GHY Tradelines

(Canadian Transportation & Logistics – Leo Ryan)

Towards the end of an eventful 2011, global shipping lines were doing their utmost to adjust to spreading economic malaise, especially in eurozone countries reeling under a sovereign debt crisis and in a United States still buckling under a real estate meltdown. Amidst weak freight rates, overcapacity and mounting carrier losses, some industry analysts were predicting more consolidation in coming years.

The Canadian economy, for its part, is performing relatively well, although GDP growth forecasts for 2011 and 2012 have recently been revised downwards by various analysts to just above 2%.

Within such a volatile environment, world maritime trade will, nevertheless, again outpace average global GDP upward performance – thanks in large part to emerging countries led by a China still maintaining growth in the high single digits despite some slowdown. Demand, for example, from Chinese steel factories is continuing to fuel ocean exports of Canadian iron ore. Read more here.
 

(DFAIT)

Agreements signed will take the Canada-China trade and economic relationship to the next level

The Honourable Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway, today highlighted in Vancouver to the Dawa Business Group Inc. and the Canada China Business Council the recent accomplishments of his visit to China, which was led by Prime Minister Stephen Harper. The Honourable Alice Wong, Minister of State (Seniors), and Wai Young, Member of Parliament for Vancouver South, also attended the event.

“I have just returned from an extremely successful trade mission to China,” said Minister Fast. “The agreements reached on this highly productive mission will take the Canada-China trade and economic relationship to the next level, as well as create jobs and prosperity for hardworking Canadians here at home.”

During the visit to China, Prime Minister Harper and China’s Premier Wen Jiabao witnessed the signing of new joint initiatives between the two countries, as well as the renewal of existing ones, in the areas of energy, the sustainable development of natural resources, education, science and technology, and agriculture.

One of the key announcements made during the visit concerned the conclusion of negotiations toward a foreign investment promotion and protection agreement (FIPA) between Canada and China. Minister Fast and his Chinese counterpart, Minister of Commerce Chen Deming, signed the Declaration of Intent for the FIPA during the visit. The agreement will contribute to jobs and growth by facilitating trade and investment flows between Canada and China. It will provide a more stable and secure environment for investors on both sides of the Pacific.

Other important announcements made during the Prime Minister’s visit to China that will strengthen the Canada-China commercial relationship include:

• the Memorandum of Understanding on Sustainable Development of Natural Resources, which will provide a platform to promote Canadian expertise, technologies and services in that area;
• the renewal of the Memorandum of Understanding on Energy Cooperation, which will attract capital investment and improve access to Chinese markets for Canada’s energy resources, technology and related services;
• initiatives on agriculture that clear the way for access to the lucrative Chinese beef tallow market, for joint research that will aim to create a stable trading environment for Canadian canola seed in China and for additional collaboration to resolve agricultural market-access issues of mutual interest;
• the statement of intent to launch two new calls for proposals for joint research and development projects under the Canada-China Framework Agreement for Cooperation on Science, Technology and Innovation, as well as the announcement of results for a previous call for project proposals; and
• the successful completion of negotiations between Canada and China on an agreement that will facilitate increased exports of Canadian uranium to China.

“Deepening and broadening access to high-growth markets like China is a key part of our government’s job-creating, pro-trade plan,” said Minister Fast. “Our government’s top priority is to create jobs, increase prosperity and preserve and strengthen the financial security of hardworking Canadians and their families.”

During his speech in Vancouver, the Minister also highlighted China and Canada’s renewal of a scholars’ exchange program. Over the years, education ties between Canada and China have expanded significantly. In 2010, over 60,000 Chinese students studied in Canada, representing close to 28 percent of international students in Canada and contributing almost $1.9 billion to the Canadian economy.

During the visit to China, Prime Minister Harper and China’s President Hu Jintao also agreed that, following the completion of a bilateral economic complementarities study in May 2012, Canada and China will proceed to exploratory discussions on deepening trade and economic relations.

Canadian merchandise trade exports to China grew by 26.9 percent in 2011 and totalled almost $17 billion. Imports from China totalled $48.1 billion, an increase of 8.1 percent over 2010. China is one of the world’s fastest-growing major economies and is now Canada’s second-largest individual merchandise trading partner. Canadian investment in China reached its highest level ever at the end of 2010, standing at almost $5 billion, an increase of 38 percent over 2009. Chinese foreign direct investment in Canada increased by almost 10 percent in the same period, reaching $14.1 billion in 2010.

