The World Trade Organization (WTO) has agreed to adopt a new mediation procedure to better help member countries settle their contentious differences over various food safety and animal-plant health matters.
The voluntary procedure (also referred to as “ad hoc consultations”), is aimed at helping prevent concerns about a range of food safety and health issues from becoming non-tariff barriers that hinder the smooth flow of trade between importers and exporters. Concerns of this sort may involve issues such as maximum pesticide residues in food to preventing the spread of pests such as fruit fly and diseases such as bird flu in agricultural products.
The new approach is, the WTO says, a “tool for resolving differences on specific trade concerns” and one that importantly avoids the expense and complication of a legal challenge under the organization’s formal dispute settlement procedure. The hope is also that tackling problems in this way will lead to speedier resolutions and better outcomes unaffected by committee politics and peer pressure.
The system is meant to bridge what is currently seen as a gap between first raising concerns about a particular issue to the WTO and having the matter escalate to the point of full-scale litigation. As such, it provides an opportunity for the two sides to voluntarily have their disagreement considered by an objective third-party: a mediator, usually the chair of the WTO’s Committee on Sanitary and Phytosanitary Measures (SPS).
Although the WTO already allows members to utilize the SPS Committee as a mediator, the new decision clearly spells out steps that the members concerned and the chair should follow, provided those countries agree to use the system.
The latest HSBC Global Connections Trade Forecast advises that global economic activity is expected to strengthen over the coming year, and increased momentum in the United States and China should lift Canada’s exports in the short run. In the longer term, Canada’s ability to access fast-growing emerging markets is dependent on an increase in energy infrastructure capacity.
The recent weakening of Canada’s world export share has led firms to begin diversifying their trade routes toward Mexico and broader Asia, the report says. By 2017, China will take the lead as the fastest-growing market for Canadian exports. By 2017, imports from India, Turkey, and China will show the strongest growth.
Click here to read the complete forecast.
The parliaments of Ukraine and the European Union ratified a landmark political and free trade deal on September 16.
“(Ukrainians) died for a place for Ukraine in Europe. Starting from World War II, no other nation has ever paid as high a price for the right to be European,” Ukrainian President Petro Poroshenko said as the European Parliament and Verkhovna Rada voted simultaneously.
The EU-Ukraine Deep and Comprehensive Free Trade Area (known simply as the “Association Agreement”) paves the way for a deeper political relationship between the EU and Ukraine and grants the country tariff-free access to the bloc’s giant market once the trade component is fully implemented. A consensus reached last week between the EU, Ukraine and Russia agreed to postpone this aspect of the deal until the end of 2015.
The reason for the delay is largely due to the fact that after years of systemic corruption and civil unrest, the struggling Ukrainian economy is far from being competitive at the moment. Some experts feared that had Ukraine suddenly been inundated with EU goods, the country could possibly collapse completely. Until the agreement comes into force, the EU will provide Ukraine with preferential terms in order to ensure that the EU market remains open to Ukrainian goods.
The postponement also gives Moscow and Kiev an opportunity to resolve various outstanding trade “concerns” over the deal. Russia – which also has a free trade arrangement with Ukraine – has called for extensive revision of the new agreement’s trade component in order to protect its own economy from being flooded with EU goods.
EU Trade Commissioner Karel De Gucht said the agreement “establishes a bond between Ukraine and the EU that will be very difficult, if not completely impossible, to undo.”
The deal still has to be ratified by all 28 EU member states to enter into force. Six countries have already done so, De Gucht said.
The Commercial Section of the Consulate General of the Republic of Korea (KOTRA) in conjunction with the Korea International Trade Association (KITA) is inviting businesses to attend an inaugural event discussing the various economic opportunities presented by the free trade agreement (CKFTA) signed earlier this year between Canada and South Korea.
Date & Time: Tuesday | September 23, 2014 | 2:30 p.m. to 7 p.m.
Location: Sheraton Hotel Airport Toronto (Ambrosia Room 2&3), 801 Dixon Rd., Toronto ON
Participants: 60 representatives from Korean Food and Household Product Businesses, 40 representatives from Canadian Retailers and distributors
Cost: Free (dinner and parking will be provided)
In addition to being a chance to network with potentially useful contacts, the forum will consist of a series of presentations from leading trade experts and professionals specializing in how best to leverage advantage from the CKFTA for the benefit of both Canadian and Korean businesses.
