U.S. to Impose 25% Tariffs on French Products in Response to Digital Tax

handbags

The Office of the U.S. Trade Representative announced the imposition of a 25% import duty on various French products in response to that country’s new Digital Services Tax, which Washington says discriminates against U.S. tech firms such as Google, Facebook and Apple Inc.

The tariffs are set to take effect Jan. 6, 2021. Products that are set to be subject to the tariffs include makeup, soap and handbags, according to a notice issued by the USTR.

The dispute arises from new legislation introduced last year by France aimed at stopping multinationals from avoiding taxes by setting up headquarters in low-tax EU countries. Currently, tech giants like Google and Facebook pay nearly no tax in countries such as France where they have large sales.

The pioneering digital services tax would impose a 3% annual levy on French revenues of digital companies with yearly global sales worth more than €750 million (US$855 million) and French revenue exceeding €25 million (US$28 million).

The French products scheduled for January 2021 tariffs over the DST include the following:

  • 3304.10.00: Lip make-up preparations
  • 3304.20.00: Eye make-up preparations
  • 3304.30.00: Manicure or pedicure preparations
  • 3304.91.00: Beauty or make-up powders, whether or not compressed
  • 3304.99.50: Beauty or make-up preparations & preparations for the care of the skin, excl. medicaments but incl. sunscreen or sun tan preparations, not elsewhere specified or indicated (nesoi)
  • 3401.11.10: Castile soap in the form of bars, cakes or molded pieces or shapes
  • 3401.11.50: Soap, nesoi; organic surface-active products used as soap, in bars, cakes, pieces, soap-impregnated paper, wadding, felt, for toilet use
  • 3401.19.00: Soap; organic surface-active products used as soap, in bars, cakes, pieces; soap impregnated paper, wadding, felt, not for toilet use
  • 3401.20.00: Soap, not in the form of bars, cakes, molded pieces or shapes
  • 3401.30.10: Organic surface-active products for wash skin, in liquid or cream, contain any aromatic/mod aromatic surface-active agent, put up for retail
  • 3401.30.50: Organic surface-active products and preparations for washing the skin, in liquid or cream form, put up for retail sale, nesoi
  • 4202.21.30: Handbags, w/ outer surface of reptile leather
  • 4202.21.60: Handbags, w/ outer surface of leather, composition or patent leather, nesoi, n/o $20 ea.
  • 4202.21.90: Handbags, w/ outer surface of leather, composition or patent leather, nesoi, over $20 ea.
  • 4202.22.15: Handbags, w/ outer surface of sheeting of plastics
  • 4202.22.40: Handbags, w/ outer surface of textile materials, wholly or in part of braid, nesoi
  • 4202.22.45: Handbags, w/ outer surface of cotton, not of pile or tufted construction or braid
  • 4202.22.60: Handbags, w/ outer surface of veg. fibers, exc. cotton, not of pile or tufted construction or braid
  • 4202.22.70: Handbags, w/ outer surface containing 85% or more of silk, not braided
  • 4202.22.81: Handbags, w/ outer surface of MMF materials
  • 4202.22.89: Handbags, w/ outer surface of textile materials nesoi

Click here to read the full notice.

(Source: The Hill)

Canada, U.S. Agree to Keep Borders Closed Another 30 Days

border closed

Canadian and U.S. officials have agreed to keep the border between the two countries closed to non-essential travel until August 21.

Sources say both governments are on the same page with extending the border restriction measures for another month.

The ban on discretionary travel was first introduced in March and has been extended each month since. The latest extension was set to expire on July 21.

The agreement, as it stands, exempts the flow of trade and commerce, as well as temporary foreign workers and vital health-care workers such as nurses who live and work on opposite sides of the border. Tourists and cross-border visits remain prohibited.

This extension in no way impacts the flow of goods across the Canada-U.S. border. The border is open for trade, only closed to non-essential personal travel.

This comes as some U.S. political figures in border states have been pressuring Canada to begin a phased reopening of the shared border, despite the surging number of new cases of COVID-19 in parts of the United States, with some regions reporting record-breaking new daily case counts.

When asked in May what the benchmarks will be for signs it’s an appropriate time to loosen travel restrictions, Chief Public Health Officer Dr. Theresa Tam said that the first step would be carefully reopening travel restrictions within Canada.

She said drastically limiting who has been able to enter the country over the last few months — specifically international visitors — has been key to Canada controlling the outbreak.

Even when international travel can resume, Tam said the 14-day mandatory quarantine and follow-up enforcement of that order will remain “a cornerstone” of the disease control measures.