Finally, to further promote Canada as a tourist destination in China, on February 8, 2012, Prime Minister Harper officially launched the Canadian Tourism Commission’s 2012 tourism marketing campaign in Beijing. Since being granted Approved Destination Status by China in December 2009, Canada has seen a significant increase in the number of Chinese visitors. Over the past year, Canada has welcomed approximately 24 percent more Chinese visitors than it did in the previous year.
 

(HS Today – Anthony Kimery)

As the U.S. Border Patrol has begun to implement a new national strategy that emphasizes enhanced intelligence collection and analysis to “establish a substantial probability of apprehending terrorists and their weapons as they attempt to enter illegally between” land ports of entry (POEs), and to “disrupt and dismantle transnational organizations that engage in smuggling and trafficking across the U.S. border,” Customs and Border Protection’s (CBP) proposed FY 2013 budget calls for important measures to strengthen the agency’s overall intelligence capabilities for securing the nation’s borders.

Among the things that the proposed budget calls for are “efforts to integrate resources and fuse information from [the] Department of Homeland Security [DHS], the Department of Justice (DOJ), the Department of Defense [DoD] and the intelligence community at the El Paso Intelligence Center, providing a common operating picture of the Southwest border and Northern Mexico.” Read more here.
 

(Canada Asia News)

An exhibit entitled Brand India Expo 2012, organized by the High Commission of India in Ottawa and India’s Trident Exhibitions Pvt. Ltd., will take place at the Ottawa Convention Centre from March 13 to 14.

This multi-product exhibit and seminar will bring together industry experts to discuss projects and pursue investment opportunities to enhance bilateral trade for Canada and India. The exhibit is supported by the Governments of India and Canada.

For more information, please click here.
 

(Tax-News – Mike Godfrey)

Canada and India hope to complete negotiations on a comprehensive economic partnership agreement in 2013, ministers say, as the latest round of trade talks concludes.  The two countries held the fourth round of trade negotiations in Delhi from February 13-16, with Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway, and Bal Gosal, Minister of State (Sport), welcoming the news.

Gosal highlighted the importance of the trade talks at Brar Sweets, a small to medium-sized enterprise (SME) in Brampton, Ontario. It is businesses such as this that government says will benefit from deeper trade and investment ties with India. The Minister also held a pre-Budget consultation and reiterated the Harper government’s commitment to deepening Canada’s trade ties in high-growth markets around the world. Read more here.
 

(ST&R Trade report)

U.S. Customs and Border Protection has extended through March 22 the public comment period on the proposed extension without change of the following information collections.

Form 3347, Declaration of Owner: Form 3347 is a declaration from the owner of imported merchandise stating that he/she agrees to pay additional or increased duties, therefore releasing the importer of record from paying such duties. The form must be filed within 90 days from the date of entry.

Form 3347A, Declaration of Consignee When Entry is Made by an Agent: When entry is made in a consignee’s name by an agent who has knowledge of the facts and is authorized under a proper power of attorney by that consignee, a declaration from the consignee on Form 3347A must be filed with the entry summary. If this declaration is filed, no bond to produce a declaration of the consignee is required.

Form 434, NAFTA Certificate of Origin: This form is used to certify that a good being exported either from the United States into Canada or Mexico or from Canada or Mexico into the United States qualifies as an originating good for purposes of preferential tariff treatment under NAFTA. This form is completed by exporters and/or producers and furnished to CBP upon request.

Form 446, NAFTA Verification of Origin Questionnaire: This is a questionnaire that CBP personnel use to gather sufficient information from exporters and/or producers to determine whether goods imported into the United States qualify as originating goods for the purposes of preferential tariff treatment under NAFTA.

Form 447, NAFTA Motor Vehicle Averaging Election: This form is provided to CBP when a manufacturer chooses to average motor vehicles for the purpose of obtaining NAFTA preference.
 

(The Guardian – Damian Carrington)

The row over the EU’s plan to label tar sands oil as highly polluting escalates as Canada says it ‘will not hesitate to defend its interests’

Canada has threatened a trade war with European Union over the bloc’s plan to label oil from Alberta’s vast tar sands as highly polluting, the Guardian can reveal, before a key vote in Brussels on 23 February.

