MARCH 1994 Economic Digest - Importing and Exporting

MARCH 1994 Edition

CROSS-BORDER TRIPS

            In 1993, according to Statistics Canada, Canadian residents made 48.3 million same-day car trips to the United States, down 15.2 per cent from 57 million in 1992, and down more than 10 million from the record 59.1 million in 1991 when studies indicated Canadian retailers lost $3.5 billion to $5 billion in sales to cross-border shopping. The 1993 figures are the lowest since 1989 when Canadians made 43.3 million same-day trips by car.

WORK

            The Japanese work several hundred more hours than European and U.S. residents, with one in six putting in hours that could kill them, says a Japanese government study. Japanese workers clocked an average 2,124 recorded hours in 1990, about 200 hours longer than Americans and Britons. And real working hours were even longer, with most Japanese probably putting in a daily average of 1.5 hours of so-called "service overtime," extra work that is unrecorded and unpaid. One in six males worked more than 3,100 hours in 1992, a level that doctors say can kill.

            The United States is the only Western nation that has not reduced factory work time in the past 30 years, says The Detroit News. By contrast, Canadian hours declined to 1,827 a year in 1990 from 1,933 in 1960.

NETWORKING

            Two Toronto businessmen have started BIG (Bishop Information Group), an electronic bulletin board that offers inexpensive direct marketing lists, ready-made designs for newsletters and business forms, and a variety of software programs and information sources that are useful to small enterprises. While the larger on-line information services are growing rapidly, they are expensive and none have specifically targeted the needs of small businesses.

            BIG charges $150 a year which entitles users to comb through the system for an hour each day, seven days a week. Direct marketing lists have 120,000 names and include lawyers, doctors, TV and film executives and many others. Lists are available for about $10.00 each. They offer, free of charge, templates for commonly used business forms such as newsletters, letterheads and business cards. The partners are talking to a variety of government agencies, business associations and trade organizations many of whom are interested in listing information about their small business programs on the bulletin board. For example, the Ontario government will soon post information explaining to entrepreneurs how their employees can be placed in training programs at little cost. Other provincial and federal offices may follow suit. Entrepreneurs can "test drive" the system for a week, at no charge, by calling 416-364-8770.

           

METRIC

            Since February, U.S. Federal Trade Commission rules require that new labels printed for consumer products must include metric as well as the British units customarily used on American products. Manufacturers will be allowed to use up their old supplies of labels so it may be a while before the label change becomes obvious. Products covered by this rule include such items as soap, toilet paper, foil wrap, plastic bags, detergents, mops, deodorants, shampoo, batteries and light bulbs. The Food and Drug Administration is developing labelling rules requiring the addition of metric measurements on foods, drugs and cosmetics. Many products already include metric measurements, especially alcoholic beverages and soft drinks. The move is the latest step under the U.S. Fair Packaging and Labelling Act which also requires that a product label disclose the contents of the package and the name and place of business of the manufacturer, packer or distributor.

HELP WANTED

            The Canadian Department of Foreign Affairs and International Trade (DFAIT) is reviewing the investment policies of Japan and the European Community (EC), and would like to hear from Canadians who have experienced government barriers in these countries affecting their investment or plans to invest.

            Barriers could include measures that favour a domestic investor over a Canadian investor, or grant special status to some foreign investors but not to Canadians. Unclear administrative requirements may also impede investment. As well, the Department would be interested in hearing about investment restrictions in certain sectors or industries that have deterred Canadian investment.

            These reviews will examine how barriers to foreign investment may hinder efforts by Canadian firms to globalize, diversify, and gain access to new markets and technologies. To discuss these or other kinds of government barriers, or other opinions regarding investment in the EC or Japan, please contact Tim Miller, Tel. (613) 996-4921, or Steve Rhealt-Kihara, Tel. (613) 992-9094, Economic and Trade Policy Branch (DFAIT). Fax: (613) 944-1679. (Source: CanadExport, Vol 12, No 2.) 

INNOVATION

            The big difference between very successful small companies and those with less impressive growth is innovation, according to a Statistics Canada survey of 1500 companies. They give high priority to technology and spent more on research and development. They also stress inventory control, process control, reducing energy costs and their use of materials, old and new.

