Although intended as celebration at having finalized terms of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union after years of negotiations, an official signing ceremony in Ottawa planned by the Harper Government for September 25-26 could also be viewed as marking the beginning of what promises to be a gruelling and uncertain ratification process.
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News reports earlier this week by Reuters indicate that the multi-billion dollar trade pact – which is widely regarded as a blueprint for the much larger transatlantic free trade agreement being currently being negotiated between Brussels and Washington – faces mounting opposition from a range of EU lawmakers, many of whom are threatening to scupper the deal over issues they feel threaten the sovereignty of the EU’s 28 governments. Both trade deals must achieve a majority vote in the European Parliament in order to be ratified.

It should be noted that the European Parliament elections last May resulted in changes to the 751-seat chamber that could prove unhelpful to supporters of the Canadian trade accord; i.e., a modest increase in seats for parties likely to oppose CETA, a sharp decline in those that have previously backed CETA, and a significant increase in the parties and independent members that could possibly be swung on the issue.

The focus of concern for most of the lawmakers opposed to the deal is the controversial “investor-state dispute settlement” (ISDS) mechanism that conceivably enables corporations to sue governments under certain circumstances for loss of anticipated profit, something one Italian MEP scathingly described as being an “affront to democracy”.  European consumer and environmental groups claim the ISDS mechanism would, to quote Reuters, “allow multinationals to bully the EU’s 28 governments into doing their bidding regardless of environmental, labour and food laws and would set a bad precedent for the planned EU-U.S. trade pact.”

 

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With companies from Amazon to Dominos attempting to perfect drone-based delivery it was only a matter of time before Google unveiled its vision, called Project Wing. First conceived of as a more efficient way to rush defibrillator kits to people suspected of having heart attacks, Google’s self-flying vehicle is being developed at Google X, the company’s secretive tech research arm, which is also responsible for its other autonomous vehicle project, the self-driving car.

The Project Wing team recently tested its drone prototypes in the remote outback of Queensland, Australia, delivering a variety of small packages to a pair of local farmers. The location was selected as a test site due to what Google calls Australia’s “progressive” rules about the use of drones, which often are more tightly controlled in other parts of the word.

With a wingspan of approximately 1.5m (4.9ft), Project Wing is larger than many rival drones, such as the Amazon PrimeAir delivery vehicle that CEO Jeff Bezos revealed on the TV news magazine 60 Minutes last year. Powered by four electrically-driven propellers, the Google drone weighs 8.5kg (18.7lb) and can take off and land without a runway. Hovering above its destination, the drone drops its load on a string, a design decision made because research showed people could otherwise have been prone to injury from the propellers when attempting to grab the packages.

“Self-flying vehicles could open up entirely new approaches to moving things around—including options that are faster, cheaper, less wasteful, and more environmentally sensitive than the way we do things today,” a Google spokesperson told reporters in an email.

Click here to read more about the project.

 

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Dan Ikenson, a trade policy director at the libertarian Cato Institute and co-author of Antidumping Exposed: The Devilish Details of Unfair Trade Law wrote a wickedly brilliant article last month in Forbes Magazine concerning the hypocrisy of U.S. trade policy when it comes to U.S. lawmakers and businesses complaining about other countries not abiding by global trade rules, but ignoring America’s own egregious track-record of protectionism, anti-dumping abuse, and WTO violations, which taken together, arguably make it “the world’s primary trade scofflaw.”
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The article focused on the curious case of alleged dumping by South Korean exporters of “Oil Country Tubular Goods” (OCTG) to demonstrate how, according to Ikenson, the levers of antidumping administration within the U.S. Commerce Department have essentially been “captured” by domestic steel producers to obtain what is in effect illegal trade protection from foreign competition.

“Politicians and protectionists have been served by the enduring myth that the United States is the most open market in the world and its government earnestly adheres to the rules of trade, while others, intent on exploiting U.S. naivety, cheat and pursue state-sponsored mercantilism,” he writes. In practice however, the U.S. frequently demonstrates an “above-the-rules” attitude that, says Ikenson, is perhaps best revealed by “the fact that no other WTO member is out of compliance (i.e., has not brought its offending actions, laws, policies or procedures into conformity with its WTO commitments) on more matters or has been so for a longer duration than the United States.”

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The Automated Commercial Environment (ACE) is a system being developed by U.S. Customs and Border Protection (CBP) to automate and consolidate border processing. By the end of 2016, ACE will be the “single window” or centralized access point that connects CBP, the trade community, and other government agencies.