“Canada will not hesitate to defend its interests, including at the World Trade Organisation,” state letters sent to European commissioners by Canada’s ambassador to the EU and its oil minister, released under freedom of information laws.

The move is a significant escalation of the row over the EU’s plans, which Canada fears would set a global precedent and derail its ability to exploit its tar sands, which are the biggest fossil fuel reserve in the world after Saudi Arabia. Environmental groups argue that exploitation of the tar sands, also called oil sands, is catastrophic for the global climate, as well as causing serious air and water pollution in Alberta. Read more here.
 

(International Freighting Weekly – David Badger)

U.S. east coast gateway handled more volumes in 2011 than it did pre-recession

The U.S. port of New York/ New Jersey set an all-time record for cargo handling last year.  The 5.5 million teu handled at the port was almost 4% up on 2010 volumes, beating the previous record, set pre-recession in 2007.  The port’s on-dock rail system, ExpressRail, also set a new record in 2011, handling 422,144teu – 12% up on 2010. Read more here.
 

(ST&R Trade Report)

U.S. Customs and Border Protection (CBP) informed members of the Customs-Trade Partnership Against Terrorism (C-TPAT) Feb. 15 that implementation of the updated International Organization for Standardization (ISO) mechanical seal standard will not be viable by March 1 as previously announced. CBP has learned that the tamper evidence element (clause 6) of the new standard (ISO 17712:2010) cannot be met and that to date no accredited independent laboratories have been willing to test and certify seals as complying with this requirement. While the ISO is working to resolve this issue, implementation of the new standard will be delayed until CBP receives definitive information that this has been accomplished.

CBP notes that since the ISO 17712: 2010 (18 mm) certification for high-security seals is attainable without the clause 6 testing portion of the standard, C-TPAT partners are encouraged to buy seals that meet this part of the standard. If they do so, however, they should request documentation to confirm that the purchased seals comply with the current testing requirements for ISO 17712: 2010 (18 mm) certification.
 

(Export Development Canada – Peter G. Hall)

Talk casually to anyone about the US housing market, and you’re likely to get a good volley of the latest reasons why it is never coming back. Data have been so weak for so long that it’s not hard to become convinced that this is just part of a ‘new normal’ of lower activity. But something is stirring in the market: housing starts jumped 11% in the latter half of 2011 from the average level in the preceding 30 months. Is the market telling us something?

We believe so. But whether it is or not, is there reason to believe that at some point in time, the market is destined for a sustained higher level of activity? Two key points suggest so. First, the housing surplus is now shrinking by a million units a quarter; if this keeps up, the market could be nearly balanced by year-end. Second, current activity is well below normal. US population data indicate that net annual household formation – the basic number of new units needed – is 1.4 million. Even with recent growth, current starts are only 660,000. There is still a lot of room to grow. Read more here.
 

(Postmedia News)

The Canadian Food Inspection Agency is wrong when it says food imports are screened as rigorously as exports – and is creating a “ticking biological time bomb” in Canada with the lack of oversight, the government’s food inspectors charged Wednesday.

Bob Kingston, president of the union representing CFIA food inspectors, took on the agency’s claim during parliamentary hearings on the future of Canada’s agricultural policy framework.

“There may be one set of rules, but they are certainly not applied the same,” Kingston testified Wednesday about import inspection and testing compared to domestically produced food bound for other countries.

“Export inspection always gets top priority in spite of what CFIA may say publicly. It’s 100 per cent versus two per cent.”

Kingston was responding to comments made at the hearings Monday by CFIA’s Paul Mayers in response to a question from Tory MP Ben Lobb. Read more here.
 

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending February 17, 2011 is now available on our website here.
 

(Bloomberg – Isaac Arnsdorf and Michelle Wiese Bockmann)

Container rates on the world’s biggest international trade route are rallying after U.S. imports of manufactured goods rebounded from the first decline in two years.

U.S. container imports gained 1.6% in the fourth quarter from a year earlier, compared with a drop of the same amount in the previous three months, data from Newark, New Jersey-based PIERS show. Volumes from northern Europe and the Mediterranean rose 12%. Rates to carry 40-foot boxes to the West Coast from China rose 29% since Dec. 16, according to Clarkson Plc (CKN), the world’s largest shipbroker.

