(American Shipper)
The U.S. Commerce Department released a report Thursday highlighting the differences between official trade statistics produced by the United States and China.
The report was prepared by the U.S.-China Joint Commission on Commerce and Trade Statistics Working Group, which includes officials from the U.S. Commerce Department’s Economic and Statistics Administration and Census Bureau, and China’s Ministry of Commerce and General Administration of Customs.
The analysis found that official Chinese data on exports to the United States are typically lower than official U.S. data on imports from China. Similarly, China reports higher imports from the United States than the United States reports that it exports to China. “The result is that Chinese data have historically shown a much smaller trade deficit with the United States than do U.S. data,” the Commerce Department said. Read more here.
View the USTR/ESA report here and press release here.
Saturday, March 6, 2010
Screening Of All U.S.-Bound Air Cargo Still Years Away
(NTI)
It could take the Homeland Security Department another two years to ensure that all cargo is screened for weapons of mass destruction before being flown into the United States on passenger airplanes, much longer than originally estimated, a senior department official told lawmakers...
A 2007 law that Democrats wrote as soon as they took over Congress required the Transportation Security Administration to ensure that all cargo aboard passenger flights is screened for weapons of mass destruction by August 2010. The deadline applies to flights originating inside the United States and those from other countries.
But the deadline for incoming international flights will be missed, Gale Rossides, TSA's acting director, told the House Homeland Security Appropriations Subcommittee.
She said the agency might be able to ensure that only 65 percent of cargo on international flights is screened. But TSA will meet the deadline for screening all cargo aboard passenger flights originating inside the United States, she added.
TSA officials have been saying since last year that meeting the August deadline for incoming international flights most likely would not be possible. But the need for another two years is the longest estimate to be disclosed so far.
Rossides said the biggest challenge is getting cooperation from the governments of 20 countries where nearly 85 percent of all cargo comes from.
It could take the Homeland Security Department another two years to ensure that all cargo is screened for weapons of mass destruction before being flown into the United States on passenger airplanes, much longer than originally estimated, a senior department official told lawmakers...
A 2007 law that Democrats wrote as soon as they took over Congress required the Transportation Security Administration to ensure that all cargo aboard passenger flights is screened for weapons of mass destruction by August 2010. The deadline applies to flights originating inside the United States and those from other countries.
But the deadline for incoming international flights will be missed, Gale Rossides, TSA's acting director, told the House Homeland Security Appropriations Subcommittee.
She said the agency might be able to ensure that only 65 percent of cargo on international flights is screened. But TSA will meet the deadline for screening all cargo aboard passenger flights originating inside the United States, she added.
TSA officials have been saying since last year that meeting the August deadline for incoming international flights most likely would not be possible. But the need for another two years is the longest estimate to be disclosed so far.
Rossides said the biggest challenge is getting cooperation from the governments of 20 countries where nearly 85 percent of all cargo comes from.
Friday, March 5, 2010
Bill Introduced to Kill NAFTA
(Journal of Commerce)
A bill that would end the North American Free Trade Agreement was introduced Thursday in the U.S. House of Representatives. The bill would require President Obama to withdraw the U.S. from NAFTA within six months.
“I voted against this legislation in 1993 because I knew that this trade agreement would lead to a decline in jobs and our industrial manufacturing base,” said Rep. Gene Taylor, D-Miss., one of 27 co-sponsors of the bill.
The bill was sponsored by 24 Democrats and three Republicans, including former presidential hopeful Ron Paul, R-Texas. Taylor said withdrawing from NAFTA would help keep jobs in the U.S. and reduce unemployment.
James P. Hoffa, general president of the Teamsters union, backed the bill. “We were sold a bill of goods about NAFTA,” he said.
To view the proposed bill NAFTA HR4759 click here.
A bill that would end the North American Free Trade Agreement was introduced Thursday in the U.S. House of Representatives. The bill would require President Obama to withdraw the U.S. from NAFTA within six months.
“I voted against this legislation in 1993 because I knew that this trade agreement would lead to a decline in jobs and our industrial manufacturing base,” said Rep. Gene Taylor, D-Miss., one of 27 co-sponsors of the bill.
