GHY Tradelines

(Windsor Star)

The embattled Green Energy Act is about to be pummelled once more, this time by the World Trade Organization. The big loser will not be the McGuinty government, but the thousands of workers who have found jobs in Ontario’s newest industry, and the very concept of sustainable development.

How the Ontario and federal governments respond to this WTO loss will be a key test of their seriousness about creating good Canadian green jobs for the future.

A preliminary WTO panel ruling in the challenge by Japan and the European Union against local content rules (“buy local” provisions) in Ontario’s landmark renewable energy policy has leaked out a month before anyone expected it. According to reports, the WTO has ruled these buy-local requirements in violation of global trade laws that forbid governments from treating imported goods less favourably than domestic goods. Read more here.
 

(MarketWatch – Shane Romig)

Mining companies with operations in Argentina will be required to submit requests to the government 120 days before importing goods and set up an “import substitution” department to boost buying of locally made goods, the planning ministry said in a statement Monday. The mining companies will have to submit quarterly estimates of their purchasing needs, which will be vetted by a special working group at the Mining Ministry, according to the statement.

The new measures come amid a host of formal and informal barriers to imports thrown up by the government so far this year. The barriers are designed to safeguard the country’s international reserves by limiting imports of goods and services and to protect local manufacturers from competition from cheaper imports. Read more here.
 

(Xinhua/China Daily)

More than a decade after China’s accession to the World Trade Organization (WTO) exposed its businesses to unprecedented trade frictions, the once-disoriented companies are learning to cope with the disputes with concerted efforts and new tactics.

Zhu Gongshan, president of Golden Concord Holdings Limited, a leading enterprise in the photovoltaic (PV) industry, said his company now holds regular teleconferences with other prominent PV makers, including Suntech and CanadianSolar, to discuss measures to counter US government anti-dumping and anti-subsidy probes that have hampered the Chinese companies’ export chances.

“We are not doing this for a pure coalition, but to join efforts to actively respond to the practices of trade protectionism by some countries,” Zhu told Xinhua.

China-made solar panels have been accused of being underpriced because of government subsidies, while Chinese manufacturers maintain the accusations are the outcome of trade protectionism aimed at shielding local businesses. Read more here.
 

(The Economist)

The European Commission is flirting dangerously with protectionism

“Free trade, yes. Disloyal competition, no. Europe that opens all its public-procurement markets when others do not open them at all – it’s no.” Thus Nicolas Sarkozy, the French president, in a markedly protectionist campaign speech earlier this month. Less than a fortnight later, the European Commission has snapped its heels. It has issued a proposal to let the EU close its public-procurement markets to firms from countries that exclude European competitors from their public contracts. Like Mr Sarkozy, Eurocrats insist that this is not protectionism. It is, rather, creating a lever to prise open closed markets. The proposal has been a long time coming; if the commission had to postpone every initiative because of an election, it could never do anything. Yet many still see this as a campaign gift to Mr Sarkozy.

France’s Socialists will not denounce it. But liberals, especially Britain and other north Europeans, are aghast. Everybody knows that Mr Sarkozy dislikes free trade. What dismays them is that the commission should abandon its role as a force for open markets. Germany, usually careful to stay close to France, said in a scathing private paper that “the proposal is unacceptable and should be rejected.” It notes that Europe can hardly argue against “buy American” restrictions while adopting “buy European” ones. Read more here.
 

(The Montreal Gazette – Maurice Doyon)

American dairy prices may be cheaper than in Canada, but what most consumers fail to recognize is that U.S. taxpayers are doling out billions of dollars each year to keep their farmers afloat

Université Laval Professor Maurice Doyon has spent six years studying the United States dairy sector as part of his graduate work at Cornell University and also has spent a year in France, where he was able to perfect his knowledge of European dairy policies.

When Canadian consumers look across the border, they see milk at lower prices than at home. But what they fail to see is that their American neighbours are paying more than just retail price for their milk products.

