MAY 1994 Edition
CHINA
China will phase out import quotas by 1997 in an effort
to comply with international trade standards. China is seeking membership in
the GATT, the world trade body, and its application has been held up for eight
years because of China's non-market economy. China currently imposes quotas or
import licence requirements on about 50 products and has pledged to cut the
number of products needing import licences by two-thirds to ease its entry into
the GATT. China wants to join the GATT in time to qualify to be a founding
member of the planned World Trade Organization, which will replace GATT in
1995.
BAD, BAD CANADA
The annual review of foreign trade practices released by
the Office of the U.S. Trade Representative includes 12 pages of complaints
about federal and provincial policies found to hinder the interest of U.S.
companies seeking to do business with Canada.
Complaints include brewers not being given fair access to
provincial markets, problems with a range of agricultural practices, including
the subsidization of Canadian durum wheat exports, and the level of protection
of Canadian dairy, egg and poultry markets. Also, "buy national" or
"buy local" procurement practices are seen as discriminating against
U.S. companies. Other issues include cultural protections at the federal level
and the increased use of trade legislation against U.S. companies alleged to be
dumping goods in Canada.
Ira Shapiro, the USTR general counsel admitted that it is
a two-way street as the Canadian government has expressed the same concerns
about increased trade actions by U.S. authorities. "I'm not going to
differentiate now between our law and their law," he said. "They
don't think much of our law I'm afraid."
BAD, BAD U.S.A.
The federal Department of Foreign Affairs and
International Trade has released its own annual list of trade irritants that
Canadian exporters face in the United States.
Canadian exporters face a myriad of problems from U.S.
federal, state and local authorities, some of them inconsistent with U.S.
commitments under the NAFTA and the GATT. Canada has 32 trade actions
outstanding under the Canada-U.S Free Trade Agreement and another six pending
before the GATT. Barriers range from subsidy practices in the defence industry
to the use of anti-dumping duties.
Among major trade barriers cited in this report: The U.S.
has reinstated subsidies under the Export Enhancement Program on U.S. wheat
exports to Mexico. A price-support system for sugar keeps U.S. prices above
world prices. U.S. trade remedy legislation, which is cumbersome and costly to
fight, has recently targeted softwood lumber and magnesium. The U.S. does not
follow GATT rules when it imposes anti-dumping or countervailing duties. The
U.S. has reinstated Section 301 of the U.S. Trade Act, known as Super 301,
allowing its Trade Representative to unilaterally retaliate to boost access for
U.S. goods which has affected Ontario beer and softwood lumber. And the
"Buy America Act"
discriminates against Canadian firms bidding on certain contracts on
federally funded mass transit, airport, highway and defence projects.
HONG KONG
While Ottawa's last budget gave us $3.5 billion in new
taxes over the next three years and promised to add $100 billion to the
half-trillion national debt, the Hong Kong Financial Secretary announced a tax
decrease in his March budget. Taxes will go down this year for 1.1 million
of the British-run territory's six million residents. The proportion of wage
earners paying no tax at all will rise from 43 per cent to 58 per cent and a
family of four on one income will not begin paying taxes until its earnings
reach $31,280. The top personal tax rate remains at 15 per cent. It is
estimated that by 1997, Hong Kong will have $46 billion in fiscal reserves--not
to mention foreign exchange reserves which now stand at $38 billion, sixth
highest in the world over all and second highest per capita.
PIRACY
Publishers lost $7.4 billion US worldwide last year from
the piracy of business software, down about one-quarter from the $9.7 billion
in 1992. Despite the decline, the loss is sizable, eclipsing, in some cases,
revenue from sales. For instance, in 1993, $6.8 billion was made in software
sales in North America. The most frequent forms of piracy are when a company
buys one program and makes it available through a network of computers, copies
the program or passes the program around to others.
The U.S. had the largest dollar loss, $1.57 billion, from
piracy in 1993, followed by Japan with $650 million and France with $435
million. Piracy is growing at the highest rate in India and Pakistan, up 95 per
cent in 1993, followed by Korea and Brazil, up 89 per cent, and Malaysia, up 88
per cent over the year.
COMPUTERIZATION
Daffodil pickers on Vancouver Island have traditionally
been paid on an hourly basis and consequently acres of flowers have been left
to rot each year.
Now, computers have profoundly changed the way the
harvest is conducted on at least one farm with the introduction of a $40,000
automated payroll system which individually tracks each worker's production in
the fields. As a result, the average picker's output has doubled; labour costs
have shrunk; production costs are down sharply; inventory controls have
improved and profits are up.
The technology includes a fleet of portable, rechargeable
hand-held computers; bar-coded packaging tags; bar-coded employee
identification and a customized software program. Crews are dispatched to
various locations and supervisors simply scan each picker's bar-coded I.D.
badge and a bar-coded tag attached to each batch of flowers which are then
boxed on the spot instead of at the warehouse. A running tally allows supervisors
to keep track of each worker's output. At day's end, the data is dumped into
the office computer where it is reformatted before being fed into an accounting
program which issues the cheques.