            The average company responding to the survey had 44 employees and sales of $6.6 million. As a rule, government programs designed to help business ranked last on the companies' list of contributors to their success. The only ones they seemed to like  were R&D tax credits and export subsidies that helped them explore and develop new markets.

            Key differences showed up in the kind of things top companies emphasized more than their less successful counterparts:

* Developing new technology--a 21 per cent higher score.

* Refining the technology of others--16 per cent higher.

* Improving their own technology--7 per cent higher.

* Just-in-time inventory control--17 per cent higher.

* Process control--26 per cent higher.

* Using new materials--19 per cent higher.

* Using existing materials more efficiently--14 per cent higher.

* Reducing energy costs--15 per cent higher.

WASHINGTON--OREGON

            Some interesting statistics have been released by the B.C. Trade Office in Seattle. If one is to break up total B.C. origin exports to the U.S. into geographic regions and rank them against our major offshore markets, exports of $2.56 billion to Washington\Oregon are second only to $4.11 billion to Japan. California and the European Community are far behind at $0.88 and $1.34 billion respectively.

            Excluding the resource and commodity products, such as dimensioned lumber, pulp, mineral concentrates, coal and natural gas, the data is even more surprising. Washington and  Oregon emerge as the single most important market by a factor of more than two, at $520 million. California is next at $183 million, followed by the EC and Japan at $102 and $100 million respectively. For more information call Michael Clark at (206) 628-3024. 

RESTRUCTURING

            A study by Wyatt Co. of 148 Canadian companies shows that some companies cut too many jobs and are now having to rehire. The survey says 51 per cent of companies that shed staff in recent years had to refill some of the jobs dropped. Other findings show that only 61 per cent of respondents that wanted to cut costs managed to do so; only 37 per cent reached their goal of increased profit and only 17 per cent increased competitiveness. Customers didn't get much out of restructuring either. Only 27 per cent of companies said restructuring helped them boost customer satisfaction.    Employers who choose to cut staff must pay close heed to the needs of survivors if they want to benefit from restructuring, the consultants say. Those who botch the job may find morale taking a nose dive, production sliding and valuable staff fleeing to other employers. In most cases it takes more than six months for surviving staff to recover from restructuring.

WATER

            Japanese consumers are developing a taste for bottled water and sales are surging, especially from Europe and particularly from France. Imports of foreign mineral water rose last year by 31 per cent to a record 54 million litres. Sales growth was even higher rising 49 per cent to $23.6-million (US). Overall, imports now account for 13 per cent of Japanese mineral water consumption up from 1.4 per cent in 1986.  The perception among consumers is that the quality of tap water is deteriorating. It is even seeping into the very foundation of the Japanese diet--rice, and people are increasingly switching to mineral water in the kitchen. The Japanese External Trade Organization predicts Japan's per capita consumption will triple in the next few years from the present three litres. In Italy it is 118 litres and 30 in the United States

            Meanwhile, in Britain, where demand for bottled water surged 1000% over the last 10 years and 520 million litres were sold last year, tap water is subject to more rigorous treatment than bottled water which contains more bacteria than tap water and is lower in mineral content.

ALCOHOL

            The alcohol sold by liquor and beer stores continued a dramatic four-year decline in the 1991 fiscal year according to Statistics Canada. The biggest drop was in the volume of spirits which fell by 5.5 per cent that year. Wine sales dropped 2.1 per cent and beer by 1.7 per cent. Authorities link the drop to the recession, higher prices, cross-border shopping brew-your-own businesses, changing drinking patterns and tax increases. It is estimated that Canadians buy four million bootleg cases of liquor each year which costs government $1-billion in revenue.

FRAUD

            A six-country survey by KPMG Peat Marwick Thorne of Toronto shows Canadian businesses second only to U.S. companies in being victims of fraud. About 1,000 Canadian companies were sent questionnaires and 290 responded. 56 per cent of executives surveyed said their companies had been victimized in the past year. The rate was 76 per cent in the U.S., 52 per cent in Bermuda, 44 per cent in Australia and 40 per cent in Ireland. The Netherlands had the lowest rate with 22 per cent. The most commonly reported type of fraud was misappropriation of funds. Respondents agreed that internal controls were the main factor in uncovering fraud but few corporations said they planned to review or improve internal controls.

