JANUARY 1993 Edition
NAFTA
President-elect Clinton has met with Mexican President
Salinas and promised to move quickly to resolve outstanding differences on the
proposed free-trade pact. Clinton has said he supports the pact but wants
separate agreements passed to protect the environment and U.S. workers. Salinas
said that Clinton had underscored that the text of the agreement would not be
reopened. Clinton has also announced that Prime Minister Mulroney will be the
first foreign leader with whom he will meet after Inauguration Day. The NAFTA
still has to be approved by the legislatures of all three countries.
FOOD-LABELLING FOR U.S.
Canadian food exporters to the U.S. will soon be faced
with an expensive hurdle. By May 1994, fresh vegetables, fish and meat will
have to be labelled for the first time and all foods will require comprehensive
nutritive tests which could cost between $600 and $1,000 and will be needed for
every product shipped across the border to retail outlets.
In general, the act requires all food
manufacturers--whether U.S. or foreign--to declare the nutritional content of
their products. It suggests the size of servings and clarifies any health
claims the product may make. The content requirements are simpler and easier to
understand than in the past. Information must be printed in a prescribed size,
colour and type face, in the same place on the package, and any health claim
must be adequately explained.
CROSS-BORDER SHOPPING
Point Roberts, Washington, has almost as many gas pumps
as residents and the effect of the dropping dollar is now being felt. In
December, border traffic was down by 25% over 1991, profits are dropping and
employees are being laid off. As many as 45% of the local work force is
jobless. At one store, sales are down by 40%. In 1980, low Canadian gas prices
virtually closed down the border community and only one service station was
open and the others were boarded up in anticipation of better days ahead.
In New Brunswick, some Americans are getting a free ride
on the health-care system. The medicare director is enlisting the help of Crime
Stoppers to prevent Americans getting access to thousands of dollars worth of
free health care. Many have managed to obtain provincial medicare numbers and
about 20 Americans are caught each year for defrauding the system.
EMPLOYMENT
British Columbia led Canada in job creation in 1992 with
most of the new jobs being in the service industries. Last December, Vancouver
and Victoria had the lowest unemployment rates at 8.9% and 8.2% respectively. The average annual unemployment rate of 11.3%
was a nine-year high and the second highest average on record, well above the
rest of the industrialized world where the average rate is less than eight per
cent.
In the east, The Canadian steel industry may have hit on
a successful strategy for retraining laid-off workers and launching them on new
careers. In the past four-and-a-half years, a program run by steel industry
executives and the United Steelworkers of America, has trained more than 8,000
laid-off workers as computer specialists, environmental technicians,
nurses--even lawyers and teachers and boasts a job-placement rate of more than
60 per cent. It has been hailed as a model for other industries. Another 3,000
will be in training by next summer.
EUROPE
January 1st saw the European Community's single market
come into force. However, the seven-year-old plan to achieve full freedom of
movement within the EC for people, goods, services and capital still has a long
way to go.
Passport checks have not been scrapped entirely because
of concerns about terrorists, drug traffickers and illegal immigrants, and
there will be delays ranging from months to years on a host of liberalization
measures, from freeing competition in EC life insurance to trade in bananas and
Japanese cars. Customs checks on goods at internal EC borders ended though
there will be some checks to prevent the illegal importing of hazardous waste
from neighbouring countries.
Of the 282 directives, or pieces of European legislation,
that form the basis of the Single Market program, 260 were adopted by EC
leaders as of December 17. Of that total, 177 require member governments to
follow through with legislation of their own. Despite efforts to arrive at
single standards for the market, each country still has a different plug for
electrical appliances: railway rolling stock cannot easily move from country to
country; voltages are different and signalling is not uniform
British truckers are rejoicing that they no longer have
to stop and fill in the 54-box Single Administrative Document before boarding a
ferry for France. This is estimated to save businesses between $80 and $90 and
hours of waiting time at the border per trip.
Ironically, until 1999 it is still permissable to buy
"duty-free" wine, spirits and cigarettes when travelling between EC
countries and duty-free allowance have been doubled.
LABOUR
Reacting to recent controversial labour legislation, B.C.
businesses appear to be going on the offensive to show their displeasure about
the law as well as increased corporate taxes, new restrictions on resource
extraction and plans to raise the minimum wage.
First, the Coalition of B.C. Businesses which includes the
B.C. Chambers of Commerce and comprises 24 organizations representing 50,000
businesses, is threatening a challenge to the new labour code under the
Canadian Charter of Rights and Freedom. Second, many high profile B.C. business
executives have dropped out of the planned visit to the annual World Economic
Forum, set for Davos, Switzerland later in January which is attended by about
1200 chief executive officers and heads of government from around the world.
Premier Harcourt of B.C. is still scheduled to go.
TEXTILES
After a series of raids on the U.S. offices of China's
textile companies, the U.S. Customs Service has switched gears and is offering
a series of seminars in Hong Kong and China to teach manufacturers there how to
comply with U.S. import laws.
