Trade News

September 2, 2020

Panic-Shipping Results in Temporary Increase of Exports to U.S., Drives Up Transport Costs

When the COVID-19 pandemic hit Canada and the longest international border in the world between two countries closed to non-essential travel, export traffic going south to the United States actually increased from some Canadian exporters.

Shipments doubled or tripled from certain sectors in the immediate aftermath of the border restrictions, says Dave Stone, manager of pricing and operations at Langley, B.C.-based Focus West Logistics, which helps companies ship goods across North America.

“Surprisingly, we saw an increase in volume and business picked up, mainly due to companies panic-shipping,” says Mr. Stone. “You have companies that maybe are shipping one truckload a month thinking, ‘Is the border going to close next month? We better ship three truckloads.’ They were trying to move as much over the border to their customers as possible and stockpile.”

The pandemic has highlighted both the strength of Canada’s trade relationship with its neighbour to the south, and the need to diversify markets.

Canadian exports saw a sharp decline in the first few months of the pandemic. Overall, Canadian merchandise exports decreased to $105.7-billion in the second quarter from $140.4-billion in the first quarter of 2020 – a nearly 25-per-cent decline, according to Statistics Canada.

But exports rebounded in June, due largely to an increase in shipments to the U.S., which were up 21.8 per cent to $27.5-billion from $23.2-billion in May. For comparison, exports to all other countries in June amounted to $12.2-billion, according to Statistics Canada.

And while exports of energy products, including oil, gas and electricity, and motor vehicles and parts declined over the quarter, exports of food products from both agriculture and fisheries actually increased.

Demand has returned to normal, for the most part, but for many countries the pandemic has highlighted that they are very reliant on trade for their food supply. In the longer term, that may impact Canada’s agricultural exports.

Canadian Manufacturers and Exporters (CME) is working with the federal government to help facilitate trade with Europe and Asia, but Canada is competing with countries that are, under normal circumstances, as competitive and probably more productive.

Canada will likely see a high, single-digit drop in manufacturing output this year, so the North American trade agreement and its most important trading partners the U.S. and Mexico, should remain the focus right now.

(Source: The Globe and Mail)

August 31, 2020

Trump Targets Canadian Lobster

The U.S. government of Donald Trump has launched a trade investigation to assess the impact of Canada’s worldwide lobster exports on the U.S. lobster industry.

On Aug. 24, the United States International Trade Commission announced it will investigate the possible negative effects of the Canada-Europe Trade Agreement (CETA) on American lobster exports.

The investigation was requested by U.S. Trade Representative Robert Lighthizer. The investigation will also examine tariff treatment of Canadian lobster in the United Kingdom, China and other countries.

The trade investigation was launched three days after the European Union eliminated an eight per cent tariff on U.S. lobster, sweeping away an advantage enjoyed by Canadian fishermen under CETA.

It was a major win for Maine’s lobster industry and for Trump, who had demanded European tariff relief two months earlier. Trump visited Maine in June, where he held a roundtable with the fishing industry and announced he was reopening the Northeast Canyons and Seamounts Marine National Monument off the New England coast to commercial fishing.

Last week, a Maine lobster fisherman was a featured speaker at the Republican National Convention, where Jason Joyce praised the removal of the European tariff and Trump’s decision to reverse the Obama administration protection for the seamounts.

A one-year trade deal with China eliminated a 35 per cent tariff on U.S. lobsters imposed during a trade war between the countries.

Lobster fishermen and exporters in Nova Scotia were beneficiaries as Canadian shipments to China soared to fill the void.

The trade commission’s findings will be released in January, but not before a public hearing is held Oct. 1 — about a month before the U.S. election.

(Source: CBC News Nova Scotia)

August 28, 2020

WTO Panel Ruling Favours Canada in Challenge to U.S. Lumber Tariffs

A World Trade Organization panel has ruled mainly in Canada’s favour and against the United States in the long-running dispute between the two countries over pricing, shipments and alleged subsidies of softwood lumber.

