Daniel Workman's Blog

Posted by Daniel Workman

Since the end of September 2006, Canadian manufacturer Bombardier has seen a substantial rise in the number of contracts the Montreal-based company has won around the world.

While Bombardier's jet division continues to struggle both with sales and operating margins, the firm's transportation division has signed more than 15 large deals ranging from a joint venture in Shanghai, China for building subway trains to an upgrade project on the moving sidewalks at a Las Vegas airport.

Over the timeframe in which those deals were announced, Bombardier's stock price (BBD.B on TSX) has seen a double-digit increase from about $3.50 to $4. If Bombardier continues its success in selling transportation contracts, Bombardier's stock may well represent the comeback of 2007 for a Canadian manufacturing company thanks to thriving customer demand and international trade.

Below are some of the headlines announcing deals signed by Bombardier in the latter part of 2006.

Bombardier Transportation Signs $549 Million US Contract With Spanish National Railways RENFE To Supply 100 Traxx Locomotives (December 28, 2006)
Bombardier To Supply 50 VIRM Intercity Trains Worth $569 Million US To Dutch National Railways (December 27, 2006)
Bombardier Wins $61 Million US Contract For Electrical Multiple Units In Perth, Western Australia (December 21, 2006)
Bombardier Signs Contract To Build 234 Subway Cars For Toronto (December 21, 2006)
Bombardier Wins AU$80 Million Contract For Electrical Multiple Units In Queensland, Australia (December 19, 2006)
Bombardier Wins 467 Million Euro Order From SNCF For 112 Additional High-Capacity AGC Trains (November 24, 2006)
Bombardier Awarded $99 Million US Contract For Advanced Rapid Transit Cars In Vancouver (November 23, 2006)
Bombardier Transportation France Signs 2.7 Billion Euro Contract With French National Railways SNCF To Supply 372 Trains For The Greater Paris / Ile-De-France Suburban Network (November 22, 2006)
Bombardier Signs $43 Million US Contract for Additional Work On The Airport People Mover System in Las Vegas, USA (November 09, 2006)
Bombardier Selected By Spanish National Railways RENFE To Supply 100 TRAXX Locomotives (November 08, 2006)
Bombardier: Swiss BLS Orders 13 Multiple Unit Commuter Trains For 58 Million Euros (November 08, 2006)
Bombardier And Chinese Joint Venture Partners Win 257 Million Euro Order For MOVIA Metro Cars In Shanghai (November 06, 2006)
Bombardier Selected By French National Railways SNCF To Supply The Future Ile-de-France Commuter Train For 2.7 Billion Euros (October 25, 2006)
Bombardier Consortium Awarded Contract For Advanced Rapid Transit Cars In Kuala Lumpur, Malaysia (October 13, 2006)
Bombardier: Deutsche Bahn Orders 42 New Prize-Winning Double-Deckers For $73 Million US (October 09, 2006)
Bombardier Signs US $1,650 Million Contracts For Rapid Rail System In South Africa (September 28, 2006)

China's Piracy Crackdown

Posted by Daniel Workman

According to Joe McDonald of the Associated Press, Chinese piracy takes away up to US $50 billion per year in sales from legitimate international trade.

This past July, Beijing launched a 100-day crackdown on vendors who sell pirated goods. China's anti-piracy campaign was renewed on the eve of trade talks with U.S. Treasury Secretary Henry Paulson.

The current campaign targets producers and distributors of illegally copied movies, music, software and books. Furthermore, Beijing will severely punish the smuggling of equipment used to make pirated products. This includes CD- and DVD-burners used for criminal purposes.

If Beijing fails to contain its piracy problem, Washington has advised that China may face a formal complaint in the World Trade Organization. That process could result in trade sanctions and other penalties against the People's Republic.

World Trade Winners October 2006

Posted by Daniel Workman

Germany, the world's largest exporter, saw its exports surge 23% to US$23 billion - the highest since the reunification of East and West Germany in 1990.