DUMPING

            A U.S. Federal Trade Commission study  finds that unfair trade practices such as "dumping" bring minimal damage to U.S. companies. Less than a third of the 179 dumping cases the FTC studied resulted in industry revenue losses greater than 5 per cent and only 21 involved losses greater than 10 per cent. The study analyzes the effects on U.S. industry of dumping and foreign government subsidies between 1980 and 1988. It concludes that for 90 per cent of the cases filed with the International Trade Commission, the injury to the U.S. industry is less than 10 per cent of industry revenue. Dumping occurs when foreign firms charge lower prices in the United States than in their own markets or charge prices below the cost of production. If the ITC discovers a case of dumping it can impose additional duties on the unfairly imported products to try to right the imbalance.       According the Morris Morke, co-author of the report, "We're finding that a lot of the time, the problem is in our own backyard. Industries aren't responding fast enough to changes in the marketplace, and it is easier to blame foreign competitors than to change."

MEXICO

            Having just agreed the NAFTA with the United States and Canada, Mexico has now negotiated a free-trade pact with Venezuela and Colombia which are known in Latin America as the Group of Three.

FEBRUARY 1994 Economic Digest - Importing and Exporting

FEBRUARY 1994 Edition

NAFTA

            We have included a NAFTA Supplement with this Digest issue. Since NAFTA came into effect, readers may have noticed articles and advertisements in the business press which offer, at a high cost, software featuring the text of NAFTA including details on the new Regional Value Content, Certificate of Origin and unfamiliar terms such as "De Minimis" and "Accumulation." The majority of this information is freely available from A & A Contract Customs Brokers and other sources.

TEAM CANADA

            The federal government needs a cohesive "Team Canada" style of export policy to sustain the economic recovery, says the Canadian Exporters Association in a recently released report. Canada risks falling behind other major trading nations unless scarce trade support and promotion efforts are focused on Canada's strengths, the report warns. Among the 80 recommendations:

* Draft a national export strategy.

* Eliminate duplication between provinces and Ottawa and federal ministries.

* Close more provincial trade offices and move the work to consulates and embassies.

* Let business decide on trade promotion and support needed.

* Create a new vision for Export Development Corp.; maintain EDC's equity base and encourage co-operation among private sector lenders.

* Increase the money available through Canada Account financing.

* Offer export tax incentives similar to those provided by U.S. Foreign Sales Corp and harmonize the GST with provincial sales taxes.

* Consult exporters before applying trade sanctions and establish a compensation plan for firms affected.

* Simplify transportation and customs regulations.

WAL-MART IS COMING

            The recent announcement that Wal-Mart was to enter Canada by buying 120 Woolco stores sent a ripple through the stock market causing Hudson's Bay and Canadian Tire Corp. stock to drop by 10 per cent. This retail giant is expecting sales of $67 billion (U.S.) for the year ending January 31.

            Founded in 1962, Wal-Mart is the world's largest retailer. A non-union operation, it boasts nearly 2,400 stores employing 520,000 people full and part time. What separates Wal-Mart from the rest of the pack is alleged to be rock-bottom prices and a single-minded emphasis on service.

            A factor behind the company's breakneck growth has been cutting-edge distribution methods that drive down costs, thereby reducing prices to the customer. That allows Wal-Mart to increase market share, which in turn gives it more clout with suppliers, which leads to even lower prices.

            The way the company replenishes inventory is the centrepiece of its competitive strategy. It is known as "cross-docking," a largely invisible logistic technique. Goods are continuously delivered to Wal-Mart's warehouses, where they are selected, repacked, and then dispatched to stores, often without ever sitting in inventory. Instead of spending valuable time in the warehouse, goods just cross from one loading dock to another in 48 hours or less.

EDUCATION

            The piece of paper earned at an educational institution is not a guarantee of a job, but it certainly helps. This is the employment record for 1993 when the total number of jobs went up. There were 153,000 more jobs (up 8 per cent from 1992) for those with a university degree; 144,000 more jobs (up 4 per cent) for those with a college diploma or trade certificate; 28,000 more jobs (up 1 per cent) for those with a high school diploma but 182,000 fewer jobs for those who failed to graduate from high school.