The WTO dispute-resolution panel’s decision, issued August 24, drew praise from Canadian government and timber industry officials but a sharp rebuke from U.S. Trade Representative Robert Lighthizer and a blast of criticism from a U.S. lumber industry group.

Softwood lumber is an important material in housing construction.

Mary Ng, Canada’s minister of small business, export promotion and international trade, hailed the WTO panel’s decision, which was initiated in 2018 by her country’s government, challenging U.S. tariffs on Canadian softwood lumber.

Ng called on the U.S. to end the duties it imposed on Canadian lumber exports in 2017. She said in a statement, “Canada remains unequivocal: U.S. duties on Canadian softwood lumber are completely unwarranted and unfair. This decision confirms that.”

Ng denied U.S. claims that Canada subsidizes its lumber industry.

Lighthizer shows no signs of relenting, however. He said in a statement, “This flawed report confirms what the United States has been saying for years: the WTO dispute settlement system is being used to shield non-market practices and harm U.S. interests.”

Jason Brochu, the lumber coalition’s co-chair, noted that the WTO ruling isn’t binding on the U.S.

The WTO ruling and the two countries’ sharply divergent reactions to it come as lumber prices in the U.S. have soared by more than 130% since mid-April, according to the National Association of Home Builders. The reasons include a rise in home-building and DIYs increased interest in home improvement projects as COVID-19 kept many at home.

The WTO panel, among other things, found fault with the factors the U.S. used to determine Canadian stumpage — payments by companies to provincial governments for harvesting timber on government land—and thus to calculate the tariff levels.

Click here to read a summary of the WTO’s panel report.

(Source: Engineering News-Record)

August 26, 2020

USTR Excludes Additional Goods From China Tariff Section 301

The USTR has updated the list of excluded products from the administration’s Section 301 List 4A tariffs.

The limited round of exclusions includes contains one subheading (thermal transfer printers of HTS 8443.32.1050) that is fully excluded, plus the following nine specific products:

3926.90.9985 (Prior to July 1, 2020) & 3926.90.9990 (Effective July 1, 2020) Doorway dust barrier kits, each comprising a sheet of plastics measuring not more than 0.15 mm in thickness, at least 1.2 m but not more than 1.6 m in width and at least 2.1 m but not more than 2.6 m in length, with two parallel slide fasteners extending the full length of the sheet, two metal flap hooks and a roll of tape with adhesive on both sides for securing the sheet to a doorway, such kits put up for retail sale.

3926.90.9985 (Prior to July 1, 2020) & 3926.90.9990 (Effective July 1, 2020) Heads, plates, grip disks, slide clamps, foot plugs and other parts of plastics, of a kind used in temporary dust barrier systems for interior construction.

3926.90.9985 (Prior to July 1, 2020) & 3926.90.9990 (Effective July 1, 2020) Locking zip tie fasteners of plastics.

7013.99.9000 (Prior to July 1, 2020) & 7013.99.9010 or 7013.99.9090 (Effective July 1, 2020) Decorative glassware, each consisting of a rectangular glass box in a brass frame with a hinged top, measuring at least 11.5 cm but not more than 21.5 cm by at least 16 cm but not more than 26.5 cm by at least 3 cm but not more than 8 cm, weighing at least 500 g but not more than 1.5 kg, valued over $5 each.

8471.60.8000 Digital optical image scanners with maximum scanning width measuring at least 60 cm but not more than 92 cm.

9506.99.6080 Slingshot apparatus, whether or not electrically powered, of a kind used for outdoor games.

Given these exclusions will be expiring very soon, requests to help the USTR determine whether they should be extended beyond September 1, 2020 should be made immediately. This can be done by using the USTR online portal (docket number USTR-2020-0031) here.

August 21, 2020

Port of Montreal Strike Has Ended

Employers and dockworkers at the Port of Montreal have reached a truce after a 12-day strike, paving the way for Canada’s second largest port to reopen.

The two sides have agreed to halt a labour action that has left thousands of containers languishing on the docks. The deal lays out a seven-month period to continue contract talks while port operations carry on without the threat of work stoppage.

