July 1998 Economic Digest - Importing and Exporting

July 1998 Edition

ASIA

In its latest report on the world economy, the Conference Board of Canada states that Asia's economic woes, which have already hurt Canadian exporters, will likely continue to the end of the year. The value of Canada's sales to Asia in the first quarter were down 33 per cent from a year earlier as a result of lower commodity prices and reduced export volumes. However, it is expected that the Asian economies will rebound in 1999. Those of Thailand, Indonesia, Malaysia and the Philippines should expand by 3 per cent, and Japan by 0.8 per cent. Canadian exporters are getting some help from the lower value of the Canadian dollar which makes goods cheaper.

LITERACY

Strong literacy skills are the key to success and to economic well-being in the information-based economy. Those with weak literacy abilities will find it increasingly difficult to gain a foothold in the labour market. Adult literacy is understood to be fundamental to the economic and competitive performance of industrialized nations. For an individual, the level of literacy skills he or she possesses can spell economic success or failure. Close to 50% of Canadian adults at the lowest level of literacy live in households with low income, compared with only 8% of those at the highest level of literacy. Also, 66% of those at the lowest scale were less likely to find work and, if they did work, earned less than $15,000.

SCAMS

According to the International Chamber of Commerce in Paris, a scam involving bank trading instruments that don't exist has turned up on the Internet. Online investors are being asked to put their money into spurious programs and the Chamber says the scam has fleeced investors of tens of millions of dollars. A quick Internet search under "bank debenture trading" yielded three scams in the first page of hits. The International Chamber of Commerce may be reached at www.iccwbo.org.

CHOCOLATE

While the world's appetite for chocolate grows more voracious each year, cocoa farms around the globe are failing, under seige from fungal and viral diseases and insects. Researchers predict a shortfall in beans from the cacao tree, the raw material from which chocolate is made, within 5 to 10 years.

GROWTH

Of the top 100 on Profit Magazine's list of fastest growing Canadian companies, manufacturing companies account for 35. Next are business services with 22; software development, 12; distribution, 10; consumer services, nine; financial services, five; construction, four and retail, three. The top ranked company makes a quality-control device that uses computers and digital cameras to scan for manufacturing flaws on production lines. It reported sales of $30 million in 1997, an increase from $117,101 in 1992.

BILLS

At the end of 1997 there were $30-billion worth of bills in circulation in Canada. The twenty dollar bill is the most popular with about 444 million of them in circulation. But the twenty is getting some hot competition from much bigger notes-- $1,000 bills and, to a lesser extent, hundreds. Since 1990, the number of thousands in circulation has more than doubled while hundreds have increased 62 per cent. Theories regarding these increases include the underground economy, criminal activity and gambling.

PATENTS

A surge in U.S. patent applications could be an indication of future economic growth, recent research suggests. According to the Harvard Business School, the rate and pace of innovation is a very important thing to factor into growth expectations for the economy. Experts are studying the recent patent explosion and say that U.S. inventors in the decade from 1985 to 1995 pushed patent applications to highs of about 120,00 a year, an increase from the previous average of about 40,000 to 80,000 a year.

FOOD

Food industry groups from Canada, Mexico and the United States have said they will work together to eliminate trade barriers with food safety, environmental and labelling requirements. The newly formed North American Alliance will try to accelerate trade among the Nafta countries. Members are the Grocery Manufacturers of America, ConMexico and Food and Consumer Products Manufacturers of Canada.

WOMEN

The Canadian government has created a new Web site designed specifically to help female exporters. The site, Businesswomen in Trade, offers electronic access to a variety of government resources as well as an on-line quiz to determine readiness for foreign markets. It also includes the success stories of experienced female exporters. The site is located at: www.infoexport.gc.ca. Of the 700,000 firms created in Canada between 1990 and 1995, 30 per cent are led by women.

VALUE

A survey of 1,030 North American companies, 346 of them in Canada, shows that most managers and employees don't see eye-to-eye when it comes to measuring performance. Just under half the workers surveyed said their current contributions are greater that their managers' assessments. Only 19 per cent of employees rate their performance lower than their manager does.

SPENDING

Because of allowances, jobs and family gifts, Canadians aged nine to 19 command around $10 billion in disposable annual income, an estimated $1.3 billion of it in B.C. The 15 to 19 age group spends the lion's share of that money, an average of $5,000 per individual against $600 per year for those between nine and 14. In terms of dollar volume, the older group spend their money on clothes and running shoes, CDs, magazines and candy and snacks while the younger ones spend theirs on clothes, cassettes and CDs, candy and food.

MESSAGES

U.S. office workers send and receive an average of 190 messages a day, and most of them get interrupted at least three times an hour by these communications according to a study by Pitney Bowes Inc. The study is based on a survey of 1,000 workers as well as face-to-face interviews. It tallied up 12 forms of communications from phone calls to letters to courier packages. Last year the average was 178 messages a day.

MOTIVATION

Forget workload and job security--skills development, competent management and rewards are the factors that keep people loyal according to a new U.S. study. Employees who plan to stick around for the next five years are generally satisfied with opportunities to learn new skills, the ability of top management and the recognition and respect they receive. The study involved 500,000 employees with 300 companies.

HORSES

Last year, 85,000 horses met their end in the four horsemeat packing plants left in the U.S. In 1996 these businesses shipped $64 million worth of horsemeat to Belgium, France, Switzerland and Mexico. The prime candidate for slaughter is a 10-12 year old well muscled quarter horse. The hind quarters are chilled and flown to Europe; the front quarters are minced and sent by boat. American exports of horsemeat for human consumption have fallen by more than a half in the past seven years. Studies and analysis of this industry are almost non-existent.

OWNERSHIP

Available from Statistics Canada, the Inter-Corporate Ownership Directory is a unique directory of "who owns what" in Canada and currently lists over 90,000 corporations. The data are presented in an easy-to-read tiered format, illustrating at a glance the hierarchy of subsidiaries within each corporate structure. The entries for each corporation provide both the country of control and the country of residence. Some findings of the Inter-Corporate Ownership Directory are: over 12,800 corporations, residing in Canada, are controlled by foreign interests; of the corporations under foreign ownership, American interests control over 6,700 corporations, British interests over 1,200, German interests over 910, Japanese interests over 560 and French interests 520.

HIGH-TECH

This industry had 1997 revenues of $7.6 billion in B.C and is growing at 22 per cent a year. It employs 57,000 workers and expects to add another 43,000 by 2000. However, there are big disparities when comparing the business climate of B.C. and Oregon. The average B.C. wage for high-tech employees was $40,627; for those in Oregon it was $43,700 (U.S.). In 1996, Oregon's revenue from the sector were $16 billion. Nearby Washington State employs 231,000 in the high-tech sector. Top executives in the industry claim the high-tech sector could be far more successful in B.C. if it weren't for high taxes, a critical shortage of talent and a lack of support from the government.

BIRDS

Television broadcasters and wireless telephone firms often build their towers on ridges and mountain tops where they act as a steel obstacle course for migrating birds which are often decapitated by the thin, taut guy wires on tall towers. A recent Wisconsin study shows that between 1957 and 1994, a single 1,000 foot tower caused the deaths of 121,560 birds representing 123 species.

THEFT

Entry-level workers in the restaurant industry admitted in a U.S. survey that they've stolen an average of $114 (U.S.) a year in cash and merchandise from their employers. 1,375 workers in 14 fast-food and full-service restaurants were surveyed. It also found that managers, while less likely to steal than hourly workers, said they took an average $80 a year.

METAL

Palladium is a precious metal used in car catalysts, dentistry, mobile phones and laptops, among other things. Recently, the price of palladium shot up by 10% to an 18-year high, making it more valuable than gold for the first time since the mid-1970s and dearer than platinum for the first time ever.

ODD

The oldest time machine in the world to suffer from the millennium bug has been found in a museum in Liverpool, England. The 400 year old instrument, which predicts the position of the planets, will stop working at the dawn of the new millennium, unable to accept the date of Jan. 1, 2000, like so many unadjusted computers around the world.

DIET

British doctors fear that health-conscious parents are starving their children by insisting on low-fat, low-sugar foods for them; as many as one in 20 young children now admitted to hospital are malnourished. According to The Independent, the so-called "muesli-belt malnutrition" has become an increasing problem for middle-class families over the past 15 years.

UNIONS

During the first half of 1997, an average of 3.5 million Canadians, or about a third of all employees, belonged to a union, according to data from the Labour Force Survey (LFS). An additional 332,000 employees were not union members but were covered by collective bargaining agreements, and thus enjoyed union-negotiated privileges.

Union membership rose fairly steadily from 2.1 million in 1967 to a peak of 3.8 million in 1990 and has declined slowly since then.

FORGERIES

A trove of 100 Roman coins, found in Britain, shows that authorities were using counterfeit money to pay their soldiers. The coins are bronze but coated with silver. Actual coins from the reign of Claudius 1 are considered rare but forgeries even more so.