            The figures are even more dramatic for the three-year period from 1990 to 1993 when total employment fell by 189,000 from the peak before the recession. 308,000 more jobs (up 17 per cent from 1990) for the university graduates; 170,000 more jobs (up 5 per cent) for those who completed other forms of post-secondary education or training; 16,000 fewer jobs (down 0.4 per cent) for high school graduates and a staggering 651,000 fewer jobs (down 19 per cent) for those who dropped out before finishing high school.

TECHNOLOGY

            McKesson Corp. has become the world's largest pharmaceutical distributor. One reason: it connects U.S. and Canadian drug stores to its Econolink-Pharmaserv data base ordering system.

            As soon as a pharmacist sends an order from an in-store terminal, a blue plastic shipping box slips onto a conveyor system in one of their three warehouses. Bar-code scanners route it through an automatic order-picker. Prompted by the computer, the machine tosses drug packages from the racks into the blue box. Rarely ordered items are taken from bar-coded shelves by people wearing computerized gloves with infrared scanners, which help identify the correct products.

            A computer printer spits an itemized invoice into the shipping box and robots label, seal it and convey it onto a waiting truck. Orders are filled every five seconds, with 100 per cent accuracy, and delivered overnight.

            Union Pacific constantly has more than 1,000 trains in transit, which it monitors by sensors connected to fibre-optic cables along the tracks. The rail network has become an information network, boosting on-time delivery to 94 per cent from 48 per cent. To avoid "losing" cars in sidings or rail yards, the company is applying bar-codes. Trackside scanners, like those at supermarket checkouts, identify the cars as they pass.

FORESTRY

            Lumber supply is already being constrained by factors such as changing forest practices and more wilderness areas being protected by government. The B.C. timber supply has peaked and pressures on wood supplies will increase in 1994 as the B.C. government begins planned reductions of up to 20 per cent in the annual harvest. B.C. sawmills are now importing wood from Alberta and Saskatchewan and will continue to do so as long as supplies hold up. Total North American production of softwood lumber is 58.1 billion board feet annually, 24.6 billion in Canada and 33.5 in the U.S. Western Canada accounts for 16.7 billion board feet with B.C producing 14.4 billion feet of this amount.  

STEEL

            Things are looking up for Canadian steel makers because of the U.S. auto industry's resurgence and the weaker dollar. North American car makers are the biggest customers for Canadian steel. Almost two million vehicles were made in Canada during 1993 with 85 per cent of the total shipped to the U.S. Still awaited are a pickup in housing and appliances, which are also major steel consumers, and a wider industrial demand for steel.

            Stelco Inc of Hamilton has announced it will resume paying dividends on preferred shares after a three year break. In October, Stelco reported third quarter earnings of $2 million compared with a year-earlier loss of $58 million. Shares in Dofasco, another large Canadian steel maker, are expected to rise by 35 per cent by the end of the year.

            Co-Steel, also of Ontario, is considering building a mini-mill in the U.S. Midwest to tap new customers and a large supply of scrap metal there. Co-Steel's New Jersey operation is the largest producer of wire rod in the U.S. but sells nothing west of the Mississippi River and has even had to turn away business east of the river recently. Last year, imports represented about 30 per cent of the seven million ton U.S. market for steel rod and bar which is used for such products as bolts and coat hangers.

CATCH-22

            For a decade tobacco consumption in Canada has been on the decline. For the first 11 months of 1993, legal sales of domestic cigarettes dropped 14.6 per cent from a year earlier but exports increased more than 80 per cent. Even the tobacco industry accepts that most cigarettes exported to the U.S. return to  Canada as contraband. It is estimated that tobacco smuggling in Ontario alone is costing the federal and provincial governments around $1 billion in lost revenue a year and that 70,000 cartons enter the province illegally each day. A trailer load of cigarettes purchased in the U.S. for $600,000 can be sold illegally in Canada for $2 million. The reason for the smuggling is a revolt by consumers against high tobacco taxes. The federal Department of Health now predicts that cigarette consumption will actually rise by 5 per cent in 1994 because of the easy availability of cheap cigarettes.      

