Ostensibly promoting his new book The Churchill Factor, London Mayor Boris Johnson devoted most of his column in The Telegraph this week to a forceful defense of the Transatlantic Trade and Investment Partnership (TTIP) against the attacks of critics he scathingly dismisses as “Left-wing misery-guts anti-globalisation campaigners.”
Free Trade-Good-v-Evil
“There is absolutely nothing not to like about the TTIP. As Churchill might have said, it is altogether un-sordid,” asserts Johnson channeling the thoughts of his biographical subject. And yet virtually the only commentary we have been offered is absurdly hostile and misinformed.”

Heaping scorn on the recent protests across Europe over the EU-U.S. trade deal, Johnson dismisses anti-free trade activists as “numskulls” who are “talking rubbish”; adding that, “Almost every single objection to the current proposals is based on pure superstition.” The fears about genetically modified organisms are, for example, according to Johnson, nothing but “a load of semi-religious mumbo-jumbo.”

Michael Taube is another pundit fighting back against “left wing myths” and “superstitions” about free trade. Writing this week in the conservative leaning Washington Times, he unloads on liberals “who blast away at capitalism, liberty and freedom with a reckless nature — and a feckless misunderstanding of these important economic principles.”

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The World Trade Organization’s latest annual report argues that the WTO has enabled developing countries to take advantage of, adapt to and mitigate risks arising from a number of significant new trends in the global trade environment.
World Trade Report 2014
The World Trade Report 2014  identifies four emerging trends as potentially significant factors affecting the relationship between trade and development:

  • the rise of the developing world;
  • the expansion of global value chains;
  • the higher prices of commodities; and
  • the increasingly global nature of macroeconomic shocks.

The report shows how trade contributed significantly to the unprecedented economic development that has taken place since 2000. Trade has allowed many developing countries to benefit from the opportunities created by emerging new markets, to integrate into the world market through global value chains at lower costs, and to reap the rewards from higher world commodity prices.

“We have entered a new era in the link between trade and development,” Director-General Roberto Azevêdo said in marking the launch of the report yesterday. “Driven in large part by trade, some developing economies have made remarkable progress in recent years, but much still needs to be done to close the gap for many poor economies.”

Azevedo stressed that the open, non-discriminatory, rule-based multilateral trading system has been critically important in underpinning the success of developing economies, but cautions that the trends also hold daunting challenges and a long road still lies ahead for many of them.

Click here to download the report.

Related: The Wall Street Journal offers up its own “5 Takeaways” from the report here.

 

The Canadian Food Inspection Agency (CFIA) is currently seeking feedback on its discussion paper entitled Enhancing Risk Analysis: A more systematic and consistent approach.

This paper provides an overview of the CFIA’s transformation agenda in connection with the federal government’s action plan to modernize food safety, and the proposed systematic application of risk analysis to guide the agency’s regulatory oversight activities. The paper is also designed to help establish a common understanding of terminology and principles that underpin CFIA’s risk analysis activities, and provides an opportunity to solicit feedback from stakeholders.

The closing date to submit comments is October 31, 2014, but prior to that, the CFIA will be holding a web consultation regarding the issue on Monday, October 27 from 11:00 a.m. to 12:00 p.m. (EST).

Click here to register for this webinar.  A confirmation of registration email (from messenger@webex.com) will be sent to you after registering. 

 

 

Despite suffering another defeat at the World Trade Organization (WTO), supporters of the U.S. country-of-origin labeling (COOL) regulations have reiterated their continued strong backing for the law and vowed to press the Obama administration to appeal the latest decision.
Tribunal
“While we will continue to review the WTO’s decision, we urge the U.S. Trade Representative to consider appealing the ruling if there are meritorious grounds to do so,” said a statement issued by United States Cattlemen’s Association (USCA). “In addition, we ask USDA to review the ruling to determine whether additional regulatory changes may permit the U.S. to come into compliance without weakening COOL.”

USCA president Danni Beer urged Congress to resist calls to withdraw the controversial rule that both Canada and Mexico claim has cost their pork and beef industries billions in lost business since it was implemented in 2009. “Today’s ruling provides no basis for false alarms about repealing the COOL statute itself,” said Beer. Congress should continue to resist such premature and unfounded calls to weaken a law that enjoys such strong support from America’s consumers, ranchers, and producers.”

