Despite having aimed to reach a conclusion by the end of the year on expansion of the World Trade Organization’s 17-year-old Information Technology Agreement (ITA), negotiations in Geneva collapsed late last week, reportedly over a deadlock between China and South Korea concerning liquid crystal display (LCD) screens.
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Hopes for updating the stalled agreement had been lifted tremendously last month following a breakthrough compromise at the APEC forum between the U.S. and China over the scope of the changes to be included and exemptions that would be allowed.

Failure of trade diplomats to conclude a deal that would reduce global tariffs on an estimated $1 trillion in high-tech goods by up to $15 billion a year seems unlikely to be the last word on the matter however. “The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement,” said WTO Director General Roberto Azevêdo, adding that “unfortunately it has not been possible to finalize the negotiations this week.”

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Findings contained in a report issued recently by the Canadian Automotive Partnership Council (CAPC) point to a number of “worrying trends” in the industry that could spell dire trouble for the future if left unchecked.

Prepared by CAPC’s Manufacturing Competitiveness Committee, which is co-chaired by Ray Tanguay, Toyota Motor Manufacturing Canada and Toyota Canada Chair, and Rob Wildeboer, Executive Chairman of Martinrea International, the position paper entitled “A Call for Action: II” represents the collaborative effort of Canadian automakers, parts manufacturers and labour, and provides what the CPAC describes as “a blueprint for sustaining a competitive automotive industry in Canada.”

The paper states that of the estimated 3.5 million units of assembly capacity that will be added to the North American auto industry between 2011 and 2015, Canada will receive just 3% (110,000 units of capacity) despite having 16% of production and 10% of sales.  The U.S. is poised to receive 63% of new capacity and Mexico will gain 34%.  CPAC notes that over the past decade Canada “has gone from being one of the lower cost places to build vehicles in the world, to one of the more expensive.”

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On Monday, Finance Minister Joe Oliver announced the five-year term appointments of Rose Ritcey and Peter Burn as permanent members of the Canadian International Trade Tribunal (CITT). “Their collective experience in research, public policy and advising government on various trade issues makes them strong additions to the Tribunal,” said the minister.
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Ms. Ritcey was the Special Advisor to the Chairperson of the CITT, contributing to the tribunal’s restructuring and the creation of a development program for trade remedy investigations staff. An MBA from Dalsousie, Ritcey previously held various research roles within the tribunal and also worked at the Department of Finance in the International Trade and Finance Branch.

Mr. Burn is Counsel in the Public Policy and Regulation Group for Dentons Canada LLP in Ottawa. A member of the Ontario bar since 1981, Burn has been an international trade and investment counselor to governments, corporations, industry associations and multilateral organizations, with experience conducting business in Latin American and Asian markets while serving as a senior executive with Bell Canada International.

The CITT provides Canadian and international businesses with access to fair, transparent and timely processes for the investigation of trade remedy cases and complaints concerning federal government procurement and for the adjudication of appeals on customs and excise matters. At the request of the Government, the CITT also provides advice on tariff, trade, commercial and economic matters.

 

The Secretary General of the World Customs Organization (WCO), Japan’s Kunio Mikuriya, recently announced that organization will be dedicated in the coming year to promoting Coordinated Border Management under the slogan “Coordinated Border Management – An inclusive approach for connecting stakeholders.”
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“It behoves all border agencies to work together for the common good despite varying regulatory mandates. With this in mind, the WCO and Customs administrations have long supported the notion of Coordinated Border Management (CBM), which aims to enhance the effectiveness and efficiency of the multiple public service functions undertaken at borders,” said Mikuriya.

The term CBM refers to a cooperative approach by border control agencies, both at the national and international level, in the context of seeking greater efficiencies over managing trade and travel flows, while maintaining a balance with compliance requirements.

CBM can result in more effective service delivery, less duplication, cost-savings through economies of scale, enhanced risk management with fewer but better targeted interventions, cheaper transport costs, less waiting times, lower infrastructure improvement costs, more wider sharing of information and intelligence, and strengthened connectivity between all border stakeholders.

The 180 WCO-member countries will have the opportunity to promote the enhanced coordination practices and mechanisms that they have implemented within their administrations and with other Customs administrations and government agencies, as well as with economic operators involved in cross-border trade.

 

The Manitoba government last week introduced legislation that would create a new special planning area for CentrePort Canada to speed up development approvals, help attract new private investment and create jobs while ensuring local landowners and residents continue to participate in a public review process for planning and development, Premier Greg Selinger announced.

