GHY Tradelines

An updated list of recently published government memorandums, notices, regulations and decisions for the week ending March 30, 2011 is now available on our website here.
 

(Transport Intelligence – Thomas Cullen)

The case of the anti-cartel fines levied by the European Union (EU) on a string of freight forwarders is a useful insight for any shipper looking to understand how they are charged by forwarders and how forwarders manage their margins.

No less than four different processes were deemed anti-competitive by the EU Competition Commissioners according to a statement on Wednesday. The first ‘cartel’ was that relating to the British customs “new export system” introduced in 2003. Here, forwarders were found to have illegally agreed to establish a surcharge on customers for operating this customs reporting service and to fix its amount according to the size of the customer’s consignment.

The next issue was concerning the American “advanced manifest system”, which the forwarders agreed a common surcharge for the transmission of data to the U.S. customs and agreed amongst themselves not to use the charge as a “tool for competition”. Read more here.
 

(Export Development Canada – Peter G. Hall)

Blinding. That’s the speed at which international trade has been transforming over the past two decades. It is re-casting models of cross-border commerce, and in the process has led to a lot of confusion about traditional definitions of international trade. In the midst of all this change, is it possible to get a handle on what an exporter really is these days? A tough task, but let’s give it a try.

We’ll start with old definitions, when things were a lot simpler. Trade used to be largely about shipping raw and finished goods. Raw goods would come from source to factory loading docks, be produced into a final good, and shipped to the end user in a foreign country. These simpler times gave rise to a stream of thinking we still struggle to shed: that exports are good, imports are bad, and that large trade surpluses are the goal. That’s the essence of mercantilism, and today’s trade probably has no greater enemy. Thankfully, trade’s transformation is increasingly helping it to gain the upper hand.

Technology is really the game-changer. Transportation has undergone a multi-generational overhaul that sees us able to whisk people about at far lower cost, at great frequency and at higher speed and efficiency. The same is true for goods, where multi-modal movements of goods to and from anywhere on the planet has been honed to a fine art, increasing the speed of movement, optimization to lower costs and reliable, just-in-time delivery. Advances in communication are growing exponentially, enabling us to buy, sell and produce on planet-wide platforms that are humming somewhere, 24-7, and make payments effortlessly. It’s complex and a bit daunting, but it opens up great possibilities. Read more here.
 

(Bridges Trade Weekly)

The legality of government support for renewable energy initiatives took centre stage in Geneva this week, with a landmark case against Canada being heard at the WTO. A three person dispute panel heard opening arguments in cases launched by Japan and the EU – DS412 and DS426, respectively – over the Canadian province of Ontario’s local content requirements in its feed-in tariff (FIT) scheme. […]

The Ontario programme in question aims at increasing the share of renewable energy in the province’s electricity mix by insulating green energy producers from risks, and facilitating investments that would otherwise be costly. While Ottawa maintains that the programme is necessary to incentivise clean energy generation, Brussels and Tokyo are concerned over the programme’s subsidising effect.

The main thrust of both complaints is that Ontario’s renewable energy feed-in tariff programme unfairly discriminates against foreign renewable energy products through its “domestic content” clause. Read more here.
 

(Journal of Commerce Online – William B. Cassidy)

Indexes show shipping costs, spot freight volume edging up in Canada

The Canadian spot market for truckload freight hits its second highest point in 11 years in February, according to TransCore’s Canadian Freight Index.  At the same time, transportation costs are climbing for Canadian shippers, according to the Canadian General Freight Index sponsored by Nulogx.

The TransCore spot market-based index climbed 1% last month from January, with equipment listings on Loadlink climbing 16% year-over-year.  TransCore’s index is based on its Loadlink freight-matching database, which the company says matches more than 13 million Canadian shipments and trucks a year. Read more here.
 

(Derek Lothian — CME)

The Canadian Manufacturers & Exporters trade group has prepared a summary of highlights from the 2012 Federal Budget with potential impact on its members. The following measures are included in the “International Trade” section:

• Extended domestic financing powers for EDC (one year)

• Refresh the global commerce strategy – consultations with industry in 2012

• Implement the Canada-U.S. Border and Regulatory Action Plans

• Trade measures to support energy industry: duty-free status of imported fuels used in manufacturing (current duty of 5% on certain items)

• Consolidation of Canada’s trade remedy investigation functions into one organization, under the Canadian International Trade Tribunal

The complete summary of CME Budget highlights can be viewed here.
 