(Source: CTV News)

CUSMA Won’t Limit Canadian Retaliation Against U.S. Tariffs: Negotiator

steel

Donald Trump’s trade ambassador continued to keep Canada’s steel and aluminum industry in suspense as trade experts, labour bosses and business leaders considered how best to retaliate if the White House decides to impose fresh tariffs on metals from north of the border.

Steve Verheul tells a House of Commons committee hearing that under the terms of the May 2019 agreement on tariffs, Canada would be able to impose retaliatory levies against American aluminum, as well as any U.S. products containing it.

He did, however, provide some insight into why Section 232 tariffs, so named for the portion of U.S. law that permits them on the basis of a perceived threat to national security, have proven such a go-to lever for the Trump White House.

“Unquestionably, we did have a crisis,” Lighthizer said of the decision in 2018 to impose tariffs on steel and aluminum imports from around the world. He suggested the move was aimed primarily at China — a longtime trade foe that has been in American sights for using its outsized production capacity to depress prices and undermine U.S. producers.

He described himself as part of an administration determined to move the United States beyond its post-war mission to be a charitable principal architect of the new industrial order, a role in which he believes the country has lingered too long at the expense of American jobs and prosperity.

Imposing tariffs was “essential” in 2018, “particularly looking back at where we would be if we hadn’t done something on it,” Lighthizer said. “And when you take an action like that, you almost have to take it on a global basis.”

Tariffs are a blunt instrument that can also cause domestic costs to rise, he acknowledged — but drastic action, exacting a toll that Americans were willing to pay, was necessary to bring the U.S. back from an “extreme free-trade position” that came at the expense of American manufacturing jobs.

“There’s a balance there, and the balance had swung way too far into the level of save a penny here, save a penny there, moving half your manufacturing to China and the other half to Vietnam,” Lighthizer said.

“Are tariffs a perfect instrument? No. But is there another instrument? I don’t know of it … It’s a far more complicated thing than this simple comment that, ‘Well, it’s always paid by the consumers.’ I just don’t buy it.”

While Lighthizer spoke, Steve Verheul — Canada’s chief trade negotiator during the effort to replace NAFTA and an assistant deputy minister at Global Affairs Canada — was telling MPs on the House of Commons trade committee in Ottawa about the federal government’s retaliation options.

The U.S.-Mexico-Canada Agreement, which officially replaced NAFTA on July 1st, won’t tie the government’s hands if that time comes, Verheul said. The separate cease-fire statement that saw the White House lift its original tariffs in May 2019 allows either country to impose retaliatory levies against incoming aluminum or any products that contain it, he said.

What actions Canada should take “really depends on what kind of action the U.S. takes,” Verheul told the committee.

“We have options in terms of how we might respond on a bilateral basis, because as I mentioned, the statement itself says ‘aluminum-containing products.’ That’s a very broad category. So there are a number of areas we could explore on that front.”

Should the U.S. action itself go beyond that May 2019 statement, Canada would be able to respond in kind, he added.

The U.S. claims of a spike in aluminum exports since the start of the pandemic are actually the result of always-on smelters in Canada adjusting their production away from the specialized, value-added products usually sought by automakers, which were forced to shut down assembly lines when the COVID-19 crisis hit.

Producers pivoted towards more generic primary aluminum products, shipping to the only storage warehouses that are cost-effective: facilities in the U.S., which is where the lion’s share of the North American aluminum market is.

“We see no justification for the U.S. to be contemplating this kind of action, because we have had no surge,” Verheul said.

“There has simply been a situation where the aluminum sector has made some adjustments, as aluminum industries in the U.S. have done, to accommodate the market demands during this particular period.”

Derek Burney, formerly Canada’s ambassador to the U.S. and one-time chief of staff to prime minister Brian Mulroney, urged Canada to take a hard line with the forces of protectionism, which he warned are on the march in the time of COVID-19 — and won’t evaporate in the U.S. even if the Democrats take over the White House in November.

“Because bilateral trade is roughly in balance, there is no reason for Canada to become a passive punching bag for U.S. protectionists and mercantilists,” Burney told the committee. “Arbitrary tariffs once again on Canadian aluminum exports will hurt American producers and American consumers more than anybody … we should not hesitate to retaliate.”

Ken Neumann, executive director of the Canadian chapter of the United Steelworkers union, accused the federal government of bungling the U.S.-Canada trade file and urged Ottawa to take a hard line with the White House.

“If the U.S. does reimpose 232 tariffs on Canadian aluminum, Canada must impose retaliatory tariffs on a wide range of U.S. products — and not only on aluminum,” he testified.

“You can’t continue to reward bad behaviour.”