Groups opposed to COOL, including the American Meat Institute, National Cattlemen’s Beef Association, National Chicken Council, National Pork Producers Council and other agri-food trade associations have described the USDA’s meat labelling regime as “a broken program that has only added costs to our industries without any measurable benefit for America’s livestock producers.” The groups banded together to petition Congress last June with a request that the COOL rule be suspended in the event of another WTO decision finding it to be an unfair trade practice.

Since the WTO’s latest decision, COOL opponents have been urging the U.S. Trade Representative and U.S. Department of Agriculture to work together with the industry and Congress to amend the COOL statute so that it complies with international obligations and brings stability to the market. “Such a change would help restore strong relationships with some of our largest and most important trading partners,” they said.

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U.S. Customs and Border Protection (CBP) last week announced the signing of a mutual recognition arrangement (MRA) with Mexico’s Tax Administration Service (SAT) that allows stronger collaboration between CBP’s Customs-Trade Partnership Against Terrorism (C-TPAT) program and its Mexican counterpart called the New Certified Companies Scheme (NEEC).
US-Mexico-Security
“This is a significant milestone for both the United States and Mexico and the facilitation of secure trade between the two countries,” said CBP Commissioner R. Gil Kerlikowske at a Homeland Security event in San Diego.

According to a CBP press release, the MRA’s goal “is to link the two industry partnership programs, so that together they create a unified and sustainable security posture that can assist in securing and facilitating global cargo trade.”

CBP states that the arrangement provides both tangible and intangible benefits to participants including: fewer exams when shipping cargo, a faster validation process, common standards, efficiency for Customs and business, transparency between Customs administrations, business resumption, front-of-the-line processing, and marketability.

The U.S. currently has MRAs in place with New Zealand, Canada, Japan, Korea, Israel, Jordan, the European Union and Taiwan. CBP officials are also in the process of reaching a similar supply chain security agreement with China.

Click here for more information about the C-TPAT MRA initiative.

 

As had been widely expected, the World Trade Organization (WTO) today confirmed that Canada has won another important trade victory in the long-running battle with the U.S. government over controversial meat labelling regulations that have caused significant economic harm to the cross-border beef and pork industries.
Canadian Cow
The U.S. Department of Agriculture amended its country-of-origin meat-labeling (COOL) rule after a WTO finding in 2012 that an earlier version was discriminatory. Canada and Mexico said the amended rule was even more onerous, further limiting their exports of cattle and hogs into the U.S. and negatively affecting the price of those products.

The World Trade Organization’s (WTO’s) decision finds that the U.S. COOL regulations violate global trade rules that require imports to be treated no less favorably than domestic products.

The panel agreed with Canada and Mexico that changes the U.S. made to the rules last year actually made the policy even more detrimental to livestock exporters. “The compliance panel concluded that the amended COOL measure increases the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock in the U.S. market,” the panel said.  “It necessitates increased segregation of meat and livestock in the U.S. market, entails a higher record-keeping burden and increases the original COOL measure’s incentive to choose domestic over imported livestock. ”

Canadian Trade Minister Ed Fast and Agriculture Minister Gerry Ritz welcomed the decision, issuing a joint statement.  “Today’s WTO compliance panel’s report re-affirms Canada’s long-standing view that the revised U.S. COOL measure is blatantly protectionist and fails to comply with the WTO’s original ruling against it,” they said.

“Canada will be watching this situation closely to ensure U.S. compliance in accordance with the WTO’s clear ruling,” the statement says, renewing the threat of retaliation with punitive tariffs on a range of U.S. imports. “We will continue to fully assert our rights to achieve a fair resolution to our concern, including seeking authorization to implement retaliatory measures on U.S. agricultural and non-agricultural products if and as necessary.”

The U.S. government is believed to be considering an appeal of the decision, but a statement by a spokesman for the U.S. Trade Representative simply said:  “We are disappointed that the compliance panels have found that the country of origin labeling requirement for beef and pork continue to discriminate against Canadian and Mexican livestock exports.”

Click here to access the WTO panel’s complete 206-page report.

 

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In an almost classical case of one person’s misfortune being another’s gain, a recent article in Law Times looks at the boost in business some tax lawyers are currently experiencing as a result of “more aggressive compliance efforts by government departments such as the Canada Revenue Agency.”
Busy Lawyer
Jack Millar, a partner at Toronto-based Millar Kreklewetz LLP, says that audit activity is not only on the rise but also becoming more sophisticated and complex, with greater emphasis on the commodity taxation aspect of business.

