JUNE 1994 Edition
GENERAL AGREEMENT ON
TARIFFS & TRADE
After seven years of work, more than 125 countries
recently signed the Uruguay Round of the GATT which the OECD estimates will
eventually result in $250 billion extra in global economic growth. The final
document totalled 26,000 pages and weighed 175 kilograms. The anticipated
implementation date is next January 1st but it could be delayed until July
1995.
The biggest gains are in four areas:
Textiles & Clothing:
Trade will gradually become freer in this sector. The so-called Multifibre
Agreement will be phased out over 10 years. Countries like Canada will no
longer be able to impose import quotas in this area.
Agriculture:
Quotas and outright bans on food imports will gradually disappear to be
replaced by declining import tariffs and government subsidies should fall. It
will become easier for developing countries to sell to developed countries. It
will be more difficult for the rich economies to flood the world with cheap,
surplus food.
Minerals.
Tariffs will fall to zero on many metals and other minerals, allowing
developing countries, with their lower production costs, to export more.
Manufactured goods:
Many countries, especially in East Asia, have become major exporters of
finished goods. The broad decrease in
tariffs agreed in the Uruguay Round--40 per cent overall--will make these goods
cheaper for consumers in the industrialized world. They gain, we gain.
CROSS-BORDER TRIPS
Canadian shopping excursions to the U.S. remained near a
five-year low in March despite a seasonally adjusted 0.4 percent increase over
February. Statistics Canada attributed the decline partly to a drop in the
Canadian dollar against its U.S. counterpart. It said another factor was rising
U.S. gasoline prices. Before adjustment for seasonal factors, same-day car
trips to the U.S. were down 17 per cent from a year earlier.
Trips by visitors to Canada of one or more nights have
been increasing gradually over the past year. Overnight travel into Canada
increased 2.7 per cent in March to 1.3 million trips. This type of travel was
relatively constant between late 1986 and early last year but has been inching
upwards since April 1993 because of the low Canadian dollar.
JAPAN
Hands-on assistance to foreign businesses looking to gain
a foothold in the lucrative Japanese marketplace will soon be available through
Import Promotion Centres in four cities: Yokohama, Nagoya, Osaka and Kobe. This
follows the positive response to the Business Support Centre which opened in
Tokyo a year ago.
The wide range of services provided include: private
offices with telephone, fax, desk and cabinets; access to exhibition halls,
personnel and a library. Further information is available from the Japan
External Trade Organization (JETRO) office in Vancouver at 604-684-4174.
INFOCENTRE
A new interactive fax information service (FaxLink),
operated by Foreign Affairs and International Trade, Ottawa, can now be reached
by dialling 613-944-4500 from an office fax machine (24 hours a day, seven days
a week). Once connected, callers will be asked either to request an index of
available faxables or to input the product code associated with the desired
document(s). FaxLink presently includes information on the Access North America
program and various documents on the GATT and NAFTA. The service will soon be
expanded to include documentation on up-to-date foreign policy matters, and
additional market information and intelligence of particular relevance to
Canadian exporters. For additional information, there is a toll-free line
1-800-267-8376, from 09:00 to 17:00 (EST).
RETAIL
During the first three months of the year, the amount of
money Canadians spent in retail outlets took off. Sales in dollar terms were up
more than 3 per cent from the final quarter of 1993, and with the consumer
price index falling during that period, the real increase was closer to 4 per
cent. The country hasn't seen such a jump since the late 1980s. By comparison,
retail sales increased by less than 3 per cent in all of 1993.
B.C. consumers spent $2.6 billion in both February and
March. The March figures were a healthy 6.9 per cent higher than same month in
1993. National sales went from $16.94 billion in February to $17.16 in
March. Alberta had the strongest annual
gain in retail sales at 13 per cent, followed by Nova Scotia at 9.4 per cent
and Ontario with a 7.6 per cent increase. Experts say fashion sales have
improved after lagging behind in recent years, though some fashion chains have
not yet made the proper adjustments to inventory and pricing. Big-box retailers
are doing well at the expense of the middle of the road, middle-size, middle
pricing outlets.
SURREY
Waugh Research was recently commissioned by the City of
Surrey to undertake a survey of Surrey businesses on economic and development
issues. 2354 survey packages were mailed which yielded 789 completed
questionnaires, a remarkable 33.5 per cent response. Among the conclusions: 42
per cent of businesses are presently exporting products and services outside
B.C,. 44 per cent to the U.S., 43 per cent to other Canadian provinces, 3 per
cent to Europe, 2.5 per cent to Asia, 2 per cent to Japan, 1.6 per cent to
China and 0.7 per cent to Mexico. 83 per cent of those exporting wish to
increase their exports, with 82 per cent interested in the U.S. 63 per cent of
companies plan to expand in the next three years, of which 69 per cent will
increase employees, 54 per cent increase product\service lines and 50 per cent
plan to expand their facilities. More information on this survey is available
from Bruce Riddick, City of Surrey at 591-4333.
