AUGUST 1993 Edition
MEXICO
We reported last
month that the U.S is prepared to use the Export Enhancement Program (EEP) to
challenge Canada's export of wheat to Mexico by offering cash bonuses to
exporters to bridge the gap between U.S. domestic prices and the lesser prices
necessary to sell abroad. Canada is now appealing this tactic to the GATT in
Geneva and is supported by Australia, Argentina, Venezuela, Brazil and Chile
all of whose farm exports have suffered from EC and U.S. export subsidies.
It now seems that two influential U.S. senators, Dole of
Kansas and Baucus of Montana, are making their support of a NAFTA conditional
on Mexico agreeing to launch a trade case against Canadian wheat. They claim a
countervailing duty investigation would be supported by Mexican wheat farmers.
The support of both senators is key to smooth passage of the NAFTA through
Congress. Dole claims that the Canadian dominance of the Mexican wheat market
for the past three years is a direct result of subsidies and that the
Canada-U.S FTA fails to address unfair Canadian competition in the U.S. and
Mexican markets.
IMPORTS
Canadian imports reached a monthly record of $13.9
billion in May as companies increased their spending on machinery, equipment
and industrial goods to make their operations more productive. Eventually this
may also lead to improved employment. Canada's export performance was not as
strong, according to Statistics Canada, as shipments fell in May, the first
decline in four months. Nevertheless, merchandise exports for the first five
months of 1993 remain 16.4 per cent higher than for the same period in 1992.
Most of the export
decline resulted from a reduction of $384 million in automotive exports which
were still up 30 per cent over the same period last year.
SMALL BUSINESS
Starting a new business means finding the answers to many
questions, many of which involve government. How do you register your new
company, or obtain a GST number? Is it worthwhile to export your product? What
government incentives are available to exporters? If you invent something, can
it be patented? And on it goes. Business owners can spend weeks, even months,
locating the right officials in federal and provincial departments often
getting lost in the bureaucratic maze.
Ottawa and the provinces believe they will eliminate many
of these delays with a new chain of problem solving centres for entrepreneurs.
The Canada Business Service Centres will be able to provide accurate contact
names and phone numbers, and are equipped to offer quick answers to hundreds of
business questions, in other words, one stop information shopping.
The concept has been tested in Halifax, Edmonton and
Winnipeg and will be expanded to a major city in every province in the next few
months. Staff at each centre have been trained to use sophisticated on-line
data bases and are able to call up names and phone numbers of officials who run
scores of programs or experts who can provide information on any number of
topics. In many cases, fact sheets or full reports can be supplied by fax or
mail. Over the past year, the Winnipeg centre has received 16,000 phone calls
and predicts this will rise to 35,000 by next year. By using a Touch Tone phone
and punching keys when prompted, information can be available 24 hours a day.
TRANSPORTATION
Special promotions are boosting the sales of pizza in the
north of England. So successful are the sales that the supplier of dough in
Dublin cannot keep up with demand.
In the past three months, Air Canada has transported
110,000 kilograms (242,504 pounds) of frozen dough to Manchester. The exported
dough is made in Spokane, Wash., trucked to Vancouver and then moved on
passenger flights via Toronto. Time from Spokane to Manchester is 36 hours.
Vancouver was chosen because no flight out of Seattle could get closer than
London.
TRADE
In an effort to reduce the growing list of Canada-U.S.
trade battles, President Clinton has promised to appoint a senior White House
official to handle disputes with Canada. The President has acknowledged that
cross-border battles are getting out of control and beginning to threaten
relations between our two countries. Beer, softwood lumber, wheat, steel and
possibly sugar threaten to overload the bilateral agenda and even though
protectionist actions taken against Canada account for less than 5 per cent of
total Canadian exports [$122.3 billion in 1992] to the U.S., the public
perception is that the existing FTA has failed to guarantee clear access to the
U.S. market.
CUSTOMS
This year, Laredo, Texas, once a sleepy border town has
become US Customs' largest inland port. In terms of value, around one third of
U.S.-Mexico trade will pass through Laredo. An estimated 80-85 per cent of all
shipments still cross the border by truck and approximately 2000 trucks cross
each day, up to a million loads a year.
Trucks waiting to cross into Mexico can be backed up for
miles and once over the border, trailers may wait for one or two days before
being transferred to a Mexican trucker. Mexican customs is doing its best to
cope with the growth and streamline procedures. On a single day in 1991, 3,200
Customs agents were fired and replaced with younger, newly trained personnel
less susceptible to the corruption which was rife. But it can still take two
days for a U.S. broker to complete the paperwork and get Mexican Customs to
confirm that all duties and taxes are paid.
In contrast, approximately 1400 trucks cross into Canada
through Pacific Highway each day. Thanks to Electronic Data Interchange [EDI]
and Line Release, many trucks are cleared in under a minute without the driver
even leaving the cab of his truck.