(Canadian Society of Customs Brokers)

The CSCB has completed a high-level review of the 2012 Federal Budget.

The following items may be of interest to members:

- As part of the Action Plan on Perimeter Security, pilot projects will be held at Prince Rupert and Montreal where goods are screened once and accepted by both Canada and the U.S. In addition to these pilot projects, the Government will take other measures to implement action plan commitments and other border improvements over the next two years;

- Certain imported fuels used as manufacturing inputs that became dutiable as a result of a CBSA ruling will be restored to their duty-free status;

- A comprehensive review of the General Preferential tariff regime will take place;

- Legislation will be introduced to consolidate Canada’s trade remedy investigation functions into one organization, under the CITT (currently handled by both CBSA and CITT);

- Travellers’ exemptions will be increased to $200 and $800, for Canadian residents returning from abroad after 24-hour and 48-hour absences, respectively;

- With respect to the Red Tape Reduction Commission, the Treasury Board will develop an Action Plan to address the Commission’s Recommendations Report to deliver better regulations in order to reduce frustration and lower costs for Canadian business;

- The Canadian Food Inspection Agency (CFIA) will change how they monitor and enforce non-health and non-safety food labelling regulations which will help the agency cut $56.1 million from its overall budget by the next fiscal year;

- Canada Border Services Agency will streamline internal services and low-performing processes;

- Canada will change the vehicle fuel consumption testing requirements to better align with those in the United States; this will affect the Green Levy Tax and amendments will made to the Excise Tax Act; and

- Tax relief will be put in place for foreign-based rental vehicles temporarily Imported by Canadian residents.

Details will be provided as they become available.

The budget, in its entirety, can be seen here.
 

(The Globe & Mail)

Canadian shoppers will have more freedom to take advantage of lower prices across the border, as Ottawa quadruples the limit on how much they can buy on a one-day U.S. trip without having to pay duties or taxes.

Thursday’s budget raises the limit to $200 from $50 for residents who been out of the country for 24 hours. The exemptions for longer trips are going up as well – doubling to $800 for those who have been away for 48 hours. Retailers anticipate a surge in cross-border shopping starting in June, when new rules are slated to take effect, a move they say will squeeze them hard unless the government also drops import taxes imposed on merchants. Read more here.
 

(Kelley Drye & Warren LLP)

Protecting the US food supply from intentional adulteration requires coordination at all levels of government and throughout the private sector. Companies engaged in the manufacture, importation, distribution or storage of food for the U.S. market will be interested in a new article published by the Food and Drug Law Institute that provides an introduction to post-9/11 policy developments related to the incorporation of new intentional adulteration safeguards into U.S. food supply regulations.

The article reviews the authority granted to FDA by the Food Safety Modernization Act, the responsibilities of other government agencies in protecting against intentional adulteration, and the efforts of nongovernmental entities to minimize risks in the supply chain.
 

(John Ibbitson – The Globe and Mail)

Canada is launching free-trade talks with Thailand and Japan in case Plan B must turn into Plan A, because Plan A is in trouble, thanks to what is being described as American bullying.

Plan A is the Trans Pacific Partnership, a set of trade talks currently involving the United States and eight other Pacific nations that Canada badly wants to join. Negotiators from the two countries are attempting to secure a pre-agreement so that the Americans will support Canada’s accession to the talks.

But the Americans are being particularly bloody-minded, from the Canadian perspective. Supply management is the biggest issue. This is the system of quotas and tariffs that protect the Canadian dairy and poultry industry from competition. Read more here.
 

(ST&R Trade Report)

U.S. Customs and Border Protection has updated its list of the quarterly Internal Revenue Service interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties. For the quarter beginning April 1, 2012, the interest rates for overpayments will be 2% for corporations and 3% for non-corporations, and the interest rate for underpayments will be 3%. These rates are unchanged from the previous quarter.

(Industry Week | Agence France-Presse)

After decades of U.S. caterwauling about the crippling impact of China’s low labor costs on domestic manufacturing, firms state-side now fret about the impact of rising Chinese wages.

First came anger, then depression and then acceptance. In the three decades since Deng Xiaoping began opening China’s economy, U.S. manufacturers have gone through something resembling Elisabeth Kuebler-Ross’s five stages of grief. Industry cried foul, then groped around for solutions, before accepting the rules of the game had changed – deciding to make a buck by offshoring some of their own production to China.

