A new report released this week by the non-partisan think tank Atlantic Council contends that the proposed Trans-Pacific Partnership (TPP) has the potential to catapult the United States, Latin American partners, and Asia-Pacific countries into a new era of geopolitical cooperation and commercial growth.

The status quo is not an option for ensuring continued economic growth in the United States, and other TPP member countries in a fast-changing global economy, the report says. The failure of TPP would bear serious economic and strategic consequences for the United States and Latin America, it maintains.

Bridging the Pacific: The Americas’ New Economic Frontier?, written by Atlantic Council consultant Peter Rashish, proposes nine concrete steps to promote the Asia-Pacific trade agenda and ensure the United States, and its fastest-growing trade partner, Latin America, benefit from an ambitious TPP agreement. Among them:

  • President Obama should publicly champion his international trade agenda and engage with Capitol Hill to explain the merits of an Asia-Pacific agreement.
  • TPP countries should advocate forcefully to ensure the agreement improves and streamlines the confusing current collection of overlapping bilateral deals.
  • Colombia, Costa Rica, Panama, and others in Latin America who wish to join TPP should be welcomed into the talks to create more geographical balance.
  • The TPP negotiating process should be made more transparent without sacrificing confidentiality, and its goals should be communicated more clearly and effectively to the public.

“The outcome of the ongoing TPP negotiations is potentially dynamic, but crucially dependent on U.S. leadership to conclude robust talks that have the support of the U.S. public,” says Rashish. “If policymakers take clear and concrete steps to negotiate an ambitious agreement and explain its benefits, the U.S. will expand its leadership role and use TPP as a vehicle for defending high levels of consumer, health, and environmental protections and standards.”

Note: Skip ahead to 21:00 in the video for the start of the discussion.

 

Australia is the country best positioned for e-commerce according to a recently published study that ranks G20 nations on the degree to which they encourage (or conversely, discourage) Internet enabled trade.
e-Commerce Chart
The  G20 e-Trade Readiness Index compiled by eBay and The Economist intelligence unit comprises more than 40 indicators across five categories: investment climate, internet environment, international trading environment, regulatory and legal framework, and the environment for e-payments.

In second place was the United States, followed by South Korea, Britain and Japan. Canada ranked seventh on the list (it did however rank first in terms of e-payments).

The study found that despite – or perhaps because of the legendary “tyranny of distance” – Australia topped the list owing to its combination of affordable internet access, a well-developed regulatory framework, high smartphone penetration and high e-payments adoption.

“The index reinforces the need for business to work with industry, government and regulators to reduce barriers limiting the growth of cross-border trade,” said Tod Cohen, eBay’s head of government relations.

“Small and medium sized businesses are continuing to integrate information and communications technology into their business models – and they need the global policies to adapt and adjust to this new global, data driven market,” the report says. It suggests that the potential for “a new wave of cross-border commercial and economic opportunity for the vast majority of businesses the world over” should be an important consideration for government policymakers looking for new economic growth.

 

After weeks of sending mixed messages, the government of India now appears most likely to block the World Trade Organization’s (WTO) eagerly-awaited Trade Facilitation Agreement (TFA) in a bid to safeguard its interest on food stockpiling and grain subsidies. A cabinet meeting chaired by newly elected Prime Minister Narendra Modi re-scheduled for Thursday is expected to definitively spell out India’s stance on the contentious issue.
Roadblock2
In the meantime, press reports cite senior government officials as saying India will not support a trade protocol ahead of a July 31 deadline unless concerns about its food subsidies are met. “We have no problem with this trade facilitation, but unless they agree with us we will not allow it to happen,” one source told the Reuters news agency. “They want to cap our subsidies, which are just a fraction of what the developed countries are giving to their rich farmers.”

India has come under intense pressure from the United States and other developed countries to drop its demands ahead of the WTO meeting in Geneva on Thursday, where member states hope to adopt the protocol — a key step before the TFA is ratified.

As well as causing concern abroad, New Delhi’s tough stance has been criticized by a leading industry group in India and surprised those who expected the pro-business Modi to radically slash the subsidy program. The position however is consistent with that of Modi’s party while in opposition when it was fiercely critical of the agreement, saying India should not have settled for anything less than a total exemption for its food security program.

India has a history of resorting to brinkmanship to get its way at the WTO, including in Bali last December where hardball tactics secured a four-year respite for its food subsidies. If India’s refusal to back the protocol derails the trade facilitation deal, critics say, it could lose the temporary reprieve and face punitive sanctions.

Related: Global Trade Facilitation Agreement Running into Trouble Ahead of Deadline?

 

New developments in active safety technology have the potential to dramatically transform the trucking industry, perhaps even culminating someday in driverless trucks. As a step in that direction, Silicon Valley startup Peloton Technology has developed a vehicle-to-vehicle (V2V) communication system it hopes to begin deploying on a large scale by next year. By tethering two trucks together — “platooning” as it is known — using advanced sensing intercommunications, Peleton says they can improve safety while cutting costs for thousands of trucks on the road.