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

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June 1998 Economic Digest - Importing and Exporting

June 1998 Edition

 THE EURO

Leaders of the European Union's 15 countries formally agreed that 11 of them would adopt a single currency, the euro, from the start of next year. Coins and notes should start circulating in 2002. Total trade last year between the European Union and Canada was $45 billion, second only to Canada-U.S. trade. The change will create challenges and opportunities for Canadian companies doing business in Europe. Every detail of their operations, from the currencies listed on cash register receipts and pay cheques to the conditions of long-term contracts must be reprogrammed. Information may be found on the IBM website at www.ibm.com.

TECHNOLOGY

A new process might turn the postage meter industry upside down. A private company has got approval from the U.S. Postal Service to field-test its technology, which lets companies print their own metered postage using the Internet, a personal computer and a standard printer. After a user enters an address, the system calculates the correct postage--even the correct zip code---and subtracts the amount from an "electronic vault," a device which looks like an oversized watch battery and is attached to the printer port of the PC. The address and postage are printed onto an envelope or label along with a barcode and the postal service sorting code. Once the vault is empty, it can be refilled by logging on to a web site.

RED TAPE

According to a 1997 World Bank survey of 3,685 entrepreneurs who operate small and large businesses in 69 countries, the most red tape is found in Northwestern South America (Colombia, Ecuador and Venezuela) followed by countries of the former Soviet Union. The fewest obstacles are in Northwestern Europe (Ireland and the U.K.) and central Western Europe (Austria, France and Germany). Obstacles include regulations, trade and foreign exchange policies, inflation, financing, government revenue and spending policies, uncertainty, corruption and crime.

SUBWAYS

In 1997, the Moscow subway had 3.16 billion riders. The next highest were: Tokyo, 2.74 billion; Mexico City, 1.42 billion; Seoul, 1.39 billion; New York, 1.13 billion; Paris, 1.12 billion and Osaka, one billion.

WEIGHT

Advertising Age suggests that a Brazilian phenomenon called "food by weight," in which consumers choose what they want to eat and are charged by weight, is jeopardizing the dominance of fast-food restaurants. Competition has intensified and McDonalds has responded by lowering its prices; French fries are now 20 per cent cheaper. 20 years ago, there were 300,000 restaurants, bars and other food outlets in Brazil. There are now 756,000.

TAXES

It seems that cyberspace will be off limits for the taxman. Reports say that negotiators at the World Trade Organization are close to an agreement that would bar governments from collecting tariffs on computer programs and similar goods delivered electronically across international frontiers over the Internet. Internet shopping, products ordered from a web site but delivered by mail, would not be covered. No country has a system for charging duties on electronic commerce. The measure's main sponsor, the U.S., had sought to ban all Internet duties.

OIL

Canada is pushing out Venezuela as the No 1 supplier of oil to the U.S. Venezuela, with its huge production of heavy oil, has historically outranked all other countries as the top exporter of oil to the U.S., followed by Canada, Saudi Arabia and Mexico. But pipeline expansion, rising production of heavy oil, and more refinery capacity in the U.S. to upgrade it should put Canada ahead in the U.S. by the end of the year. The U.S. government has long supported a policy of diversifying oil imports from the Persian Gulf.

DOGS

The dog culture in New York pumps an estimated $500 million (U.S.) into the city's economy annually. The Big Apple has dog psychics, a $15 do-it-yourself dog wash, a limousine service for dogs and an acting workshop that trains dogs for TV and the movies. A Dog Scout Camp in Michigan offers merit badges to dogs who master socially useful skills such as therapy in nursing homes and hospitals and assisting disabled people and retrieving empty beer cans.

COMPETITION

Australian competition laws, followed by those of Germany and Canada, are the best in the world at preventing unfair competition, according to businessmen surveyed for the latest World Competitiveness Yearbook published in Switzerland. The report tries to rank countries' competitiveness according to 259 criteria. The U.S. was fifth. Worst was Indonesia.

LICORICE

China has blamed the overharvesting of the licorice plant, a sand-dwelling species, for devastating dust storms that have swept through the northern part of the country. China's licorice root has skyrocketed in value as other licorice-producing countries such as Russia and the U.S. have implemented export bans to protect their environments.

PORTS

Led by Vancouver, Canada's ports handled a record amount of international cargo in 1997. The growth in international cargo pushed the total tonnage handled by the ports to its highest level in nine years. Shipments of four bulk commodities-crude oil, coal, iron ore, and wheat-were responsible for the increase in international marine cargo. Total international cargo reached 282.3 million tonnes, an 8.5% increase from 1996 and an all-time high. Total cargo handled reached 375.5 million tonnes in 1997, up 5.0% over 1996. Vancouver handled a record 71.8 million tonnes of cargo in 1997, almost one-fifth of the total cargo handled at Canadian ports.

ORGANIC

Worth an estimated $1.5 billion annually, organic farming in Canada is an industry on the threshold of moving from a niche in the food supply industry to becoming big business. The transformation has been quicker in the U.S. where the organic industry brings in $3.5 billion (U.S.) a year. Organic farmers don't spray their fields with pesticides, spread synthetic fertilizers or fatten their livestock with chemically treated feed. Instead, they use a variety of techniques, including the liberal use of manure, compost and mulches along with crop rotations and an array of tilling techniques.

SOLO

Information on starting or running a business may be found on a U.S. Web site at: www.workingsolo.com. It is geared toward independent entrepreneurs and offers articles, book reviews and a free e-mail newsletter.

JOBS

U.S. based P.O.V. magazine has come out with its forth annual listing of Hot Jobs\Not Jobs. The hot jobs: Java programmer (working with Internet software), private equity investor, estate planner, Hispanic media professional and interactive advertising executive. The not jobs: ship captain, credit authorizer, farmer, corporate middle-manager and proofreader.

KNOWLEDGE

Executives believe knowledge is critical to a company's competitiveness, but they do not think they have a good handle on managing it. Respondents to an Ernst & Young survey by 431 companies in the U.S. and Europe said they are poor or very poor at transferring knowledge to other parts of their firm.

DESTINATIONS

According to the World Tourist Organization, the top tourism destinations in 1997 were: France, 67 million; the U.S., 49 million; Spain, 43 million; Italy, 34 million and the U.K., 26 million. Canada was 10th with 17.5 million visitors.

HEALTH

The health of Canadians improved in 1996, particularly among men. Life expectancy at birth rose to new highs because of declines in the mortality rates for the leading causes of death. In 1996, life expectancy at birth, a key indicator of a population's health status, reached 81.4 years for women and 75.7 for men, representing gains of 0.1 and 0.3 years over 1995 respectively. Thus, the gap in life expectancy at birth between men and women continues to narrow: from 7.5 years in 1978 to 5.9 in 1995 and 5.7 in 1996.

HOURS

A new study shows a sharp rise in the number of U.S. workers who would like to reduce their hours. Nearly two-thirds of workers would reduce their time on the job by an average of 11 hours a week, an increase from 47 per cent in 1992. In identifying obstacles to lower work hours, most of them cited a need for money, pressure from employers or a desire to help their companies succeed. The study also suggests that when workers do not have enough time for themselves and their families, then job performance suffers.

RESOURCES

The Futurist magazine reports that researchers at the University of British Columbia recently estimated that the typical North American consumes resources each year equivalent to the renewable yield from 12 acres of farmland and forest land. For all the world's people to consume at this rate is a mathematical impossibility. It would require four Earth's worth of production.

2000

The Washington Post reports that the big explosion of U.S. lawsuits won't start until next year according to industry specialists. However, the Gartner Group which monitors Year 200 work at 375 large law firms says that 200 disputes have already been settled out of court, most of them resolved for substantial sums, between $1 million U.S. and $10 million per settlement. Meanwhile, some U.S. utility companies estimate that 10 to 15 per cent of their generators will blow in the early days of the new millennium.

TUESDAYS

The best day of the week from a manager's point of view is Tuesday--the day employees are by far the most productive, says Accountemps, a U.S. temporary employment firm. In a survey of 151 executives, 51 per cent chose Tuesday. In distant second was Monday, cited by 17 per cent, followed by Wednesday with 15 per cent and Thursday with just 5 per cent. Of course Friday brought up the rear--only one percent said it was the most productive day of the week.

CATASTROPHES

Last year was the least disastrous since 1986, measured by catastrophe-insurance payouts. According to Swiss Re, a reinsurer, worldwide insured losses were $6.7 billion last year, around half of 1996's figure in real terms and barely one-fifth of 1992's record high. Storms, particulary severe in Eastern Europe, were the chief source of insured catastrophic losses, costing $2.5 billion. Despite headlines about El Nino, storm losses were less than half what they were in 1996 and much smaller than during the previous bad El Nino, in 1982-83.

STRIKES

The Danish government has intervened in an effort to end Denmark's biggest strike for two decades. Some 450,000 Danes have been demanding, among other things, a sixth week of holiday a year!

PRIZES

Recently, a vice-president of marketing for the underwriter ASU Enterprises spent the afternoon stacking Oreo cookies, but he never made it past 22. A Nabisco Holdings unit needed to know the cost of insuring the risk of someone winning the $1 million (U.S.) it offered to anyone who could stack 85 Oreos.

