canadian companies made more money during the last three months of 2011 than they did during the three that preceded it. Although profitability is now at the highest level it has been since the end of 2008 when the recession was beginning in Canada, it’s still $6.1 billion below the level it was at earlier in the year, the previous all-time high. Read more here.

Summary statistics and links to the data files are on the Statistics Canada website here.
 

(Industry Week – Steve Minter)

U.S. trade growth will pick up but lag global growth, HSBC reports

The global economy is entering a new period of international trade growth, according to HSBC’s Global Connections trade forecast, with world trade growing at an annual rate of 3.78% over the next five years. HSBC said the world economy will slow in 2012, but then begin growing, picking up speed after the middle of 2014. The bank said overall world trade will grow by $1 trillion year-on-year to 2016.

HSBC predicts even stronger trade growth of 6.23% annually from 2017-2021.

“In 2011, U.S. exports grew an impressive 14.5%, with exports of U.S. manufactured goods reaching a record $1.27 trillion,” said Christopher Lewis, executive vice president at HSBC North America. “With the right focus and commitment, the U.S. and the businesses that drive its economy have the opportunity to surpass those marks if they manage their supply chains and do business with the best trading partners regardless of where they are located in the world.” Read more here.
 

(CBC News)

European Union vote on ‘fuel-quality directive’ moves up to full council debate

European Union officials are at a stalemate after voting on whether to classify Canada’s oilsands crude as more harmful to the environment than other fuels — a proposal that Canada would fight.

The ballot by experts from the EU’s 27 member countries, which are weighted by population, failed to produce the required 255 votes needed to approve the classification.

As a result, the proposal will move up to the European Council, which will vote on it in late spring or early summer.

“This is not the end of it,” the CBC’s Margo McDiarmid reported. “Instead, what happens is that this policy … will get bumped up to the EU Council. If the council does vote for the measure to declare Canada’s oilsands oil dirty, Canada will appeal to world trade bodies.” Read more here.
 

(ST&R Trade Report)

The Consumer Product Safety Commission has announced that the revised ASTM F963-11 standard, “Standard Consumer Safety Specifications for Toy Safety,” will become a mandatory consumer product safety standard effective June 12.

The previous version of this standard was established as a mandatory standard pursuant to the Consumer Product Safety Improvement Act of 2008. The CPSC notes that because ASTM F963-11 does not reincorporate section 4.27 (toy chests) of ASTM F963-07, that provision remains in effect.

Click here for the CPSC notice.
 

(Canadian Transportation & Logistics)

TransCore’s Canadian spot market freight index saw a steady start to the new year with volumes increasing one percent from December while year over year it was off slightly by 1% from January 2011.

Intra-Canadian loads accounted for 28% of the volume.  Top regions for loads within Canada were:
• Western 53%
• Ontario 23%
• Quebec 18%
• Atlantic 6%

Equipment postings in January increased 11% from the previous month; while year-over-year capacity was unchanged from January 2011.

The equipment-to-loads ratio increased from December, matching the volumes recorded in January 2011.

TransCore’s Loadlink freight matching database constitutes the largest Canadian network of carriers, owner operators, freight brokers and intermediaries and has been available to Canadian subscribers since its inception in 1990.  Over 13 million full loads, LTL (less than truck load) shipments and trucks are posted to the Loadlink network annually. As a result of this high volume, TransCor believes its Canadian Freight Index is representative of the ups and downs in spot market freight movement and provides a historical account of the domestic and cross border spot market freight movement.