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| Canada-Colombia FTA Now in Effect | 
The Canada-Colombia Free Trade Agreement came into force on Aug. 15, 2011. The deal removes or reduces most tariffs on trade between the two countries. The agreement was reached in 2008 and received royal assent in 2010. Two-way trade between Canada and Colombia totalled $1.4 billion in 2010. Imports from Colombia include coal, coffee, bananas, fuel oil, and cut flowers. Canadian exports include wheat, news-print/paper, machinery, equipment, off-highway dumpers, and pulses (beans, peas, lentils). A copy of the Canada-Colombia FTA Certificate of Origin is available from our website here. | |
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| Changing Face of Trade Pacts Requires Coherence With WTO, Report Says | 
Burgeoning bilateral and regional trade agreements meet the need to regulate global production and can benefit non-members, but the WTO's multilateral system also has a role in reducing the resulting complexity, according to the latest edition of the organization's flagship publication released last month in Geneva. The World Trade Report is an annual publication that aims to deepen under-standing about trends in trade, trade policy issues and the multilateral trading system. | |
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| Shippers Warned to Brace For More LTL Rate Hikes |  | |
FedEx Corp.'s FedEx Freight unit recently announced that it will implement a 6.8% general rate increase, effective Sept. 6, although its fuel surcharge will remain unchanged. The rate increase applies to FedEx Freight shipments in the contiguous U.S. & Canada.
Starting this month, rival United Parcel Service's freight division is raising average noncontractual shipping rates in North America by 6.9%, as the industry copes with rapidly rising fuel costs.
Several other leading LTL carriers including ABF Freight System Inc., YRC Worldwide Inc., and Con-way Freight are also indicating they are prepared to impose rate hikes in the 5- to 6-percent range early next year. That would be about six months after the most recent cycle of increases, most of which went into effect at the beginning of August.
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| DNA "Taggant" for Packaging and Labels Could Prevent Counterfeiting |  | |
Counterfeiting has become a very real problem for food and consumer products supply chains - one
that's costing these industries billions of dollars a year world-wide. A recent story in Supply Chain Quarterly, outlined several strategies for cracking down on counterfeiting. Now comes word of a surprising new tool for preventing counterfeit packaging from entering the supply chain: DNA.
Deoxyribonucleic acid, it turns out, could eventually become as common in the manufacturing plant or the warehouse as it is in crime investigations.
According to Applied DNA Sciences Inc., the developer of the patented taggant, its SigNature DNA is a plant-derived mark that cannot be copied and can provide a "forensic chain of evidence" to authenti-cate products, including packaging and labels.
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| CBP Preparing to Pilot Test Reusable High-Security Container Lock |  | |
U.S. Customs and Border Protection is currently soliciting participants in a pilot program for the Secure Transit Corridors program, which will evaluate an experimental reusable high-security lock in a real world environment. The experimental locks for this pilot program, which is tentatively scheduled to begin Oct. 1 and last 12 months, will be used in place of the high-security seals that are normally affixed to containers bound for the U.S.
According to CBP, only Tier III members of the Customs-Trade Partnership Against Terrorism (C-TPAT) that make entry through the ports of Detroit or Nogales are eligible to participate in the pilot. For members who use Detroit, only supply chains utilizing highway carriers are being considered.
CBP states that the pilot will require the installation of system readers at the facility grounds where the containers are loaded and high-security seals are affixed to the containers. System readers will also need to be installed at the C-TPAT member's U.S.
distribution centers or warehouse facilities. The system readers create a geo-free-zone allowing the experimental locks to be opened and closed without sending an alarm message to the importer.
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| New Assessment on Imports of Softwood Lumber to Take Effect Next Year |  | |
U.S. importers and domestic manufacturers of softwood lumber will be subject to a new assessment beginning Jan. 1, 2012, under a Department of Agriculture final rule.