“There is no question that the way audits are being carried out on the income tax side is leading to a lot of work,” Millar says. “They are asking for reams of information, they’re asking for a lot of co-operation by taxpayers, and they are creating a lot of work for people like myself.”

On the customs side, Millar tells Law Times that he’s seen an increase in the number of compliance issues on the part of the Canada Border Services Agency (CBSA) corresponding to the renewed focus on trade compliance. “After 9/11, governments took more of their trade budget and put it into security,” says Millar. “But the pendulum has swung again and the trade compliance directorate of the CBSA has got more resources now.”

Click here to read the complete article.

 

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Last week, U.S. Customs and Border Protection (CBP) invited stakeholders including importers, customs brokers and software developers to participate in a new Animal & Plant Health Inspection Service (APHIS) Lacey Act Working Group that will address the technical requirements associated with changes in the upcoming Automated Commercial Environment (ACE) transition.

The Lacey Act requires importers to file with CBP specific documents and information pertaining to the harvest and processing of a wide range of wooden products to assure compliance with U.S. regulations and international agreements concerning the sustainability of plant resources globally.

According to the CBP, the transition to ACE “will result in changes to the way Lacey Act, CBP, and the members of the trade who import these items, do business.” Among other things, ACE will require Lacey Act-specific data to be submitted electronically via the partner government agency (PGA) message set. The Working Group will be reviewing the proposed PGA message set guidance and any impacts the ACE transition will have on the business process for Lacey Act related importations.

Those interested in participating in the Working Group should contact Frank Korpusik, Sandra Scott or Debbie Benish no later than Friday, October 24.

 

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Hoping to push India into supporting a World Trade Organization (WTO) global trade deal struck last year or risk being left out of a proposed agreement to ease worldwide customs rules, Italy’s deputy industry minister Carlo Calenda, the chairman of EU trade ministers, set a deadline of next Tuesday for the country to re-consider its position.
Hourglass
In blocking the first global trade reform in two decades, which according to some estimates would add $1 trillion and 21 million jobs to the world economy, India faces the almost certain alternative of being excluded in future from multilateral trade facilitation arrangements involving a coalition of countries willing to participate in the process of streamlining customs clearance and eliminating costly barriers to global trade.

After having spent months ambiguously waffling over reforms it previously committed to in Bali last year that would clearly benefit the country’s importers and exporters, India now insists that, in exchange for signing the trade facilitation agreement, it must see more substantial progress on a parallel pact allowing it more latitude in the enforcement of domestic food security policies that it regards as vital, but which ostensibly violate WTO policies on the subsidization and stockpiling of food grains.

Some see resolving the current impasse over the controversial issue as pivotal to the future direction of the WTO project and possibly even a definitive end to the viability of developing sweeping global trade agreements in favour of a new approach involving plurilateral and regional arrangements that better reflect the priorities of like-minded participants.

“What is at stake is not only our ability to reach agreements, but also to implement what has been clearly agreed. There should be no mistake, the current stalemate will have consequences on the WTO and the multilateral system,” the EU’s ambassador to the WTO recently told the Financial Times.

 

The recent Federal Court of Appeals decision in US vs. Trek Leather, finding the president of the company criminally liable for gross negligence, has caused some to worry that it could have the effect of holding trade compliance professionals liable for acts of a corporate importer of record. One of them is international trade attorney Susan Kohn Ross, who has written an insightful article in The Journal of Commerce highlighting the troublesome dilemmas facing individuals trying to navigate a virtuous path through some of the treacherous moral hazards involved when things go wrong.

Gator Man

The conundrum faced by all employees, but in particular by those dealing with compliance, “is what to do when you think something isn’t being done properly,” says Ross.

Opinion seems to be divided on whether documenting problematic compliance situations is an entirely advantageous CYA approach for the dutiful compliance person in situations where internal controls are seen to be failing, as too is the specific level and extent to which problems should be detailed. Ross considers some of the various difficulties associated with raising awareness of non-compliant practices in both closely held and larger companies, including the sort of pitfalls to be expected when possibly running into opposition from the conflicting priorities of others in corporate management.

If the company is large enough, there are other avenues to pursue, including legal and human resources. Eventually, you have to hope to find the right person to take your concerns to the CEO, unless you’re daring enough to do it yourself and have the needed access. What if the CEO does nothing? Does your view of options change if the controller is the CEO’s daughter-in-law?