The proposed planning amendment act would create a new special planning area (SPA) for CentrePort land located within the Rural Municipality (RM) of Rosser. It would also establish a new special planning authority that would hold public hearings and provide advice and recommendations to the minister of municipal government on planning bylaws, amendments, subdivision applications and other development within the SPA.

“The proposed new special planning area and authority would provide CentrePort with another key differentiator when it comes to selling the inland port to potential investors,” said Diane Gray, president and CEO, CentrePort Canada Inc. “This single-window approach will result in more timely approvals and give us a competitive edge in attracting new and early private investment decisions. It will also provide business with improved cost and planning certainty, and provide the community with an accountable and transparent planning process.”

The creation of a special planning area is a key part of the Manitoba government’s strategy to support the ongoing development of CentrePort Canada, the premier said. He noted other important provincial investments include the construction of CentrePort Canada Way and its planned extension to bypass Headingley, the extension of water and sewer services to CentrePort lands, and the development of the new CentrePort Canada Rail Park.

 

Just over two months following its signing on September 22, the Korean National Assembly last week ratified the free trade agreement with Canada (CKFTA), thereby officially putting implementation of the bilateral trade deal into motion for the beginning of next year. On December 5, the Canada Border Services Agency (CBSA) issued Customs Notice 14-030 announcing that the CKFTA will become effective on January 1, 2015.
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The CBSA notice states that, “With the exception of a few agricultural goods, the CKFTA will essentially eliminate the customs duties on all imports from Korea, either immediately upon implementation of the agreement, or through a tariff phase-out.”

Considered by some as a key foothold to Canada’s trade strategy in the Asia-Pacific region, the Harper government has touted the deal with South Korea as “an ideal partnership” and a “landmark agreement” that will bring “immeasurable benefits” to both countries.

According to figures from the department of Foreign Affairs, Trade, and Development, Canada exported $3.5 billion in goods and merchandise to South Korea last year and imported $7.33 billion in goods. Canada’s top exports are industrial goods; metals and minerals; agriculture; forestry and wood products; fish and seafood. In addition to leveling the playing field with foreign competitors, the government claims the trade deal will boost Canada’s annual GDP by $1.7 billion and increase annual exports to the S.E. Asian country of 50 million by over 30 percent.

Announcement of the CKFTA’s implementation coincided with a trade mission from Manitoba headed up by World Trade Centre Winnipeg and CentrePort Canada Inc. The two groups have been formulating a market access strategy since last spring to explore and develop new opportunities for Manitoba companies with Canada’s seventh largest trade partner.

 

Meanwhile, back in the world of reality… Last week, Transatlantic Trade and Investment Partnership (TTIP) negotiators and experts were questioned on safeguards for labour standards and public services, and how a TTIP deal could help to create high-quality jobs, at a joint public hearing held by the Employment and International Trade committees.
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During the discussion, Employment and International Trade MEPs voiced concerns about the possible privatization of public services and deterioration of labour standards and demanded concrete figures on possible job creation – or losses – due to the trade agreement.

The EU is looking for the trade deal to have a positive impact on Trans-Atlantic economy and create new jobs in addition to the 5 million that already depend on commerce with the USA. Acting chair of the Employment Committee Marita Ulskvog, said “There are four elephants in room: ISDS [investor-to-state dispute settlement]; the status of public services; whether there will be any new jobs; and if so what kind of jobs will be created.” Extensive briefing notes provided by the Commission — which, unlike the inflammatory rhetoric of anti-TTIP campaigners, are actually fact-based — attempt to address many of the concerns surrounding these hot-button issues.

A video of the 2½-hour long event can be viewed here. Note that the embedded media file struggles to load in both Firefox and Chrome browsers, but runs without difficulty in Internet Explorer (this could just be a glitch with our equipment — ymmv).

 

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Advocates of trade liberalization and greater economic integration between countries (though something of a misnomer, routinely described as “globalization”), often contemptuously dismiss critics of such ideas — most usually from the environmental, social justice and labour movements, but not exclusively those groups by any means — with a range of colourful expressions, frequently involving disordered states of mind, it has to be said. Quite often they are accused of being nothing but “conspiracy theorists” or “fantasists” and it is generally assumed they are “leftists” if not even something far more extreme in that direction. Of course, none of these things are necessarily true and are far from always being the case — but in some instances however, if it looks like a duck…

The Centre for Research on Globalization (CRG) is a non-profit organization based in Montreal that was founded in 2001 by Michel Chossudovsky, a tenured professor of economics at the University of Ottawa. Despite the organization’s academic-sounding name and purporting to be a source of scholarly analysis, arguably it could more accurately be described as a clearinghouse of polemics involving a range of highly dubious conspiracy theories that stray far afield from its stated mission of “curbing the tide of globalization and disarming the new world order” (e.g., 9/11, HAARP, chemtrails, vaccines, GMOs, to name but a few). GRC appears quite happy to source contributions from practically anyone who seems even vaguely aligned with its anti-capitalist ideology or anti-American, anti-Globalization agenda.