The assessments will be used to finance operations under the new Softwood Lumber Research, Promotion, Consumer Education and Industry Information Order, which aims to strengthen the position of softwood lumber in the marketplace, maintain and expand markets for softwood lumber and develop new uses for softwood lumber within the United States.
The assessment will initially be set at $0.35 per thousand board feet of softwood lumber shipped within or imported into the U.S. but could be increased to a maximum of $0.50 per thousand board feet. No assessments will be imposed on organic lumber, exports, entities that domestically manufacture and ship or import less than 15 million board feet per fiscal year, and the first 15 million board feet for imports and domestic shipments in excess of that amount.
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| U.S. Steel Import License Application Under Review |  |
The International Trade Administration is accepting public comments through Sept. 6 on form ITA-4141P, the application for steel import license.
The president's proclamation on steel safeguards mandated that the departments of Commerce and the Treasury institute an import licensing system to facilitate the monitoring of certain steel imports. Regulations were established that implemented the Steel Import Monitoring and Analysis system and expanded on the licensing system for steel that was part of those safeguards. The import license information is necessary to assess trends in imports of steel products.
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| Due Diligence on Conflict Minerals Should Begin Now, State Dept. Says |  | |
The State Department has issued a document providing guidance to commercial entities concerning the
conflict mineral requirements included in the financial reform legislation enacted last summer. While this guidance may be revised once final regulations from the Securities and Exchange Commission are issued later this year, State believes is it "critical" for companies to "begin now to perform meaningful due diligence."
Conflict minerals include columbite-tantalite (coltan), cassiterite, gold, wolframite and their derivatives, which are used in the manufacture of a wide range of goods such as cell phones, computers and video game systems, medical equipment, high-speed tools, machine parts, glass and lamps.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, certain persons who use these minerals must disclose to the SEC whether those minerals originated in the Democratic Republic of the Congo or an adjoining country, where their mining and sale has helped finance an ongoing civil war and related human rights violations.
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| FDA Creates Food Emergency Preparedness Tool |  | |
A new online tool developed by the FDA together with several branches of the U.S. government aims to encourage all stakeholders to examine their current food emergency response plans. The Food Related Emergency Exercise Boxed Set (FREE-B) is available here.
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| GHY E-Newsletter #19 August 2011 |
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Border Barriers: SMEs' Experience With Cross-Border Trade
According to a new report by the Canadian Federation of Independent Business (CFIB), the number one obstacle in cross-border trade for smaller companies on both sides of the border relates to the complexity of the process and its related paperwork. The common thread in the problems faced by small business is the varying requirements of government agencies and complicated rules and regulations.
In its research, the CFIB also found some interesting differences between Canadian and U.S. SMEs that were interviewed. Canadian firms seemed more willing to learn about border and trade rules in order to access new markets or purchase a wider range of goods or services. By contrast, many U.S. companies, perhaps due to having a larger domestic market than Canada does, are more more inclined to be apprehensive about shipping across the border, some even to the point of being afraid to export.
To lessen the intimidation felt by many SMEs, the CFIB recommends that customs agencies in both Canada and the United States can help by focusing on small-business friendly policies, providing information in plain language, making an extra effort to provide information and services geared to small business' unique needs, and creating a culture of service and understanding of small business challenges. The trade group feels that if such steps were taken by the CBP and CBSA it could help to encourage more small firms to take the plunge and start looking to other markets to grow and expand their business.
As both Canada and the U.S. have a strong entrepreneurial presence with SMEs accounting for half the GDP, more than half of employment and the bulk of net new jobs, the CFIB maintains that efforts made by customs agencies to help facilitate cross-border trade for SMEs would be beneficial to the economy as a whole. |
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Harper's Latin America Tour Aims to Boost Trade and Investment
Prime Minister Stephen Harper concluded a four-country Latin American tour earlier this month having announced a number of modest trade deals with Brazil, Costa Rica and Honduras.