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

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May 1998 Economic Digest - Importing and Exporting

May 1998 Edition

 HEALTH FOODS

Stores selling health foods are getting stronger in the retail marketplace. The funny-smelling shops that sell herbs and root extracts have grown into one-stop shopping emporiums that carry a full selection of organic foods, nutritional supplements and environmentally friendly items. A study by the U.S.-based Food Marketing Institute showed sales of organic products growing at double-digit rates.

VEHICLES

The average amount consumers paid for new vehicles in Canada has been rising faster than average household income. From 1992 to 1996, the latest year for which average household income estimates are available, average household income in current dollars increased 5.2%, from $46,465 to $48,875. During the same period, consumers paid 34.1% more for new vehicles, up from $18,410 in 1992 to $24,694 in 1996.

CARTELS

The world's major industrial countries have decided it's time to crack down on cartels. The OECD has agreed to beef up national legislation and institutions designed to break cartels, share information among themselves to track international cartels and prosecute suspected cartel members. The OECD definition of a cartel is a conspiracy among competitors to fix prices, rig bids, establish output restrictions or quotas and to share and divide markets by allocating customers, suppliers, territories or lines of commerce. Recent fines for cartel activity included manufacturers of citric acid, graphic electrodes, explosives, bread and companies in the marine industry.

SMALL-MARTS

As it approaches the saturation point for existing store concepts, Wal-Mart is about to open much smaller stores that could compete with convenience stores and supermarkets. If successful, the format could open the way for Wal-Mart to open stores in markets with populations too small to support a larger store, or in metropolitan areas where big developments are curbed by planning restrictions or lack of space. Wal-Mart has 1,900 discount stores selling general merchandise, 440 supercentres that sell groceries and fresh produce and 440 Sam's Club warehouse stores.

IMAGE

Focus groups have told the Disney Corporation that Mickey Mouse and his colleagues lack "attitude." According to Disney, the characters were born in the Great Depression and were imbued with a simple optimistic outlook. In a series of 60 new stories, Mickey will be reintroduced as a mouse for the nineties but one also baffled by the rise of feminism and advanced technology. Minnie Mouse, formerly a homebody, will become a career woman--the conductor of an orchestra. Goofy will swap his bicycle for a snowboard.

2000

A new $50 million loan program aimed at helping small businesses cope with the Year 2000 computer problem is now available from the Business Development Bank. The program includes flexible payments, such as the possibility of no principal payments until the year 2000. The venture capital lender is also offering services to entrepreneurs to evaluate their 2000 vulnerability. The bank has come up with a questionnaire to help owners determine their readiness and is offering expert advice through its toll-free number 1-888-INFO-BDC.

EXCHANGE

Asia's credit crunch is sending it back to the age of barter. With national and corporate coffers from South Korea to Indonesia depleted of foreign exchange, companies looking to sell their goods in Asia are being offered everything from tea to textiles instead of cash. Southeast Asian leaders are calling for regional trading programs that avoid the U.S. dollar, or any other currency. A group of Australian cattlemen is negotiating beef on the hoof for Indonesian cement and beer. A Malaysian concern is exchanging rice for Philippine corn. No-cash deals are expected to increase by 20 per cent as companies try to keep commerce moving.

INFORMATION TECHNOLOGY

Two recent studies indicate that companies continue to throw money at information technology projects they can't manage and usually generate no increase in profit. Last year, North American companies spent $800 billion on IT, but only a third of that investment improved profitability. Despite these results, the companies will increase spending to $1.4 trillion by 2002. Over 500 of North America's 3,000 biggest companies were surveyed. A study of 1,450 Canadian companies paints a picture of out-of-control spending; three-quarters of them missing IT deadlines by a wide margin and more than half greatly exceeding their budgets.

EXPORTS

According to the World Trade Organization, the U.S. remains by a large margin the world's biggest exporter. In 1997 it sold merchandise worth $689 billion to foreigners, or 12.6 per cent of the global total. Germany accounted for 9.4 per cent of worldwide exports and Japan 7.7 per cent. China has moved up to tenth position with 3.3 per cent.

ENTERTAINMENT

Although young adults often get the credit for being the economic force behind the entertainment industry, the biggest spenders are middle-aged Americans, according to The Boomer Report. In 1995, householders aged 35 to 54 controlled 51 per cent of all spending on entertainment.

MERGERS

Canadian firms do a better job of executing takeovers than their U.S. counterparts. 62 per cent of Canadian takeovers are successful, compared with 46 per cent of U.S. mergers and acquisitions. A recent study, limited to publicly traded buyers, looked at 184 Canadian deals each worth more than $100 million and 250 U.S. deals each worth more than $1 billion. Total return to shareholders was tracked for three years after the deal and purchasers that out performed their industry were judged a success. The study speculates that the Canadian success rate arises from lessons learned in earlier failures with U.S. acquisitions. Last year's U.S. mergers were worth a record $1 trillion and $101 billion for Canadian deals.

TRADE

World merchandise trade grew in volume by 9.5% in 1997, the second highest rate in more than 20 years, largely thanks to strong trade growth in North and South America. Despite Asia's problems, world output grew by 3%, the best rate in eight years.

MAQUILADORAS

According to the Mexican government, 42 new maquiladora manufacturing plants opened in January generating 7,306 jobs. Maquiladoras are manufacturing operations that import component parts duty free and assemble them for export. This brings the number of workers employed in maquiladoras to 988,667.

WINE

A Melbourne wine merchant has discovered fake bottles of a premium Australian wine, 1990 Penfolds Grange, a vintage whose price has soared to around US$332 a bottle since America's Wine Spectator named it wine of the year in 1995. One clue on the fraudulent label: "pour" was spelt "poor."

FAST-FOOD

According to Euromonitor, a market research company, the U.S leads the world with 25 burger outlets and 11 pizza parlours for every 100,000 people. Japan is far behind with five burger and two pizza restaurants with Britain at its heels. The fastest growth is in European countries such as France, Germany, Spain and Italy which have less than two burger outlets per 100,000, but where numbers have doubled in the last five years. As of 1996, Canada had roughly 21 pizza and 14 burger restaurants for every 100,000 people.

TARIFFS

China has offered to reduce further its tariffs on imported goods to boost its chances to join the World Trade Organization. The country is ready to remove more barriers to foreign investment as long as it's allowed to implement tariff cuts and other concessions over a period of time.

TRAINING

According to a Statistics Canada report, Canadians are hungry for training. One in three workers say they want more training for career or job-related reasons. That is higher than the rate for other countries involved in the study which included: the U.S., Switzerland, the Netherlands, Germany and Sweden. Canadian workers receive an average of 44 hours of training a year. The Netherlands was at the high end with 72 hours a year.

STRESS

Reducing animal alarm and aggression is important as it is costly commercially. Experiments in Scotland indicate that television and video images may help battery hens get over their anxieties. At the Roslin Institute, they showed hens and chicks screensaver-type moving images for 10 minutes each day. Within three days the fowl were hooked, running over to the TV as soon as it was turned on. The most popular images so far are fish and flying toasters.

SEEDS

The U.S. Department of Agriculture and a U.S. seed company have been granted a patent for a technique that can prevent seeds from germinating when replanted. So far it has only been used on cotton and tobacco seeds but some scientists believe that within a few years crucial crops like wheat, rice and soy beans--staples for three-quarters of the world's poor--may be under the control of international agribusiness.

CELLULARS

Revenues from cellular phone services in Canada grew from $118 million to $2.4 billion between 1987 and 1996, a compounded annual growth rate of 40 per cent. In the same period, the number of subscribers grew from 98,300 to 3.4 million. The average monthly revenue per subscriber has declined steadily from $116 to about $70 in 1996. Since 1988, the number of full-time employees in cellular telephone services has almost tripled from 2,465 persons to 7,075.

QUIET

The South Pacific is the quietest part of the world's oceans at 65 decibels. The North Atlantic whaling areas are about as noisy as a New York intersection (100 decibels). A shoal of shrimp can put out 80 decibels and an offshore oil rig is good for 180 decibels.

ELEVATORS

In Canada, the U.S., Guam and the Caribbean islands, there are 105,000 Otis elevators. When people in these elevators press the help button, the phone rings in a second- floor office in Connecticut where 850 to 950 calls are received a week on the Otisline.

BLADES

Gillette recently unveiled the Mach3, the long-awaited $5.00, three-bladed, spring-loaded successor to the highly successful but merely two-bladed SensorExcel. Development will have cost not far off $1 billion by the time the razor hits the shelves in a few months.

ANNIVERSARY

This year marks the 50th anniversary of the world's multilateral trading system. Previously known as the General Agreement on Tariffs & Trade, it is now called the World Trade Organization. Industrial tariffs have dropped over the 50 years to an average of just under 4 per cent from 40 per cent, helping to boost world economic growth and living standards. In 1950, trade as a proportion of world gross domestic product was just 7 per cent, it is now 23 per cent. Since 1950, world merchandise trade has risen 14 times.

WORTH

Used-car dealer Tom Hartley, 14, has become Britain's youngest millionaire. He says: "I am no different from any other 14-year-old except that I buy and sell cars."