TECHNOLOGY
Nuala Beck, guru of the New Economy, tells us that in the
past year alone, Canada's communications and telecommunications equipment
manufacturers have created 5,000 new jobs and telecommunications broadcasting
has created an additional 2,000 jobs. At an average weekly wage of $900, they
pay 30 per cent more than the average Canadian wage.
Comm and Tel is already larger than the transportation
equipment industry and accounts for 4.0 per cent of GDP and 3.0 per cent of
employment. More Nova Scotians are employed in Comm and Tel than mining and
fishing combined: more Quebecois are working in this sector than in
construction and more British Columbians than in pulp and paper.
However, in July, Northern Telecom Ltd, the Canadian
telecommunications giant, announced that their second quarter losses would be
over $1 billion and that 5,000 staff around the world would lose their jobs,
including 2,000 in Canada.
TIMING IS EVERYTHING
When the board of Northern Telecom decided to sell an
underwater cable subsidiary for $900 million they had a problem. Northern is
based in Mississauga, Ontario, the cable company in Britain and the buyer in
France. Northern shares are listed on markets in New York, Toronto, Tokyo and
London and its parent BCE Inc is listed globally. Government regulations as
well as market rules required that the announcement be made in such a way that
traders in one country would have no advantage over traders in another country.
That meant finding a window to release the information when the North American,
European and Japanese markets were closed. The window opened at 3 a.m. in
Mississauga and the fax machine began humming. It was 8 a.m. in London, 9 a.m.
in Paris and 4 p.m. in Tokyo.
AIRLINES
Because of price wars, the European Community is faced
with a crisis that could see thousands more added to the unemployment lines.
The president of the EC has called a meeting of the 12 member states to plot a
rescue strategy.
Over the last year, EC airlines were granted more leeway
to set prices. The discounts that followed have added to the industry losses.
The airlines are also grappling with the first steps towards deregulation and
strict curbs on additional subsidies. In addition, transatlantic competition
remains fierce and many in Europe say it includes unfair trading practices. Air
France, Lufthansa and KLM were among the big losers last year while British
Airways turned a profit.
Closer to home, Air Canada pilots recently agreed to a
five per cent wage cut as part of a tentative agreement with the airline which
has laid off 243 pilots this year. The wage concessions are tied to job
security provisions.
GREEN
The Conference Board of Canada study says that Canadian
trade could be hit hard in coming years as environmental awareness grows at
home and abroad. So far, the impact of environmental measures has been small
and confined mostly to the forest industry, but could grow significantly. For
instance, the U.S. has introduced recycled-content rules for newsprint and many
Europeans are critical of how Canada--one of the world's leading pulp and paper
exporters--manages its forests.
GOVERNMENT CONTRACTS
Federal contracts recently awarded in the Lower Mainland
include two for Richmond companies, one of which is sharing in a $1 million
contract to supply Canada Communications with printed envelopes and the other
is to provide technical and engineering support for National Defence helicopters
for $80,000. A Delta firm has landed a $375,000 contract to prepare and apply
salmon fertilizer solutions for Fisheries and Oceans.
B.C. TRADE OFFICE
Washington represents 27 per cent of B.C.'s exports and
Oregon 8 per cent. Exports to Washington, Oregon and California represent more
business to B.C. than all of Europe.
B.C. businesses can now get closer to this market by
using offices of the old B.C. Trade Development Corporation at Suite 930, 720
Olive Way in Seattle, two blocks from the Canadian Consulate. The facilities
include six offices, an executive office and a boardroom and costs run around
US $275 a month. For more information about booking, call Mike Clark, director
of the B.C. Trade office in Washington at (206)-628-3023 or Steve Guthrie at
B.C. Trade in Vancouver, at 844-1846.
SMUGGLING
Last year, the growth industry in Newfoundland, one of
Canada's most depressed provinces, was tobacco smuggling from the French
islands of St-Pierre-Miquelon. It was estimated that as many as thirty boats a
night were making the ten kilometre run, each earning around $3000 a trip. So
prevalent was the smuggling that many local retailers stopped stocking tobacco
products.
This year it is cod. Stocks of the northern cod are so
depleted that the Department of Fisheries has had to impose a two-year ban on
commercial catches. But some fishermen, who are allowed to fish to feed their
families, are selling the cod instead. Fisheries estimated that
"recreational" fishermen would catch 5,000 tonnes of fish. They now
figure that the catch exceeded 10,000 tonnes, or 22 million pounds, with the
majority of the fish finding its way into a thriving black market. More than
20,000 Newfoundlanders are out of work during the fishing moratorium.
TRIVIA
Rolls Royce Motors Ltd has opened a dealership in Moscow
and expects to sell 20 to 25 cars a year for over $200,000 (U.S.) each. Lenin
used to own two of them.
Last year, Mercedes sold more cars in Russia than in the
rest of Europe put together.
NOT SO TRIVIAL
According to Fraser Institute economist Filip Palda, the
federal government could save about $11 billion by stopping unemployment
insurance, Canada Pension Plan, old age security and family allowance payments
to families with incomes above $100,000 per annum.
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