Harper and Brazilian President Dilma Rousseff signed agreements on air transport, social security, Olympic co-operation and international development aid effectiveness. They also announced a business leaders' forum that would see Canadian and Brazilian executives meet on the margins of high-level diplomatic talks.
In Colombia on what some described as a free trade "victory lap" for the Prime Minister, he held a roundtable with Canadian businesspeople in Bogota to discuss business opportunities in the wake of the Canada-Colombia free trade deal coming into force. While there, a Canadian company's oil operations were attacked by what Colombian officials said were FARC revolutionary militants.
During a working visit with President Laura Chinchilla in San José, Costa Rica, Harper announced the launch of negotiations to  modernize the existing free trade agreement between Canada and Costa Rica, as well as the signing of an air transportation agreement and a tax information exchange agreement between the two countries.
According to the PMO, the negotiations with Costa Rica will aim to accelerate the elimination of tariffs for agricultural and industrial goods, increase market access and broaden the agreement to cover other areas, such as cross-border trade in services, including financial services.
On his final stop in Honduras, the first visit by a foreign leader since the Central American nation was re-admitted into the Organization of American States (it had been kicked out of the OAS after a military coup ousted the country's leftist president in 2009), Harper announced that Canada has struck a free trade deal with the country.
The deal is controversial, however, as critics say the country's human rights record is still dismal. Canadian mining companies have also been blamed for health problems among indigenous populations in Honduras. Two-way trade between Canada and Honduras was worth $192 million in 2010. Canadian exports to Honduras were $40.8 million, while Canada imported $151.2 million worth of goods from the country, which is one of the poorest in the region.
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U.S. Senate Leaders in Agreement on Pending Free Trade Deals
Three long-delayed trade deals with South Korea, Panama and Colombia are moving closer to a vote after the Senate's leaders announced that they had reached an agreement to bring the pacts up for consideration when Congress returns from recess in September.
Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) also agreed to hold a vote on a program favored by Democrats, called Trade Adjustment Assistance, which provides aid and retraining to workers who have lost their jobs because work was sent overseas.
 Industry associations praised the move, but urged lawmakers to follow-through as soon as they return.
"As the president and some congressional leaders stated this week, the legislative agenda in September must focus on getting Americans back to work, increasing the volume of exports that leave our ports every day and generating economic growth," said Chuck Dittrich, vice president for regional trade issues at the National Foreign Trade Council. "While there will be many legislative priorities when Congress returns, the administration and Congress must now move to a vote and finally take yes for an answer on trade."
Thomas J. Donohue, president and chief executive officer of the U.S. Chamber of Commerce, said further delays by Congress and the administration are "unacceptable.
"We must not see any more roadblocks throw in front of these deals during the short legislative session that remains," he said. "While our economic recovery is stalling, delaying action on these job-creating trade agreements is absolutely inexcusable."
Congressional approval is by no means guaranteed, but passage of the deals would fulfill a plank of President Obama's economic policy. The administration has called for a doubling of U.S. exports by 2015. "These agreements will support tens of thousands of jobs here at home," U.S. Trade Representative Ron Kirk said after news of the Senate agreement. |
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After Delays, U.S. Customs Reports Progress on ACE Testing
Pilot testing of the ocean and rail manifest systems in the U.S. Customs and Border Protection's Automated Commercial Environment is scheduled to begin early this fall according to Cindy Allen, executive director of the ACE business office.
Allen said that successful performance of the new manifest systems will give Customs the opportunity to turn off the rail and ocean manifest systems in the 1980s-era Automated Commercial System, one of the primary goals in ACE development.
The first phase of testing began in May with 17 ocean carriers, four railroads, a customs brokerage and a service center providing data for testing. After September, Customs will invite three ports to use ACE for all ocean and rail manifests. If the manifests pass all tests, Customs will formally accept the software from its prime contractor in January 2012, leading to a shutdown of the ACS manifests in June.