In addition to the cash they spend up front on milk at the local store, taxpayers in the United States also contribute to numerous subsidies and programs paid out by their government to keep U.S. dairy farmers afloat. Over the years, the U.S. dairy industry has tried to solve their recurrent problem of oversupply, which results in significant government financial intervention, with sometimes counter-intuitive programs. For instance, at some point they had a program that paid farmers not to produce milk, or a program that bought dairy cows to eliminate them with the hope of reducing supply. None of these programs were really successful. Read more here.

(CBC News – Laura Payton)

Trade Minister Ed Fast must meet with his U.S. counterpart to head off talk of a new tariff for goods shipped through Canada and into America, the head of the Canadian Chamber of Commerce said Monday.

Fast says the attempt by the U.S. Federal Maritime Commission to add a tariff to cargo shipped into Canadian ports and across the U.S. border is in its infancy. He says it’s too soon to say what could come of it.

But Perrin Beatty, CEO of the Chamber of Commerce, says the government should intervene very forcefully to make it clear that the move would run contrary to U.S. President Barack Obama and Prime Minister Stephen Harper’s attempts to ease trade.

Fast should meet with U.S. Trade Representative Ron Kirk, Beatty says, and Canadian embassy staff in Washington should be meeting with American authorities.

“I think we need to make it clear that Canada will not willingly accept an attack upon Canadian ports and railroads,” Beatty said.  “I think we should be trying to head off improper action on the part of the Americans in the first place. If we’re forced to pursue this under international trade law, we’ll have to do that, but our goal should be to prevent something from happening, which is damaging to the trade relationship between Canada and the U.S. and which is also damaging to consumers in both countries.” Read more here.
 

(WTO)

WTO economists announced Friday that they are revising their 2011 trade forecast to 5.8%, down from their earlier conservative estimate of 6.5%, since trade has grown more slowly than expected in recent months and the outlook for the global economy is increasingly uncertain. Director-General Pascal Lamy said: “The multilateral trading system has been instrumental in maintaining trade openness during the crisis, thereby avoiding even worse outcomes. Members must remain vigilant. This is not the time for go-it-alone measures. This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future.”

Since the original forecast for 2011 was issued on April 22, developed economies in particular have been buffeted by strong headwinds, including the lingering effects of the earthquake and tsunami in Japan, the prolonged budget impasse and credit downgrade in the United States, and the ongoing euro area sovereign debt crisis.  Disappointing output and employment data have damaged business and consumer confidence and contributed to the recent turmoil in financial markets.

In light of the deteriorating economy, the WTO now expects world merchandise exports to increase by 5.8% in volume terms in 2011, supported by real GDP growth of 2.5%.  Developed economies exports are expected to rise by 3.7% and their output to go up by 1.5%.  Meanwhile, shipments from developing economies are estimated to increase by 8.5% and GDP by 5.9%.

During the economic crisis of 2008-09, WTO members were for the most part able to resist protectionist pressures, but their collective will has recently been tested by weaker economic growth, high unemployment and forced austerity.  Another downturn in the global economy could strain their resolve to the breaking point and trigger a descent into self-destructive protectionism.

“The multilateral trading system has been instrumental in maintaining trade openness during the crisis, thereby avoiding even worse outcomes. Members must remain vigilant. This is not the time for go-it-alone measures. This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future.” Director General Pascal Lamy said.

Tables, charts and a link to more data files are on the WTO website here.
 

(CFIB)

The Obama Administration’s recent legislative proposal to include ‘Buy American’ trade restrictions on portions of the stimulus contained within the draft American Jobs Act of 2011 runs contrary to a long-standing shared commitment by the Canadian and US governments to free and open trade. Canadian Federation of Independent Business (CFIB) president Catherine Swift stated, “We are very disappointed to hear about the inclusion of ‘Buy America’ provisions in the recent American Jobs Act announcements.  Protectionist policies like this have never been shown to be effective, and indeed will end up punishing U.S. consumers by imposing higher prices at a time when consumers are already beleaguered by a difficult economic climate.”