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The development of ACE began in 2001 as a replacement for CBP’s Automated Commercial System (ACS), an older trade information database. The purposes of ACE are to streamline business processes, facilitate growth in trade, ensure cargo security and determine admissibility, provide the tools to monitor the movement of and materials into and out of the country, and foster participation in global commerce.

CBP has published an updated version of its “ACEopedia” which contains information on current ACE features and their benefits, as well as details on what new features are currently being developed. Click here to download a copy of this document.

 

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The Canadian Food Inspection Agency (CFIA) is reminding stakeholders that the comment period for a number of food safety modernization consultations will end August 29, 2014.

The consultations in question include:  Draft Integrated Agency Inspection Model; New Regulatory Framework for Federal Food Inspection; Use of Private Certification to Inform Regulatory Risk-Based Oversight; Incorporation by Reference; and Foreign Food Safety Systems Recognition: Proposed Framework.

A number of related consultations, however, remain open throughout September and October 2014. A complete listing can be obtained from the CFIA website here.

 

Writing on the Lowy Institute for International Policy’s blog (“The Interpreter”), Dr. Stephen Grenville, a trade policy expert based in Australia asks: “Are we measuring international trade correctly?”

In light of the rise in recent decades of multinational supply chains (so-called “global value chains”), Grenville suggests that conventional trade statistics are not providing a true picture of trade activity because they fail to account for the value of inputs in the production process that have been “unbundled”.

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The familiar example of the iPad is used to explain that while the product is assembled in China, only about $10 of its total production costs takes place there with the vast majority of its cost coming from inputs made in other countries, including the intellectual property and design input from Apple in California.

Grenville points to a new data model developed by Australia’s central bank which incorporates value-added statistics and that offers to supply new insights about a country’s economy and trading relationships. “These value-add statistics don’t replace the conventional gross statistics,” Grenville says, but “they provide a valuable alternative perspective, sometimes with policy implications.”

 

Citing leaked information from a reliable source, the Wall Street Journal confirms that the World Trade Organization (WTO) has ruled against the United States and in favour of Canada and Mexico in the long-running and often bitterly fought trade dispute over country-of-origin labeling (COOL) for beef, pork and other meats imported into the U.S.

Parties to the appeal were confidentially advised last month on an interim basis of the WTO dispute panel’s decision and suggestions had been made at the time that the final report would be released at the end of July, but speculation now is that it won’t be made publicly available until September or October.

The WTO decision comes as no surprise to many and indeed was already hinted at by Canada’s Agriculture Minister Gerry Ritz when he told a business meeting in Calgary last month that he was “buoyed” by what the WTO had said about Canada and Mexico having “actually proven our case.” President Howard Hill of the National Pork Producers Council told reporters that his organization expected the WTO ruling along with eventual retaliation by Canada and Mexico against the United States.

“There is an opportunity for the U.S. to appeal, and so the retaliation is not going to occur this year,” Hill said. “Eventually we’re going to have to get this fixed or we will have a really serious situation with retaliation. We are going to have to rally the troops to get Congress to fix this because that is the only way it is going to get fixed now. Now they are out of session and there is probably not a lot that is going to happen in the lame duck session.”

The Canadian government last year declared its intention to retaliate if the WTO were to overturn the disputed COOL regulations by publishing a list of goods from the U.S. that could be subjected to higher import tariffs. Mexico’s Economy Ministry has likewise said it could target products such as fruits and vegetables, juices, meat, dairy products, machinery, furniture and home appliances, among others. It could be another year or more before any such measures are actually imposed, however, given that the U.S. administration will most likely appeal the panel’s decision.

 

 

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Federal Industry Minister James Moore last week unveiled proposal to break down Canada’s interprovincial trade barriers that many business leaders see as harming the national economy and negatively affecting Canadian companies, workers and consumers.
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The document One Canada, One National Economy: Modernizing Internal Trade in Canada sets out guiding principles for modernizing the current Agreement on Internal Trade (AIT). The Harper Government contends that eliminating internal trade barriers would create jobs, boost economic growth and strengthen Canada’s internal market by helping to move goods and services more freely across Canada.

The government notes that when the interprovincial AIT came into effect nearly 20 years ago, Canada had concluded only two international trade agreements, but today has free trade agreements in force or being finalized with scores of countries, giving Canadian businesses preferential access to more than a billion consumers worldwide. With this global perspective in mind, the government is seeking to replicate an “all goods and services” approach taken when negotiating international free trade deals such as those with Korea and the European Union.

