DECEMBER 1992 Edition
NAFTA
It now seems likely that president-elect Clinton wants to
negotiate two side deals with Mexico (and Canada) to rectify
"omissions" before signing the NAFTA. He wants to set up two
trilateral commissions, one on environmental protection and the other on labour
standards. Their mandates would be to uphold and enforce each country's worker
safety, wage laws and environmental standards.
He also wants to insert controversial changes in NAFTA
enabling the U.S. to turn back foods treated with certain pesticides and to
close the border against Mexican and Canadian goods if a "surge" of
imports are harming U.S. producers.
Understandably, Prime Minister Mulroney would like the
deal concluded long before it could become an election issue while
Clinton is unlikely to
rush into what is seen as a Bush initiative.
The government of Quebec, confident that the deal will
come to pass, has announced a $3-million action plan to develop more trade with
Mexico. Presently, Quebec has a $100-million a year trading deficit with
Mexico. The province will spend its money on assistance to Quebec business
people who want to develop sales in Mexico; information on specific Mexican
markets; promotional activities for Quebec products, technical and financial
support for companies entering the market, and closer financial ties between
Quebec and Mexican banks. The staff at the Quebec delegation office in Mexico
City will increase from four to 26 people. 200 Quebec companies are presently
doing business in Mexico.
The Government of B.C. continues to be less than
enthusiastic about NAFTA.
FTA
Opponents of FTA seem to have blamed every problem with
the economy on free trade, scarcely recognizing the high Canadian dollar,
overseas competition and a global recession. Trade figures would seem to tell a
different story however.
Comparing the three years prior to FTA to the three years
after, merchandise exports to the U.S. are up 11 per cent, (that with an 85 to
89 cent dollar). September's $13.1-billion in total merchandise exports was an
all time high as was the $10.3-billion that went to the U.S.
Not only do we see traditional Canadian exports such as
wheat (up 37% so far this year) and natural gas (up 21%), but also industrial
machinery (18%), office equipment (8%), auto parts (19%), heating and
refrigeration equipment (19%), electric lighting (16%) and interestingly,
textiles and apparel (up 18% and 40% respectively). Critics of FTA said it
would wipe out Canadian manufacturing. Canada's
overall share of U.S. imports has grown to almost 20% with increases recorded
in 19 of 22 industries and a recent study by the C.D. Howe Institute shows that
gains have been greatest in those sectors liberalized under FTA. These
increased 16% between 1989 and 1991 while exports of the same goods to other
countries declined by 6.3 per cent.
CROSS-BORDER SHOPPING
Canadian retailers should get a boost from the decline in
the dollar as more and more goods are now the same price as in the U.S. after
factoring in the exchange rate. According to the Bellingham Herald, "The
number of Canadian shoppers has fallen off sharply this year. If this trend holds,
the retail sector in [Whatcom] county could be in for a rough ride."
Northwest Washington state retailers employ 15,200 workers, more than a quarter
of the work force of the whole of Whatcom County. Economists estimate that the
10% drop in the Canadian dollar will cost
Whatcom County $40-million in reduced retail sales.
Prompted by falling tax revenues and predictions of a
higher deficit, Manitoba has now decided to allow Sunday shopping from noon to
6 p.m. The government claims Manitoba is losing hundreds of millions of dollars
in retail sales to neighbouring Ontario, Saskatchewan, North Dakota and
Minnesota.
The Ontario government plans to copy B.C. and have
federal officials collect provincial taxes on the foreign purchases of
cigarettes and alcohol at the border. It projects that this will add nearly
$7-million to provincial revenues.
In Quebec, the Parti Quebecois plans to block legislation
that would lift restrictions on Sunday shopping in Quebec. Allowing Sunday
shopping would reduce cross-border trips and increase retail sales by 1%, or
about $448-million worth, and create 8,816 jobs according to the government
while the PQ claims it would have no significant impact.
INTER-PROVINCIAL TRADE
The Conference Board of Canada has concluded that, as a result
of FTA, many companies have an easier time doing business with the U.S. than
with other parts of Canada.
Internal barriers range from government procurement
policies to restrictions on out-of-province workers, liquor board marketing,
pricing practices for beer and wine, and farm marketing boards. In one case
cited by the Board, the Ontario pulp and paper industry is not allowed to bring
in power from Manitoba, thus increasing costs.
With the defeat of the referendum, politicians are now
turning to the issue of the economy which Canadians all along had said was the
most important issue facing the country.
Industry Minister Wilson is expected to begin a major
push shortly to eliminate these trade barriers. New Brunswick Premier Frank
McKenna has said that his government will hit back at provinces that refuse to
tear down their barriers to trade saying, "We're no longer going to put up
with barriers preventing our access to their markets and allow them unlimited
access to ours." He considers Quebec, Saskatchewan and B.C. to be the
worst offenders.
TOURISM
This vital part of the economy had a third quarter
deficit of $2.2-billion. Spending by Canadian travellers to other countries was
$4.23-billion against $2.02-billion spent in Canada by visitors.