ECR

            "Efficient Consumer Response" (ECR) is a new U.S. grocery industry strategy that could save the industry $30 billion and require 41 per cent less inventory. The ultimate goal of ECR, an Electronic Data Interchange (EDI) application, is a responsive, consumer-driven system in which distributors and suppliers work together as business allies to maximize consumer satisfaction and minimize cost. Accurate information and high quality products flow through a paperless system between manufacturing line and check-out counter with minimum degradation or interruption both within and between trading partners. By focusing on the efficiency of the total grocery supply systems rather than the efficiency of individual components, they expect to reduce total systems costs, inventories and physical assets while improving the consumer's choice of high quality, fresh grocery products. Grocery supply chain inventories will drop as products move more quickly from packaging line to the check-out counter. In dry goods, it will cut the supply chain inventory from 104 days of supply to 61 days.

TOURISM

            Japanese tourists spent more money in Canada last year than other overseas visitors. The British ranked first in trips to Canada but Japanese tourists spent $434-million--an average of $174 a night. Japanese tourists accounted for 13 per cent of trips to Canada compared with 18 per cent for the British. In terms of total spending however, Japan accounted for 17 per cent of the total compared to the U.K.'s 15 per cent. B.C., traditionally the most popular province for Japanese visitors, strengthened its position during the past ten years, accounting for 41 per cent of overnight provincial visitors in 1992 compared with 38 per cent in 1982, Ontario gained slightly to stand at 30 per cent, Alberta slipped to 17 per cent from 20 per cent a decade earlier. A total of 392,000 Japanese spent one or more nights in Canada last year.

USER PAYS

            A British businessman took out his bank manager for lunch and found that his account had been charged $220 for two hours and 40 minutes of the man's time. The bank was unrepentant saying that the manager had to read up on the file before lunch and do a lot of paperwork afterwards.

AD AGENCIES

            The new president of the Association of Canadian Advertisers has warned that agencies will have to change considerably over the next few years to keep up with the shifting needs of tight-fisted clients. Agencies can expect their fees to continue to dip because many advertisers are no longer prepared to pay their agencies the traditional 15 per cent commission rate. Already, many advertisers are negotiating flat fees with agencies, or other special arrangements. Many advertisers are shopping around for the most cost effective way to communicate their message, which may not necessarily be with one ad agency.

            One Toronto agency has created considerable interest by offering a money-back guarantee for its work. The advertiser pays the agency its overhead and staff expenses but provides its profit only if the advertiser's targets are met. The first advertiser to try this offer was a small brewery. The agency redesigned the brewer's packaging and launched a new ad campaign in December of 1992. Sales soared 50 per cent in the following two months after stagnant sales in 1992 and sales in 1993 were up 40 per cent. This success earned the agency income that was about 60 per cent greater than if it had charged the fee.

JANUARY 1994 Economic Digest - Importing and Exporting

JANUARY 1994 Edition

B.C. ECONOMY

            According to the provincial government the economy is on a roll. Latest figures show revenues were up 12 per cent from the previous year while spending was up three per cent. 41,000 new jobs were created in the first three months of 1993. Housing starts were up 10 per cent, retail sales up 8.8 per cent in the first nine months of 1993, bankruptcies were down 18 per cent and business creation up 14 per cent. It is expected that the projected $1.5 billion deficit will be met but not exceeded.

            On the revenue side, the biggest gainers were the social services tax (up 26.5 per cent, or $270 million) and the corporation income tax (up 22 per cent, or $57 million). Personal income tax revenue continued to lag but natural resource revenue climbed 35 per cent in the first half of the fiscal year. B.C has the lowest deficit among all provinces as a per cent of gross domestic product and its economy is outperforming all others.

THE "NEW" ECONOMY

            Last year saw much publicity given to Nuala Beck, guru of the New Economy, who claims that the future health of the economy depends on sectors such as computers and semiconductors, health and medical industries, communications and telecommunications and instrumentation. However, Bank of Nova Scotia economists state that it is premature to dismiss the "old economy" of resource extraction and basic manufacturing.

            They point out that traditional industries are powering Canada's recovery through export sales to the U.S. The driving force is transportation equipment (mainly auto manufacturing) which in turn fuels primary metals and rubber products and the upswing in housing starts which is boosting lumber sales.