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

Past issues of the A&A Economic News Digest can be found at http://www.aacb.com/publications/ed/index.asp

April 1998 Economic Digest - Importing and Exporting

April 1998 Edition

 
AMERICAS

Ottawa plans to develop its own free trade agreement in Latin America, whether the U.S. is on board or not. Canada has stated that it would like to see the U.S. at the forefront of an Americas agreement but the U.S. administration has been unable to move ahead with the planned FTAA by 2005 because Congress has refused to give the President special, fast-track negotiating authority. Canada already has an agreement with Chile.

FOR-HIRE TRUCKING

Canada-based long distance for-hire carriers, with annual revenues of $1 million or more, transported 109.5 million tonnes of freight in the first half of 1997. While domestic activities accounted for 74% of the total tonnage and 79% of the total shipments, transborder movements generated 42% of the revenues earned and 46% of the tonne-kilometres performed by these carriers.

CARGO

Projections for passenger and cargo growth in, out of and within the Asia-Pacific region have been scaled back. IATA estimates that the annual average growth in passengers to 2001 will be 4.4%, not 7.7% as previously expected; for cargo the figure is 6.5%, against 9%. That means 30 million fewer passengers in 2001 than the 207 million expected.

PROMOTIONS

A University of Illinois study of 86 grocery stores in Chicago suggests that numerical pitches can get customers buying. "Three bags of chips for $3.00" and "limit of 12 cans of soup per person" significantly raised the amount purchased by consumers. Items such as candy, soup and soda were offered in slightly discounted multiple units and resulted in increased sales of 40 cent.

INFORMATION

A survey by a firm of consultants looked into where companies pick up management trends. The most popular sources of information are business periodicals, followed by books and conversations with colleagues. In terms of reliability, co-workers are the most authoritative, followed by conferences and consultants. The most unreliable sources of management tools were found to be newspapers, which only 5.5 per cent of North American executive respondents found extremely valuable and 13.3 per cent found unreliable and misleading.

ABUSE

Drug and alcohol abuse costs Canadian industry billions of dollars a year according to the Canadian Centre on Substance Abuse. Abusers are likely to be in low-status jobs, and to be young and male. They also hold positions with easy access to drugs such as medicine and nursing, jobs in high-stress environments or where the use of drugs and alcohol is part of the culture. It is estimated that the annual cost of alcohol abuse alone is $7.5 billion with $4.1 billion in lost productivity.

CALLS

When the economy is booming, people talk longer on the telephone. On average, business phone calls in 1996 lasted 3.17 minutes, an increase from 3.02 minutes in 1995 and 2.96 minutes in 1994. More than two-thirds of business calls lasted less than five minutes. 40 per cent were shorter than a minute, which was attributed to a lot of voice-mail-message phone tag going on.

FRAUD

Fraudulent use of Visa cards in Canada jumped by 31 per cent in 1997 over the previous year, more than double the rate of increase in fraud among Visa's worldwide members. Financial institutions issuing Visa cards in Canada wrote off about $65 million last year because of fraud. Visa has about 70 per cent of the credit card market in Canada. Experts suggest that it because Canadian criminals are especially adept at reproducing the magnetic stripes that contain card data and grafting them on to fake cards. Some countries, such as Britain, have accelerated the move to cards that store data on a computer chip to reduce fraud.

INNOVATION

According to Entrepreneur magazine, companies are using an array of techniques to get their message across. A U.S furniture company puts a lottery ticket in its mailings, which are stamped "lottery ticket enclosed." The catch is the person has to listen to a follow-up telephone sales pitch before they are told the winning number. More than two-thirds of people listen to the message. And a home-furnishings retailer sends prospective customers a Polaroid of an item they are considering. Since starting the practice, closing rates have increased by 25 per cent.

THE BORDER

Americans made more cross-border car excursions into Canada in January 1998 than they have in almost 17 years. Meanwhile, the number of same-day car trips by Canadians to the United States was at its lowest level in 10 years. The Canadian dollar dropped below US$0.70 in January. Americans made 2.3 million same-day car trips to Canada in January - the highest level since May 1981. The 5.8% jump in January was the seventh consecutive monthly increase and the strongest gain since May 1994 when the casino in Windsor, Ontario opened. More than a year after the casino in Niagara Falls opened, in December 1996, Americans continued to make an increasing number of car excursions (+22%) into Canada via the Rainbow and Whirlpool Bridges.

SMART

For decades, U.S. corn farmers have practiced a simple technique to control rootworms; They rotate their field between soybeans and corn every year. The larvae love corn but don't like beans. Amazingly enough, the beetles have figured this out in several states and are laying their eggs in the soybean fields, so the next season when the corn is planted the larvae are ready and waiting. This is a major behavioral shift and could threaten a crop which is a U.S. agricultural cornerstone.

LOANS

The Business Development Bank of Canada (BDC) made 6,403 new loans totalling $1.4 billion to small business in 1997, a 25 per cent increase from a year earlier. Ontario companies were the biggest beneficiaries as the value of their outstanding loans rose by 18 per cent. They were followed by Atlantic Canada (16 per cent) and Quebec (14 per cent). B. C. and the Yukon were 3 per cent.

MORE FRAUD

Three international swindlers used an empty British bank in Torquay, Devon, to run a fraud that netted them $12 million. Calling themselves Bank Europe and offering to lend overseas investors billions of pounds in secured loans, they actually had assets of only $350 in a New York bank.

DATA

Tidal waves of data, according to the U.S. National Science Foundation are known as "Knowledge Storms." IBM Corp estimates that only 7 per cent of the information expensively collected in corporate data bases is ever used; the rest just sits there.

TYPICAL

A typical small business, according to a Dun & Bradstreet survey in the U.S. has three employees, generates $150,000 to $200,000 in revenue, operates 1.3 locations and is privately owned. The owner tends to be a white male (53.5 per cent) who works 50.4 hours a week.

AGRICULTURE

The European Union has announced proposals to limit aid to farmers and create freer markets in sectors where efficient Canadian farmers can eventually hope to compete with European producers on equal terms, including grains and feedgrains. The Common Agricultural Policy and regional aid account for four-fifths of an annual European Union budget of $130 billion.

WORKPLACE

American Demographics magazine reports that the No 1 complaint employees have about work is boredom, cited by 29 per cent of respondents. Next was having a bad boss (28 per cent), then machines that regularly break down (22 per cent), unfriendly co-workers (12 per cent) and poor climate control systems (10 per cent).

EMPLOYMENT

More than 222,000 men reported themselves as truck drivers in the 1996 Canadian Census, the largest single job among men. In 1991, truck drivers ranked third on the list of top 10 jobs. Retail salespersons, the most frequent occupation for men in 1991, dropped to second place. Janitors, who were in fifth place in 1991, rose to third in 1996. Five of the 10 most frequent occupations for men in 1996 were jobs in the broad category of trades, transportation and equipment operators: truck drivers, motor vehicle mechanics, material handlers, carpenters and construction trade helpers. The 10 most frequent jobs for men accounted for 20% of all jobs held by men in 1996.

TRANSPORT

The vast majority of Canadians settled in behind the wheel to get to work in 1996. About 8.9 million people, or 73% of the working population, drove to work in their automobile, whether it was a car, truck or van. Another 7%, or almost 900,000 people, traveled as a passenger with someone else doing the driving. Just 10% of the working population, or about 1.2 million people, reported that they used some form of public transit in 1996 to get to work. A further 7% walked to work, while 1% used a bicycle.

LANGUAGE

Linguists predict that half of the approximately 6,000 languages spoken today will be extinct within the next century and at least 100 are down to one native speaker. Deep in Alaska, there are only three households where Kuskokwim is still spoken and just two people in their 70s keep the Klamath language alive in Oregon. In northern Australia, about 10 native speakers know Jingulu. Most often, languages die because of the influence of more common languages, such as English, a process aided by modern communications technology and easy transportation.

ISO

A report in Quality Systems Update states that in 1997, North American companies continued to seek registration to the ISO 9000 series of quality systems standards. 22,000 firms were registered by the end of the year, almost 50 per cent more than in 1996. In the U.S., 16,776 companies had received certificates. The total in Canada was 5,222 and 596 in Mexico.

BARTER

The age-old practice of paying for goods and services with other goods and services rather than cash, is becoming increasingly common. In North America, the International Reciprocal Trade Association and the National Association of Trade Exchanges, suggest that the industry is now worth about $8 billion. Over the past decade, the bartering business has grown about 15 per cent annually. Today, there are some 20 barter exchanges in Canada negotiating trades. Exchanges charge a one-time initiation fee and a commission on the value of each transaction.

WIRELESS

Visitors to the Nagano Olympics were surprised to see hordes of Japanese children with their own wafer-thin mobile phones. And reporters at the recent economic summit in Switzerland were impressed at the number of Europeans with telephones. For all the talk of creating the information society, this is one area the U.S. has lagged the rest of the world. But things are changing. From 13 million five years ago, the number of wireless phones in the U.S. has jumped to 54 million today.

BAIL

An Oregon woman arrested 12 times last year on forgery and theft charges was released last month after posting bond with $2,000 worth of bogus money orders. The County no longer takes money orders for bail.