(Source: The Canadian Press)

“We’re Going to War:” Doug Ford Comes Out Swinging at Donald Trump Over Aluminum Tariffs

aluminum

Ontario Premier Doug Ford is railing against U.S. President Donald Trump for threatening tariffs against Canada, warning that could trigger a nasty trade war.

Ford, who in the past has professed support for Trump, urged the American leader not to slap levies on Canadian aluminum, which would hurt Ontario.

“We’re the number one customer to 19 states, we’re the number two to nine others. We were instrumental in employing 9 million Americans, and then they want to start talking about tariffs against us?” the premier told reporters Friday in Woodbridge.

“You got to be kidding, we’re the number one customer in the world, Canada is. So I highly recommend President Trump, don’t do it,” he said.

“Don’t put tariffs on our aluminum or we’re coming out swinging, we may be small, but we’re your number one customer. Remember that. Don’t forget it.”

In off-the-cuff comments after promoting a new “Ontario-made” push to get people to buy domestic products, Ford, who once ran his family’s label business in Chicago, said “we’re going to make sure we support our own.”

“I was down there for years, ‘made in USA.’ Well, guess what, it’s going be ‘made in Ontario,’ ‘made in B.C.’, ‘made in Quebec,’” he said.

“Folks, let’s stick together because economically, we’re going to war.”

Last week, Prime Minister Justin Trudeau skipped a White House meeting with Trump and Mexican President Manuel Lopez Obrador to mark the new U.S.-Mexico-Canada Agreement, or USMCA, pact that took effect July 1.

(Source: The Star)

Trudeau Concerned by U.S. Threat of Tariffs on Canadian Aluminum and Steel

steel

Prime Minister Justin Trudeau says he is concerned by reports suggesting Washington is considering reimposing tariffs on Canadian metals just as Canada, the United States and Mexico are celebrating the launch of a new free trade deal.

Speaking to reporters in Ottawa, Trudeau said he looks forward to congratulating U.S. President Donald Trump on the coming into force of the United States-Mexico-Canada Agreement (USMCA), also known as CUSMA in Canada.

The free trade agreement between the three North American neighbours officially came into force on July 1, replacing the 26-year-old North American Free Trade Agreement (NAFTA).

“I think it’s really important that at a time of economic strain and stress, we continue to have access to the world’s most important market and this is good for Canadian workers and Canadian jobs right across the country,” Trudeau said.

“At the same time, we are concerned about the threat of extra tariffs on aluminum and possibly steel. This is something that again is a little difficult to understand, because the United States relies heavily on imports of Canadian aluminum, in particular, for their domestic manufacturing capacity.”

Trudeau said the U.S. doesn’t produce nearly enough aluminum to cover its needs.

Canadian officials are “continuing to push very hard on encouraging the U.S. not to move forward on tariffs” that lack any justification and would have a negative impact, Trudeau said.

The United States imposed tariffs on Canadian and Mexican steel and aluminum imports in 2018 but removed them last year.

Catherine Cobden, a spokesperson for the Canadian Steel Producers Association, said the organization heard some conflicting reports about the possibility of tariffs being reimposed by Washington.

“I can’t confirm whether or not steel is part of what the U.S. is considering,” Cobden told Radio Canada International. “What I can tell you, though, is there is absolutely no need for tariffs, especially now when we signed the USMCA, which is a very strong agreement for North American steel producers.”

The American Primary Aluminum Association (APAA), which represents two of the last three remaining primary producers in the United States, has argued that a “surge” of Canadian aluminum exports to the United States is threatening the viability of the domestic primary aluminum industry.

APAA CEO Mark Duffy has called on the Trump administration to reimpose the so-called Section 232 tariffs on Canadian aluminum on national security grounds “to save American jobs.”

The U.S. Aluminum Association, which represents more than 120 companies across the entire industry, disagrees with that position.

Aluminum Association president and CEO Tom Dobbins has argued that the U.S. trade action should focus on Chinese overcapacity rather than Canadian exports.

In a report issued Wednesday, the U.S.-based Competitive Enterprise Institute, a conservative think tank, urged the Trump administration to get rid of all tariffs.

“Tariff reform should have been a priority before the coronavirus hit, but now it’s even more urgent to lift trade barriers, in particular for health care supplies and treatments,” said Ryan Young, CEI senior fellow and author of the report, in a statement.

“Tariffs were never needed in the first place, and they are causing harm during a potentially Depression-level economy. The time to act is now.”

Among other things, the report calls on Congress to “make big-picture, institution-level reforms to U.S. trade policy” — including the repeal of Section 232 of the Trade Expansion Act of 1962 and Sections 201 and 301 of the Trade Act of 1974 — to “restore tax authority to the legislature and make trade policy less subject to presidential whim.”