Platooning simply means one truck or tractor-trailer leading another in a “close-formation platoon” with a 36-ft gap between them, the two connected and that gap managed electronically. The system reduces the wind drag on both trucks, and could therefore save trucking companies millions of dollars in fuel every year. Peloton’s system consists of radar sensors, a wireless communications system, and computers connected to each truck’s central computer. Video screens in both cabs show the drivers views of blind spots around the two vehicles.

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Customs Self-Assessment Program Now Open to Non-Resident Importers

Canada and the United States are delivering on key Beyond the Border Action Plan commitments related to their joint Trusted Trader programs, according to a statement released yesterday by the Canada Border Services Agency (CBSA).
Trust
Trusted traders importing goods into Canada can now apply for additional benefits under the “platinum” version of the Customs Self-Assessment program. CSA-Platinum is available to CSA importers who voluntarily demonstrate that their business systems, internal controls and self-testing processes are effective and reliable at ensuring trade compliance.

The CSA program offers low-risk, pre-approved companies streamlined clearance of eligible goods when using a CSA authorized importer, a CSA authorized carrier and an approved commercial driver. Currently, there are 95 members in the CSA importer program that account for US $89.3 billion in annual trade.

The new CSA-Platinum benefit aims to assist CSA importers attain the highest rate of compliance with the CBSA’s trade programs since importers will be directly responsible for verification and testing of their trade program compliance. By doing so, Platinum members are subject to reduced trade compliance verifications by the CBSA, allowing the Agency to invest resources in areas of higher or unknown risk.

Non-resident importers in the U.S. will also now be eligible to apply to the CSA importer program. Previously, only importers residing in Canada or, in the case of corporations who had their head office in Canada or operated a branch office in Canada, were eligible to participate in the CSA program.

Additionally, the CBSA has launched a new online Trusted Trader Portal that enables companies to apply for membership in the Partners in Protection (PIP) program, and allows existing members to maintain their Trusted Trader membership.

The portal will serve as the foundation for future phases of Trusted Trader enhancements, including the streamlined exchange of program information between the Trusted Trader and the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) portals.

 

For the past eight years, manufacturers in Canada have been fighting an uphill battle. From the downturn of the U.S. economy and the rising Canadian dollar, to skilled labour challenges and off-shoring trends – manufacturing here has faced tough headwinds. Today, times are finally moving in a direction that helps rather than hinders manufacturers, according to KPMG’s Canadian Manufacturing Outlook 2014, released yesterday.
KPMG Manufacutring Outlook 2014
“Canadian companies have the opportunity to respond to the growing demand among their customer base for more and better products delivered faster, and gain competitive advantage by investing in R&D and increasing speed to market,” the report says.

The report reveals that Canadian companies are increasingly turning away from off-shoring as a cost-saving solution. In 2014, only 14 percent of manufacturers planned to source from China, compared with 31 percent in 2013 – likewise, plans to source from India were at three percent this year compared to 12 percent last year. Rising energy and transportation costs, along with added pressure on lead times and increased inflation in China have made Canada and the US more competitive as sourcing nations. Reasonable energy costs and the quality and consistency of products offered here at home have also driven Canadian manufacturers to look on-shore for their sourcing strategies.

“The manufacturing sector in Canada has undergone a period of survival of the fittest over the past decade. The strongest companies having withstood tough times are well positioned to compete locally and globally,” says KPMG’s Laurent Giguère, one of the report’s co-authors.  “Those manufacturers who are still around are resilient – they have some tailwinds because we have a stronger U.S. dollar that is favouring our exports and Canadian manufacturers, 78 percent of those exports are to the U.S.”

This shift to North American sourcing, along with the strengthening U.S. economy and a dollar that is working to their advantage, allows Canadian companies to move past survival mode and focus their efforts on increasing revenue – the top priority for 81 percent of manufacturers. Earlier this year, the sector experienced its highest monthly growth in Canada since 2008, with revenue increasing 1.4 percent across the sector. Given the current economic climate, the time is right for manufacturing companies to tap into current trends and seize industry opportunities to ensure continued growth and future success.

 

In a joint statement issued last week, industry associations from around the world representing a multitude of sectors urged G20 trade ministers to address the rapidly growing challenge of “forced localization” – a harmful protectionist trend they contend is threatening to undermine the very foundation of a successful global trade market.
Protectionism
So-called “forced localization” policies seek to impose location-specific conditions on global production, procurement, investment, and data flows. They are non-tariff barriers designed to protect, favour, or stimulate domestic manufacturing industries, service providers, and/or intellectual property (IP) providers at the expense of foreign competitors, particularly those operating in innovative industries.

The Peterson Institute for International Economics estimates that, since 2009 alone, local content requirements implemented by various countries have had a total negative impact of more than $3 trillion on global trade.