Which brings us to an article GRC published last week by Peter Koenig (more about him later) that provocatively asks whether the EU will become a “U.S. colony” if the “nefarious” (his word, not ours) Transatlantic Trade and Investment Partnership (TTIP) is ever signed. The strident rhetoric actually begins right off the top before encountering even the first line of the piece, with the title asserting that TTIP would “abolish Europe’s sovereignty” and then follows up with another question asking whether “Madame Merkel” is “betraying the EU” and “endangering the lives of future generations” by pushing the trade deal. Strong words and scary stuff indeed!

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While news earlier this week that German Vice Chancellor Sigmar Gabriel has backed down from his prior opposition to the Comprehensive Economic and Trade Agreement (CETA) over the issue of the controversial investor-state dispute settlement (ISDS) mechanism was a positive development for proponents of the trade deal, it is not the only hurdle still facing its ratification.
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As was mentioned here last September, there exists an ongoing legal argument within the European Union over how such trade deals should be approved and if a simple majority in the EU Parliament is required, or whether ratification by all 28 member states is also needed. This potential obstacle was brought to the attention of Globe & Mail readers in an article last Monday about an “obscure case” concerning a similar trade deal between the EU and Singapore.

The case in question is actually a request for an opinion from the EU Court of Justice that was made earlier this year by former EU Trade Commissioner Karl De Gucht in order to hopefully resolve the ongoing debate between the EU Commission and the EU Council (comprised of the heads of State or government of the member states) over whether the Commission has the power (within its “exclusive competence”) under terms of the Treaty on the Functioning of the European Union (more usually referred to as the Lisbon Treaty) to negotiate and conclude free trade agreements, among other things.

The article notes that the EU-Singapore trade deal also “contains a similar investment chapter to CETA, and both include a mechanism for settling disputes between foreign investors and states” and points out that should the Court rule against the Commission in the Singapore matter, CETA “could be held up for years as politicians in each EU country debate the pros and cons of the agreements.” A judgment from the Court is expected to take between six months to a year and ratification seems unlikely until such time as it has been rendered.

 

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Much Ado About GMOs

On December 6, 2014, in International Trade, by admin

Genetically modified organisms (GMOs) are one of the favourite bogeymen deployed by opponents of free trade deals like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Virtually no anti-TPP/TTIP website, literature or protest rally is complete without the almost obligatory fearmongering about this highly controversial issue.
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Despite the fact that around 70% of processed foods in the U.S. today contain genetically modified ingredients, opinion polls show that barely more than a third of the public believes that GMOs are safe to eat. 52% of people believe such foods are actually unsafe or hazardous to health, and an additional 13% are unsure about them. In Europe, although one would never know it from the claims of “overwhelming opposition” to GMOs made by most anti-TTIP crusaders, in one recent poll a surprisingly small percentage, only 8%, said they are worried about GMOs. Public opinion about the issue in the EU varies widely however from country to country, with anti-GMO sentiment still strong in France and Germany, for example, compared to Britain where it has dropped significantly since the 1990s.

The image problem of GMOs isn’t hard to understand given the number of alarmist stories over the years in the media, together with numerous “documentary” films and a raft of best-selling books all warning about the hazards of biotechnology and alleged threats posed by GMOs. The titles alone give a pretty fair indication of the level of hysteria involved: Genetic Roulette; GMO-OMG; Seeds of Deception; Seeds of Destruction; Seeds of Death; The GMO Deception; The Unhealthy Truth; Altered Genes, Twisted Truth; and so on. Also helping fuel the irrational fear about GMOs are innumerable misinformed celebrities, quacks with talk shows and, of course, hordes of online conspiracy theorists.

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Senior U.S. government officials told a recent international conference on the Foreign Corrupt Practices Act (FCPA) that both the Securities and Exchange Commission and the Department of Justice are increasingly pursuing individuals as well as companies for violations of the anti-corruption law. Importantly, they indicated that strong compliance programs and self-reporting of violations are among the most effective SEC Sealmeasures that companies can take to avoid or mitigate FCPA penalties.