(Source: CBC News)

CBSA Collecting Personal Information From Truckers

truck

Canada Border Services Agency (CBSA) has begun collecting personal information from truck drivers at several border crossings on behalf of the Public Health Agency of Canada (PHAC).

This has taken some drivers, including lease-operator Greg Decker by surprise, and caused some concern. He was recently asked for his personal email address and cell phone number while crossing at Coutts, Alta.

Decker called the CBSA toll-free line, but didn’t receive any further information on why his personal info was being collected. He then turned to social media and found other drivers had been asked for the same information at Coutts.

“This adds to the already catastrophically high stress level,” Decker told Today’s Trucking in an email. “If the government wants this information, have the courtesy and respect to explain why in public.”

CBSA’s Prairie Region media spokesman, Luke Reimer, confirmed the information is being collected on behalf of PHAC at several border crossings as part of a pilot project. Those crossings include: St. Stephen 3rd Bridge, N.B.; St-Armand/Phillipsburg, Que.; Lansdowne, Ont.; Queenston-Lewiston Bridge, Ont.; Coutts, Alta.; and Pacific Highway, B.C.

“As of June 30, in conjunction with PHAC, the CBSA launched a pilot project to collect contact information from persons who are exempt from quarantine by virtue of falling within one of the exemptions in Section 6 of Order in Council 2020-0524. This is so these exempt persons may be contacted during the 14-day period that begins on the day on which they enter Canada,” Reimer explained, noting further border crossings may also take part.

If requested for their personal information, “it is mandatory for travelers – including exempt persons – to provide their contact information in accordance with section 15(1) of the Quarantine Act and section 2(b) of the Order in Council 2020-0523,” Reimer added.

Decker is unhappy the pilot wasn’t communicated to the trucking industry before its launch, and still has some reservations about providing personal information at the border. He also questions the effectiveness of the approach.

“There is zero chance that I would reply to either a phone call or email from anyone claiming they are from a government agency. Do they not realize the volume of calls we receive from scam artists claiming to be from CRA? Or the latest scam, from the RCMP?” Decker noted.

“I understand the desire and intent, but they should have actually consulted someone outside of their bubble,” he added. “Most truck drivers I know are not going to respond to inquires from Public Health, many are giving their company emails and phone numbers.”

(Source: trucknews.com)

Webinar: From NAFTA to USMCA

Major Changes from NAFTA to USMCA that affect the Apparel, Footwear and Gear Sector

The BC Apparel and Gear Association is pleased to host a free webinar with Carson International’s Vice President, Dave Pentland. He will walk us through the major changes from NAFTA to USMCA that affect the Apparel, Footwear and Gear Sector.

Dave has worked in the Customs and Logistics Industry for the past 40 years, much of this involved with large, medium and smaller apparel, footwear, action sports companies. With experience in the airline industry, trucking industry, freight forwarding as well as Canadian and American Customs Brokerage, He is a Licensed Canadian Customs Broker and an IATA Certified Freight Forwarder.  Dave has guest lectured at a number of post-secondary institutions and hosted many Trade Association Seminars on a wide array of Customs, Logistics and International Trade topics.

Date: Thursday, July 9, 2020
Time: 12:00 noon PDT

Higher Ocean Rates Here to Stay

ocean freight

Carriers will keep capacity tight to protect their bottom line, meaning shippers will need to get used to paying higher ocean freight rates, according to DHL Global Forwarding’s Dominique von Orelli.

The global head of ocean freight for the Germany-based forwarder says he has never seen carriers as united as they are today in their strategy of managing capacity to match demand.

To manage the steep drop in volume as major markets locked down in the battle against COVID-19, carriers have been blanking significant numbers of sailings. Sea-Intelligence Maritime Consulting data show carriers have announced 74 blank sailings from Asia to North America for April and May. Asia-Europe trades will cancel 75 sailings through September in a bid to match capacity with weak anticipated volume levels.

The amount of capacity withdrawn from service in the third quarter means shippers would have to improve their long-term planning over the next few months, von Orelli said. 

“What’s clearly been shown in the last two months is that carriers are really agile in taking out capacity, and extremely quick at changing schedules,” says von Orelli. “Carriers will do whatever they have to in order to keep the capacity tight and to protect their bottom line, so service will not be the number one criteria for the carriers at the moment.”