“Most modern trade agreements cover all goods and services, except for those that are explicitly identified and exempted,” the proposal states. The AIT, it claims, follows an “outdated” approach by singling out specific goods to be covered. The government believes that a “brand new trans-Canada partnership” could be negotiated on the basis of this more inclusive framework.

 

The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) is accepting comments through October 20 on the proposed extension of an information collection required by the Lacey Act for the importation of certain plants and plant products.

The law was originally enacted 114 years ago aiming to preserve wild game and birds (click here for a rather shocking description of hunting practices at the time which first encouraged its passage), making it a federal crime to poach game in one state with the purpose of selling the bounty in another. Since that time Laceypidgeonhowever the legislation has morphed into a much broader statute that, as of 2008, makes it unlawful to import certain plants and plant products into the United States without an import declaration, which must contain (among other things) the scientific name of the plant, the value of the importation, the quantity of the plant and the name of the country in which the plant was harvested.

The Canadian Manufacturers & Exporters (CME) – the country’s largest trade and industry association – has previously petitioned the U.S. Congress in opposition to this legislation characterizing the compliance burden associated with the required import declaration as an onerous and completely needless trade barrier. “Each [declaration] represents an unnecessary, incremental direct cost to Canadian exporters,” the CME has stated.  “The direct costs pale in comparison to the in-house, corporate cost of completing, reconciling, matching and storing the required declaration information to the shipment destined to the United States.”

In a 2012 submission to the cross border Regulatory Cooperation Council protesting the “logistical nightmare the import declaration presents” the association could not help but point to the absurdity of the fact that the 2008 amendment broadening the scope of the Lacey Act’s coverage was intended to protect fragile rain forests, but in actuality, 90% of all declarations submitted to APHIS are filed by Canadian manufacturers. Obviously this was “hardly a concern when it comes to Canadian forestry management,” the filing asserted.

 

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The Association of Canadian Port Authorities (ACPA) held its annual conference last week in Belledune, New Brunswick, meeting with shipping industry partners and government officials to discuss a wide range of existing logistics challenges and how best to capitalize on future economic opportunities for Canada’s 18 port authorities.
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ACPA facilities currently handle more than 60 percent of all waterborne cargo, worth an estimated $162 billion annually. The association notes that since 2006, Canada has concluded new trade agreements with nine countries, is currently negotiating with many more and has just finalized an historic deal with the 28-nation European Union which promises to open up preferred access to the world’s largest trading bloc.

To meet the expanding shipping demand and volumes of cargo anticipated as a result of these international trade agreements, the ACPA has called on the Canadian government to increase the country’s competitiveness through strengthened port facilities and improved supply chain efficiencies.

Citing a recent World Bank survey that gave Canada a less than stellar grade regarding the efficiency of the nation’s trading practices based on various factors including the quality of its infrastructure, the association is determined to improve that ranking.  “In our view, 14th is not good enough for one of the world’s leading trading nations,” said ACPA president Wendy Zatylny.

“Our goal should be to break into the top 10, and we are confident that we can achieve that goal. With the partnership and support of the Government of Canada, Canada’s Port Authorities will be able to ensure our infrastructure is able to support expanded international trade and that our supply chains operate smoothly and efficiently.”

Speaking to port officials at the conference, Transport Minister Linda Raitt said that a review of the Canada Transportation Act already underway dovetails with the country’s recent success in negotiating free trade agreements with the European Union and South Korea.  “To succeed with this ambitious trade agenda, we have to make sure that our transportation systems here in Canada are ready,” Raitt said. “We have to be able to execute on these deals, and we have to do that with solid transportation networks.”

 

U.S. Customs and Border Protection (CBP) has updated its non-textile “Side-by-Side Comparison of Free Trade Agreements and Selected Preferential Trade Legislation Programs” chart. Click here to download the latest version.

The comparison chart provides a convenient summary of basic customs information and citations relative to the various free trade agreements and selected trade preference programs the United States currently maintains with various countries around the world.

 

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International production, trade and investments are increasingly organized within so-called global value chains (GVCs) where the different stages and aspects of the production process are located across different countries. The growth of GVCs in recent years has increased the degree to which economies are interconnected and has led to the international dispersion of specialized activities such as design, production, marketing, distribution, etc., in a new “trade-investment-services-know-how nexus.”
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The Organization for Economic Co-operation and Development (OECD) has been a strong advocate of the GVC production concept as an effective means of stimulating global economic prosperity and trade. The international group published a book on the subject last year and has also prepared a wide range of studies and papers aimed at helping decision makers around the world to better understand the effects of GVCs on a number of policy domains.