One component of the New Economy, electrical and electronic products, has seen a decline in orders and shipments over the past year which has affected office and business machines, appliances, telecommunications and other electronic equipment, and even if they were doing well, they account for only five per cent of manufacturing activity. Canadian companies are buying lots of high-tech equipment, but it is mainly foreign suppliers who are benefitting.

LUMBER

            Industry experts say lumber prices will hit the roof again in 1994 as resurgent demand and the timber-supply crisis push the U.S. into a shortfall which is expected to be about one billion board-feet. Pent up demand from up to three million first-time homebuyers will push U.S. single-family housing starts to 1.2 million units next year from 1.1 million in 1993. The shortfall will also force builders to reverse the decade long trend toward the building of much larger houses. Prices for western spruce-pinefir two-by-fours peaked at $475 US per thousand board-feet in March 1993 and then fell. By the end of 1993, prices reached $436 US compared with $244 US a year earlier. U.S housing starts jumped 3.9 per cent in November to the highest level in nearly four years.

ASIA

            Korea has become one of our fastest growing trade partners and, after Japan, our most important Asian market. Korea's 40 million people have a literacy rate of 93 per cent and emphasize education and R&D. Last year, 40,000 Koreans visited Canada. Their economy is expected to grow 6 to 7 per cent annually in the 1990s. At this rate, the GNP of $280 billion in 1991 will exceed $800 billion by 2001. The economy is becoming high-tech driven. Industries targeted for R&D include energy, bioengineering, computers, consumer electronics and telecommunications. By the year 2000, Korean trade could exceed $400 billion and could have a per capita GNP of $17,000. The top ASEAN economies of Indonesia, Singapore, Thailand and Malaysia have grown an average of 5.5 to 13.2 per cent annually since the 1980s. Falling trade barriers and liberalized exchange and investment rules mean opportunities for Canadian goods and services. These countries have 325 million people, competitive product costs and high demand for capital and infrastructure investments.

EXPORTS

            Canadian exports for October 1993 hit a record $16.1 billion, up 3.2 per cent over September. October imports also set a new monthly high at $14.7 billion for a trade surplus of $1.4 billion. Canada's highest ever trade surplus of $2.2 billion was in 1984. Continuing to lead the way were surging exports of cars, machinery and equipment,  lumber and computers--mainly to the U.S. Canada's trade surplus with the U.S. also hit a new high in October at $2.24 billion. Fish and agricultural products, except for wheat, also increased. The October trade figures pushed Canada's merchandise trade surplus to $10.1 billion so far, up sharply from $6.9 billion in the first 10 months of 1992. Exports have now risen 30 per cent since the beginning of 1991.

HOLLYWOOD NORTH

            B.C. is the second largest film production centre in North America surpassed only by Los Angeles. According to the industry, this has created 10,000 jobs and brought in well over $700-million to the province both directly through the purchase of service and goods and indirectly through foreign investments. The B.C. Film Commission states that 61 productions were shot in B.C. last year, up from 53 a year earlier. The Vancouver Art Gallery profited by $56,000 for 23 days of filming and $500,000 was spent in Gibsons during a five week period shooting a Stephen King movie which also employed 180 B.C. residents. Pacific Rim and European film makers are also discovering B.C., indicating that the growth of the industry will continue.

TARIFFS

            Canada wants to settle the question of new agricultural tariffs with the U.S. before it reaches the courts. Because of the recent GATT agreement, Canada will replace import quotas that protect 37,000 dairy and poultry farmers with huge tariffs--as high as 280 per cent on chicken and 351 per cent on butter--starting in 1995, to be reduced by 15 per cent over six years. The U.S. has served notice that it believes the tariffs should be eliminated by 1998 under provisions of FTA and NAFTA. In turn, the U.S. will be required to open its borders to all Canadian goods, agricultural and otherwise, by 1998. No doubt many lawyers will be gainfully employed in the months ahead arguing about whether the rules of NAFTA or the GATT take precedence. It is doubtful that the Canadian public will be particularly enthusiastic about supporting such high agricultural tariffs.