According to Allen, ACE is making progress in reducing paperwork with the perfection of a document imaging system that allows importers to electronically submit supplementary information to their entries.
On August 12, CBP announced that later this month it will be deploying new capabilities that will allow rail and sea carriers to transmit electronic manifest data to the Automated Commercial Environment.
Customs is also working on modernization of the Census Bureau Automated Export System, and making it a part of ACE. Allen said Customs is mindful of the need for maintaining the confidentiality of Census data, but it will also give Customs officers the opportunity to operate in a single system.
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Provinces Unite on New Trade Role
For the first time, Canadian provinces and territories have agreed to sign on to a policy that seeks a framework with the federal government codifying their involvement in international trade talks.
The Council of the Federation released its provincial trade strategy, Canada in the Global Economy, during its annual meeting on July 22nd. The document stresses the importance of taking advantage of the Beyond the Border Working Group and the Regulatory Cooperation Council to improve upon the mature trade, economic and energy relationship between Canada and the US. In a press statement, the premiers indicated their belief that provinces and territories need to have active and meaningful participation in the new border security initiative.
This represents a significant departure from the past when, for various reasons, governments at the sub-federal level had little success organizing a unified effort to be included as active participants in international trade negotiations.
Recent trade deals, however, have demanded change in this regard. Generally, they are now much more comprehensive and involve many more "behind-the-borders" issues falling under provincial jurisdiction. For example, the European Union wanted provincial and municipal procurement included in the proposed free trade deal with Canada, and therefore provinces have subsequently been sitting at the table. As well, in 2010, the federal government allowed US firms for the first time to bid on provincial or municipal procurement contracts for a temporary period.
The question now will be how the federal government will move to further tackle these behind-the-border issues while still holding the levers of power when it comes to trade.
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FDA To Impose New Re-examination Fees on Food Imports
The Food and Drug Administration announced its plan to implement re-examination fees under the recently enacted FDA Food Safety Modernization Act. Through FSMA, FDA is authorized to collect a fee from importers for a re-inspection or re-examination of an imported food if there is any identified failure to comply with a requirement that is materially related to food safety.
Slated to go into effect October 1st, 2011, this new fee structure will create significant new layers of costs and fees for importers. At the core of this new process is the requirement that at least two examinations of a food must take place for FDA to assess the new imported food fee.
 U.S. importers, most of them small businesses, will be charged $224 per hour (plus expenses) for any such re-examinations. Those expenses will presumably be passed on to consumers resulting in an increase to food costs in the USA. In its Federal Register notice, FDA stated that a first examination occurs whenever it reviews information to determine a food's admissibility and that review results in an FDA detention for a violation related to food safety. Such a review includes the few instances when FDA actually samples and tests imported food and conducts a facility inspection (e.g., of a foreign manufacturer or US importer) or a food label review.
However, FDA also includes in its first examination definition other tasks that do not involve an FDA examination of the food at all, such as reviewing sample results from a third party, reviewing any relevant epidemiological evidence, reviewing a third party facility inspection report, and almost any activity related to an FDA import alert.
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A Fresh Start on Improving Economic Competitiveness and Perimeter Security
A new research paper by Derek H. Burney, former diplomat, conservative political strategist, and business executive, provides a comprehensive overview of the new initiative for a North American security perimeter, a deal that would boost co-operation on border security and better facilitate legitimate cross-border trade. The perimeter security and economic competitiveness initiative is a bold undertaking - the first, potentially major, bilateral initiative in more than two decades. The agenda for negotiations is intended to streamline access for people, goods and services, improve cooperation between border agencies and law enforcement officials, and alleviate the regulatory over-burden that stifles the efficiency of a highly integrated North American economy.  Border issues have languished for the past decade. New monitoring and surveillance technologies, all in the name of enhanced security, frustrate rather than facilitate trade. New inspection procedures and reporting mechanisms were introduced, contributing to long line ups at border crossings and undermining the practical advantage of "Just-in-time" deliveries for tightly organized cross-border supply chains.