“Both Canada and the U.S. have a strong entrepreneurial presence with small- and medium-sized enterprises (SMEs) accounting for roughly half of GDP, employment and the bulk of net new jobs. Open bilateral trading arrangements are vital to SMEs on both sides of the border,” said Swift. Adding, “CFIB is pleased to see the Canadian government moving quickly on this matter to ensure the many small- and medium-sized businesses who actively trade with the U.S. are not harmed at a time when business conditions are already fragile.”

For many years, CFIB has been very active on border and trade issues and has lobbied to ensure that low-risk; low-volume trade by Canadian smaller firms is not overlooked. CFIB will continue to work with the government to oppose this latest threat and promote policies that support open trading relationships in the U.S. and elsewhere. “We believe long-term economic growth and good jobs are best protected and created by broadening and deepening our trading relationships and removing trade barriers, not restricting free and open trade. As well, these proposed restrictions, if enacted, will send negative signals to governments around the world that trade restrictions are an acceptable policy choice,” concluded Swift.
 

(AFP – Roddy Thomson)

A top U.S. trade official said she will bang down the door of the European Commission Thursday in a bid to break a longstanding impasse blocking the march of genetically-modified foods.

“When Europeans come to the United States, they come and enjoy our cuisine with no concerns whatsoever,” Deputy U.S. Trade Representative Miriam Sapiro said ahead of talks with European Union trade commissioner Karel De Gucht’s senior officials.

“Why should we have different standards in Europe? We have very strict safety standards – as do you – and I think that alone is good reason to make sure that our products are able to be sold in Europe,” she insisted. “I will be raising that issue today – it is important to address, and to continue to press the commission to go the right way.

“Decisions on GM foods need to be science-based,” she stressed. Read more here.

(Peter O’Neil — Postmedia News)

The Canada-European Union free trade talks have hit another snag due to the continued reluctance of some EU member states to negotiate a wide-ranging agreement to liberalize trade in services.

The delay is raising questions about whether the tabling of formal offers, which was supposed to take place last week in Brussels but was then rescheduled for the next round of negotiations in Ottawa in April, could be hit with further complications. […]

Canada is pushing for a “negative” list, which means that all services will be liberalized except those specifically identified. Canada has historically included water services, public education, and health and social services as exempt sectors in past trade agreements.

Europe has always used a “positive” list in which all sectors and sub-sectors being liberalized are spelled out in the agreement. Read more here.

(National Post – John Ivison)

The Conservative attack ads unveiled Monday suggest one front of the election campaign, whenever it comes, will be fought in the fields of rural Quebec. In this theatre, victory will be determined by whichever party shouts loudest of its love for Quebec’s dairy industry, in the form of the government-mandated but consumer-funded supply-management program that inflates the cost of milk, butter and cheese for all Canadians.

At the same time as they promise to protect protectionism, Conservatives and Liberals claim to be ardent free-traders.

In last year’s Speech from the Throne, the Conservatives pledged “aggressive pursuit of free trade” to provide more competition, more choice for Canadians and more economic growth. For their part, the Liberals claim their trade strategy will secure Canada’s future as an “Asia-Pacific Nation.” This is what Goethe meant when he described politicians as visionaries and charlatans.

The next major international trade deal is likely to be the Trans-Pacific Partnership (TPP), a nine-country trade negotiation that includes the United States, Australia and New Zealand. Canada wants in, even if it is playing coy publicly, but has been denied entry because it is not prepared to consider fundamental reforms to supply management. This should be a pivotal moment in Canada’s irrational defence of supply management. There are signs that Japan and Korea are prepared to undergo structural reforms to their agricultural sectors, in exchange for a seat at the TPP table. Read more here.

(Maclean’s/CPAC)

This Thursday, January 20, CPAC and Maclean’s host a LIVE two-hour debate from the Newseum in Washington, D.C., on the state of Canada-U.S. relations. Canada-U.S.: Best Friends or Perfect Strangers? is the fifth town hall discussion in the CPAC-Maclean’s “In Conversation” series.