Tight industry-wide management of capacity has enabled carriers to not only prevent a rate slide, but to actually push rates higher — significantly, on some east-west trades. The Shanghai Containerized Freight Index (SCFI) this week shows Asia-US West Coast rates at $2,692 per FEU, up 94 percent year over year, while Asia-North Europe rates are 18 percent higher at $890 per TEU.

Von Orelli said he was “cautiously optimistic” for the second half of the year and expected the forwarder’s volume to grow at levels slightly ahead of the market, but there was certainly no surge in demand so far on the Asia-Europe trade.

“There is some replenishment going on, but we don’t see a big rush from European importers to fill up stock. Everyone seems to be ramping up in slow motion,” he said. “I don’t think there is a big appetite to consume, and importers are cautious not to buy what they cannot sell.”

(Source: JOC)

If you have any questions about ocean rates, please get in touch:

Mike Long — mlong@carson.ca
Tyler Carson — tcarson@carson.ca

U.S. CBP Issues Interim Final Rule on USMCA Rules of Origin

freight

U.S. Customs and Border Protection published an Interim Final Rule to implement Rules of Origin provisions for the new United States-Mexico-Canada Agreement that came into force on July 1.

The interim rule creates Part 182 to the customs regulations for the new trade deal and amends the NAFTA regulations under 19 CFR Part 181 so they no longer apply to entries on or after July 1.

The majority of the regulations included in the interim final rule are found in Appendix A to 19 CFR Part 182, which reproduces the Rules of Origin provisions of the Uniform Regulations agreed upon by the U.S., Mexico, and Canada and released last month.

This appendix contains the uniform regulations for the interpretation, application, and administration of the Rules of Origin of Chapter 4 of USMCA and the Rules of Origin of Chapter 6 of USMCA related to textiles and apparel goods.

Currently, most of the sections of 19 CFR Part 182 include a title only and are reserved for future regulatory text.

CBP says it expects to publish additional regulations over the course of the next year and be finalized by July 1, 2021. 

Reopening the Canada-U.S. Border Will be a Long, Piecemeal Process

Canadian and American flags

With the United States adding 40,000 new cases of COVID-19 each day, the European Union is leaving the U.S. off a list of 15 countries whose citizens soon will be allowed to visit its 27 member nations. In Canada, there seems to be no great desire to quickly reverse the unprecedented border restrictions that were imposed in March.

The question for Canadians is how much longer the virtual wall will have to be in place — and how much it might hurt to keep it there.

“My guess is it’s going to have to stay closed for more than 12 months,” Colin Furness, an epidemiologist at the University of Toronto, told CBC News this week. “It’s hard to imagine what’s going to happen in the United States until we have a vaccine or until the population has been sufficiently infected that you have herd immunity.”

When Leger Marketing asked Canadians in May when they thought Canada should reopen its border with the United States, 47 per cent of respondents said “not before the end of the year.” With more than 2.6 million cases now in the United States, it’s unlikely Canadians’ enthusiasm for welcoming our American neighbours has increased since then.

An exemption for “essential” travel significantly reduced the disruption to the Canadian economy. “Canadians continue to get the food, medicine, commercial goods, and other essential supplies they need to live and work, and Canadian exporters for the most part have not suffered disruption,” said Goldy Hyder, president and CEO of the Business Council of Canada.

But the decline in traffic across the border has still been precipitous. According to data obtained by Postmedia, between June 15 and June 21 just 170,998 people entered Canada at a land crossing with the United States — and 104,247 of those people were truck drivers. Over the same period in 2019, more than 1.2 million people traveled through a land crossing from the U.S. into Canada.

Based on those numbers, the pandemic is going to leave a deep mark on the Canadian tourism industry and on border towns like Windsor and Sarnia, Ontario. Hyder and the Business Council have called on the federal government to extend its wage subsidy for the tourism sector through the rest of the year.

But it can’t be assumed that the exemption for essential business travel and widespread use of video conferencing are preventing all damage to the economic relationships between Canadians and Americans.

“People say, okay, well, the trucks are going, so the supply chains are working. But the supply chains reflect agreements and contracts that were made in the past with a lot of face-to-face interaction,” said Bill Anderson, director of the Cross-Border Institute in Windsor. “If those agreements aren’t being made now, the question is — what’s the supply chain going to look like six months to a year from now?”

But all complications associated with the current restrictions must be balanced against the significant health risks of reopening the border — and the economic disruption that would occur if there is a resurgence of COVID-19 in Canada.

The border restrictions put in place in March have been extended three times and are now set to expire on July 21 — officially, at least. Even if the deal is only extended for another month, it’s likely time to accept that a largely closed border between Canada and the United States is, like the disease itself, going to be our reality for the foreseeable future — and to plan accordingly.

(Source: CBC)