The bill was sponsored by 24 Democrats and three Republicans, including former presidential hopeful Ron Paul, R-Texas. Taylor said withdrawing from NAFTA would help keep jobs in the U.S. and reduce unemployment.
James P. Hoffa, general president of the Teamsters union, backed the bill. “We were sold a bill of goods about NAFTA,” he said.
To view the proposed bill NAFTA HR4759 click here.
The Loonie Looks Ready To Fly
(Financial Post)
Canada in a bit of a quandary. The strong Canadian dollar has proven to be a challenge for Canadian exports as it has made Canadian goods and services more expensive. This leaves the policy makers at the Bank of Canada between the proverbial “rock and a hard place”.
If it decides to raise interest rates aggressively and the US Federal Reserve decides that it can afford to wait to raise interest rates in the US it is likely that the Canadian dollar could be in for a prolonged period of appreciation. The implication for Canadian exports is clearly negative.
The central bank knows that it has to be mindful of preventing inflationary pressures from taking root. On the other hand, Canadian interest rates can only go so far ahead of US interest rates. If the spread between the two countries’ interest rates widens too far in Canada’s favour, then the Canadian economy could be hit with the sledge hammer combination of high interest rates, a surging Canadian dollar and by extension a slumping export sector. Read more here.
Canada in a bit of a quandary. The strong Canadian dollar has proven to be a challenge for Canadian exports as it has made Canadian goods and services more expensive. This leaves the policy makers at the Bank of Canada between the proverbial “rock and a hard place”.
If it decides to raise interest rates aggressively and the US Federal Reserve decides that it can afford to wait to raise interest rates in the US it is likely that the Canadian dollar could be in for a prolonged period of appreciation. The implication for Canadian exports is clearly negative.
The central bank knows that it has to be mindful of preventing inflationary pressures from taking root. On the other hand, Canadian interest rates can only go so far ahead of US interest rates. If the spread between the two countries’ interest rates widens too far in Canada’s favour, then the Canadian economy could be hit with the sledge hammer combination of high interest rates, a surging Canadian dollar and by extension a slumping export sector. Read more here.
Thursday, March 4, 2010
Canadian Dollar Extends Gains Ahead of Budget, Bonds Slip
(Reuters)
The Canadian dollar extended gains against the U.S. currency for a fifth session on Thursday ahead of the federal budget later in the day.
At 9:45 a.m. (1445 GMT), the Canadian dollar was at C$1.0301 to the U.S. dollar, or 97.08 U.S. cents, up from C$1.0320 to the U.S. dollar, or 96.90 U.S. cents, at Wednesday’s close.
“It’s pretty much where we left things yesterday. It’s been a quiet morning,” said J.P. Blais, vice president of foreign exchange products at BMO Capital Markets.
He said there was risk that the Canadian dollar could weaken slightly on softer crude oil prices, an important Canadian export, while the market was also keeping an eye on developments in Europe.
“I think people are concerned about what’s happening in Europe, in the UK and the euro,” Blais said. Read more here.
The Canadian dollar extended gains against the U.S. currency for a fifth session on Thursday ahead of the federal budget later in the day.
At 9:45 a.m. (1445 GMT), the Canadian dollar was at C$1.0301 to the U.S. dollar, or 97.08 U.S. cents, up from C$1.0320 to the U.S. dollar, or 96.90 U.S. cents, at Wednesday’s close.
“It’s pretty much where we left things yesterday. It’s been a quiet morning,” said J.P. Blais, vice president of foreign exchange products at BMO Capital Markets.
He said there was risk that the Canadian dollar could weaken slightly on softer crude oil prices, an important Canadian export, while the market was also keeping an eye on developments in Europe.
“I think people are concerned about what’s happening in Europe, in the UK and the euro,” Blais said. Read more here.
Webcast Presentation – Incentives for Greening of the Supply Chain
(IE Canada)
Event held on January 19, 2010 hosted by Ernst and Young LLP.
To view this presentation click here.
Event held on January 19, 2010 hosted by Ernst and Young LLP.
To view this presentation click here.
Wednesday, March 3, 2010
Is It Time to Ding Beijing?