According to Ross, the plight of the compliance professional dealing with systemic malpractice is very much a highly stressful, no-win situation in many respects, one that often requires having to confront the harsh possibility of being out of a job, whether voluntarily or otherwise.  In the end, however, Ross advocates the most obvious solution; namely, avoiding such perils from the outset by “having proper internal controls, which are correctly documented and truly followed. “

People not currently working in a company that has invested in the creation and effective implementation of serious internal controls because they see the integral value of being compliant should consider why they haven’t left already, Ross suggests, and perhaps even wonder about their own complicity and the extent to which they might be held liable by authorities in the event of an enforcement action against their employer.

 

Canada and the EU recently signed the most ambitious trade deal Canada has ever negotiated. With 28 member states representing more than 500 million people and annual economic activity of almost $18 trillion, the EU is one of Canada’s most important trade partners. The impact of the Canada European Comprehensive Economic and Trade Agreement will be significant.

As part of its webinar series, IE Canada invites Canadian companies to find out what is included in the final text of the agreement, what this deals means to the Canadian economy and how their business can benefit. Providing an outline of the agreement and higlighting the benefits to Canadian businesses will be international trade experts Milos Barutciscki and Matthew Kronby of Bennett Jones LLP.

Date: Wednesday November 5, 2014

Time: 1:00 PM – 2:30 PM EST

Location: Webinar login information to be sent out 24 hours prior to session.

Cost: $150 – IE Canada Members | $200 – Non-members

Click here to register for this event.

 

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News today that Amazon has the lion’s share of the online retail market in Canada, with $1.5 billion in e-commerce sales in 2013 – more than the next seven leading retailers combined – coincides with two trade industry articles focused on very different aspects Amazon’s supply chain challenges.
Amazon Kindle
Supply Chain Digital’s Sam Jermy looks at Amazon’s shift away from dependence on UPS/FedEx to a more flexible and diverse network of logistics providers and also examines some of the recent innovations and improvements to Amazon’s cross-border network that have slashed delivery times in half from its European fulfillment centers. One notable example cited is utilizing delivery lockers (such as those used domestically in places like 7-Eleven stores) in the London Underground to access a customer base making 11 million journeys per day. This, Jermy states “is classic Bezos – tapping into a relatively unheard of practice and capitalising on the business opportunity to stay ahead of the industry curve.”

Innovative delivery methods aren’t the only way Amazon seeks to change the rules of the game. Jermy notes Amazon’s sometimes cheeky attitude towards government regulation, as in the case of circumventing a bothersome French law preventing e-shops from shipping bargain books for free. Amazon deftly side-stepped this obstacle by simply charging its home delivery customers in that country a nominal one euro cent for such books.

The other article in Logistics Management is an interview with Maria Haggerty, an e-commerce logistics expert on Amazon’s somewhat surprising “Back to the Future” move with the construction of a new brick and mortar retail store in midtown Manhattan that’s set to open for the upcoming holiday season. Once complete, the facility will likely include a showcase for Amazon’s gadgets and contain a selection of inventory to accommodate local same-day delivery and shoppers who want to pick up products bought online.  “Amazon is always opening up the conversation for the global supply chain to find a way to send consumers their online orders faster and at a lower cost,” Haggerty says. “This move is the latest endeavor to do that.”

 

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Though far from being the sole objection of critics to so-called next generation free trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), the controversial investor-state dispute settlement (ISDS) mechanism has been the primary conduit through which much of the recent public outcry about these trade deals has been funneled.
ISDS Dispute
The origin of the ISDS mechanism can be traced back to an obscure 1959 business investment treaty, but is today a commonplace feature routinely included in most international trade agreements. ISDS was originally designed for depoliticizing investment disputes, removing them from the vicissitudes of domestic law and court procedures, and providing instead an alternative forum that would offer investors a fair hearing before an independent, neutral and qualified tribunal capable of rendering final and enforceable decisions through a swift, cheap, and flexible process.

Aside from the more hysterical fears of anti-free trade activists about the ISDS process inevitably leading to the gutting of environmental protections, a wholesale “corporate takeover” of public healthcare systems or robbing citizens in sovereign, democratic states of the ability to determine the sort of country they want to live in, there are legitimate concerns about the current ISDS system of arbitration. These include, among others things, a perceived lack of legitimacy and transparency, questions about the independence and impartiality of arbitrators, and concerns relating to the costs and time involved in the process.

This week’s edition of The Economist examines some of these shortcomings and looks at the growing problems with implementation of the mechanism intended to protect foreign investors from expropriations or other unfair treatment. While perhaps not exactly the “worst judicial system in the world” as claimed by an oft-cited report critical of ISDS, there is, the magazine points out, a kernel of truth in the exaggerations of TTIP protesters.