“We are confident that we will be able to reach a deal between now and that…time,” Maritime Employers Association CEO Martin Tessier said at a news conference Friday.

It will take two to four weeks to move the accumulated containers off the terminals and onto trucks, trains and ships.

(Source: CTV Montreal)

August 20, 2020

Port of Montreal Strike Continues as Workers and Employers Face Impasse

Signs of potential progress between employers at the Port of Montreal and striking dockworkers emerged on Wednesday evening, 10 days into the port shutdown.

At a news conference yesterday, MEA head Martin Tessier described the progress as “very slow,” in contrast to federal Labour Minister Filomena Tassi’s depiction Monday of “encouraging progress made between the two parties.”

Approximately $100 billion in merchandise passes through the port each year, prompting concerns that the strike threatens the food, manufacturing, retail and auto industries, especially in Quebec and Ontario. Ottawa has so far declined to intervene despite pleas from industry groups and the Ontario and Quebec governments.

Tessier said he has asked the union to move 477 containers out of about 11,500 now on the waterfront in order to clear essential goods such as pharmaceuticals and medical equipment, as well as perishable foods and hazardous materials.

The union has only agreed to move COVID-19-related cargo, meaning managers or replacement workers will likely handle some of the others, Tessier said.

Michel Murray, a spokesman with the Canadian Union of Public Employees, said dockworkers feel the situation is unproductive because the employers association refuses to reveal the exact contents of the containers.

The longshore workers have said from the outset of the strike, on Aug. 10, that any pandemic-related freight can leave the port. For the rest, the union cites a June decision by the Canada Industrial Relations Board on what constitutes an essential service at the Port of Montreal.

In a statement released yesterday by the Port of Montreal, it estimates that approximately 90,000 twenty-foot equivalent units (TEUs) are now either stranded on its docks or aboard the fifteen or so container ships rerouted to other ports.

Additionally, it estimates that roughly 325,000 more tonnes of dry bulk could be impacted by the situation should it persist over the next few weeks.

The strike by 1,125 dockworkers, who have been without a collective agreement since September 2018, revolves largely around wages and scheduling.

Longshore workers are paid $36 an hour for a minimum of 32 hours per week, even if they don’t work an hour — which is rare — Tessier said. The minimum threshold rises to 36 hours after five years and 40 hours after 10 years.

The obligation constantly to be on call remains an impediment in negotiations.

(Source: CBC News)

August 19, 2020

China’s “Belt and Road” Initiative Embraces Surrey

A major warehouse facility under construction in Surrey is not just paving the way for more trade between B.C. and China. It could be helping pave Chinese President Xi Jinping’s Belt and Road Initiative to Canada.

The massive $190 million, 470,000-square-foot complex, dubbed the “World Commodity Trade Center,” is a joint venture between a Chinese state-sponsored company and a local development firm. The centre, first conceived in Beijing, has four warehouses and two large exhibition halls — to be lined with Chinese and Canadian flags — strategically located in the Campbell Heights industrial zone between Vancouver International Airport and the United States border.

The centre is purported to be one of several non-Chinese import-export facilities servicing a central commodities hub on the outskirts of Beijing, called Yanjiao International Trade City, being developed by brand company World Commerce Valley, a division of Hong Kong-based trading firm Shing Kee Godown Group. The centre is being developed through Canadian subsidiaries North America Commerce Valley Development Ltd. and Shing Kee Godown (Canada) Holdings Ltd. and in partnership with local development firm Pollyco Group.

China’s belt and road initiative is the government’s estimated $1.5tn foreign and economic policy, announced in 2013, to establish maritime trade routes across the globe and invest in infrastructure projects in dozens of countries. The projects include pipelines, ports, railways and other major infrastructure projects.

The centre’s proponents say it will facilitate the packaging, processing and storage of outgoing Canadian commodities and incoming Chinese products, to be showcased at exhibition hall events and trade conferences — all driven by an e-commerce trade model. Its detractors believe it is the thin edge of the wedge in facilitating a stronger presence of Beijing-directed business in the region.