Moderated by CPAC host Peter Van Dusen, the panel includes Maclean’s columnists Andrew Coyne, Paul Wells, and guests Gary Doer, Canada’s Ambassador to the United States, Senator Pamela Wallin, David Frum, a former speechwriter for George W. Bush and Editor of FrumForum.com, Maryscott Greenwood, Senior Managing Director at McKenna, Long & Aldridge, and Christopher Sands, a Senior Fellow at the Hudson Institute.

Panelists will square off on everything from border security and trade issues, to climate change, the economy and more.

What: In Conversation with Maclean’s

Canada-U.S.: Best Friends or Perfect Strangers?
Where: The Newseum in Washington, D.C.
555 Pennsylvania Ave., N.W.
When: Thursday, January 20

Airing live on CPAC 7 pm ET / 4 pm PT

Also airing LIVE in the U.S. on C-SPAN2, and repeating on C-SPAN1 Saturday, January 22 at 4 pm ET / 1 pm PT.

For complimentary tickets, go here and/or visit http://www.cpac.ca to send your written comments and video submissions for the panel.

(Keith Bradsher — New York Times)

The military appropriations law signed by President Obama on Friday contains a little-noticed “Buy American” provision for the Defense Department purchases of solar panels — a provision that is likely to dismay Chinese officials as President Hu Jintao prepares to visit the United States next week. […]

Representative Maurice Hinchey, Democrat of New York, said he had fought for the provision to be included in the bill.

“We’ve had a lot of money taken out of this country and invested in other places around the world, particularly China, and particularly in alternative energies,” he said in an interview by phone. “For them to be producing alternative energy, that’s great, but we need to do it ourselves, and as much of it as possible.” Read more here.

(James Milway — Toronto Star)

We may be out of the recessionary woods as unemployment is easing and economic growth is resuming slowly. Governments recognize that good fiscal and monetary policies are critical to getting us back on track. But equally important is the need to tackle protectionist threats and increase global trade.

Protectionism contributed mightily to the collapse of global trade from $5.3 billion (U.S.) in 1929 to $1.8 billion by 1933. This is a key reason why the Depression was so deep and long — and we can’t forget this lesson. While protectionist measures may be politically popular, they will only lengthen the recession and leave us all worse off. Read more here.

(Montreal Gazette – Andrew Mayeda, Postmedia News)

Buy American. Negotiations for broader agreement on horizon

Canada will enter negotiations with the United States early next year in the hopes of reaching a broader, long-term agreement based on the Buy American compromise the two sides reached earlier this year, says Trade Minister Peter Van Loan.

The worst fears of Canadian exporters – getting frozen out by their trading partner – became a reality when the U.S. government included Buy American provisions in its $787-billion U.S. economic-stimulus legislation. The bill required all iron, steel and manufactured goods used in construction projects that received stimulus funding to be produced in the United States. […]

Van Loan declined to provide a timeline for a wider deal, noting that individual states will have to be convinced. “It’s too early to predict what the timeline would be, because there’s so many variables. You’re not just dealing with a national government, you’re dealing with specific states,” he said, adding that any deal likely would be separate from the North American Free Trade Agreement. Read more here.

(Gideon Rachman — Financial Times)

During the past two years, the world has experienced its deepest economic crisis since the 1930s. But – despite the fears of many experts – there has been no major outbreak of protectionism. Globalisation, the economic and political mega-trend of the past three decades, is still firmly in place.

However, when Barack Obama visited India recently, the US president warned his hosts that the debate about globalisation has re-opened in the west. The reasons for this are obvious. The western world has come out of the Great Recession in much worse shape than emerging powers. [...] Americans and Europeans are increasingly ill at ease with the “new world order” that emerged after the end of the cold war. As a consequence, a backlash against globalisation is forming – and it is likely to grow in strength. Read more here.