Shipping lines will make money again this year after “deep losses” at the end of 2011, said Jon Windham, an analyst at Barclays Capital in Hong Kong. Investors should buy shares of A.P. Moeller-Maersk A/S and Neptune Orient Lines Ltd., according to Morgan Stanley, which expects charter rates to more than double this year. U.S. cargo volumes will rise as much as 3.5% to a five-year high in 2012, UBM Global Trade predicts. Read more here.
 

(Bloomberg BusinessWeek)

A United Nations panel is calling for tougher inspections and detailed labeling of air shipments of lithium batteries following two incidents in which aircraft were destroyed when freight shipments burst into flames.  The Dangerous Goods Panel at the UN’s International Civil Aviation Organization agreed Friday to the new standards, said Mark Rogers, who heads hazardous-materials handling issues for the Air Line Pilots Association union.

The action may lead to more stringent U.S. rules for battery shipments. Congress earlier this month passed an aviation bill restricting U.S. regulators from imposing rules stricter than those set by the ICAO. Tighter rules proposed by the Department of Transportation stalled following industry objections that they would lead to higher consumer costs.

“I’ve been working on lithium batteries for 10 years and this is the biggest development to date,” said Rogers, who serves on the 19-member ICAO panel.

Without new safety standards, lithium batteries that can spontaneously combust were projected to destroy one U.S.- registered cargo jet every other year, according to a study commissioned by U.S. and Canadian aviation regulators. Shipments of lithium batteries that include those used in mobile phones, tablets and laptop computers have been suspected of contributing to two U.S. cargo-jet accidents since 2006. Read more here.
 

(ST&R Trade Report)

The congressional trade agenda for 2012 is beginning to take shape and a number of longstanding issues are on the radar screen. As always, prospects for these measures will depend on a variety of factors, not the least of which is this fall’s presidential and congressional elections.

Countervailing Duties
Observers believe the trade legislation most likely to advance, at least in the near term, is a bill to explicitly allow the federal government to impose countervailing duties on goods imported from non-market economy countries like China. Such a bill, which has yet to be introduced, would effectively reverse a recent court ruling against this practice and allow the U.S. to continue the 24 CV duty orders it currently has in place against Chinese goods. The Obama administration and key lawmakers oppose that ruling and are working to overturn it legislatively as well as through the courts. Click here for more information.

China 
As has often been the case in recent election years, lawmakers will make noise about passing legislation to address the alleged undervaluation of China’s currency. There is always a possibility that such a measure could make it through to the White House, given that one or another version has been approved by the House and/or Senate at different times in recent years, that the U.S. economy continues to struggle and that “unfair foreign competition” from China is frequently cited as a direct cause, and that the annual U.S. trade deficit with China hit an all-time high in 2011. However, any such action would have a significant symbolic effect that goes beyond any actual economic impact and thus it remains an unlikely scenario.

Russia
A topic that is anticipated to be taken up this year is extending permanent normal trade relations status to products imported from Russia. Russian goods already have NTR status, meaning they are subject to normal tariffs when imported into the U.S., but that status must be approved each year through a waiver of the so-called Jackson-Vanik Amendment. Permanent NTR must be granted to allow U.S. companies to fully take advantage of the trade liberalization measures Russia will implement as part of its accession to the World Trade Organization, which is expected to take effect in the next few months. Lawmakers do not have an interest in disadvantaging domestic businesses seeking improved access to the Russian market, but the expected debate over PNTR will involve politically sensitive topics such as rule of law and human rights.

Customs Reauthorization 
Sources indicate that Senate staff have finished a draft of a long-delayed customs reauthorization bill and are working to finalize a few details. Similar legislation is still being crafted in the House. Topics likely to be addressed in these bills are listed in this article.

Other 
Other trade-related legislation, such a miscellaneous trade bill to suspend or reduce duties on imported manufacturing inputs and other goods or a measure to provide limited relief from the Lacey Act Amendments of 2008, are only likely to advance to the extent that they can engender bipartisan support.

Recent Legislation
Finally, below is a list of trade-related bills that have been introduced recently. The texts of these bills are or will be shortly available on the Library of Congress’ Web site.