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

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March 1998 Economic Digest - Importing and Exporting

March 1998 Edition

 TRUCKS

While the proportion of households with a vehicle remained unchanged over the last 10 years the real change occurred in the type of vehicle Canadians were driving. In 1987, 78% of households reported having an automobile and only 23% had a van or truck. By 1997, automobile ownership had dipped slightly to 72%, while van or truck ownership had increased to 33%. The minivan popularity of the early 1990s and the more recent appeal of four-wheel drive vehicles may explain this shift. New motor vehicle sales data show that, on a seasonally adjusted basis, sales of trucks, vans, and buses increased 21% between May 1996 and May 1997.

SHOPPERS

Crowds are the No. 1 complaint of shoppers: 26 per cent cited the problem in a survey by Decima Research for the Retail Council of Canada and American Express. Other pet peeves were high cost of goods (19 per cent), the time involved (17 per cent), bad service and long lineups (7 per cent each) and poor selection (5 per cent). The council suggests retailers do whatever it takes to make shopping less painful. Store employees should be quick, products must be easy to find and checkouts should be free of lineups, it says.

FAMILY FOOD

Average Canadian expenditure on food remained virtually unchanged between 1992 and 1996. The average household spent $112.09 a week on food purchased in grocery stores or restaurants, compared with $110.44 in 1992. One reason that household expenditure on food rose only slightly was due to a 6.5% decline in spending on restaurant meals. Households spent on average 5.0% more on food purchased from stores in 1996 compared with 1992. Provincially, the average weekly food expenditures were lowest in the east and highest in the west. In 1996, the average for households in New Brunswick was $97.31 a week on food while households in B.C. spent on average $121.73 a week, 20.1% higher. Households spent 27.8% of their weekly food budget on restaurant meals in 1996, compared with the 30.2% in 1992.

TRENDS

A major Canadian supermarket chain has launched a new product----banking services for its customers. Modeled on a similar service offered by some grocery stores in Britain, it will provide debit cards, credit cards, savings accounts and access to automated teller machines and telephone banking. The new venture will also feature some in-store kiosks. Banking customers will get loyalty points they can use towards groceries. Chains in Britain have signed up hundreds of thousands of banking customers. Supermarkets have also become more prominent on the U.S. banking scene, where thousands of in-store branches have sprung up and are generally successful.

TRAVEL

After four years of haggling, Japan and the United States reached an agreement on dividing up the $10 billion Transpacific airline market. But European airlines are likely to challenge some of the details of the deal, which still seems to favour American airlines at others' expense.

CONSULTING

According to the Kennedy Research Group which tracks the consulting industry, the worldwide management consulting business is expected to grow by nearly 60 per cent to about $114 billion (U.S.) by the year 2000, driven by technological change and globalization of the marketplace. They expect information technology to account for 70 per cent of consulting work by 2000, an increase from 64 per cent now.

SKILLS

A new Ontario survey says skilled trade jobs are highly valued, but that sentiment isn't prompting youngsters to enter these fields in big numbers. More than half of the 525 interviewees to the Ernst & Young Poll said they would encourage young people to take up a trade. Many industries could soon face severe labour shortfalls in the skilled trades. The study suggests more needs to be done to get the word out about these potential job opportunities.

SENIORS

Having bought a digital organizer and finding it hard to use because the instructions were confusing, the buttons too tiny and its labels so small they could not be read, an Illinois entrepreneur has formed an evaluation company (www.seniorfriendly.com on the Internet) that rates consumer electronics and home appliances according to their ease of use for people 50 and over, of which there are more than 69 million in the U.S. Currently, the website recommends only two VCRs out of 14 units it has tested and 3 out of 15 camcorders. Products are tested against six criteria: Friendliness of packaging, assembly instructions, assembly, operating instructions, operations and routine servicing.

DEALERS

The U.S. has 22,650 automobile dealers and their net profit margins are a modest 1.5 per cent of total sales. The net profit on each of the 15 million new vehicles sold last year in the U.S. was $300 before discounts. New cars, which 20 years ago used to bring in most of the profits, now account for barely 10 per cent of the total. The rest comes from used cars (an estimated 40 million were sold last year), servicing and finance. About 850 dealerships have disappeared in the last five years and it is estimated that there will only be around 11,000 in five years time.

LABOUR

Plantation owners in Thailand are not replacing people with machines, they are giving the work to monkeys. In some Thai villages up to 10 per cent of the land is devoted to growing coconuts which are harvested each month and produce up to 70 coconuts a year. A workforce of several thousand monkeys in southern Thailand help pick the country's crop of 1.5 million tonnes of coconuts. Villages often have at least one monkey per household and the animal is rented out to the local plantation at a modest fee. A well trained monkey can change hands for up to $400. This is a bargain for a plantation owner who spends just $12 a month on "wages" of eggs, rice and fruit. Working monkeys are given names, groomed, bathed and fed three times a day.

LUMBER

According to the Canadian Lumbermen's Association, China is opening up as a big market for Canadian lumber, helping to offset slumping demand in countries hit by the Asian currency crisis. The Chinese government has rescinded 15-year-old restrictions on the use of lumber and wood products in construction. The country had wanted to conserve its wood supplies but now realizes that most of the wood used in China is for cooking and heating, not construction.

NEWSPAPERS

After years of decline, newspaper circulation in Canada appears to have stabilized. The Canadian Newspapers Association, the main lobby group for the country's 105 daily newspapers, reports that 32.96 million copies a week were sold across Canada in 1997, just slightly below the 34.03 million sold in 1996. Until 1997, circulation fell every year in the 1990s.

2000

Most of Canada's stock exchanges are moving to force public companies to disclose the risks that the Year 2000 computer problem poses for them. Companies that refuse to comply could face sanctions raging from a $1-million fine to a cease-trade order. In the U.S., the Securities and Exchange Commission has already put in place disclosure rules which require public companies which have substantial Year 200 problems to disclose their costs and plans this spring. The SEC guidelines cover about 12,000 public corporations, 400 investment companies and thousands of investment-advisor firms.

ADB

Canada is the second largest non-Asian contributor to the Asian Development Bank and the sixth largest out of 56 members. Canada's capital subscription is $2.57 billion (U.S.). Canada has about 5 per cent of the votes on the ADB and any company in a member country can bid on contracts related to ADB projects. Contracts for goods and services awarded to Canadian companies since the bank was founded total nearly $300 million and consulting contracts just over $100 million.

HOURS

France's parliament has passed a law to reduce the working week from 39 to 35 hours starting in 2000.

CARGO

Bulk carriers will soon have to toughen up to meet strict new international guidelines aimed at stopping disasters at sea. The rules, which will take effect July 1, 1999, will force companies to strengthen the bulkheads that separate the front two cargo holds, hopefully preventing vessels from sinking if water gets inside. Because Canada is a frequent port of call for many carriers, it will be up to inspection officials to do more checks. Canada will be able to refuse entry to below-standard ships or delay them until the necessary changes are made.

GROWTH

Mexico has posted its strongest economic growth in 16 years with a 1997 GDP increase of 7 per cent. Analysts are impressed at growth that defied banking sector weakness and a consequent credit squeeze. Last year's performance was helped by positive oil prices, an energetic effort to use up industrial capacity and a predicted downturn in the U.S. economy which never materialized.

PETS

A pet retirement home is being built in Westhampton, N.Y. Though still a hole in the ground, 2,000 pet owners have already asked for applications. There is room for only 50 cats and 50 dogs in the retirement home which has air conditioning and heated floors. $10,000 pays for perpetual care and burial.

DEBT

U.S. consumers spending is at record heights and is being financed through credit at ever increasing rates. According to the U.S. Federal Reserve Board, Americans owe a staggering $1.24 trillion in automobile and revolving credit, double the debt load they had in 1991. On plastic alone, they owe about $523 billion, almost as much as the total of insolvent loans racked up by the troubled Asian countries. Average per capita credit card debt is $7,000 and most Americans have 7.5 credit cards. The cards are lucrative for their issuers. The average interest rate is 16 per cent but some are as much as 22 per cent.

TRANSPORTATION

U.S. customs officials are rethinking a proposed rule change that Canadian truckers say could cause costly inconvenience for shippers. The draft regulation would give local U.S. border officials the power to redirect traffic entering the U.S. If implemented, the new rule could cost millions of dollars. A detour of only 50 kilometres could add more than $60.00 to the cost of a typical international load. Trucks handle about 70 per cent of Canada-U.S. trade.

AFRICA

When companies think of expansion, sub-Saharan Africa is not usually the first place that comes to mind. But a new Harvard study of 20 successful companies concludes it is possible for firms to overcome the region's many obstacles if they think creatively about solutions and make an effort to understand the local environment. The report suggests that Africa may well be the last business frontier.

INSTRUCTIONS

Some product advice noted by the New Scientist:

-(Airline peanuts) "Instructions: Open packet, eat contents."
-(Swedish chainsaw) "Do not try to stop chain with hands."
-(European camera) "This camera only works when there is a film inside."