Click here for complete details and registration form.
Vice President of Product Management and Solutions Consulting at Amber Road Inc., Ty Bordner delivers some truisms about the essential role played by trade compliance in supply chain management efficiency and illustrates how it can both positively and negatively affect the bottom line of a company’s trading activities in terms of time and cost.
Compliance is, Bordner says, “needed to deliver goods in a timely manner; maximize supply chain efficiencies; lower costs and increase revenues; decrease cycle times and lower inventory levels.”
In addition to potentially expensive fines and penalties, other problems that could be induced by compliance, or rather more as the consequence of non-compliance, include the needless postponement of shipments not meeting customs pre-shipping data submission requirements and the myriad of costly delays associated with the physical examination of goods if accurate shipment information is not available at the time it’s required to be on hand.
Bordner’s solution, quite unsurprisingly, is an approach to achieving compliance that largely focuses on greater automation of the documentation process to ensure that it is both “consistent and informative” in every respect, from minimizing re-keying errors at point of input to generating more complete and auditable records. In addition to many internal benefits such as ability to leverage a single view of product information throughout the supply chain, Bordner contends that implementation of an automated system will effectively reduce the potential for inspections and the concomitant risk of attracting penalties for non-compliance.
Click here to read the complete article in Supply & Demand Chain Executive magazine.
U.S. Customs and Border Protection (CBP) published a fact sheet last week indicating that applications from exporters for participation in the Customs-Trade Partnership Against Terrorism (C-TPAT) will now be accepted. The effort is seen as bolstering the administration’s National Export Initiative to facilitate export cargo shipments.
CBP has been working towards opening the program to exporters since 2012 when it conducted test validations for an Exporter pilot and in July of this year released a list of eligibility requirements. As stated at the time, CBP felt that “developing an export component for C-TPAT would further enhance both the program and its relationship with other mutually recognized Foreign Customs administrations.”
The fact sheet outlines a number of benefits exporters who have been certified, validated and are in good standing can be expected to gain from participating in C-TPAT including, among other things: mutual recognition arrangements (heightened facilitation from foreign partners); reduced examination rates; and time priority processing.
Negotiations between 12 nations drafting the Trans-Pacific Partnership (TPP) made “important progress” following 10 days of intensive meetings in Hanoi, according to a press release earlier this week from the Office of the U.S. Trade Representative (USTR).
“We have committed to a focused work plan, which will allow us to boost momentum and make continued progress,” Barbara Weisel, U.S. Chief Negotiator for TPP, is quoted as saying. “All countries involved want to reach a conclusion to unlock the enormous opportunity TPP represents.”
Wiesel elaborated on the specifics of the progress made in an interview with Bloomberg, which primarily concerned establishing rules for state-owned enterprises. “We are not done and further work is needed, but we have made a significant step forward on some of the most challenging provisions in the SOE text,” Weisel said. “We want to negotiate this chapter in a way that addresses the real sensitivities that countries have without undermining the obligations that we are seeking to negotiate.”
Despite the progress made in this critical area, significant obstacles still remain around intellectual property protection, the environment, and various specific market access issues, including agriculture.
A solution to the impasse between the U.S. and Japan over proposed tariff elimination for certain key agricultural products remains elusive despite two days of talks recently in Tokyo. The failure to make any significant headway on closing the “considerable gaps” remaining between the two countries regarding special exemptions for certain agricultural goods puts in doubt the prospect of striking a bilateral deal by the end of this month, seen as vital before all TPP negotiating members can reach an agreement.
The main focus of the discussions has been the extent to which Japan should cut tariffs on beef and pork – one of Tokyo’s five sensitive agricultural product categories – and safeguard measures it seeks to introduce should imports of certain farm products surge under the Pacific-region trade agreement.
A new report called “Leveraging Trade Agreements to Succeed in Global Markets” published by the Canadian Agri-Food Policy Institute (CAPI) states that Canada’s agri-food sector is competing in an increasingly complex trade world where significant export success depends on the timely negotiation of preferential trade access and achieving new ways to reach consumers in foreign markets.