(Epoch Times – Joan Delaney)

Both the United States and Canada need to take action to avoid further erosion of the strained business relationship between the two countries, indicated the Canadian Chamber of Commerce in a new report.

Many of the benefits that came from eliminating tariff barriers between the two nations have gradually been lost due to regulatory differences and border inefficiencies, states the report.

“Canada and the U.S. have a long, vibrant history of cooperation and success, but it is clear that bilateral relations have drifted,” said Chamber President and CEO Perrin Beatty in a statement. “At a time when the global economy is undergoing significant shifts, it is imperative that both countries recognize the advantages of the integrated North American market.”

The report titled Strengthening Our Ties: Four Steps Toward a More Successful Canada-U.S. Partnership examines how U.S.-Canada relations have become strained in recent years and outlines four areas – trade, regulatory policies, border efficiency, and environment and energy security – where “notable progress” would potentially strengthen economic growth and prosperity for both nations.

Canada in particular needs to develop a “dedicated strategy for engagement” in the United States, with focus on highlighting the gains made from the North American Free Trade Agreement (NAFTA) and promoting free trade, advised the Canadian Chamber of Commerce.

The protectionist policies adopted by the United States to combat the financial crisis, such as the 2008 “buy American” requirement, ignored the integrated nature of North American supply chains and harmed businesses on both sides of the border, noted the organization in their report. Read more here.

(National Post – Tamsin McMahon)

A dispute over leather conference chairs for an Ohio courthouse has the potential to ignite a new Canada-U. S. trade war over the pervasive “Buy American” policy, a Canadian diplomat has warned.

Last month, Franklin County, Ohio, issued a bid for US$1.3-million worth of furniture for its new $100-million, seven-storey glass courthouse. Read more here.

(WTO)

The WTO Secretariat reported that during the period 1 January – 30 June 2010, the number of initiations of new anti-dumping investigations showed a 29% decrease compared with the corresponding period of 2009. The number of new measures applied also decreased during the first semester of 2010 when compared with the first half of 2009.

In particular, during January-June 2010, 19 WTO Members reported initiating a total of 69 new investigations, compared with 97 new investigations reported by 18 WTO Members for the corresponding period of 2009. A total of 14 Members reported applying 59 new anti-dumping measures during the first semester of 2010, with a decrease of 5% than the 62 new measures reported by 16 Members for the corresponding period of 2009. Fifteen new investigations were opened by developed Members and 10 out of 59 new final measures were applied by developed Members during the first half of 2010. This compares with 15 new investigations begun and 15 new measures applied by developed Members during the first half of 2009.

The Members reporting the highest number of new initiations during January-June 2010 were India, reporting 17 new initiations, followed by the European Union, reporting 8 new initiations, Argentina (7), Brazil and Israel (5 each). Other Members reporting initiations were Australia and China (4 each), Indonesia and Korea (3 each), Colombia, Thailand and the United States (2 each), and Canada, Chile, Jamaica, Mexico, Chinese Taipei, Turkey and Ukraine (1 each). These figures represented increases for India, the European Union, Brazil and Israel, and declines for Argentina, China, Indonesia, Colombia, the United States, Canada, Turkey and Ukraine. …

Read the complete press release, and link to the individual reports in the series here.

(Zhang Zhiping — Beijing Reviews)

In the middle of October, acting on a complaint from the United Steelworkers union, the Office of the U.S. Trade Representative initiated a Section 301 investigation into China’s clean energy policies and practices. The move has aroused strong opposition from China. China’s New Energy Association says the probe is neither well-founded nor responsible, and is typical trade protectionism.

New energy has recently become a driving force of economic development, most obviously in the two major greenhouse gas emitters—China and the United States. These two countries have huge potential for cooperation in this sector, the object of a significant consensus reached by their leaders.

If it has a direct effect, the probe will reduce exports of China’s new energy products, and will undermine U.S. efforts to develop new energy. Investment in China by U.S. new energy corporations will be hit hard. Read more here.