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

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February 1998 Economic Digest - Importing and Exporting

February 1998 Edition

 AIR MILES

There are newsletters dedicated to collecting points, Internet sites that offer advice and even a company that sells insurance to protect them. When American Airlines started the first of the reward programs in 1981, it attracted 1.8 million participants. It is estimated that 52 million people in North America are now enrolled in points programs, and the number is growing at 11 per cent a year with 6.2 per cent of all flights on the continent taken free. The big rise in the pursuit of points now stems from the fact that consumers can collect points and redeem them without leaving the ground. 40 per cent of points are now earned in transactions through the use of credit cards, the familiar Air Miles card and even through phone companies.

SKILLS

The Conference Board warns that Canada has not produced, attracted or retained enough skilled workers to sustain growth in high technology, one of the biggest and fastest-growing industries. Too many of the nation's skilled technologists are being lured to the U.S. to fill some of the 190,000 high-tech jobs now vacant there. They are attracted by innovative U.S. companies offering the kind of work environments that appeal to young, mobile people. Conversely, the comparatively low value of the dollar and high personal tax rates are additional incentives for Canadians looking south of the border.

TOURISM

A study by the World Tourism Authority estimates that the worldwide tourist industry will expand so fast between now and 2020 that it will not only be the world's biggest industry but it will be the largest by far that the world has ever seen.

SHORTAGES

Anyone thinking about China's 1.2 billion consumer market should think about hair, or scrap metal or leather. Of all the consumer products made and sold in China, these make up the very short list of items that the country's ministry of internal trade says are in short supply. China is a major manufacturer of wigs made from human and synthetic hair. Four types of leather and fur are in short supply, used for making coats and five types of scrap metal, including aluminum and copper.

EUROPE

A Price Waterhouse study suggests that Canadian companies with subsidiaries, debt or private placements within the European Union should prepare a strategy for the arrival of the European Economic and Monetary Union which starts January 1, 1999. It states that Canadian firms have underestimated how the European landscape will change. Debt outstanding at July 1, 2002 will have to be redenominated and companies may need to renegotiate, sign new documentation and establish new payment arrangements. Contracts in European currencies will have to be converted into the new one.

CAREERS

The U.S. occupation with the biggest projected job growth is cashier. The Bureau of Labour Statistics says 530,000 cashier jobs will be created by 2006, a 17 per cent increase from the current 3.1 million. Other growth areas: systems analysts, general managers and registered nurses.

CHEMICALS

Turmoil in the Asian financial markets is hastening a downturn in the chemicals business worldwide as prices tumble. Nearly one-third of U.S. chemicals exports go to the Asia-Pacific region. Chemical companies in the U.S., Japan and Europe are struggling with their heavy investments in Asia, especially in Thailand, Indonesia and South Korea. Many large U.S. companies are curbing production to forestall inventory buildups in the U.S. Some chemicals, such as polypropylene, are selling at half the price of a year ago. Estimates are pegging 1998 as a terrible year, with 1999 and 2000 even worse for the industry.

PHARMACEUTICALS

The European Union is challenging Canada's drug patent legislation before the World Trade Organization, arguing that it reduces protection to 19 1\2 years. This could force Canada to change the way it treats generic drug companies. The Patent Act gives brand-name drug companies a 20-year patent protection. But during those 20 years, generic drug companies are allowed to develop and test copies of the brand-name products and six months before the 20 year patent expiry, actually begin producing and stockpiling generic products ready for the market. About half of Canada's pharmaceutical market is dominated by European firms and sales in Canada are worth over $5 billion annually.

INFORMATION

A generation of "dataholics" is on the rise, with more than half of all business people saying they crave information, especially from computers and the Internet. A Reuters study of 1,000 international business people said 53 per cent admitted to craving information and 54 per cent claimed to get a "high" when they find what they want in an electronic search. At the same time, they often feel overwhelmed by all the information at their disposal and worry that their children are turning into info junkies. 46 per cent of those surveyed said their children already prefer computers to their peers.

WEB SITE

A new site contains tips for female entrepreneurs. The Online Woman's Business Centre (www.onlinewbc.org) covers topics such as marketing, finance, technology and networking. Although the site is sponsored by the U.S. government's Small Business Administration, much of the information is useful to Canadians.

BANKS

According to the Canadian Bankers Association, Canada's seven biggest banks have more than 722,000 small and medium-sized business clients, defined as those with credit authorizations of less than $1 million. The average amount of credit outstanding for this group is $64,000. Since the second quarter of 1996, the number of these customers has increased by 3.2 per cent.

WINE

France spends more on wine than any other country. The French spent $14.1 billion in 1996 equivalent to $242 a head. Although America's wine market, worth $10.5 billion, is the second biggest, this works out at a mere $40 each. Austrians are just behind the French, buying $240 a head. Wine sales in Britain, where beer once ruled, are already the third-highest in the world, and still growing at over 10 per cent a year. Russia and Poland are likely to remain the fastest growing markets as incomes rise and people develop western spending habits. The Japanese spend only $4.50, barely enough for a bottle each.

CARGO

Some German enthusiasts are designing a helium-filled blimp that could revolutionize the global heavy-haulage business. Their CargoLifter 160, a 246 metre long, 61 metre wide blimp would be able to hoist heavy, bulky objects such as 160-ton turbines or an empty Boeing 747, wings and all, 10 times faster and an average 20 per cent less expensively. The CargoLifter's cargo bay would hold 395 cubic metres. An even bigger airship still on the drawing boards would haul as much as 450 tons. Such unprecedented carrying capacity could lead to changes not only in the way that companies deliver things, but in the way they design and build them too. Airships appear to be on a comeback, helped in part by the U.S. governments 1996 decision to sell off its strategic helium reserves.

ASIA

Some Asian governments are sending a stern message to their citizens: Stay home. They are raising passport fees and other international travel costs, and even openly admonishing people not to go abroad, as part of efforts to protect their foreign-currency reserves. Malaysia has more than doubled the cost of passports and there is now a travel freeze for government officials. Thailand is considering raising international airport taxes and imposing an exit tax. In South Korea, the government is essentially shaming citizens into not travelling overseas. Flight attendants were recently shown on television at Kimpo Airport with signs urging people not to travel.

LICENSING

According to Fortune magazine, the National Basketball Association of the 1990s has emerged as a truly global sports league. NBA games are televised from Santiago to Seoul and last year the league and its partners sold almost $500 million (U.S.) worth of licensed products. Even in countries such as Mongolia, Namibia and Kuwait where it does no other business, it licenses TV rights to local broadcasters.

INDIA

The results of the biggest tax amnesty in India were recently announced. Film producers, sports stars and thousands of businessmen hid their faces from the press as they visited their local tax offices to declare illicit gains. They came in limousines, some with bodyguards and suitcases of money, others with sachets of jewels, all hoping for peace in the new tax year. They declared a massive $13 billion in illicit gains, hidden in jewels, gold and silver, bogus land deeds and false bank accounts. The 466,000 Indians that came forward paid a staggering $4 billion in taxes to the government, a windfall that was greater than all foreign aid to India last year.

SHOPPING

With the U.S. dollar worth C$1.40, U.S. shoppers are making a run for the border to hunt for bargains. The 40 per cent exchange rate makes shopping in Canada worthwhile to Americans, even after taxes and tunnel or bridge tolls. Clothing, china and giftware are particularly popular items as well as furs and crystal according to retailers. U.S shoppers also save on sales taxes as most stores ship directly to their U.S. customers and under the NAFTA, customers don't have to pay sales tax on those items.

TAXES

User fees imposed by all levels of government in Canada were estimated to bring in $23 billion last year. This is more than the amounts raised by the goods and services tax or corporate income taxes. User charges cover the costs of such things as food inspection, passports, maintaining camp-sites, ice breaking and providing regulatory advice on merger proposals. At the federal level about 300 user charges raised nearly $4 billion in revenue. The Auditor General of Canada has raised questions about the government's increasing reliance on user fees.

OTHER FEES

Circuit City Stores have imposed a 15 per cent "restocking fee" on non-defective personal computers returned within 14 days. Electronics retailers are getting fed up with students who "borrow" laptops, returning them for a refund after term papers are done.

PRIZES

According to the Chronicle, seeking to boost the reputation of its city, the Houston Image Group spent $500,000 to place an ad in Time featuring scratch-and-win cards that awarded free trips to Houston for up to 33 lucky readers. Only one prize was claimed, and only 900 entries were submitted for a "second chance" drawing. Typically, says an industry observer, a national lottery draws 100,000 to 200,000 second responses.

NAMES

Brad's Drink: The original name of Pepsi Cola, which celebrates its centenary this year.
Ludus pilae mensalis: The Latin phrase for table tennis, according to the Vatican.

WILLS

In 1948, a prairie farmer used his pen knife to scratch a valid will on the fender of his tractor. He was trapped under the vehicle for 10 hours and died two days later in hospital. The farmer wrote: "In case I die in this mess, I leave all to the wife." In 1996, the fender was rescued from a courthouse and donated to the law library at the University of Saskatchewan.

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

Past issues of the A&A Economic News Digest can be found at http://www.aacb.com/publications/ed/index.asp

January 1998 Economic Digest - Importing and Exporting

January 1998 Edition

 EUROPE

Canadian companies could miss major export opportunities in what is becoming the world's biggest market because they pay too much attention to the U.S. and too little to Europe, according to the Conference Board of Canada. The EU already has a combined population of 376 million people and an economy worth $8.6 trillion (U.S.) a year. The U.S., Canada's largest trading partner, has a population of 263 million people and a $7.3 trillion economy. Last year, Canada ran a $7 billion trade deficit with the EU exporting only $15.7 billion worth of goods which represented six per cent of total Canadian exports.