“Countries are competing with each other to be the first to secure free or at least preferential access to the world’s major markets,” states the report’s authors. Two examples make the point. The bilateral agreement between the United States and South Korea has been costly for Canada, which has not secured such a deal. On the other hand, Canada and the EU have advanced an agreement well before any such EU-US arrangement.
The paper portrays how these situations are conferring distinct comparative trade advantages (the Canada-EU case) and disadvantages (the US-South Korea deal) and this affects export strategies. “In this environment of competitive trade liberalization,” state the authors, “firms need to consider the most cost-effective way of reaching consumers in foreign markets”.
Opportunities abound for Canada’s agri-food sector in this new trade world, but the discussion paper advances the idea that “trade barrier audits” are required to assess the breadth of issues facing current and prospective exporters and the marketing hurdles. The paper notes that trade agreements, while important, are only one part of a series of integrated steps that must be taken to achieve export success. Firms must also overcome often restrictive non-tariff barriers, other regulatory requirements and stiffening supply chain standards as well as fully comprehending diverse consumer market niches to achieve immediate and longer-term success.
On September 9, 2014 the Animal and Plant Health Inspection Service (APHIS) issued a proposed rule to amend its procedures for setting fruit and vegetable import regulations. APHIS is proposing to expand the use of a notice-based process for the approval of all new fruit and vegetable imports into the United States and for the interstate movement of fruits and vegetables from Hawaii and the U.S. territories. The proposed rule would also expand the list of general phytosanitary measures, also referred to as performance standards, which could be used to approve the importation or interstate movement of fruits and vegetables.
Under the proposed notice-based process, amendments to the regulations codified in 7 CFR 318.13 and 319.56 would no longer be needed each time APHIS approved a new fruit or vegetable import. Instead, the approval of fruit and vegetable imports would be accomplished via the publication of notices in the Federal Register. APHIS claims that the proposed changes will allow it to be more responsive to evolving pest situations both in the United States and in exporting countries while decreasing the time it takes to approve fruits and vegetables that can be safely imported into the United States.
APHIS estimates that expanded use of the notice-based process would significantly shorten the amount of time it takes to approve fruits and vegetables for import from 18 to 24 months to 5 to 12 months, on average. The proposed rule would also establish a procedure under which APHIS would be able to order emergency import bans and restrict the importation of specified goods through a Federal Register notice. The commodity clearance process at ports of entry would not be altered by the proposed changes.
There is a 60-day comment period for this proposed rule. Stakeholders must therefore make submissions by November 10, 2014.
The Organization of Women in International Trade (OWIT-Toronto) invites you to an upcoming seminar entitled: A Personal Reflection on Doing Business in Hong Kong: Lessons on Intellectual Property Protection from a Pioneer.
One of the biggest concerns of companies doing – or planning to do – business in China is Intellectual Property protection. Join OWIT-Toronto on September 18 to hear from one of the top IP professionals in Asia. Ella Cheong, a prominent solicitor in Hong Kong and Beijing (and one of a few on the Roll of Honour of the Law Society of Hong Kong) is a pioneer in the legal field and has won awards and accolades around the world. Involved in IP practice for many years, at this exclusive event she will give attendees the inside track on:
- Hong Kong Special Administrative Region (SAR) – its colonial past and present;
- Doing business in Hong Kong; and
- The protection of IP rights in China.
Date: Thursday | September 18, 2014 Time: 5.00 pm – 7.30 pm
Location: Toronto Board of Trade | 77 Adelaide St. W., Toronto, ON M5X 1C1
Fee: OWIT members: $25 (plus HST); non-members: $40 (plus HST)
On a related note, The Globe & Mail yesterday published an article summarizing the findings of an annual survey by the Asia Pacific Foundation of Canada indicating that for Canadian firms doing business in China, having their intellectual property stolen remains a key concern. About 11 percent of respondents indicated they had suffered violations of their intellectual property rights and nearly one-third said the country’s IPR “rules and practices” still present a major hurdle to doing business in China.