This past month, the OECD released Global Value Chains: Challenges, Opportunities, and Implications for Policy, a report written in conjunction with the World Trade Organization and the Word Bank. Submitted to the G20 trade ministers who recently gathered in Australia, the report outlines the current state of the GVCs, puts forward a number of policy prescriptions and strongly suggests that countries take a “whole-of the-supply-chain” approach to facilitating progress in this regard. The policies advocated include: good infrastructure and connectivity, a business-friendly environment, flexible labour markets, access to credit, innovation and macroeconomic stability. Other policies are more targeted, such as tariffs and other trade restrictions, subsidies, local-content or export-performance requirements, and restrictions on foreign exchange.

 

Which American states are the most threatened by globalization and free trade?  A “Storyline” feature in last Friday’s Washington Post attempts to answer the question with a series of infographics and analytic snapshots based on statistics drawn from the U.S. Department of Labor’s Trade Adjustment Assistance (TAA) program since 1994.

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Originally drafted by lawmakers in the 1960s, the TAA is a federal compensation program intended to mitigate the harmful effects of global trade liberalization by providing support to those displaced by foreign competition.

The article notes that since the North American Free Trade Agreement took effect two decades ago, more than 2.7 million U.S. workers have qualified for assistance.  It further notes that wide disparities exist among states with – not unsurprisingly – those “heavily invested in low-wage manufacturing industries” being the most threatened by foreign trade competition.

Click here to read the complete feature.

 

The Canada Border Services Agency (CBSA) last week published the final report evaluating its border security Intelligence Program.

The program collects, analyzes and distributes a variety of actionable security intelligence concerning the cross-border transit of individuals and entities including the commercial movement of goods, shipments and conveyances. The purpose of the evaluation was to assess the relevance and performance of the $47 million/year program to the CBSA’s border enforcement mandate and was based on research carried out over a six month period between December 2012 and June 2013.

The audit found that 5.2% of goods seized by Customs could be attributed to intelligence derived from the program, but found that gaps in the way data is presently collected and maintained limited assessment of the program’s efficiency and ultimately its “value for money”.

The report also pointed to the need for better communications, greater transparency within the agency and improvements to standard operating procedures for systems used by frontline and intelligence staff. Finally, it determined that the large number of priorities currently being handled was excessive to deal with efficiently and that CBSA management struggled tracking progress in meeting expected outcomes and performance targets.

 

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The World Customs Organization (WCO) last month published a list of more than 200 amendments to the current Harmonized System (HS) nomenclature, which will become effective on January 1, 2017.

The intergovernmental organization in Brussels maintains the international commodity description and coding system used by every major trading country in the world as the basis for their tariff schedules. As a vital tool for collecting statistics and monitoring trade activity on a worldwide basis, revisions are periodically made by the WCO to reflect various changes and shifting patterns in the global trade environment. HS 2017 will be the sixth version of the HS since the Convention entered into force in 1983.
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The majority of the 234 recommended amendments concern various environmental and social issues and were advanced by the Food and Agriculture Organization of the United Nations. For example, amendments are proposed relating to fish and fishery products are aimed at further enhancing the coverage of species and product forms which need to be monitored for food security purposes, and the better management of resources.

The classification of forestry products has also been modified, in order to enhance the coverage of wood species and get a better picture of trade patterns. The modification will enable trade data on tropical wood to be identified, resulting in better statistics on the trade in tropical wood and better data on the use of non-tropical hardwoods. In addition, the amendments include new subheadings for the monitoring and control of certain bamboo and rattan products.

New subheadings have also been created for a number of hazardous chemicals controlled under the Rotterdam Convention and for certain persistent organic pollutants (POPs) controlled under the Stockholm Convention. In some cases, there is a confluence of control regimes for chemicals by both the Rotterdam and Stockholm Conventions.

Advances in technology are also reflected in the amendments such as the size criteria for newsprint, light-emitting diode (LED) lamps, multi-component integrated circuits (MCOs), and hybrid, plug-in hybrid and all-electric vehicles.

Contracting parties to the HS have six months to formally object to the amendments.  Otherwise, it is expected the changes proposed will be reflected in upcoming versions of the Canadian and U.S. Tariff schedules on or before the January 2017 implementation date.