SELF-EMPLOYMENT

In 1996, more than two-thirds of Canada's self-employed worked in the service sector. Together, trade, business services, and personal and household services accounted for half of all self-employment. In addition, about one-quarter worked in either agriculture or construction. The incidence of self-employment was high in business services. About 30% of workers in computing services were self-employed, while the proportion was 42% in accounting, 32% in legal service, 61% in consulting and 41% in advertising.

SELF-EMPLOYMENT

In 1996, more than two-thirds of Canada's self-employed worked in the service sector. Together, trade, business services, and personal and household services accounted for half of all self-employment. In addition, about one-quarter worked in either agriculture or construction. The incidence of self-employment was high in business services. About 30% of workers in computing services were self-employed, while the proportion was 42% in accounting, 32% in legal service, 61% in consulting and 41% in advertising.

MIR

Last month, two Russian cosmonauts used an Internet link from the Mir space station to go on a shopping spree in Manhattan's Virtual Emporium. They bought gifts including Barbie Dolls, Chicago Bulls sportswear, computers and an exercise machine. Meanwhile, the cash-strapped Russian space agency is considering an offer to put actors on Mir to make a movie. Cosmonauts have already done in-space commercials for Pepsi, Omega watches and Israeli milk.

MARKETS

The world economy will change fundamentally over the next 25 years as Brazil, China, India, Indonesia and Russia assume more central roles in the global market place according to the World Bank. The so-called "Big Five" developing economies, which currently account for less than a 10th of global output and trade, could double their share of the world market and surpass the European Union by 2020. These countries should grow at an average annual rate of between 5 and 6 per cent a year over the next 25 years.

PRODUCTIVITY

While the performance of the whole Canadian business sector has remained quite comparable with its U.S. counterpart since 1961, labour productivity of Canadian manufacturing started to lag behind the U.S. in 1986. However, Canada has performed better than the U.S. in the services sector as well as some goods producing industries (for example, construction and mining), which accounts for 75% of total production in the business sector. From 1961 to 1985, labour productivity in both the Canadian and the U.S. manufacturing sectors grew at much the same rate. Since then, a widening gap has emerged in favour of American manufacturing. Between 1986 and 1996, labour productivity grew on average 1.6% per year in Canada and 2.6% in the U.S.

ROYALTIES

Canadian companies licensing their trademark, copyrights and patents around the world are losing revenue because they are not collecting royalties according to the accounting firm of Price Waterhouse. It claims organizations are losing millions of dollars by not enforcing royalty agreements and suggests companies should make one person with authority responsible for all royalties, do an inventory of all licensing agreements and then set up a system to monitor constantly the flow of royalties.

HEALTH

A new Health Canada report states that losses to the economy due to illness, disability and premature death cost the country more than the direct costs of health care. The study estimates that the total burden of illness to the economy comes to $157 billion a year. The direct cost of care, including money spent on hospitals, physicians, drugs and research came to $72 billion. It is estimated that there were $85 billion in indirect costs in the form of lost productivity because of disability and premature death.

COAL

Western Europe's coal industry, which powered the Industrial Revolution, is dying because of cheaper imports, government spending cuts and alternative sources of fuel, such as natural gas. It is estimated that by 2010 the industry will be finished except for a few mines in England. The unexpected slowdown in Asia's economic growth and excess global supplies of coal are contributing to the problem. Right now, it costs about US$120 a tonne for Germany to produce coal, while imports from outside the EU cost about US$40 a tonne. South Africa mines some of the cheapest coal at US$30 a tonne before freight costs.

SHORTAGES

Modern Purchasing reports that a 20-state inspection by the U.S. government uncovered wide-spread short-filling and short-weighing by the American dairy and fruit juice industries. Out of 1,638 containers inspected at supermarkets, schools, dairies and packaging plants, 666 (41 per cent) were underfilled. Although packages were underfilled by between only one and 6 per cent, the dairy industry sells billions of cartons a year, and even a one per cent shortage represents hundreds of millions of dollars in illegal profits. Almost 46 per cent of milk and 23 per cent of juice containers inspected were underfilled.

INFORMATION

The Canadian government has launched a new on-line information product, Take a World View ... Export Your Services, to assist Canadian service firms in preparing to export to foreign markets. It may be found at http://strategies.ic.ca/twv or http://www.infoexport.gc.ca. It is a joint effort between the private sector, the Department of Foreign Affairs and International Trade, and Industry Canada, and is one of several initiatives of Team Canada Inc., formed specifically to promote the trade of Canadian products and services in the international marketplace. It is aimed at small and medium- sized firms in the knowledge-based service industries, including management consultants, architects, engineers, professional trainers and designers.

LOW-TECH

For a new consumer product, Freeplay doesn't seem to have a lot going for it. It's bulky, heavy and a lot pricier than similar products. It's a radio with batteries that will never go flat and doesn't use one watt of electricity. Freeplay is the first wind-up radio: Just 30 seconds of cranking and it pumps out 40 minutes of AM, FM or shortwave tunes. The size of a lunchbox, weighing 2.7 kilograms it costs $80. Until now, news of the radio spread by word-of-mouth among hikers and environmentalists but it is now being stocked by major stores in England and the U.S.

TOURISM

Last year, the most popular countries for international tourism were: France, 61 million, Spain, 45 million, the United States, 45 million, Italy, 29 million, China, 23 million, Britain, 22 million and Mexico, 19 million.

WASTE

According to the European Union's financial watchdog, the EU wasted about $7 billion in 1996 and another $5.5 billion is unaccounted for. The Luxembourg-based Court of Auditors said more than 5 per cent of the EU's $134 billion budget was paid out in error. Excessive agricultural subsidies accounted for the bulk of the excess spending.

COMPETITION

In an effort to lure film business away from B.C., Washington State has passed legislation giving film companies another break on sales tax. Film and TV producers spent $37 million in Washington in 1996 (down from $76 million in 1994). B.C. film and TV production totaled $537 million in 1996 (up from $400 million in 1994). 1,250 locations were used for filming in and around Vancouver in 1996, a 25 per cent increase over 1995.

SMART ABMs

A Canadian bank has set up eight "smart ABMs" in the Toronto area to test consumer reaction to a more advanced machine that can act as a kind of electronic variety store selling products such as movie and airline tickets. Besides its share of the ticket revenue, the bank makes money from ads carried on the machines. Pitches for soft drinks and hamburgers, among others, pop up as you wait for cash or movie tickets to print. Eventually, these ABMs could act as a personal financial adviser telling users, for example, about mortgage renewal options.

SHIPPING

An ocean-shipping cartel, which controls about 85 per cent of shipping capacity from Asia to the U.S., is going to try and force a 10 per cent rate increase on U.S. imports from Asia, the biggest increase in a decade. This would affect shipping rates on some $200 billion of goods a year. Any rate boost would be bad news for U.S. consumers because transportation costs, which account for about 5 to 10 per cent of the price of most goods, are usually tacked on to a product's price.

NUTRIA

Louisiana has begun a $2 million campaign to encourage people to eat nutria. This South American rodent, which looks like a cross between a beaver and a furry rat with yellow teeth, was brought to the state in the 1930s, in an attempt to establish a fur trade. About 50 animals escaped during a hurricane. There are now an estimated 20 million of these rodents in the wild, each of which contains about three pounds of low-fat meat.

CIDA

It is now easier to prepare proposals for the Canadian International Development Agency (CIDA)'s Industrial Co-operation Program. The agency has introduced its Automated Proposal System (APS). Users of the APS software complete their proposals by responding to the software's structured set of questions about their projects. A handy help feature is available with each question to further define proposal requirements. The resulting proposal is organized in a standard format that contains all the essential information and can be processed automatically. Applicants avoid lengthy paperwork and get speedier responses to their applications.

BEES

By some estimates, 95 per cent of the wild honey bees in the U.S. have been wiped out by parasite mites in the past three years. Many farmers and fruit growers are having to pay commercial beekeepers to bring their insects to pollinate their crops.

GRASS

An ancient grass that has flourished in parts of Europe and Asia for thousands of years may be introduced to the Prairies. Researchers from Agriculture Canada say sainfoin appears to be an improvement over alfalfa, which causes bloat in livestock and is vulnerable to attack by the alfalfa weevil. Sainfoin also grows earlier in the spring than alfalfa, gives good forage yields and can be harvested in late July or early August.

NUMBERS

-More than 40 per cent of radio listeners in the U.S. listen to one of its 2,642 country-music stations.
-There are 191 member countries in FIFA, soccer's governing body, compared with 184 countries in the United Nations.
-Thirty per cent of the Earth's inhabitants have no access to any health care whatsoever; 50 per cent have no toilet to use.
-Around the world, 53,333 people are working for various United Nations offices. Three times as many work for McDonalds

LANGUAGE

The U.S. version of English grows by about 5,000 words a year. The new terms are mostly medical or technical.

