Canada Not Benefitting From CETA

Canada EU flags

Canada’s Minister of Agriculture Marie-Claude Bibeau admits the country is not benefiting from the Comprehensive Economic and Trade Agreement (CETA) with the European Union.

Expected to reach $1.5 billion in new agri-food exports, the deal has fallen short of those targets since being implemented in 2017.

In a September 21st letter to Prime Minister Justin Trudeau, five former premiers wrote the deal has “failed to deliver on its promises for Canada’s agri-food exporters.”

“This outcome results from the EU Commission and EU member states continuing to impose a wide range of trade barriers for pork, beef, canola, sugar and grains, or failing to reduce those that were to be lowered or eliminated altogether through CETA,” reads the letter penned by former Saskatchewan premier Brad Wall and others.

During her virtual appearance at Politico’s Agriculture and Food Summit on September 25, Bibeau emphasized Canada’s commitment to advocating for rules and science-based trading with its partners, including the EU.

During her appearance at the Politico event, Bibeau highlighted Canada’s work to reform the World Trade Organization (WTO), saying it’s important that the international body “is strong and functioning well.”

She didn’t close the door on including agricultural subsidies as part of the discussions to succeed in that reform. Developing countries, particularly some in South America, have contended subsidies offered by the EU, the United States, Canada and other create an unfair global agri-food trading environment.

(Source: The Western Producer)

Automakers Sue U.S. Government Over Tariffs on Chinese Imports

mercedes-benz car

Automakers Tesla, Volvo, Ford and Mercedes-Benz have sued the U.S. government over tariffs on Chinese goods, demanding customs duties paid on imports be returned, with interest.

The lawsuits were filed over the past days in the New York-based Court of International Trade and concern tariffs imposed by the U.S. Trade Representative on imports from China, which Tesla in its filing called “arbitrary, capricious, and an abuse of discretion.”

The duties came amid a wider trade dispute between Washington and Beijing, and the automakers are asking for the tariffs to be revoked and any money paid to import parts returned.

Mercedes in its filing accused Washington of “prosecution of an unprecedented, unbounded and unlimited trade war impacting over $500 billion in imports from the People’s Republic of China,” and argued U.S. law “did not confer authority on defendants to litigate a vast trade war for however long, and by whatever means, they choose.”

The lawsuits target the expansion of tariffs by the Office of the U.S. Trade Representative, under Section 301 of the Trade Act of 1974. 

China and the U.S. signed their “phase one” trade deal earlier this year that partially ended the dispute, under which China promised to buy $200 billion in U.S. goods and Washington backed down on tariffs on $160 billion in Chinese goods, particularly consumer electronics.

The U.S. also slashed by half 15% tariffs on $120 billion in goods but kept in place 25% duties on $250 billion in imports, which some of the automakers cited in their lawsuits.

Beijing has retaliated for these levies, while Washington is aiming both to reduce its trade deficit and reform Chinese business practices it considers “unfair.”

The Commerce Department reported the U.S. trade deficit in July surged nearly 11% to $63.6 billion, with the deficit with China climbing to $28.3 billion.

(Source: VOA)

Freight Capacities Continue to be Challenged Amid COVID-19 Pandemic

freight

Undoubtedly, 2020 has been a year of challenges. Whether by Air, Ocean, or Ground, freight has felt the deep impact of the COVID-19 pandemic.

Air Cargo

As airlines have increased the number of flights, air freight rates have decreased with the corresponding increase in capacity, with air rates currently at approximately double. It is currently forecast that the demand for air cago will increase, along with rates. With the much anitcipated fall launches of new smartphones from Apple and Samsung, air capacity will continue to be challenged. 

At destination, there is significant congestion and wait times at terminals. Airline handling warehouses are struggling to keep up with demand, causing lengthy waits for pick up.

Ocean Cargo

Early in the pandemic, ocean carriers started to use blank sailings to control capacity and increase their pricing. As economies re-opened, supply chain have not been able to recover from this. Large volumes of cargo being held at origin were being pushed out in addition to large quantities of PPE.

In May, ocean rates were $1600 USD to the West Coast, and $3100 to the East Coast. Currently, ocean rates have increased to $4000 USD to the West and $5200 USD to the East respectively. 

With the huge surge of cargo, Canadian railroads have not been able to accommodate the overflow. The Montreal port strike that took place this past August has had a crippling impact on rail in particular, as carriers diverted containers to Halifax, and rail simply could not provide enough cars to move cargo between Prince Rupert and Halifax. It is expected that the backlog of cargo diverted to Halifax could take upwards of a month to clear.

It is also currently a challenge to secure export rail appointments, as many rail locations are no longer able to accept empty containers since they have run out of capacity.

These cargo delays are causing equipment shortages at origin.