(Foreign Policy)
There is a growing drumbeat to do something about China’s undervalued currency. In November, Paul Krugman urged the Obama Administration to take the situation seriously. As the financial crisis abates, he wrote, trade imbalances would blossom again. So picture this: month after month of headlines juxtaposing soaring U.S. trade deficits and Chinese trade surpluses with the suffering of unemployed American workers. If I were the Chinese government, I’d be really worried about that prospect.
In the Financial Times in December, a retired University of Chicago economics professor called for a 10 percent tariff on all U.S. imports from China. Last week, a group of 15 Republican and Democratic senators demanded the Commerce Department to treat China’s currency policy as a subsidy. In just over a month, the Treasury will need to state yet again whether it considers China a currency manipulator.
So what is to be done? There is a very strong case that China’s currency is undervalued. The most telling indicator is that China’s foreign exchange reserves have hit $2.4 trillion and are growing at a rate of roughly $400 billion per year. There is also a strong, but more subtle, argument that it would be in China’s own interest to revalue its currency. But the Chinese leadership has frozen the RMB against the dollar since the middle of 2008.
The question, then, is what policy options are on the table. Read more here.
There is a growing drumbeat to do something about China’s undervalued currency. In November, Paul Krugman urged the Obama Administration to take the situation seriously. As the financial crisis abates, he wrote, trade imbalances would blossom again. So picture this: month after month of headlines juxtaposing soaring U.S. trade deficits and Chinese trade surpluses with the suffering of unemployed American workers. If I were the Chinese government, I’d be really worried about that prospect.
In the Financial Times in December, a retired University of Chicago economics professor called for a 10 percent tariff on all U.S. imports from China. Last week, a group of 15 Republican and Democratic senators demanded the Commerce Department to treat China’s currency policy as a subsidy. In just over a month, the Treasury will need to state yet again whether it considers China a currency manipulator.
So what is to be done? There is a very strong case that China’s currency is undervalued. The most telling indicator is that China’s foreign exchange reserves have hit $2.4 trillion and are growing at a rate of roughly $400 billion per year. There is also a strong, but more subtle, argument that it would be in China’s own interest to revalue its currency. But the Chinese leadership has frozen the RMB against the dollar since the middle of 2008.
The question, then, is what policy options are on the table. Read more here.
Japanese Fret Over Quality of Manufacturing
(Financial Times)
Toyota’s recall of 8.5m cars , trucks and sports utility vehicles in recent months has shocked Japan, home of manufacturing innovations such as the kaizen philosophy of continuous improvement and “total quality management”. But while there is little evidence that Japan has got worse at making things - in spite of fretting triggered by Toyota’s recalls - quality has become a big problem for Japanese companies. Japan’s challenge is that, while its factories still work well, the nature of products, the scale on which they are sold and where they are made have all changed.
Cars and gadgets have become more complicated, with engineers forced to specialise. “There are fewer and fewer people who understand how all the parts work together,” said Yoshinori Iizuka, a professor at Tokyo University. Cars now use more electronics and digital electronics use more software. “For electronics, quality is largely determined at the design stage. If there’s a flaw, it doesn’t matter how good quality control is at the assembly plant,” said Yoshiki Matsui, a professor at Yokohama National University.
On Monday, Sony told millions of PlayStation 3 users not to use their games consoles as it rushed to fix a bug. The warning appeared to be another blow to one of the biggest names in the electronics industry. Sony, which yesterday said it had resolved the glitch, believes its PS3 problem was due to a bug in the clock system that led consoles to act as if 2010 was a leap year. Toyota answered complaints about the brakes in its Prius hybrid with a patch to the software that controls them.
The problems highlight how Japanese companies have had to accept imperfections as products become more complex and their lifespan shorter, and mass-market consumers have demanded lower prices. “It’s extremely costly to make products 100 per cent defect-free,” said Mr Matsui. Read more here.
Related: Senator Suggests Banning Japanese-made Cars (USA Today)
EU Condemns US 100% Sea Cargo Scanning Law as Too Costly
(Port News/HKTDC)
A report from the European Commission (EC) has criticised the 100 per cent scanning demands for US-bound sea containers by July 1, 2012 as too far too costly.
EC commissioner Algridas Semata said the US legislation would “require sizable investments, increased transport costs and entail massive welfare losses for no proven security benefit”.