To be sure, there are still frequent spasms of anger over China’s ability to produce goods at “unfair” prices, notably in election years. But the bitter pain of jobs lost and factories closed has been sweetened just slightly over the years. Using cheap Chinese laborers has resulted in $499 iPads, bumper corporate profits and – in turn – fatter pensions for those who have stock-based plans.

But there are already signs that this low-cost, high-reward Chinese paradigm is coming to an end. Read more here.
 

(ST&R Trade Report)

The Environmental Protection Agency has issued a proposed rule that would require persons who intend to import, manufacture or process specified chemical substances for an activity designated as a significant new use to notify EPA at least 90 days prior. Entities potentially affected by this rule include those who plan to use the listed substances in conjunction with apparel and other finished products made from fabrics, leather and similar materials, those that plan to use the listed substances in conjunction with paper and allied products, and importers, manufacturers or processors of the listed substances in printing inks. Comments on this proposal are due no later than June 26.

This rule would add (a) nine benzidine-based chemical substances to the significant new use rule on benzidine-based chemical substances, (b) a SNUR for di-n-pentyl phthalate (DnPP) (1,2-benzenedicarboxylic acid, 1,2-dipentyl ester) and (c) a SNUR for alkanes, C12-13, chloro. In the case of the benzidine-based chemical substances, EPA is also proposing to make inapplicable the reporting exemption relating to persons that import or process substances as part of an article.

This rule may also affect certain entities through pre-existing import certification and export notification rules under the Toxic Substances Control Act. Persons who import any chemical substance governed by a final SNUR are subject to the TSCA section 13 (15 USC 2612) import certification requirements and the corresponding regulations at 19 CFR 12.118 through 12.127. Those persons must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA, including any SNUR requirements. In addition, any persons who export or intend to export a chemical substance that is the subject of a proposed or final SNUR are subject to the export notification provisions of TSCA section 12(b) (15 USC 2611(b)) and must comply with the export notification requirements in 40 CFR part 707, subpart D.
 

(Zeebiz.com)

Certain categories of Indian steel pipes being exported to the US received a subsidy of about 300 per cent, an American trade body said on Wednesday.

As a result, the US Department of Commerce has instructed Customs and Border Protection to collect a cash deposit or bond based on these preliminary rates, an official statement said.

“In the India investigation, mandatory respondents Zenith Birla (India) Ltd and Lloyds Metals and Engineers Ltd both received preliminary net subsidy rates of 285.95 per cent, based on the application of adverse facts available,” the International Trade Administration said.

All other Indian producers/exporters also received a preliminary net subsidy rate of 285.95 per cent, it said. Read more here.
 

(STR Trade Report)

An Indiana-based medical device company will pay a $17.28 million criminal fine and $5.4 million in disgorgement of profits and pre-judgment interest to resolve violations of the Foreign Corrupt Practices Act in the bribery of health care providers and administrators employed by government institutions. The company has entered into a deferred prosecution agreement with the Department of Justice under which it is also required to implement rigorous internal controls, cooperate fully with the department and retain a compliance monitor for 18 months.

A DOJ press release states that this agreement recognizes the company’s cooperation with the investigation, thorough and wide-reaching self-investigation of the underlying conduct, and remedial efforts and compliance improvements. The company also received a reduction in its criminal penalty as a result of its cooperation in DOJ’s ongoing investigation of other companies and individuals. However, the Securities and Exchange Commission noted that the company’s compliance and internal audit functions failed to stop the illicit payments even after they were discovered.

According to a DOJ press release, the company and its subsidiaries, employees and agents were charged with making more than $1.5 million in direct and indirect corrupt payments from approximately 2000 to 2008 to publicly-employed health care providers in Argentina, Brazil and China to secure lucrative business with hospitals. At the end of each fiscal year these payments were falsely recorded on books and records as commissions, royalties, consulting fees and scientific incentives to conceal their true nature.
 

(Story: CP24 – The Canadian Press | Video: Global National)

Canada and Japan have agreed to enter free trade talks.

Prime Minister Stephen Harper and his Japanese counterpart made the announcement following a bilateral meeting in Tokyo on Sunday.  “These are important steps forward; historic steps forward,” Harper said before the bilateral meeting.