Andrew Ceresney, director of the SEC’s Division of Enforcement, told delegates that nothing “situates a company better to avoid FCPA issues than a robust FCPA compliance program,” and that “the existence of such programs will pay dividends should an FCPA issue arise.” The SEC staff  “will look well on companies that have robust [compliance] programs,” he said.

“The best companies have adopted strong programs that include compliance personnel, extensive policies and procedures, training, vendor reviews, due diligence on third-party agents, expense controls, escalation of red flags, and internal audits to review compliance.”

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Economic sanctions against Russia are presenting significant challenges for Canadian firms doing business abroad, including those who are not normally active in that region. Canada has been among the most aggressive and outspoken countries when it comes to dealings with Russia – it was one of the first governments to threaten sanctions against Russia for interference in Ukraine and it maintains one of the longest blacklists.

Understanding and mitigating these compliance and reputational risks in international operations is an important competitive advantage for exporters. This practical webinar will cover the critical components of the economic sanctions regime, address potential traps for the unwary, and discuss effective risk mitigation and compliance strategies.

Speaker: John Boscariol, Partner, McCarthy Tetrault

Date: December 12, 2014 | Time: 10:30 AM to 12:00 PM EST

Cost: $150 (IE Canada members) | $200 non-member rate

Click here to register for this webinar. 

 

As reported last month, at the Asia-Pacific Economic Cooperation (APEC) forum in Beijing, the U.S. and China announced they had reached an understanding to eliminate duties on more than 200 tariff lines in an expanded Information Technology Agreement (ITA) paving the way for the resumption of negotiations.
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The ITA, established in 1996, eliminates tariffs on a number of technology products, such as semiconductors, computers, and telecommunications equipment but has not been updated since that time to keep pace with technological advances. Prior to the breakthrough at APEC, talks had floundered after China had tried to exclude over 100 products and refused to commit to shorter tariff phase-out periods for those which it regarded as economically “sensitive” goods.

With negotiations having resumed yesterday at the World Trade Organization (WTO) in Geneva, the Canadian government announced at the same time the launch of a domestic consultation process “to obtain advice and views on priorities, objectives and concerns to help outline the parameters of this trade initiative.”

Click here for more information on making submissions to the Department of Foreign Affairs and International Trade. It should be noted that both governments and trade associations have called for the talks to be brought to a “swift conclusion” so while no specific date in connection with the consultation has been provided, time is likely of the essence in order to participate in the process.

 

Although it would be challenging for the casual observer to discern from reading the business section of many newspapers or trade publications where the subject is most usually discussed in terms of something that is continually exploding at a rapid pace, the rate of global trade growth has in fact slowed sharply since 2012, to the point now where it is Slow Worldactually underperforming gross domestic product for the first time in four decades.

This does not mean that some kind of dire situation in the world exists at present — international trade is still on the rise by about 3 percent per annum since bouncing back from the global financial crisis — but at least according to some economists, persistently sluggish growth may be the “new normal” and is almost certainly not likely to be as heated again as was the case during the frenzy of what has been described as “hyperglobalization” in the years leading up the trade collapse in 2009.

Research by analysts from Deutche Bank last month determined that “this anaemic development of world trade since 2012 is caused by combination of cyclical and structural factors which suggests that the favourable factors pushing up global trade in the past are losing impetus.”  Some of the cyclical factors cited include “global overcapacities, weak commodity prices, elevated geopolitical risks and heightened uncertainty regarding the global outlook.”

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When former EU Trade Commissioner Karl de Gucht initiated a 90-day public consultation earlier this year regarding the inclusion of an investment protection and investor-state dispute settlement (ISDS) clause in the Transatlantic Trade and Investment Partnership (TTIP) as a response to the growing public debate and increased concerns about the issue, the commission was swamped by almost 150,000 replies between March and July.
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That figure has been widely cited in press since and was taken by anti-TTIP (and anti-CETA) activists as a compelling demonstration of widespread public opposition to the proposed trade deal. Influential U.K. blogger and technology writer Glyn Moody, for example, said that it was “an astonishing number for such an apparently obscure aspect of a trade agreement, and a clear reflection of how strongly people feel about this.” The “massive demonstration of citizen engagement,” he said was “surely not something the European Commission ever expected,” but meant “that it can have no doubt about the public’s views on this matter.”

Turns out maybe not quite so much. Last week, Reuters reported that the consultation had effectively been “hijacked” by a small number of organizations opposed to the trade deal with Washington and particularly hostile to the ISDS provision. EU officials disclosed to the news agency that over 95% of the submissions came from a handful of groups in the form of identical or very similar responses, automated or generated by forms filled in on campaign websites.

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