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December 1997 Economic Digest - Importing and Exporting

December 1997 Edition

DRUG RESEARCH

Last year, pharmaceutical companies in Canada pumped $665 million into drug development research. Nearly $400 million of that money funded clinical trials, in which new drugs and therapies are tested on patients prior to their formal approval. There are now twice as many Canadians enrolled in clinical trials as there were seven years ago. Last year clinical trials involving nearly 35,000 patients investigated 140 drugs across Canada. But, increasingly, there are countries where it is more cost-effective to conduct clinical trials. Eastern Europe is now attracting clinical research dollars because of the much cheaper costs of running trials there.

CELL PHONES

Canada's cellular telephone industry continued to record strong growth in 1996. There were 3,420,318 cell phone subscribers in Canada on December 31, 1996, up 32.1 per cent over the 1995 year-end figure of 2,589,780. Cell phone service providers reported annual revenues of $2.84 billion in 1996, an increase of 24.5 per cent compared with 1995 revenues.

PORTUGAL

Trade between Portugal and Canada is undergoing a transformation. In the past two years, sales of Canadian goods and services to Portugal have increased by nearly 300 per cent. In 1996, Canadian exports to Portugal totaled $99 million, while imports from Portugal reached $179 million. A co-operation agreement was signed recently between the Industrial Association of Portugal (AIP) and the Alliance of Manufacturers & Exporters Canada (AMEC). This agreement allows for much closer ties between these two major manufacturing associations and seeks to boost the competitiveness of their respective countries and to promote both exports and investment. Canadians can increasingly see Portugal as a gateway to the major European market. The Portuguese economy has the strongest growth rate of any European country in 1997, with GDP increasing by 2.5 per cent.

GROWTH

Since 1986, the home-computer market in the U.S. has grown from a $3-billion (U.S.) annual industry to more than $16-billion. Growth is fuelled by owners being accustomed to replacing their systems, on average, every 2.5 years. By contrast, people who buy a TV or VCR might not replace it for 11 years. It is suggested that adopting the economics of the personal-computer industry is the only way the consumer electronics industry can survive.

GENETICS

Two U.S. patents were granted recently for a process that puts vaccines directly into vegetables. But even before the patents were approved, the first clinical trials for edible vaccines received approval from the U.S. Food and Drug Administration. Volunteers in Maryland will be fed raw potatoes that have been genetically engineered to trigger an immune reaction to the E. coli bacteria, a major cause of stomach upsets. A group in Mexico is putting the E. coli gene into bananas.

RETAIL

Despite increased consumer spending, a Consumer PulseCheck Survey states that Canadian retailers are losing sales because of high prices, out-of-stock items and slack service. While 32 per cent of consumers head out to a store with a specific purchase in mind, only 11 per cent actually find and buy what they want. Would-be buyers cite such hassles as high price (33 per cent of respondents), not finding the item (26 per cent), item not in stock, (16 per cent) and couldn't get service (7 per cent). A startling 20 per cent of consumers said they could not think of anything they liked about shopping.

RELAXATION

The Llama Therapeutic Group has opened North America's first llama retreat centre in B.C. Burnt-out business people are being invited to spend time without faxes, TVs or pagers. According to the founder, within 20 minutes of feeding, grooming and outfitting a llama for a trek, executive worry lines start to disappear, the tone of their voice changes and their breathing relaxes. Only $1,600 a time.

PROFITS

A new study by Gistics Inc. states that last year, 94 per cent of all CD-ROM publishers in the world failed to make a profit. The consulting firm gives two reasons: customers can't preview the expensive products before buying and the failure rate of CD-ROMs is high; Windows computers, it claims, have a 40 to 50 per cent failure rate when trying to run them.

INCOME

In 1996, spending from abroad on post-secondary education brought $1 billion into Canada in the form of tuition fees and living expenses. At the same time, spending by Canadian residents at universities and colleges abroad amounted to over $600 million. Sales abroad of legal services by law firms in Canada amounted to over $260 million including registration of patents and trademarks. The purchase of legal services from abroad approached $210 million. International management consulting produced some $215 million in revenues for Canadian providers. The estimate includes work funded by CIDA.

SITES

Two more sites are available on Strategis, Industry Canada's Web site, which are designed to give small businesses the tools they need to innovate, grow and create jobs. For growth-oriented firms, there's a page providing tips on how to get risk capital at strategis.ic.gc.ca/growth. Another specializes in steps to competitiveness and may be found at strategis.ic.gc.ca/steps.

LABOUR FORCE

So far this decade, there has been extraordinary growth in the number of Canadians who are self-employed. Between 1989 and 1996, the self-employed accounted for over three-quarters of job growth. The number of people who became their own boss surged 25% during this period, while the number of paid employees increased only 1%. As a result, the self-employed now account for 18% of all workers, up from 14% in 1989 and 12% in 1976. While the likelihood of being self-employed has grown considerably over the last 20 years for both sexes, the rate of growth has been stronger for women. While men represented about 74% of the self-employed in 1976, they now represent about two-thirds.

FACILITIES

In the U.S. national park at Delaware Gap, Pa., Washington has built a two-hole outhouse for $333,000 (U.S.). Although critics have attacked its cost, supporters note the state-of-the-art structure was the work of more than a dozen designers, architects and engineers and it is earthquake-proof.

STANDARDS

Canadian businesses can now check out thousands of Canadian and international standards on the Internet. The Standards Council of Canada has teamed up with the Open Text Corp of Waterloo, Ont., to provide quick on-line information such as manufacturing specifications for companies interested in exporting their products. Canadian businesses can also provide comment and recommendations on new standards. The council's Web site is www.scc.ca.

PROFITABILITY

Among Canada's larger enterprises, the most profitable goods producers in 1996 were firms engaged in the production of chemical fertilizers (excluding potash), and explosives. The median rate of return was 17.3%. In second place in the 1996 rankings were motor vehicle parts and accessories manufacturers (14.7%). The least profitable goods producers were pulp and paper manufacturers (0.9%) and fish and other seafood processors (1.9%). Among financial institutions, the most profitable in 1996 were independent investment dealers (26.5%) and investment dealers that are subsidiaries of banks (15.7%).

FEATHERS

A U.S. federal researcher, pondering new ways to use chicken feathers--a poultry rendering plant can process half a million pounds a week--has suggested using the absorbent material to make disposable diapers. Currently, ground-up chicken feathers are used to grow mushrooms or are fed back to chickens as a protein supplement.

WATER

U.S. companies selling bottled water may legally use the terms "Mountain fresh" and "Glacier pure" even if their product has been nowhere near a mountain or a glacier.

CLEAN-UP

Opportunities exist for Canadian companies in the area of environmental clean-up. The sharp resurgence in Gulf of Mexico oil and gas activity has been accompanied by the challenge of disposing of a large number of less economically viable, older-generation wells. More than 3,000 platforms currently dot the U.S. federal waters in the Gulf, and the looming cost of removing the platforms, plugging and abandoning the wells and cleaning up the ocean floor has been estimated by the U.S. Department of Environment at about $US5 billion -- $US2.9 billion for platform renewal, US$1.4 billion for plugging and abandoning, and $US600 million for site clearance.

SMALL BUSINESS

According to the Business Development Bank of Canada, small businesses now employ half of Canada's private sector workers. They also generate almost 43 per cent of the private sector output and create 90 per cent of the new jobs.

HARDWARE

Canadian hardware manufacturers are highly export-oriented. In recent years, foreign shipments have been equivalent to as much as 73% of factory shipments. At the same time, imports of information technology products are substantially greater than domestic production. Canada incurred a trade deficit of $18.6 billion in these products in 1995. Few countries - not even the U.S. - consistently maintain a trade surplus in information technology products. Moreover, information technology imports reflect investment in cutting edge technologies by Canadian corporations to maintain their competitiveness in international markets.

TEACHING

Though retirements and burnout will open up new teaching jobs after the year 2000, there will be a lot of competition for these jobs according to a Statscan study. Teachers specializing in mathematics, the sciences and certain technical subjects have the best prospects, even in the current tight job market. Assuming a retirement age of 60, about 61 per cent of Canadian elementary and secondary school teachers--or 211,000 out of 347,000 teachers--will retire between now and 2015. There are currently more than 35,000 teachers available for full-time work.

FLOWERS

After the Princess of Wales died, Colombia's flower industry saw a 20 per cent leap in the sales of its blooms to Europe.

INFORMATION

Across North America, long-distance directory assistance is handing out bad information with increasing frequency. The problem, according to the Washington Post, is that as local phone companies begin to compete against long-distance carriers and each other, many are refusing to share updated lists of customers' phone numbers.

MEMORY

Researchers at British Telecom and MIT are working on "intelligent glasses." When confronted by a familiar but nameless face, the spectacles will automatically print the name above the person's head in a way only the wearer can see, or whisper it into an ear.

QUOTES

"Why, sir, there is every possibility that you will soon be able to tax it."--British scientist Michael Faraday (1791-1867) when asked by a politician about the usefulness of electricity.

Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.

Past issues of the A&A Economic News Digest can be found at http://www.aacb.com/publications/ed/index.asp