NOVEMBER 1992 Edition
NAFTA
It remains to be seen if president-elect Bill Clinton
will ask to have the NAFTA agreement reopened. He suggested during the election
campaign that, while he supported NAFTA, he wanted to review the effect of the
pact on U.S. labour and the environment. Canadian and Mexican officials have
said that they will oppose any changes to the deal.
According to Canadian External Affairs, one of the most
important, and overlooked, benefits of NAFTA to Canada is the opening up of
contract opportunities with Washington which will rise to $78-billion (US) from
the present $20-billion under the Canada-U.S. free trade agreement.
Under
NAFTA, purchases by U.S. federal departments and agencies (including bodies
such as Amtrak and the Tennessee Valley Authority) of $25,000 for goods and
$50,000 for services will be open to bidding by Canadian companies. Under the
FTA, Canadian companies were not eligible to bid on services.
FTA
One of the benefits of FTA not often mentioned is the
fact that American trade associations are now increasingly accepting Canadian
companies as members.
In Toronto, Grey Tool Co, a manufacturer of hand tools
and metal forgings selling into the U.S. for 12 years, has joined an U.S trade
association and is now able to exhibit at major trade shows south of the
border. Last year, at its first trade show, Grey Tool picked up 17 new
customers and has boosted U.S sales to 40% of total sales compared to 25% a few
years ago.
The Canadian Trade Commissioner Service and consulates in
the U.S. can be very helpful in this regard. If any of our readers wish the
address of a Canadian consulate in the U.S. or details concerning a particular
trade association, please let us know and we shall endeavour to track down the
information.
Meanwhile, an American flour milling company has quietly
slipped into Vancouver, which it was unable to do before FTA, and is reporting
sales of over $300,000 a month after one year in business.
JAPANESE INVESTMENT
After a decade of investing heavily in B.C., Japanese
investment in the province has recently ground to a halt. According to a report
released by the Japanese External Trade Organization (JETO), the number of
companies setting up shop in Canada has declined from an average of 17 a year
in the 1980s to just one in 1991.
The purchase of the Chateau Whistler early in 1991 was
the last major purchase in that area where the Japanese own about 40% of all
hotels. Two major projects have recently been abandoned.
The JETO report blames the GST, the strengthening
Canadian dollar, the Canada-U.S. free-trade agreement and the world recession
for the declining investment.
Local financial analysts blame this year's real-estate
and stock market crash in Japan suggesting that the Japanese have been spending
far beyond their means throughout the 1980s and have been selling off assets up
and down the Pacific Coast in order to pay back the banks.
RETAILING
Experts are cautiously predicting a retail sales growth
of around three per cent this Christmas over last year. A survey conducted by
Deloitte & Touche showed that more than 70% of retailers expect higher
sales this year and 40% of consumers reported that they had already started
their Christmas shopping. Besides
slightly increased consumer confidence, sales are expected to increase because,
for the last six months, same day trips to the U.S. have dropped due to the
declining Canadian dollar and Canadian retailers are increasing service and
decreasing margins, thus becoming more competitive.
In September, department store sales were up 11.5% in
B.C. over the same month last year. Nationally, sales were up 4.4% for the same
period.
EMPLOYMENT
A job creation boom boosted B.C. employment by 16,000
jobs in October, the greatest number of jobs created in the province since
August of 1991. Over-all, B.C. employment has increased by 1.1% while Canada
has seen a decline of about one per cent. According to Canada Employment and
Immigration, immigration from other provinces and countries continues to fuel
B.C.'s economic growth where the population is growing twice as fast as the
rest of the country. Most of B.C.'s employment growth was in public
administration, primary industries and the wholesale trade.
Meanwhile, in Toronto, Canada's largest city, more than
200,000 people have lost their jobs since the start of the recession. Toronto
bankruptcies in the period January to August were up 13.8 per cent compared with
the same period in 1991.
Canada's unemployment rate is now down to 11.3 per cent
while the U.S. Labour Department says that unemployment in the U.S. inched down
to a six month low of 7.4 per cent in October even though employers hired few
new workers. The rate reduction probably occurred because many teen-agers
returned to school, shrinking the labour force, not because more people found
jobs.
CASCADIA
A & A Contract Customs Brokers recently attended a
meeting with retiring Washington State Congressman John Miller who, with
Canadian M.P. Bob Wenman, is promoting the Cascadia concept--the corridor of
urban centres running from Vancouver to Portland.
Now we have learned that the U.S. Congress has passed
legislation in support of an international forum to manage growth in the
Cascadia region and pledged $400,000 (US) to help set up the commission which
will deal with issues such as transportation and the environment in the
corridor which is also known as the Georgia-Puget Basin.