In an age of new security threats, including from cyberspace, it makes sense to heighten surveillance and joint monitoring capacities. Likewise, the forces of globalization oblige countries like Canada and the U.S. to revitalize trade flows and break down regulatory barriers.
There are no guarantees of success, there are many formidable challenges involved, and much hard negotiation lies ahead. A key ingredient will be firm, persistent political prodding from the top on both sides of the border.
Along with firm political leadership, the best antidote to attitudinal impediments in both countries will be overt support from credible stakeholders who stand to benefit from the new arrangements -- exporters, importers, investors, truckers, professionals and travelers. Broad advocacy efforts can strengthen the hands of the negotiators and the legitimacy of the process while mustering essential public support for the result. The document was originally published as a University of Calgary School of Public Policy Research Paper and can be downloaded from our website. |
C-TPAT Members to be Notified of Others' Changes in Status
U.S. Customs and Border Protection announced recently a change to the Status Verification Interface (SVI) for Customs-Trade Partnership Against Terrorism members in response to requests to allow the SVI to notify C-TPAT members when another member (that is being monitored) has had a change in status.  While CBP cannot give exact details of such events, as of Aug. 14 it deployed a change to SVI that will include the following data elements to the SVI monitoring table:
1) business type (which was not previously available on the main screen but was available if the hyperlink in "partner name" was clicked); 2) added date (defaulted to Aug. 14, 2011, for existing SVI-monitoring partners); and 3) modified date (which will indicate when a modification happened to a monitored partner's account status)
In addition, the SVI will email C-TPAT partners a notification on their SVI monitoring page when the following changes occur: a company drops off the list (i.e., they generate a new SVI number, in which case there will be no details on the SVI page as the partner has initiated an event to be removed from the monitoring list), a company status changes to a non-certified state, or a company status changes to a certified state. New additions will not trigger an email notification.
CBP states that this new feature should be considered not as a replacement for regular SVI monitoring but as an enhancement to current procedures.
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Get Help to Get Export Ready - Ontario Exporters Fund
The Ontario Exporters Fund has been established to assist small and medium-sized enterprises (SMEs) to become export ready and help them gain/increase access to international export markets. The fund is administered by the Ontario Chamber of Commerce (OCC) with the support and funding from the Ontario government.
The Ontario Exporters Fund is intended to: help SMEs better understand their export capacity and thereby improve their ability to access foreign markets; and encourage SMEs to develop focused export market access strategies.
 Ontario SMEs can receive up to $5,000 to conduct an export readiness assessment and up to $50,000 to cover 50% of eligible costs associated with hiring an exerienced Export Manager. To be eligible, your company must have between five and 500 employees, have been a registered company (federally or provincially) for a minimum of two years and operate in one of these sectors: Advanced Manufacturing; Aerospace; Building Products and Construction; Clean Technology (including renewable energy and environmental technologies); Exportable Professional Services (e.g., Architecture, Engineering, Urban Planning); ICT including Digital Media; and Life Sciences. Note: Applicants do not need to be a member of the OCC to qualify for funding. Click here to find out more about the program. |
Truckers Meet With Government on Cargo Crime Issues
The Canadian Trucking Alliance (CTA) recently met with Vic Toews, Canada's Public Safety Minister, to speak about issues such as the Canada-U.S. border and the growing problem of cargo crime. The meeting provided the minister with a first-hand account from people most affected by these situations.
The CTA said it hopes the meeting will contribute not only to a better understanding of each other's concerns, but that it will feed directly into the Regulatory Cooperation Council and the Beyond the Border Working Group, two consultative bodies formed after the U.S. and Canadian governments announced negotiations aimed at reaching an agreement on a joint perimeter security strategy.
 "We are delighted the minister took the time to come and visit with the industry directly," said David Bradley, president and CEO of the CTA. "There's nothing like hearing for himself about the issues the people that live and breathe the border daily are encountering."