Harper said a deal would strengthen the Canadian economy by generating billions of additional dollars in commerce with Japan.  He estimated Canadian exports to the island nation could increase by two-thirds.

After being shut out Trans-Pacific Partnership talks, both countries embarked on a joint study on economic co-operation, which Canadian government officials say found complimentary areas. Read more here.
 

(CBSA)

Foreign Affairs and International Trade Canada (FAITC) announced in Canada Gazette Vol. 146, No. 6 – March 14, 2012, that the implementation of a new import permit system for steel and steel products will come into effect on April 1, 2012.

Importers of steel and steel products will no longer be required to obtain individual permits but will, instead, be provided by FAITC with general import permits (GIP) for all steel covered by the Import Control List of the Export and Import Permits Act.

The new import permit system will eliminate a need for importers of steel and steel products to provide to the Canada Border Services Agency (CBSA) the individual permit information (electronic transaction record or paper copy of the transaction record) with the release request.

Please note that General Import Permit No. 80 – Carbon Steel (GIP 80), and General Import Permit No. 81 – Specialty Steel Products (GIP 81) must be quoted on the release documentation (e.g. description of goods field on the invoice) or in the description free text field, when release requests are transmitted to the CBSA using Electronic Data Interchange (EDI).

For details on import requirements and permit procedures for the importation of goods listed in the Import Control List under the Export and Import Permits Act, please refer to the Memorandum D19-10-2, Export and Import Permits Act (Importation).
 

(ST&R Trade Report)

The Environmental Protection Agency has proposed that companies be required to report all new uses, including in domestic or imported products, of five groups of potentially harmful chemicals: polybrominated diphenylethers (PBDEs), benzidine dyes, a short chain chlorinated paraffin, hexabromocyclododecane (HBCD) and phthalate di-n-pentyl phthalate (DnPP). These chemicals have been used in a range of consumer products and industrial applications, including paints, printing inks, pigments and dyes in textiles, flame retardants in flexible foams, and plasticizers. An EPA official noted that although a number of these chemicals are no longer manufactured or used in the U.S. they can still be imported in consumer goods or for use in products.

According to an EPA press release, the proposed significant new use rules under the Toxic Substances Control Act would require anyone who intends to manufacture, import or process any of these chemicals for an activity that is designated as a significant new use to submit a notification to EPA at least 90 days before beginning the activity. This notification means that EPA can evaluate the intended new use and take action to prohibit or limit that activity if warranted.

In addition, EPA plans to issue a proposed test rule that would require manufacturers or processors to conduct testing on the health and environmental effects of PBDEs.
 

(Reuters)

The United States said on Friday it would appeal a World Trade Organization ruling against a law requiring country-of-origin labels on all meat sold in grocery stores, a move that disappointed Canada and Mexico, both of which want the law changed.

The meat labels became mandatory in March 2009 after years of debate. U.S. consumer and mainline farm groups supported the requirement, saying consumers should have information to distinguish between U.S. and foreign products.  Big meat processors opposed the provision, which they said would unnecessarily boost costs and disrupt trade.

A WTO panel ruled in November that the country-of-origin labeling, or COOL, provision violated WTO rules on technical barriers to trade. The case was brought by Canada and Mexico, which have sizeable cattle and hog trade with the United States. Read more here.
 

Annual surface transportation trade between the U.S. and its NAFTA partners Canada and Mexico reached $904 billion in 2011, the Bureau of Transportation Statistics reports, a 14.3% jump that was the third-largest increase since NAFTA took effect in 1994. U.S. imports from Canada and Mexico via truck, rail and pipeline were up 13.8% while exports rose 14.8%. Total U.S.-NAFTA trade is up by 42% since 2009, when it fell to a recent low due to an economic recession.

U.S. surface transportation trade with Canada totaled $537 billion in 2011, up 14% from a year before. Imports carried by truck rose 10% by value while exports gained 12.4%. The top commodity category transported between the U.S. and Canada via surface modes was vehicles and vehicle parts, which accounted for $96.1 billion in trade and was roughly split between exports and imports.

Total surface transportation trade between the U.S. and Mexico reached $367.1 billion, up 14.6% from 2010. The value of imports by truck saw a 12.4% gain while exports climbed 14.9%. The top commodity transported between the two countries via surface modes was electrical machinery at $80.5 billion.

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