ENVIRONMENTAL SERVICES

            In Canada they may be competitors. In Indonesia, where they are about to set up their head office, the 15 companies (from Ontario, Newfoundland, Nova Scotia, Quebec, Alberta and B.C) are Canora Asia Ltd, a consortium that is pooling knowledge and resources to chase multi-million dollar contracts in Southeast Asia's hot advanced environmental services market. For a fee of $20,000, the appeal of Canora is that it allows small to medium sized companies with specialized services and products low cost entry to the region and a chance to work on large projects that otherwise would be out of their league. Besides private and government contracts, they will attempt to secure large World Bank and Asian Development Bank projects involving solid waste management, the treatment of hazardous waste and waste water, and the supply of safe drinking water. Canora projects potential billings of $114 million over the first five years and net revenue of $9 million.

A "GOOD" TRADE WAR

            Quebec prevents out-of-province construction companies from working in the province and subsidizes the local manufacture of transit buses that could be bought for $35,000 less in Ontario. The Government of Ontario retaliates with similar laws and it also forbids the purchase from Quebec of furniture for public buildings. Trade between the two provinces is $33 billion annually with Ontario having a surplus of $3 billion in that trade. New Brunswick enacts laws to prevent Quebec construction workers working in that province. In the west, B.C. threatens to stop Alberta construction working in the province. An eight month old agreement allows Alberta dairies to sell fluid milk into B.C. The Alberta milk is cheaper but consumers do not benefit. Alberta companies are required to charge the same price as in B.C. and the difference goes into the pockets of the B.C. producers to compensate for their lost sales. And on it goes, the inter-provincial trade wars with more than 500 different laws that some estimate cost the economy over $6-billion a year. Having successfully negotiated FTA, then the NAFTA and with the GATT now concluded, there is evidence, as 1993 ends, that the political will may exist to do away with the final hurdles to truly free trade within Canada as bureaucrats from Ottawa and the provinces meet to find a way to eliminate these barriers.

ELECTRONIC DATA INTERCHANGE (EDI)

            B.C.'s Liquor Distribution Branch is leading its counterparts across the country into the electronic age. The LDB is hoping to move soon from mailing out cheques to crediting suppliers' accounts electronically. The LDB now has an electronic ordering system which allows for tighter inventory control and stocks will shrink by five per cent this year. Currently 68 per cent of wines, spirits and specialty beers are ordered electronically, and the goal is for 90 per cent by this spring. Electronic payment by signalling the bank to transfer funds to suppliers has been delayed temporarily because suppliers are having difficulty generating electronic shipping and billing notices which form the basis for electronically authorized funds transfer. The LDB claims that, by using EDI, shipping errors are reduced by avoiding the manual entry of information and that suppliers are much more likely to be paid within 30 days.        

TRENDS

            The Nova Scotia government, with a $13.3 billion debt, has introduced legislation to outlaw provincial overspending and trim fat from the legislature pension plan. The budget set out a four-year plan to cut government spending. Government must cut operating costs by three per cent each year for the next two years and by two per cent in each of the following two years. Capital spending must decline by five per cent each year for four years. Double dipping--when a former member collects a pension and a provincial government salary at the same time--will end. Anyone collecting the pension will have the amount of their monthly pension deducted from any government pay. The legislation increases to 55 from 50 the age a former member must reach before being eligible for a full pension. That pension will be cut by six per cent for every year it's being taken early, up from 3 per cent under existing rules.

TECHNOLOGY ASSISTANCE PROGRAM

            The B.C. government will provide $600,000 for this year's Technology Assistance Program, which assists businesses pursuing research and development. The program cost-shares up to 50 per cent of specific research and development projects proposed by firms which don't have staff or facilities to carry out in-house research and development. Cost-sharing is available to a maximum of $35,000.

PRIVATIZATION

            Minneapolis is about to put its public  schools in private hands. The school board recently voted to hire a consulting company to run the 43,000 student system with a budget of $350-million (US). Minneapolis is the biggest of several U.S. school districts that have turned to outside managers to save money or improve performance. The performance goals--still being worked out--will likely include closing the academic gap between white and minority children.

TRIVIA

* In England recently, Rachel Whiteread won the ($30,000) Turner prize for art. She also won the ($80,000) K. Foundation prize for worst artist of the year.

* Labatt's Brewery held a draw in England to give away a year's supply of beer. The winner had to pick Canada's capital from a list of cities. The choices? Vancouver, Toronto and Montreal!