The industry is calling for increased enforcement resources to be allocated to cargo crime and for the courts to begin handing out stiffer penalties as provided under the government's new "tough on crime" legislation. The CTA noted that organized crime syndicates are playing an increasing role in these crimes. "While the trucking industry has made substantial investments in security programs and policies, organized criminals are not deterred," Bradley said. "In the absence of a greater enforcement effort and penalties, the return from cargo crime is seen as far outweighing the risk by many criminals.
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Shifts in U.S. Merchandise Trade 2010
The International Trade Commission released Aug. 15 its annual compendium of data and analysis examining changes in merchandise trade with key U.S. partners and in crucial U.S. industries.
The report provides a comprehensive review of U.S. trade performance in 2010, focusing on changes in exports, imports and trade balances of key natural resources, agricultural and manufacturing industries as well as changes in U.S. trade with major partners and groups. Also included are profiles of the U.S. industry and market for over 250 industry groups and subgroups, featuring data for the years 2006 through 2010 on consumption, production, employment and trade.
The report's findings include the following:
Overall Performance
From 2009 to 2010, the value of U.S. merchandise exports increased by 20% to $1.12 trillion and U.S. imports for consumption increased by 23% to $1.90 trillion. The associated trade deficit increased as well, rising by $164.1 billion (27%) to $776.5 billion. All U.S. industries and sectors except agricultural and forest products registered a trade deficit. The most significant deficits occurred in energy-related products, electronic products and transportation equipment.
Export Growth
U.S. exports increased in all merchandise sectors. The greatest absolute increase ($31.1. billion, or 19%) occurred in the chemicals and related products sector, 25% of which was driven by gains in certain organic chemicals and miscellaneous plastic products. Exports grew due to greater foreign demand for these products as a result of government policies in key foreign markets encouraging the adoption of renewable fuels and increased joint venture projects in key Asian economies. Transportation equipment exports grew by $28.3 billion (15%) and much of this growth was influenced by increased sales of motor vehicles.
Import Growth
The largest absolute increases in imports (by value) occurred in energy-related products ($77.3 billion), transportation equipment ($67.1 billion) and electronic products ($66.2 billion). Canada remained the leading source of U.S. imports of energy-related products, representing 28% of the total U.S. trade deficit in these products. Greater domestic consumption of motor vehicles ccounted  for 57% of the import growth in transportation equipment, and Canada, Japan and Mexico remained the largest suppliers to the U.S. market (a combined 64%). Within the electronic products sector, imports of three product groupings increased significantly, collectively growing by $45.2 billion: computers, peripherals and parts (up 25%); telecommuni-cations equipment (up 23%); and semiconductors and integrated circuits (up 38%).China remained the United States' single largest source of imports by value, and the $278.3 billion deficit with China was the largest with any U.S. trading partner.
Bilateral Trade
There was an increase in the trade deficits between the U.S. and its five leading trading partners in 2010, including the European Union (up $21.8 billion), Canada (up $16.7 billion), China (up $47.9 billion),
Mexico (up $26.6 billion) and Japan (up $15.3 billion). Together, these economies accounted for 78% of the total U.S. trade deficit, maintaining their relative positions from 2009 to 2010. |
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Finding time to follow the latest international trade developments and programs of Customs agencies on both sides of the border relevant to your business can be challenging, so we hope you find this issue of our Tradelines e-newsletter to be a helpful resource in this respect. As always, we'd greatly appreciate any opinions, comments and suggestions you may have to help us improve this information resource, so please don't hesitate to let us know what you think. If you haven't already, we'd like to take this opportunity to invite you to check out our Tradelines E-News weblog where you can find current stories updated daily about business events and developments that are important to Canadian importers and exporters. Sign up for our RSS feed and get automatic updates to your favourite reader as soon as they're posted. As well, you can now follow GHY on Twitter for the latest information, updates and links to articles of interest. |
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