The port facilities — Prince Rupert, Vancouver, Montreal, and Halifax — are all full and dealing with congestion. This is causing delays in cargo loading to rail. In Vancouver, it is now taking longer for vessels to berth and discharge containers. For some vessels it is currently taking up to 3-4 days for vessels to berth.

The cumulation of these issues is wreaking havoc on schedule integrity. There are some new schedules from Shanghai to Vancouver that have increased from 15 to 30 days, while vessels are not returning to Asia on time, impacting schedules at origin.

Ground Cargo

Despite the closure of the Canada / U.S. borde, truck transportation has not been largely affected. The current issues that do exist are around cargo imbalances, with more cargo coming out of some areas than trucks moving in. Carriers moving cargo to Canada are full.

These challenges, of course, pose significant obstacles for businesses. We encourage you to reach out to us for guidance around how to navigate these complex freight issues as we continue to move through the COVID-19 pandemic.

We will continue to provide updates as they become available, and are always available to answer any questions or concerns. 

Trump to Approve $22B Railway Between Alaska and Alberta

U.S. President Donald Trump says he will grant approval to a $22-billion freight rail project connecting Alaska and Alberta.

The president tweeted Friday that based on the recommendations of Alaska Senator Dan Sullivan and Congressman Don Young, he will be issuing a presidential permit approving the A2A Rail project. 

The project would build a new rail line from Fort McMurray, Alta., through the Northwest Territories and Yukon to the Delta Junction in Alaska, where it will connect with existing rail and continue on to ports near Anchorage. 

The 2,570-kilometre railway could move cargo like oil, potash and ore, container goods, or even passengers. 

Christine Myatt, a spokesperson for Alberta Premier Jason Kenney, said in an emailed statement that the premier welcomed the approval.

Kent Fellows, an economist at the University of Calgary’s School of Public Policy, said while oil is likely the main driver for the project, it’s not the only advantage to bringing a rail line up north.

“Rail has some advantages and some drawbacks compared to pipelines,” he said.

“You can diversify a little bit … you don’t just have to haul crude oil. You can hold a lot of other commodities, too, as long as there’s a market for it. So market access is big, not just for crude oil.”

Fellows said as well as carrying Alberta or Yukon goods to international markets, the line could be used for imports, too.

“That’s the whole point of trade. It’s a two-way street.”

The next steps will include going through environmental impact assessments, and obtaining the correct regulatory approvals in both the U.S. and Canada. 

In July, A2A Rail commissioned an engineering firm to begin surveying land along the Alberta segment of the proposed route. It said it planned to begin field activities like land clearing, fencing and access road preparation in the province in the next three to six months. 

“The new rail line will create new economic development opportunities for a wide range of businesses, communities and Indigenous communities in Canada and Alaska,” A2A founder Sean McCoshen said in a release at the time.

A2A Rail has said that if built, the project will create more than 18,000 jobs for Canadian workers and bring in $60 billion to the country’s GDP through 2040. 

(Source: CBC News)

Webinar: Avoid Audits and Delays While Increasing Your e­Commerce Business

Carson International is pleased to partner with Miller Thomson LLP for another instalment in our webinar series addressing Canada/U.S. cross-border trade developments and updates.

Cross­-border e­commerce is plagued by a myriad of legal and financial regulations, with every country has its own regulations concerning imported goods. Customs agencies use the commodity type, quantity, and other factors to determine duties and taxes charges.

Avoid missteps that may result in border delays, financial headaches and fines by joining the conversation.

Panelists:

Dave Pentland, Carson International
Dan Kiselbach, Miller Thomson LLP

Webinar Details:

Avoid Audits and Delays While Increasing Your e­Commerce Business
Wednesday, September 30, 2020
Time: 12:00 p.m. (PST) / 3:00 p.m. (EST)

Please register by September 29 at 4:00 p.m. (PST).

The webinar will be approximately 30 minutes in length.

Canada Abandoning Free Trade Negotiations With China

Chinese and Canadian flags

Canada is abandoning free trade negotiations with China amid a host of disagreements on a range of topics, according to Foreign Minister Francois-Philippe Champagne.

“I do not see the conditions being present now for these discussions to continue at this time. The China of 2020 is not the China of 2016,” Champagne said about trade negotiations as quoted by The Globe and Mail.

The comments mark a major policy shift towards China that brings Canada more in line with the hardline posture adopted by the United States, Australia and parts of the European Union.

What began as an expressed interest in fostering deeper economic ties between the two countries, has now turned soured after Canadian authorities detained Huawei CFO Meng Wanzhou in 2018 at the request of the U.S., which was followed by the arrests of two Canadian nationals on charges of espionage in China.

The tense relationship has been further exacerbated by Canada’s condemnation of the newly enacted Chinese law on national security in Hong Kong and a suspension of some bilateral agreements with the special administrative region.

Beijing has said that it reserves the right to respond to any interference on Canada’s part and the Canadian side will be held accountable for all the consequences.