Guo Taicheng, chairman of Hong Kong-based trading firm Shing Kee Godown Group, envisions Canadian food producers as key warehouse tenants. The Surrey facility, he said, will lease space to small- to medium-sized Canadian businesses and “offer them entry to the Chinese market.”

Guo said the market would dictate what comes back to Canada, suggesting in light of the COVID-19 pandemic, Chinese-manufactured personal protective equipment could be a hot import upon opening.

Click here to learn more.

(Source: Western Investor)

August 18, 2020

Indonesia Posts Largest Trade Surplus in 9 Years

Indonesia has posted its biggest trade surplus in nine years in July, reporting a $3.26 billion surplus.

Exports grew 14.33% from June, while domestic demand for imports remained subdued amid the COVID-19 pandemic, showing an overall plunge of 32.55% year over year. Exports, however, still remained 9.9% below the value of shipments in the same month last year.

By value, exports were the highest since March. Statistics bureau chief Suhariyanto attributed this to sales of agricultural products like palm oil, herbs and birds nests, and despite weaker exports of coal, rubber and oil and gas.

The data indicates the potential for a further narrowing of the current account deficit for the rest of the year, even after it significantly narrowed in the first half due to the pandemic.

Central bank data earlier on Tuesday showed Indonesia’s current account gap in April-June was equal to 1.2% of GDP, less than half the deficit in the same period in 2019.

Bank Danamon’s economist, Wisnu Wardana, said despite the trade data the central bank may need to consider a number of other indicators before utilising “a limited room of monetary easing”, such as inflation and the rupiah’s movement.

Bank Indonesia (BI) is due to wrap up a two-day policy review on Wednesday. The majority of economists in a Reuters poll, including Wardana, expects the benchmark rate to remain unchanged after four cuts to support the economy.

(Source: The Chronicle Herald)

August 17, 2020

U.S., China Trade Deal Review Postponed

U.S. and Chinese officials did not meet over the weekend for a planned six-month review on their phase one trade deal. Instead, both sides have indefinitely postponed the compliance review between Lighthizer, Liu and Treasury Secretary Steven Mnuchin, Reuters reported.

One source familiar with the plans told Reuters that U.S. officials wanted to give China more time to increase purchases of U.S. goods agreed to in the deal to improve the optics of the meeting. Another said it stemmed from a scheduling conflict and was not because of any problem with the trade deal.

China is not on track to meet its target on purchases of U.S. energy, services, and farm and manufactured goods as agreed in the deal. But officials have expressed optimism that Beijing’s purchases will pick up as it recovers from the pandemic’s economic fallout.

On Friday, Chinese Foreign Ministry spokesman, Zhao Lijian, said that China had been “fulfilling its commitment in real earnest” to ensure implementation.

But Zhao noted that the pandemic and certain U.S. restrictive measures have had an impact on China’s ability to import certain goods and services. “We hope the U.S. will stop restrictive measures and discriminatory practice against Chinese companies to create conditions for implementing the phase one trade deal,” Zhao said at a Foreign Ministry news conference.

(Source: Politico)

August 11, 2020

U.S. to Label Hong Kong’s Goods as “Made in China”

The U.S. will order imports from Hong Kong to be labelled as “Made in China” according to a government document, in the latest escalation of trade tensions between the two nations.

The notice, published in the U.S. Federal Register, says that goods produced in Hong Kong and imported into the U.S. must be marked to indicate their origin is China. Importers have been granted a transition period until September 25, 2020 to implement marking consistent with this position.

The change was made because of President Trump’s July executive order ending Hong Kong’s special status with the U.S. “due to the determination that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China,” the notice said.

Hong Kong’s government protested the announcement, which it said ignored Hong Kong’s “unique role” as a member of the World Trade Organization. The city’s government will discuss the decision with the U.S. via its office in Washington D.C., according to its statement , and didn’t rule out taking action against the U.S. decision.

Click here to read the U.S. Federal Register notice

(Source: Bloomberg)