This has resulted in a 20 per cent reduction in the farm's
unit costs this spring--to about 18 cents a bunch from 22 cents in 1993, and a
40 per cent drop in the farms $250,000 spring payroll which was previously
inflated by less productive hourly workers. In other words a $100,000 savings.
That's a 150 per cent return on the farm's $40,000 investment in new technology
this spring alone. And the pickers like it too. Many are now earning 80 per
cent more than under the previous flat hourly rate.
At the end of each working day, the farm knows precisely
how many flowers have been picked and can estimate what still remains in the
fields. The next step will be to track bulb production and relate it to actual
flower production.
INVESTMENT
Last year, foreigners bought a record $48 billion worth
of Canadian bonds, treasury bills, and stocks, almost as much as they bought in
the previous two years combined. They bought $27 billion worth of bonds, $9
billion worth of treasury bills and $12 billion worth of stocks. With all the
money coming into the country, it would be reasonable to expect the Canadian
dollar to soar, yet it dropped by about 3 cents (US). One reason for the
decline is the growing tide of money that Canadian money managers have been
sending out of the country to buy securities abroad. In 1993, Canadians spent
almost $13 billion on foreign stocks and bonds--$4 billion on bonds and $9
billion on stocks--almost as much as they bought in the previous two years.
PATENTS
For the first time in nearly a decade, a U.S. corporation
has dislodged a Japanese company from first place in the top 10 list of
companies receiving patents in the United States. While the Japanese still held
six of the top ten positions on the list released by the U.S. Patent and
Trademark Office, the IBM Corp. jumped into first place with 1,085 patents in
1993, up from sixth place in 1992. Throughout the 1980s, the list stood as a
sharp illustration of how the U.S. trailed Japan in the race for discoveries
leading to new products and services. The list is watched closely as a
barometer of the research, development and innovation emanating from the
creators and manufacturers of technology around the world. Eastman Kodak and
General Electric have moved into fourth and fifth spots giving Americans three
of the top five spots.
JAPAN
Japan has opened its first bonded warehouse, a selling
centre where foreign companies can bring in products duty-free for display to
Japanese retailers. Foreign exporters have cited Japan's complicated
distribution system as a barrier hindering access to its lucrative markets. The
new market in Osaka is the first of six such facilities to be built in Japan
during the next three years. An official of the Ministry of International Trade
and Industry's Import Division says the move is part of Japanese efforts to
open its market wider to foreign companies. Japan's trade surplus in 1993 was a
record $120 billion (US), about half of which was with the United States.
OPTIMISM
Another survey of entrepreneurs confirms that confidence
is rising in this sector of the economy. Ernst & Young's poll of 125
respondents in the east shows that 82 per cent believe economic conditions will
improve for their businesses this year. A year ago, only 60 per cent of
respondents felt this way. The number of respondents who feel conditions will
worsen fell to 4 per cent from 12 per cent.
PROCUREMENT
The United States and the European Union have reached an
agreement to open up each other's government procurement markets which are
worth more than $200 billion (US) on both sides of the Atlantic. The agreement
excludes telecommunications contracts and some Buy American provisions,
including those covering mass transit and highway steel.
TRUCKING
Trucking industry associations in Canada, Mexico and the
United States have formed the North American Transportation Alliance to pursue
common research and policy goals across the continent. The new group will
support integration of freight transportation under the North American free
trade agreement.
PROGRESS
PCs are now so cheap that companies can afford to put one
on everyone's desk. In 1970, it cost $7.00 a transistor to create a processor.
Today, the cost is 4,000 millionths of a cent per transistor. You can now buy
gift cards that play Christmas or other jingles, and then you throw them out.
When you do, you throw out more computing power than existed in the entire
world before 1956.
MUSIC
Canada is the sixth-largest market for music; globally,
the industry was worth about $39 billion in 1992. The top 10 markets for
recordings are: the United States (31 per cent of world sales), Japan (15.2 per
cent), Germany (9.2), Britain (7.0), France (6.8), Canada (3.0), Italy and the
Netherlands (both 2.3), Spain (2.0) and Australia (1.7).
BUREAUCRACY
In the past, bureaucrats at the European Community in
Brussels have come up with directives that banned curved cucumbers and defined
the carrot as a fruit. Now, feeding stale crusts to the Queen's swans is
illegal. Britain's hundreds of bakers who give leftover bread to swans and
wildlife charities could end up in court.
An EC directive means bakers will have to pay for a
licence to give bread away and charities will have to pay for a licence to
receive it. Brussels defines leftover bread as "food waste" and all
waste must be tightly controlled. The shop that provides waste food is a
"waste producer" and waste must be disposed of by an "authorized
person." To be an authorized person you have to fill in lots of forms and
apply for a licence which for an animal charity could cost $4000.00.
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