Despite the tensions, China remains Canada’s second-largest trading partner after the US.

(Source: Economic Times)

CERS Transition Date — September 30, 2020

freight

The Canadian Export Reporting System (CERS) is a free, web-based, self-service portal for submitting electronic declarations and Summary Reporting Program monthly reports. It is replacing the Canadian Automated Export Declaration (CAED) system.

All Canadian exporters will have to report in the new system by September 30, 2020. The Canadian Border Services Agency (CBSA) has recently release new documents to support transition to the new system:

If you have any questions, please get in touch with Carson Freight Services by clicking on the button below.

Please note that Carson has pre-loaded the information of existing Carson Freight clients, effectively registering you for the new CERS system.

Clock Is Ticking for Canada-U.K. Trade Deal

UK Canada flags

With only three months to go, businesses that trade between Canada and the United Kingdom are worried about not having a post-Brexit deal in place.

Although the United Kingdom left the European Union in January, the terms of the EU’s Comprehensive Economic and Trade Agreement (CETA) with Canada continue to apply until Dec. 31, offering a bit more time to negotiate a bilateral replacement deal — but not that much more.

“As the U.K. and EU’s transition period nears its end, the clock is ticking,” reads a joint statement Monday from the Confederation of British Industry and the Canadian Chamber of Commerce. “The benefits businesses have under CETA are set to disappear and without a trade deal in place both our countries will be going into unchartered territory.

“After months of trade and supply chain disruptions due to the pandemic, a continuation of uncertainty as our economies slowly rebuild is not an environment businesses can withstand,” they said.

CETA has been good for both countries, the statement said, boosting two-way trade by about 10 per cent over its first two years. That’s why they’re calling for a bilateral deal to replace it “at the earliest opportunity.”

According to International Trade Minister Mary Ng’s office, officials now are working toward a “transitional agreement” to minimize disruptions for businesses and workers. 

A transitional agreement with Canada in the short term won’t be the same as a customized, bilateral agreement. That would take far longer than three months to conclude.

It would, however, prevent the two countries from “crashing out” of CETA, offering a stop-gap measure until both sides have the time and capacity to negotiate something more bespoke.

Ng confirmed that Canada and the U.K. are back at the table while taking questions during a webinar Monday morning hosted by the Canada–EU Trade and Investment Association to mark CETA’s three-year anniversary.

The minister said she is “very hopeful” and it’s her ambition to reach a transitional agreement “before or in time” for Brexit.

“That will set the stage for a more comprehensive [free trade agreement] with the U.K.,” she said. “The most important thing for me right now is stability for Canadian businesses … It’s our job to make sure that we do our level best to accomplish that environment for them.”

(Source: CBC News)

Steel Import Licenses Must Include Country of “Melt and Pour”

steel

The U.S. Department of Commerce’s Steel Import Monitoring and Analysis System (SIMA) will be modified effective October 13, 2020, to require that the country where the steel was “melted and poured” to be identified in the license application. Other changes in the final rule published on September 11, 2020, include adding coverage for eight additional HTS numbers in order to synchronize the system with the coverage of Section 232 for basic steel mill products; increasing the low-value license to $5,000, and allowing multiple uses; and extending the SIMA program indefinitely.

The new rule defines “melted and poured” as “the original location where the raw steel is: (A) First produced in a steel-making furnace in a liquid state; and then (B) Poured into its first solid shape…The first solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished steel mill product.”

The reporting requirement does not apply to raw materials used in steel manufacturing. The new required information on the country of “melt and pour” may also be useful in investigating circumvention of duties.

The SIMA website will shut down from October 9 until October 13, 2020 when the new website is updated and goes live. Commerce has created a page with the latest updates regarding SIMA. In the interim, Commerce stressed that there will be limited availability for manual license processing.

Click here to read the Final Rule from in the Federal Register.

For any questions, please reach out to Carson.

(Source: Global Trade)

Hong Kong Formally Objects to U.S. Demand for “Made in China” Export Label

clothnig

Hong Kong has filed a formal objection with the United States over its demand for “Made in China” labels on goods exported from the Chinese semi-autonomous city, the commerce secretary said on Wednesday.

Washington’s move last month followed China’s imposition of a national security law on the former British colony and a U.S. decision to end a special status that had allowed Hong Kong different treatment from the rest of China.

Commerce Secretary Edward Yau said he formally asked the U.S. consulate to relay Hong Kong’s request for withdrawal of the new regulations to U.S. trade officials.

“Such regulations go contrary to WTO (World Trade Organization) regulations and infringe upon our rights as a separate customs region,” Yau told reporters. “We are a separate, and indeed, independent member of the WTO.”

The United States has extended until Nov. 9 its enforcement deadline on the “Made in China” label, from Sept. 25 previously.

(Source: The Chronicle Herald)