• S. 2091 – to reform the international tax system of the United States

• H.R. 4005 – to direct the Secretary of Homeland Security to conduct a study and report to Congress on gaps in U.S. port security and a plan to address them

• H.R. 3976 – to provide exporting assistance to small business concerns

• H.R. 3979 – to amend the Harmonized Tariff Schedule of the United States to extend to 2025 the production certificate program that allows refunds of duties on certain articles produced in U.S. insular possessions

• H.R. 3984 – to limit the quantity of arsenic and lead in beverages containing fruit juice pursuant to tolerances under section 406 of the Federal Food, Drug and Cosmetic Act

• H.R. 3914 – to amend the Export Apple Act to permit the export of apples to Canada in bulk bins without certification by the Department of Agriculture

• S. 2063 – to prohibit the transfer of technology developed using funding provided by the United States government to entities of certain countries

• S. 2067 – to amend the Federal Food, Drug and Cosmetic Act with respect to medical device regulation

• H.R. 3880 – to require the imposition of sanctions on foreign financial institutions that are members of an entity that provides services relating to secure communications, electronic funds transfers or cable transfers to the Central Bank of Iran or sanctioned financial institutions

• H.R. 3889 – to amend title 35, United States Code, to provide for an exception from infringement for certain component parts of motor vehicles
 

(MarketWatch – Adam Johnston)

Soft ocean freight rates, which hit 25-year lows in early February, are helping cut into Canada’s grain freight disadvantage with some of its competitors, said industry participants.  The Baltic Dry Index, which is used as a guide for global shipping rates, is sitting at 715 points, up from a twenty-five year low of 647 points Feb. 3. However, that’s still well below the 2011 high of 2,173 points in mid-October and the 2008 peak of 11,793 points.

David Przednowek, manager of marine logistics with the Canadian Wheat Board, said the softening of ocean freight rates has been beneficial for Canadian grain shippers.   Transporting grain from Canada to many global areas, including Asia, takes more time, in comparison to moving it from Australia. However, softer shipping rates have narrowed the freight disadvantage, making it more competitive for Canadian grain distributors, he said.

Trevor Lavender, president of the Summit Maritime Corporation in Montreal, said much of the dramatic downward trend seen in ocean freight values is due to the large supply of ships. The lack of seasonal demand due to the Chinese new-year holiday, has also weighed on freight rates recently. Read more here.
 

(CSCB)

The Export Controls Division of Foreign Affairs and International Trade Canada is organizing an Export Controls Seminar in Montréal March 6, 2012.

This seminar will review the responsibilities of Canadian industry with regards to export controls of military, strategic, and sensitive commercial goods and technology.

Details are available on the DFAIT website here.
 

(Aamer Madhani — USA Today)

In what was billed as a major policy speech, Chinese Vice President Xi Jinping told U.S. business leaders [Wednesday] that Washington and Beijing must respect each others’ “core interests and concerns.”

A day after hearing from President Obama and other top administration officials that China must do more to level the playing field for U.S. businesses competing against Chinese firms, Xi made the case that China has already made significant strides in balancing trade policy. Earlier Wednesday, House Speaker John Boehner and Majority Leader Eric Cantor met with Xi and complained of “deficiencies” in China’s enforcement of intellectual property laws. Read more here
 

(Scott Meiner — Hawaii News Daily)

U.S. Customs and Border Protection is seeking authority to eliminate requirements that it post notice of seizures in local and port newspapers. Current regulations require “administrative seizure and forfeiture notices for at least three successive weeks in a newspaper circulated at the customs port and in the judicial district where CBP seized the property.”

Additionally, CBP is required to attempt to notify all known parties-in-interest in advance of publication. However, attempting to notify known parties doesn’t require that the parties actually be notified. Dusenbery v US – 534 U.S. 161 (2002) It requires taking steps “reasonably calculated” to achieve notification.

Under CBP’s proposal, public notice would be satisfied by posting forfeiture updates on the Department of Justice’s forfeiture web site, www.forfeiture.gov, in lieu of newspapers. Read more here.
 

(Reuters – Ron Popeski)

A tariff structure that supports domestic farmers should not be a barrier to Canada’s entry to a pan-Pacific trade pact, although all issues are up for negotiation, Canada’s trade minister said on Wednesday.  Ed Fast, interviewed in Singapore at the end of a tour of Southeast Asia, said most of the nine countries working toward the conclusion of a Trans-Pacific Partnership (TPP) deal supported Canada’s entry into the negotiations.

He declined to say which countries did not back the plans. News reports have suggested Australia and New Zealand are unhappy about Canada’s supply management support program for poultry and egg producers, a network of marketing boards and quotas intended to keep markets stable and ensure farm incomes.  Some reports suggest U.S. support is not guaranteed. Read more here.