SHOPPING
Supermarket lines could become a thing of the past
according to a South African research group that wants to put microchips into
shopping carts. The Pretoria-based Council for Scientific and Industrial
Research recently demonstrated its "Supertag," a cart containing 50
different items imprinted with microchips that would take only one second to be
scanned and priced. The CSIR described the device as a single integrated
circuit chip which can broadcast its identity despite interference from other
tags in the vicinity. This means that unlike products with barcodes that have
to be read one at a time, products with the Supertag chip can be read at the
same time, even when they are jumbled up with others in the cart.
OPPORTUNITY
Cracking the Japanese market can be hard but Nu Skin
International, a U.S. cosmetics manufacturer, has shown that selling door to
door can yield spectacular results. After entering Japan less than a year ago,
that country is already Nu Skin's top overseas
market. The company expects Japan sales to total some $100 million
during the first 12 months, representing around one-fifth of its total sales.
Nu Skin now has some 100,000 Japanese sales agents representing its products.
The reasons for this success are attributed to Japan's population density and
emphasis on relationships and family ties.
TRANSPORT
A Memorandum of Understanding signed March 1st between
Canada and Mexico allows Canadian trucks to travel 20 kilometres
into Mexico. Trucks
originating in Canada may now load further goods in the U.S. for drop-off in
Mexico and, even more usefully, load goods in Mexico for distribution in the
U.S. as well as Canada on the way back. The quantity of trucked goods directly
from Mexico for Canadian receivers is relatively light; having products for the
U.S. markets makes the return journey more viable. It is the first time foreign
trucks have been allowed into Mexico. By the end of 1995, commercial trucking
to virtually any area in North America will be open to trucks from NAFTA
countries.
AGING
People over 50 now make up about 26 per cent of the population
but own 80 per cent of financial assets in Canada. This group also control 55
per cent of discretionary income. They purchase 43 per cent of all new cars and
48 per cent of new luxury cars. The value of real estate owned mortgage-free by
this age group is about $500 billion, approaching the total Canadian yearly
economy. 60-plus people have an average income of $27,000 to 35,000 per person
putting their average household income in the $60,000 range. Most of that
income is disposable since most people in this age bracket are debt-free.
Seniors in Canada hold about a trillion dollars in assets. Big marketing areas
for the grey group involve financial services, pharmaceuticals, travel,
automotive, health and fitness.
WORLD MARKETS
World Markets at Your Doorstep is a one-day trade show
and seminar that has proved successful in the East. Continuing across Canada,
it will arrive in Vancouver December 8th. The Market helps exporters and
potential exporters tap into the global networks, contacts and expertise of
Canadian and International trading houses. To date, manufacturers who have
attended the events have generated an estimated $25 million in new export sales
and ventures. Their success is due to one objective: introducing qualified
suppliers to selected trading houses and their extensive overseas contacts and
expertise. Interested B.C. suppliers should contact Dale Harvey of the B.C.
Institute for Studies in International Trade. Tel: 844-1905, Fax: 660-3917.
Trading houses should contact Mike Reshitnyk at Foreign Affairs and
International
Trade, Ottawa. Tel:
613-996-1862.
BUILDING
A $28 billion effort to rebuild post-war Lebanon could be
a huge opportunity for Canada's construction industry if it makes an effort.
However, most Canadians ignore the Middle East market in favour of the U.S. and
the Pacific Rim. As Iraq, Israel and Gaza rebuild their cities, Canadian
businesses have a 10 year window of opportunity to sell concrete forming
panels, two-by-fours, trusses, flooring, wall coverings, paint, shutters,
blinds and epoxies. Saudi Arabia will spend $56 billion during the next five
years to build homes, schools, commercial centres and health care facilities.
Kuwait, which by law provides free homes for all nationals, has a current
backlog of 60,000 units, a $4 billion market for construction materials.
BOEING
Several Canadian companies have a big stake in Boeing
Co.'s newest aircraft, the Boeing 777, which was officially rolled out in
April. The landing gear, fairings, aerodynamic coverings for struts holding the
engines, control columns and other aluminum components are supplied by 15
Canadian companies with contracts worth $635 million, so far. To date, 16
airlines have announced 147 orders and 108 options for the new aircraft.
HOOVER: THE FINAL CHAPTER
Readers may recall that we reported last year on the
marketing fiasco by Hoover, the UK appliance manufacturer, a division of Maytag
Corp. Consumers were offered two free return tickets to Europe or the U.S. if
they purchased any appliance valued at $150. The campaign created an enormous
response by consumers who were better at maths than were Hoover executives,
three of whom lost their jobs. It also created a gigantic second-hand market in
unused Hoover products.
The final bill has been tallied and the cost is around
$99 million. By the time the promotion ends this spring, Hoover will have flown
more than 220,000 people free. A year ago, Maytag reduced profits $40 million
to help resolve the problem but the bill turned out to be much higher. Even now,
Hoover is not certain all the bills have been paid.
E-MAIL
It is estimated that by 1995 North America's top 2,000
companies will exchange 14.3 billion E-mail messages. In a recent legal action
over intellectual property in Palo Alto, California, the E-mail messages of
four key corporate executives were ordered up by an attorney; the printout was
100,000 pages long.
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