Fundamental changes of port procedures and regulations for an estimated growth in shipping costs of 10 per cent on US-bound sea freight, including EUR430 million (US$581 million) costs for scanning and radiation detection equipment and space needed for its use, and additional staffing costs for 2,200 extra personnel.
In a report from London’s International Freighting Weekly, the commission calculated combined losses of EUR10 billion for the US and European Union with global losses in the range of EUR17 billion, and an annual loss of EUR150 billion should the scanning model go worldwide.
“In the absence of a convincing demonstration that 100 per cent scanning at export would produce significant global supply chain security benefits, incurring such costs is not justified,” added the report.
Said Mr Semata: “A multi-layered approach to risk management covering all world trade” with the EU’s aim to roll-out “electronic systems and practical tools of collection of information” during 2010 would be adequate maritime security.
A report from the European Commission (EC) has criticised the 100 per cent scanning demands for US-bound sea containers by July 1, 2012 as too far too costly.
EC commissioner Algridas Semata said the US legislation would “require sizable investments, increased transport costs and entail massive welfare losses for no proven security benefit”.
Fundamental changes of port procedures and regulations for an estimated growth in shipping costs of 10 per cent on US-bound sea freight, including EUR430 million (US$581 million) costs for scanning and radiation detection equipment and space needed for its use, and additional staffing costs for 2,200 extra personnel.
In a report from London’s International Freighting Weekly, the commission calculated combined losses of EUR10 billion for the US and European Union with global losses in the range of EUR17 billion, and an annual loss of EUR150 billion should the scanning model go worldwide.
“In the absence of a convincing demonstration that 100 per cent scanning at export would produce significant global supply chain security benefits, incurring such costs is not justified,” added the report.
Said Mr Semata: “A multi-layered approach to risk management covering all world trade” with the EU’s aim to roll-out “electronic systems and practical tools of collection of information” during 2010 would be adequate maritime security.
US to Impose Anti-Dumping Duties on Chinese Salts, Coated Paper
(Xinhua)
The US Commerce Department said Tuesday that it would impose preliminary duties on imported Chinese potassium phosphate salts and coated paper, a move that may escalate trade disputes between the two countries.
In these countervailing duty (CVD) cases, the two products will face 109 percent and up to 13 percent duties, respectively.
Potassium salts are used in industrial cleaning products, fertilizers and food additives, while coated paper is used in printing of corporate annual reports and high-end catalogues and magazines.
The department said in separate statements that it had “preliminarily determined” that Chinese producers and exporters of the two products had received subsidies equivalent to the duties that were imposed.
“As a result of this preliminary determination, Commerce will instruct US Customs and Border Protection to collect a cash deposit or bond based on these preliminary rates,” said the statement.
According to the US government data, from 2006 to 2008, imports of certain potassium phosphate salts from China increased 228 percent by volume and were valued at about $16.4 million.
The Commerce Department will make its final determination in May. Read more here.
The US Commerce Department said Tuesday that it would impose preliminary duties on imported Chinese potassium phosphate salts and coated paper, a move that may escalate trade disputes between the two countries.
In these countervailing duty (CVD) cases, the two products will face 109 percent and up to 13 percent duties, respectively.
Potassium salts are used in industrial cleaning products, fertilizers and food additives, while coated paper is used in printing of corporate annual reports and high-end catalogues and magazines.
The department said in separate statements that it had “preliminarily determined” that Chinese producers and exporters of the two products had received subsidies equivalent to the duties that were imposed.
“As a result of this preliminary determination, Commerce will instruct US Customs and Border Protection to collect a cash deposit or bond based on these preliminary rates,” said the statement.
According to the US government data, from 2006 to 2008, imports of certain potassium phosphate salts from China increased 228 percent by volume and were valued at about $16.4 million.
The Commerce Department will make its final determination in May. Read more here.
Tuesday, March 2, 2010
Obama Administration Releases 2010 Trade Agenda
(World Trade Interactive)
The Obama administration delivered to Congress March 1 its 2010 Trade Policy Agenda and 2009 Annual Report. A press release from the Office of the U.S. Trade Representative states that this document explains how USTR will support the president’s National Export Initiative, which seeks to double U.S. exports over the next five years, through new market openings and trade enforcement.