The trade groups said the world’s largest advanced and emerging economies must “resist measures that isolate their own markets through forced localization policies and actively work to encourage other governments to do likewise.”

“The rise of forced localization policies, notably in important sectors such as manufacturing, services and information and communication technologies (ICT), marks a troubling shift in global trade and economic policies,” the letter said.

According to the National Association of Manufacturers, “Unless policymakers raise forced localization policies as a global economic priority and agree to take united action to address it, the impact on the U.S. economy and economies across the globe will be substantial.”

 

The B20 summit of business leaders wrapped up last week in Sydney with the presentation of 20 “mutually reinforcing recommendations” they say could, if enacted, add $3.4 trillion to global gross domestic product and create millions of jobs within five years.

New private sector infrastructure investment was a major focus, with business urging governments to create lists of bankable projects overseen by independent authorities. Free trade, an end to protectionist policies, the elimination of trade barriers, more business-friendly banking regulations and labour market deregulation were also key themes.

“We are asking governments to remove barriers and impediments to growth,” B20 Chairman Richard Goyder said.

Attended by about 300 business leaders, the B20 Summit preceded the G20 trade ministers’ meeting which started on Saturday, also in Sydney. The B20 was set up in 2010 to give policy recommendations on behalf of the international business community to the G20 bloc of advanced and developing countries. Like the World Economic Forum, the B20 comprises leaders and CEOs from the world’s major corporations, as well as major industry group representatives, such as the European Round Table of Industrialists (ERT) and the International Chamber of Commerce (ICC), a CEO advisory group to the G20. However, the B20 also includes representatives from international organizations, such as the WTO and OECD.

The business leaders want the G20 to tackle what they say is a $57 trillion shortfall in global infrastructure and are pressing for changes to funding, trade and corruption rules they say would help big projects move ahead. G20 nations were also urged to reform their domestic supply chains to make trade easier, and use imported materials rather than more expensive locally produced inputs as part of an efficiency-boosting “made in the world” approach to manufacturing.

Adopting all their recommendations would enable the G20 to achieve its goal of lifting world economic growth by 2 percent over five years and would create 50 million jobs, they said.

Click here for a series of videos from the three day B20 summit.

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G20 trade ministers reaffirmed Saturday their commitment to free trade as a central driver of growth and to streamline the flow of goods through borders.

The ministers met in Sydney for the latest round of talks among the world’s leading economies, with Australia’s Trade and Investment Minister Andrew Robb saying all nations were still committed to the Trade Facilitation Agreement (TFA) struck by World Trade organization (WTO) members last December in Bali.
G20-2014
The G20 membership comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade.

In his opening remarks to the meeting Robb said that “trade and investment has become of great interest to replace, in many cases, growth that has been driven in the last few years by debt finance government spending.” Trade ministers need to create an enabling environment for the private sector that allows them to get on with growing their businesses by improving their competitive position and much of this can be encouraged by changes each make to its own domestic policies, he said.

“We spend a lot of time as trade ministers talking about what we can do collectively or between one another or within regional groupings but when you think about it, so much of the benefit of any agreement, is in the end, what structural adjustment it really forces on our own countries.”

Business leaders at a B20 summit in Sydney earlier this week made a series of recommendations on structural reforms and free trade that could boost global growth by up to $3.4 trillion and create millions of jobs. They included a call for the free flow of goods, services, labour and capital, an effective and transparent regulatory framework, as well as structural reforms that would boost trade and lift infrastructure investment.

 

Enthusiasm was high when ministers from nearly 160 countries of the World Trade Organization (WTO) met late last year in Bali, Indonesia and managed to reach a trade facilitation deal aimed at making it easier to move goods around the world by cutting red tape and streamlining customs procedures. India GlobeDespite the narrow limitations of its scope, the International Chamber of Commerce still estimated the Trade Facilitation Agreement (TFA) could boost global exports by $1 trillion and create 18 million jobs in the developing world.

“We have put the world back into the World Trade Organization. For the first time in our history, the WTO has truly delivered,” then WTO Director-General Roberto Azevedo boasted after successfully concluding the only global agreement made since the trade organization was established in 1995.

Of course, when it comes to actually implementing the technical details of such a complex multilateral deal, things are never quite that facile. As they say, there’s many a slip ‘twixt the cup and the lip; or in this case, the deadline to finalize the protocol. Although progress post-Bali has been slow, the TFA is meant to be formally adopted by WTO members by the end of July and scheduled to come into force by July 31, 2015.

As a condition of support for the TFA, India extracted promises from other WTO members that its ongoing concerns related to food security and agricultural subsidies would be addressed. The Indian government routinely pays its farmers above-market prices to create enormous stockpiles of food that millions of its poor depend on, an arrangement that puts it at risk of breaching current WTO rules on farm subsidies.

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