Congressman Miller has said, "The Cascadia corridor
is exploding. If federal, state, provincial and local governments do not work
together our region will lose the living quality that makes us want to live
here."
In a related development, there has been talk of reviving
rail service between Seattle and Vancouver. The Washington State legislature
has approved $5-million (US) to begin upgrading tracks and level crossings and
Amtrack has pledged enough rolling stock to run two trains a day in and out of
Vancouver. Also, the U.S. government
has designated the Portland-Seattle-Vancouver axis as a high speed rail
corridor, freeing up about $1-million a year in federal grants for the next
five years to improve tracks. No detailed planning has yet been done on the
Canadian side of the border.
COMMERCIAL ESPIONAGE
With the Cold War over, it seems that it is no longer the
KGB we have to worry about. According to U.S. intelligence officials, the
French government and its agents are the new foes. It is alleged that they have
:-
* Steered American defence officials and
businesses to bugged Air France seats and Paris hotel rooms.
* Tapped French phone lines to obtain
faxed contract bids and new product
designs from U.S. companies.
* Placed moles in U.S. computer firms in Paris and
Silicon Valley to obtain breakthrough technology and stolen garbage in Houston
in search of industrial secrets.
* Recruited French nationals employed by the
U.S. embassy in Paris to spy on visiting American VIPs.
* Posed as non-defence customers to obtain
classified U.S. "stealth" technology.
* Exploited inside knowledge of an intended
U.S. dollar devaluation to make a killing on international currency markets.
Japan, Britain, South Korea, Taiwan and China were also
named before a congressional committee as countries that have targeted the U.S.
for spying. The head of the French equivalent to the CIA was remarkably candid
in admitting, "In the technological competition we are competitors, we are
not allies."
EXPORTING
The U.S. Department of Commerce recently invited A &
A Contract Customs Brokers to act as a resource at a workshop they sponsored in
Seattle to educate U.S. businesses about international transportation and
documentation. This was clearly an attempt by the U.S. government to encourage
companies to consider the opportunities that exist for exporting to Canada.
If there is sufficient interest among our readers, we
would be pleased to consider organizing a similar workshop for Canadian
companies wanting more information about the paperwork required to export to
the United States.
FORESTRY
A recent survey of the world's 50 largest forestry firms
ranks Canada's major forest companies as
the industry's worst financial performers in 1991, a Price Waterhouse report
says. Finnish companies were the only other to report net aggregate losses but
they lost much less than their Canadian competitors.
Net losses for Canada's five largest forestry companies
were $950-million (US) and $289-million for Finnish firms. The Canadian
companies ranked in the top 50 internationally by sales were Noranda Forest
Inc. and Abitibi- Price Inc, both of Toronto; MacMillan-Bloedel Ltd of
Vancouver, Domtar Inc. and Canadian Pacific Forest Products Ltd. of Montreal.
LABOUR LAW
The Government of B.C. has at last introduced its labour
legislation which includes proposals to allow certification without secret
votes, restrictions on replacement workers and secondary boycotts.
A coalition of major business groups is objecting
strenuously to the proposals and threatening to stop co-operating with the
government in several areas if the bill is not amended. They intend to refuse
to accompany the Premier on international trade missions, participate in a
joint labour-management institute or to attend any talks on the economy or
other issues.
In Ontario, where such legislation has been in effect for
some months, the government is now turning to the most far-reaching
employment-equity legislation in North America.
The province's Bill 79--introduced in June-- would have all
companies with 50 or more employees set goals and timetables for the hiring and
promotion of women, visible minorities, natives and the disabled. The business
community is quoted as being generally "positive about employment equity
but worried about the implementation process." Two lobby groups have
sprung up in recent months claiming the law discriminates against white males.
If this legislation is successful, can B.C. be far
behind?
TRIVIA
Ottawa has helped itself to ever-greater portions of
income over the past eight decades.
* In 1920, the federal
share of personal and corporate income tax was $87 million. In 1960 it was
$3,161 million and $70,997 million in 1990.
* In 1920 personal income
tax as a percentage of total direct taxes was 37%. In 1960 it was 60% and 81%
in 1990.
* In 1958 federal MP's
earned $8,000 plus a $2,000 tax free allowance. In 1970 it had risen to $18,000
and an allowance of $8,000. In 1990 the minimum salary was $64,400 and $27,300
in allowances.
* The total cost of
Parliament per MP in 1990 was $770,000 and it required a 476 page manual to
detail the "allowances and services for MP's."
* A Senator can earn
$75,000 a year just for showing up once for every two consecutive sessions of
Parliament.
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