According to the press release, highlights of the 2010 agenda include commitments to:
• support and strengthen a rules-based trading system, including “an ambitious and balanced Doha agreement that liberalizes three core market access areas - agriculture, goods and services;”
• enforce U.S. rights in the rules-based trading system by strengthening monitoring and enforcement, bringing cases at the World Trade Organization as necessary, increasing focus on non-tariff barriers that hinder U.S. exports, and fully enforcing labor and environmental rights in trade agreements;
• enhance U.S. growth, job creation and innovation by emphasizing bilateral relations with major emerging markets and long-standing key trade partners; pursuing regional engagement (particularly through the Trans-Pacific Partnership Agreement); continuing to consult with Congress, the public and the affected nations to address outstanding issues regarding the pending free trade agreements with Panama, Colombia and Korea; strengthening relationships with current partners such as Canada, Mexico, Japan and the European Union; and seeking to maximize returns on the economic opportunities of existing agreements;
• facilitate progress on national energy and environmental goals by working to fast-track action with willing partners in the WTO’s work on liberalizing trade in innovative, climate-friendly goods and services through tariff reductions; and
• foster stronger partnerships with developing and poor nations by expanding trade opportunities and maximizing existing benefits through measures such as technical assistance and market-based and rule of law reforms
The Obama administration delivered to Congress March 1 its 2010 Trade Policy Agenda and 2009 Annual Report. A press release from the Office of the U.S. Trade Representative states that this document explains how USTR will support the president’s National Export Initiative, which seeks to double U.S. exports over the next five years, through new market openings and trade enforcement.
According to the press release, highlights of the 2010 agenda include commitments to:
• support and strengthen a rules-based trading system, including “an ambitious and balanced Doha agreement that liberalizes three core market access areas - agriculture, goods and services;”
• enforce U.S. rights in the rules-based trading system by strengthening monitoring and enforcement, bringing cases at the World Trade Organization as necessary, increasing focus on non-tariff barriers that hinder U.S. exports, and fully enforcing labor and environmental rights in trade agreements;
• enhance U.S. growth, job creation and innovation by emphasizing bilateral relations with major emerging markets and long-standing key trade partners; pursuing regional engagement (particularly through the Trans-Pacific Partnership Agreement); continuing to consult with Congress, the public and the affected nations to address outstanding issues regarding the pending free trade agreements with Panama, Colombia and Korea; strengthening relationships with current partners such as Canada, Mexico, Japan and the European Union; and seeking to maximize returns on the economic opportunities of existing agreements;
• facilitate progress on national energy and environmental goals by working to fast-track action with willing partners in the WTO’s work on liberalizing trade in innovative, climate-friendly goods and services through tariff reductions; and
• foster stronger partnerships with developing and poor nations by expanding trade opportunities and maximizing existing benefits through measures such as technical assistance and market-based and rule of law reforms
Canada’s Prospects Outshine Realities Challenging U.S.
(The Globe and Mail)
A smaller deficit leaves Canada in a better position to take advantage of the rebound in the global economy Canadians have long tended to define themselves by what they are not: Americans. As Finance Minister Jim Flaherty prepares to deal with the fiscal cost of the recession, that distinction is taking on new meaning.
Facing the biggest budget deficit since the Second World War and none of the spirit of political compromise necessary to fix it, prospects for the United States. Fiscal reality limits the Obama administration’s options, and it remains uncertain whether the economy is strong enough to reverse an unemployment rate of about 10 per cent without government spending.
As a general rule, what’s bad for the United States is worse for Canada. Exports account for about a third of Canada’s gross domestic product and more than 70 per cent of those shipments are destined for buyers in the country’s southern neighbour. In 1982, the U.S. economy contracted 1.9 per cent, compared with a 2.9-per-cent slump in Canada, according to the International Monetary Fund; in 1991, U.S. gross domestic product dropped 0.2 per cent, compared with a decline of 2.1 per cent in Canada.
But Canada appears destined to do better during this period of American economic woe, which has come to be typified by that stubbornly high unemployment rate and a budget deficit that is 10.6 per cent of gross domestic product… Read more here.