In a curious move, if the provincial government is
serious about international trade and investment, the minister of tourism for
B.C. has said that only B.C. firms can bid on a $1.5-million tourism marketing
contract. Further, it seems that foreign owned companies are not entitled to
bid even if they have offices in B.C. (Seems like a trade barrier).
'TIS THE SEASON
Shoplifters are expected to be out in droves this
Christmas season, snapping up everything from jewellery and clothing to cameras
and compact disc players.
Theft is a growing problem for retailers. siphoning off
about $2-billion from their tills annually. Shrinkage, which includes
shoplifting, employee theft and sloppy bookkeeping, rose to 1.8 per cent of
sales this year from 1.28 per cent in 1989,
Book and card shops had the highest shrinkage, at 2.75
per cent of sales, followed by 2.25 per cent for drug stores, 2.05 for
department stores, 1.87 for clothing retailers and 0.5 for supermarkets.
Retailers have at their disposal an array of
hardware--surveillance cameras, mirrors and electronic tabs that gush ink if
the customer tries to remove them. But the most effective deterrent is to make
shoplifters aware they are being watched.
A survey by Ernst & Young in the U.S. found that
theft prevention programs are less effective at Christmas, primarily because of
increased store traffic and an influx of untrained part-time employees who are
less adept at spotting suspicious behaviour.
THE ENVIRONMENT
The environment is a $6-billion a year industry in Canada
and according to a study by Employment and Immigration Canada it is threatened
by a shortage of technically skilled workers and management. The study says
that the industry's 60,000 strong workforce must grow by 5,000 to 7,000 new
workers by 1995, including up to 3,000 skilled workers, to meet growing demand
for products and services and increasing government legislation. Without the
development of these human resources, the industry won't be competitive in a
worldwide environment market valued at $250-billion.
As Canada's economic base moves from natural resources to
manufacturing, environmental concerns will only continue to grow. Canada's
environmental industry plans, through a newly established council, to team up
with educators to teach students the needed skills and develop customized
business management courses for those in science and engineering. The study
also found that few students have a clear understanding of career opportunities
in the environment field or of the educational requirements to enter the
industry.
GATT
The Uruguay Round has been deadlocked for two years by a
dispute over demands by the U.S. and other exporters for cuts in the EC's huge
agricultural subsidies.
Now, the U.S. and the EC have tied up the last details of
a key farm trade deal opening the way for final talks to revitalize world
commerce into the 21st century. This is the last major barrier to concluding
six years of talks on a broad range of goods and services under the General
Agreement on Tariffs and Trade which could pump as much a $200-billion into the
global economy over the next ten years.
Canada stands to gain significant increases in wheat
sales abroad and when the
marketing boards are
replaced with tariffs, as is proposed, the consumer will benefit from lower
prices for dairy products, up to now a highly protected industry.
Fierce opposition to the deal has come from the French
government which is faced with angry demonstrations by their farmers. France is
the EC's top farm producer and some French politicians have suggested vetoing
the accord, even at the risk of triggering a crisis in the EC.
VANCOUVER PORT
CORPORATION
The corporation is preparing for an expansion which will
double its container-handling capacity by building a new $206-million facility
at Roberts Bank. VPC's two terminals handled 383,563 containers in 1991, a gain
of 18.9 % over 1990. This year, traffic is up by 20%. Delta Port will
eventually have a capacity of 400,000 a year. Experts claim that Vancouver will
have arrived as a port when it is handling a million containers a year.
However, the U.S. West Coast rivals are also moving
ahead. The ports of Tacoma and Seattle take most of the estimated 70% of
inbound Canadian containerized cargo routed
through the U.S. Seattle is planning a $220-million expansion allowing
it to take an estimated 1.2-million containers and Tacoma which topped a
million containers in 1991 is hoping to reach two million by the year 2000.
THE ECONOMY
The recession is over and we are now into recovery, such
as it is, so say the experts. Economists predict that all 10 provinces should
post growth in the coming year with the biggest growth being in the West
influenced by:- Low interest rates, Currency depreciation, In-migration and
House prices.
According to the British Columbia Ministry of Finance and
Corporate Relations, the outlook for the province is as follows:-
* Real GDP will be up by 3%
* Employment up 2.5%
* Unemployment Rate will be about 10.5%
* Housing Starts, 41,500.
* Retail Sales up 6.5%
* Inflation 2.5%-3.0%
TRIVIA
No doubt we can all take comfort knowing that in 1991 our
tax dollars were spent on the following Social Science and Humanitarian
Research Council grants:-$79,000: To study the repertoire and ethnology of
singing in an Ottawa valley community. $208,286: To write a treatise on
knowledge and power; religious and historical practice among northern Malagasy
speakers. $34,028: to study women as tragic heroes: nineteenth-century stage
cross-dressing. $19,520: to study the linguistic consequences of `creolization'
in Sango, `langue nationale' of the Central African Republic, and, $44,010: To
write an index of Canadian lesbian reviews 1970-1990.
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