The seminars follow a 19-month investigation of China's
textile export practices which have resulted in indictments on customs-fraud
charges of Chinese companies--including some owned by the Chinese
government--their officials and U.S. importers. They were accused of trying to
evade duties and import quotas by falsely labelling products made in China and
shipping them to the U.S. through other countries.
COMPETITIVENESS
According to the Canadian Manufacturers Association,
Canada's industrial competitiveness continued to slip in 1992 as companies lost
market share in both domestic and world markets and failed to keep pace with
other countries by investing in new technology.
Production by Canadian manufacturers has risen by 13.5%
since 1980, but in the other Group of Seven industrial nations the increase was
32 per cent. During the same period, unit labour costs increased by more than
60 per cent in Canada compared with 33% in the other G7 nations--the United
States, Japan, Germany, France, Italy and Britain. Overall competitiveness in
other G7 nations improved by 34 per cent in the past 12 years, while Canada's
increase was only 22 per cent.
It takes Canadian companies seven hours and 52 minutes
out of eight hours of production to cover overhead, and five minutes to pay
taxes, leaving only three minutes to earn the profits needed for reinvestment.
AUTOMOBILES
The
$339-billion automobile industry which accounts for 10% of Japan's overall
economy is in trouble, a major factor in their deepening recession. Domestic
car and truck sales are down 13% from the 1990 peak of 7.7 million vehicles and
profits for the five biggest car makers--Toyota, Nissan, Honda, Mitsubishi and
Mazda-- are off about 64% from the same year.
The U.S. market is making a modest comeback with car
sales having increased an estimated 1.5% in 1992. The Japanese share of the
U.S. market has retreated slightly to 30%. Also helping is the fact that
Japanese companies are weak in the light-truck category which allowed Dodge and
Ford to get the lion's share of this niche market that grew more than 18% last
year to 4.5 million vehicles.
The strong Yen and inflated prices have made Japanese
vehicles about $1,500 more than an American-built mid-priced vehicles.
EARNINGS
According to a recent World Bank report, the Swiss are
the world's top wage earners receiving an equivalent of $35,510 US a year.
Canada finished 11th with its citizens earning $21,260 per capita, behind
Switzerland, Luxembourg, Japan, Sweden, Finland Norway, Denmark, (former) West
Germany, Iceland and the United States. The bank calculates its wealth
comparisons by taking a country's gross domestic product and dividing by the
population.
The poorest countries are in Africa where the average
yearly income was $70 in Mozambique, $100 in mainland Tanzania and $130 in
Ethiopia. The report lists 56 areas, from Argentina to Zambia, where the
average income declined between 1980 and 1991.
FARMING
A Singapore agronomist says the city-state could develop
farms on the rooftops of high-rise apartment buildings. A year-long experiment
shows that aeroponics--in which plants are anchored in polystyrene foam and
grow with their roots suspended in mid-air--can produce more crops than by
hydroponics and is easier to manage. Aeroponic roots are enclosed in soil-less
boxes and fed nutrients by atomizers.
FREE MARKETS
The first of the year saw the ASEAN nations--Brunei,
Indonesia, Malaysia, Philippines, Singapore and Thailand--set up their own
free-trade zone. They aim to cut tariffs on intra-ASEAN trade in manufacturing
and processed agricultural goods to a maximum of 5 per cent over the next
fifteen years. Leaders hope the large regional market will enhance ASEANs
attraction as a trading partner and investment target.
Meanwhile, the Presidents of Brazil, Argentina, Paraguay
and Uruguay sealed a deal for a common market that will go into effect January
1. 1995. The treaty calls for the four to adopt common tariffs for imports from
other countries. Eventually, they are to coordinate policies for agriculture,
industry, exchange rates, customs, immigration and investment.
Inflation in Brazil, by far the biggest member, had led
to concern the target date might be pushed back. Other problems include
persistent trade imbalances, exchange-rate fluctuations and tariff barriers.
INVESTMENT
According to the New York Times, this is what an
investment of $1000 on July 31, 1982--before the bull market of the 1980s--
would be worth now, excluding dividends.
Coca Cola: $13,392.
Philip Morris: $12,909. Merck: $12,011. Boeing: $7,330. General Electric:
$5,118. Procter & Gamble: $4,899. Sears: $2,261. General Motors: $1,520.
Caterpillar: $1,454. IBM: $857.
TRIVIA
* Part-time work, temporary work and self
employment account for almost one-third of all jobs in Canada and up to half of
all new jobs.
* Medicare is billed $400-million a year in a
futile attempt to stamp out sniffles and sneezes. That's the cost of patients
seeking medical treatment for the common cold, for which there is no real cure.
* 180 Canadians who earned $250,000 and 920 who
earned over $100,000 or more in 1989 paid no tax at all.
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