U.S. Customs and Border Protection Agency (CBP) has released its August 2014 ACE Monthly Trade Update. This month’s update about developments in the Automated Commercial Environment (ACE) includes information on: the ACE Portal’s In-Bond Arrival and Export capability enhancement, the ESM-7025 CBP Forms 28, 29, 4647 Status Report, the upcoming ACE eBond functionality, plus much more.
On March 14, 2013, the U.S. Census Bureau (Census) published a Final Rule amending the Foreign Trade Regulations (FTR) contained in 15 CFR Part 30. The final rule established the requirement, effective April 5, 2014, for mandatory filing of export information through the Automated Export System (AES) or through AESDirect for all shipments of used self-propelled vehicles and temporary exports.
U.S. Customs and Border Protection (CBP) established a 180 day Informed Compliance period, effective from April 5, 2014 through October 2, 2014 “to educate the trade the trade on the new requirements.”
Once the informed Compliance period ends as scheduled on October 2, 2014, exporters should be aware that penalties may be issued for violations of the new FTR requirements such as:
- New EEI data elements – Ultimate Consignee Type and License Value
- Removal of the EEI filing exemptions for some temporary imports and exports
- Reduction of the post-departure filing time frame from ten calendar days to five calendar days
- Expanded EEI data element – Foreign Trade Zone (FTZ) Identifier
Click here for additional information on the FTR.
Nina Easton at Fortune asks why leading Washington liberals and labour-backed protectionists are working so hard to block pending free trade deals with Europe and Asia when it is trade that is driving post-recession economic gains and job growth in unionized, Democratic strongholds – in other words, America’s big cities. In the first two years of recovery, exports grew at five times the rate of output in America’s 100 largest metro areas – “bastions of blue voters” – and were responsible for more than half of those cities’ economic recovery, according to data collected by J.P. Morgan Asset Management. Click here to read the complete article.
Houston lawyer and FCPA expert Thomas Fox puts a compliance spin on five key lessons drawn from an article in this month’s Harvard Business Review entitled “What’s Your Language Strategy?” by Tsedal Neely and Robert Steven Kaplan.
The authors believe that problems revolve around potential “blind spots regarding language.” They write that company leaders pay too little attention to the role of language when “hiring, training, assessing and promoting employees. This can lead to miscommunication and friction, especially among team members who collaborate across borders.” While the authors point that a company’s competitiveness that may suffer, I would suggest that a company’s compliance function could also suffer.
Fox concludes by saying the “authors’ piece is chock full of ideas, insights and issues for a Chief Compliance Officer (CCO) or compliance practitioner.” Click here to read his blog post.
Late last week, the Obama administration and the Harper Government jointly released the terms of a new cross-border regulatory partnership between the U.S. and Canada aimed at reducing the cost of doing business with each other.
The U.S.-Canada Regulatory Cooperation Council (RCC) Joint Forward Plan is a set of agreements to streamline rules in some areas, reduce duplicative requirements and allow regulators to share information. “This kind of international cooperation on regulations between the United States and Canada will help eliminate barriers to doing business in the United States or with U.S. companies, grow the economy, and create jobs,” said Howard Shelanski, administrator of the Office of Information and Regulatory Affairs.
In a release from the Office of Management and Budget (OMB), Shelanski called the accord “a significant pivot point” in cooperative efforts between the two governments that would institutionalize the way regulators can work together. A release from the Prime Minister’s Office said the plan “sets the stage for fundamental changes in the way regulatory departments and agencies in both countries work together, making it easier for businesses to operate in both countries.”
The goal is to have bilateral regulatory cooperation across a broad range of issues, entrenched within the regular planning and operational activities of regulatory agencies in both countries. Areas of focus, among others, will include the following: Food safety; Pharmaceutical and Biological Products; Plant and Animal Health; Aviation Regulations; Marine Safety and Security; Energy Efficiency Standards; Transportation of Dangerous Goods; Motor Vehicle Safety Standards; Chemicals Management; Crop protection products; Medical Devices; and Toy Safety.
In the upcoming three months, the RCC will hold a conference in Washington D.C. to obtain stakeholder and government agency input. The RCC indicates it will regularly provide status and implementation updates to the public.