The overall number of known cases reached over 500 in 2012, with host countries facing claims of up to $114 billion and awards of up to $1.77 billion. In many cases foreign investors have used – or abused, according to some – ISDS claims to challenge measures adopted by countries in the public interest (for example, policies to promote social equity, foster environmental protection or protect public health). A notable example in this regard is that of Vattenfall, a Swedish utility operating two nuclear plants in Germany which demanded compensation of almost $5 billion, under the ISDS clause of a treaty on energy investments following the German government’s decision in 2011 to phase out nuclear power.

The manner in which complaints like these are typically resolved makes them all the more galling: the proceedings are not open to the public and the arbitrators making politically and fiscally important decisions are often moonlighting corporate lawyers. It is no surprise that many people believe ISDS stacks the rules of globalisation in favour of big firms.

The article describes how an increasing number of governments around the world are beginning to learn from past mistakes and the steps being taken by some to reform the process, such as taking care to more narrowly define the mechanism’s scope and ensure that ISDS proceedings and findings are made publicly accessible.

Click here to read the article (and the cover piece here).

 

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Protesters in cities all over Europe gathered yesterday to demonstrate in opposition to the far-reaching Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated by the European Union and the United States.

The “secretive” TTIP has garnered increasing controversy in recent months as critics fear it could lead to the privatization of public healthcare systems, the weakening of environmental regulations and the removal of food safety standards to allow GM crops and chlorine-washed chicken.
TTIP-CETA Protest
The “European Day of Action” – consisting of marches, rallies, flash mobs and other public events involving tens of thousands of people in over 1,000 locations in 22 countries – was organized by an unprecedented alliance of civil society groups and individuals, social movements, trade unions, farmers and grassroots activist groups.

The main aim of the wave of protests is “to reclaim democracy” – which in this case translates into ending the TTIP negotiations as well as killing the EU-Canada deal (CETA) and withdrawing from talks over the trade in services agreement (TiSA) that aims to liberalize trade in areas such as banking and transport. At the demonstration in Berlin, protesters symbolically stuffed signs marked “TTIP” and “CETA” into a wood chipper.

In the UK, where over a dozen actions took place, many people fear for the future of the country’s public services. Critics worry that the NHS healthcare system, the education system and even the BBC may be susceptible to market interference from U.S. corporations. A recent YouGov survey found that most Britons (54%) do not trust the current Tory government to negotiate a good deal for the country in the trade talks.

Conservative trade minister Lord Livingston said that TTIP talks “can’t be sacrificed by misinformation and scare stories” and business secretary Vince Cable told reporters he was “genuinely baffled” by fears about Britain’s health service.

 

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A new report commissioned by HSBC Bank says the United States could create 10 million new high-paying trade-connected jobs over the next decade if it pursues a comprehensive pro-trade policy agenda.
HSBC Trade Report
Despite the U.S. having entered its 64th month of recovery from the depth of the Great Recession and unemployment falling to just 5.9 percent, the jobs regained have, as a whole, been lower paying than the ones lost – on average 23 percent less, according to a study earlier this year by the U.S. Conference of Mayors.

Authored by Matthew Slaughter, professor and associate dean at the Tuck School of Business at Dartmouth, the report, entitled How America Is Made For Trade, explains why high-wage jobs are often those connected to the world through international trade and investment. Slaughter points out that research has long documented that workers at globally engaged companies tend to earn more than workers at purely domestic companies: about 15%-20% more in companies that export or import, and about 25%-30% more in multinationals.

“Because trade encompasses a dynamic mix of products, customers, and production methods, America needs a similarly dynamic policy agenda to create more good jobs connected to trade,” Slaughter says.

Some of the key highlights that demonstrate the impact U.S. exports have had on the economy include:

  • The typical U.S. multinational relies on small business suppliers for more than 24% of their total input purchases.
  • U.S. exports have more than doubled in the past year.
  • Companies that employ 500 workers or fewer accounted for over 97.7% of total US exports in 2012, and this number is steadily rising.

To open new markets and extend supply chains, the report urges U.S. lawmakers to liberalize trade and investment through ambitious new free trade deals like the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership. Additionally, it recommends that government should expand and streamline high-skilled immigration in order to broaden the country’s business ties abroad and suggests it would attract more investment from global companies by overhauling America’s ostensibly high-rate and notoriously complex corporate tax code.

Click here to download the report.

 

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