A smaller deficit leaves Canada in a better position to take advantage of the rebound in the global economy Canadians have long tended to define themselves by what they are not: Americans. As Finance Minister Jim Flaherty prepares to deal with the fiscal cost of the recession, that distinction is taking on new meaning.
Facing the biggest budget deficit since the Second World War and none of the spirit of political compromise necessary to fix it, prospects for the United States. Fiscal reality limits the Obama administration’s options, and it remains uncertain whether the economy is strong enough to reverse an unemployment rate of about 10 per cent without government spending.
As a general rule, what’s bad for the United States is worse for Canada. Exports account for about a third of Canada’s gross domestic product and more than 70 per cent of those shipments are destined for buyers in the country’s southern neighbour. In 1982, the U.S. economy contracted 1.9 per cent, compared with a 2.9-per-cent slump in Canada, according to the International Monetary Fund; in 1991, U.S. gross domestic product dropped 0.2 per cent, compared with a decline of 2.1 per cent in Canada.
But Canada appears destined to do better during this period of American economic woe, which has come to be typified by that stubbornly high unemployment rate and a budget deficit that is 10.6 per cent of gross domestic product… Read more here.
Monday, March 1, 2010
Wal-Mart Sets New Sustainability Mandates
(Journal of Commerce)
Retailer wants suppliers to cut emissions by 20 million metric tons by 2015
Wal-Mart announced an “aggressive” new environmental initiative across its supply chain Thursday, saying it will call on suppliers of its products to eliminate a total of 20 million metric tons of greenhouse gas emissions over the next five years.
Wal-Mart said the effort would run from sourcing of goods to transportation and packaging, adding new mandates to sustainability plans the world’s largest retailer has already launched across its sprawling distribution channels.
“Our analysis has shown that we have opportunities in many of our private label products and with our supply chain,” Mike Duke, Wal-Mart’s president and CEO said in prepared remarks.
“We will work closely and in cooperation with our suppliers throughout this effort,” he said.Read more here.
Retailer wants suppliers to cut emissions by 20 million metric tons by 2015
Wal-Mart announced an “aggressive” new environmental initiative across its supply chain Thursday, saying it will call on suppliers of its products to eliminate a total of 20 million metric tons of greenhouse gas emissions over the next five years.
Wal-Mart said the effort would run from sourcing of goods to transportation and packaging, adding new mandates to sustainability plans the world’s largest retailer has already launched across its sprawling distribution channels.
“Our analysis has shown that we have opportunities in many of our private label products and with our supply chain,” Mike Duke, Wal-Mart’s president and CEO said in prepared remarks.
“We will work closely and in cooperation with our suppliers throughout this effort,” he said.Read more here.
Freight Rates Back to 2007 Peak Levels
(Port News/Cargonews Asia)
Freight rates for container shipping trade lanes between Asia and Europe have returned to their peak levels of 2007 as exports gain strength and shipping companies control capacity over the route, reported the South China Morning Post.
Coscon, the largest shipping company on the mainland, said rates had increased to US$1,400 per TEU, plus a $510 bunker adjustment charge. Rates per FEU rose to $2,650, in addition to $1,020 in bunker charges.
"The market leaders such as Maersk and MSC have urged the industry to keep a balance between supply and demand, and most of the players have reacted positively to keep [control of] capacity," said an official from China Cosco, the parent of Coscon.
Coscon has kept 40,000 TEUs of capacity, or about 10 vessels at "hot lay-up", meaning idling the vessels outside the ports.
About 10 per cent of the global fleet is idled across the globe. Read more here.
Freight rates for container shipping trade lanes between Asia and Europe have returned to their peak levels of 2007 as exports gain strength and shipping companies control capacity over the route, reported the South China Morning Post.
Coscon, the largest shipping company on the mainland, said rates had increased to US$1,400 per TEU, plus a $510 bunker adjustment charge. Rates per FEU rose to $2,650, in addition to $1,020 in bunker charges.
"The market leaders such as Maersk and MSC have urged the industry to keep a balance between supply and demand, and most of the players have reacted positively to keep [control of] capacity," said an official from China Cosco, the parent of Coscon.
Coscon has kept 40,000 TEUs of capacity, or about 10 vessels at "hot lay-up", meaning idling the vessels outside the ports.
About 10 per cent of the global fleet is idled across the globe. Read more here.
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