According to MarketWatch, the U.S. trade deficit narrowed by 8.4% in October to $58.9 billion, the largest decrease in the deficit since December 2001. October's reported deficit was well below the $63.1-billion imbalance forecast by Wall Street economists.

American exports to its trade buddies rose to a new record in October, while imports fell by the largest amount in almost five years.

Despite the improvement, the U.S. trade deficit with China widened to a record $24.4 billion in October compared with $20.4 billion in the same month last year and $23.0 billion this past September.

U.S. Treasury Secretary Henry Paulson warned China in early December that the world was frustrated waiting for China to appreciate the Chinese yen and to remove trade constraints, measures that would make other countries' exports more competitive.

China has responded that its exchange rate is a matter of national sovereignty, but has agreed to respond positively to America at high-level discussions in China this week.

China's trade surplus in November 2006 was $22.9 billion, slightly lower than October's record $23.8 billion and more than twice the surplus for November 2005.

Starbucks Loyalty Card Goes Global

Posted by Daniel Workman

The 15 million loyalty cards sold during last year's holiday shopping season produced almost $170 million in revenues for Starbucks once they were redeemed. Those cards accounted for 12% of the company's North American revenues for the holiday quarter, surpassing management expectations.

Sales in North America excelled such that Starbucks launched its loyalty card in selected overseas markets.

Early last month Starbucks began offering its loyalty card in the United Kingdom. Customers bought so many cards that the company had to more than double the number of cards in the initial batch to keep up with demand.

Starbucks also made its card available in Japan, Germany, Greece, Australia and Thailand.

Although international sales statistics are not available, the Associated Press reports that Starbucks is pleased with how well its card is selling in overseas market. So much so that the American coffee giant plans to expand its loyalty card into other countries, although Starbucks isn't saying where or when.

If the 12% boost in North American revenues last year is any indication, Starbucks global sales should pick up respectably in the current holiday season and into the new year.

There are no reports on whether copycats are counterfeiting Starbucks loyalty card like has happened with other Starbucks' brand items. Wendy's, McDonald's and Burger King have all followed Starbucks' lead and are offering customers reloadable convenience cards.

Xmas Tree Exports

Posted by Daniel Workman

European Christmas trees are traditionally unsheared. North Americans prefer close-sheared trees with dense foliage but with comparatively less space on which to hold decorations.

According to the National Christmas Tree Association, each year almost 200,000 real Christmas trees are sold via the Internet or catalogue and are shipped mail-order in the U.S.

A typical retail Christmas tree is from 6 to 7 feet tall and takes about 7 years to grow. For each Christmas tree harvested, up to 3 seedlings are planted in its place during the following spring.

America has about 21,000 Christmas Tree growers, with over 100,000 full- or part-time employees. Oregon, North Carolina, Michigan, Pennsylvania, Wisconsin and Washington are the top Christmas-producing states. The U.S. has about 500,000 acres of Christmas trees, which supplies the daily oxygen needs of about 9 million people.

While real Christmas trees are renewable and recyclable, artificial trees contain non-biodegradable plastics and potentially toxic metals like lead. Some 85% of artificial trees sold in the U.S. comes from China, America's second-largest import trade buddy (after Canada).

Some consumers prefer the convenience of artificial trees, finding that they can be used for several years and are therefore less expensive than real trees. At the end of the Christmas season artificial trees can be disassembled and stored compactly.

Yet the U.S. has found great success in exporting natural Christmas trees notably to Japan and Mexico.

Japan imports Christmas trees grown principally from Pacific Northwest states as well as British Columbia, Canada. Most trees exported to Japan are from 2 to 3 feet tall, small enough to fit on a table.

America exports almost one million Christmas trees to Mexico annually. Mexico is America's largest export market, but Mexico also imposes stiff restrictions on tree exports. For example, Mexico requires that Christmas trees be "shook" before export to Mexico. This forces American exporters to pay for expensive machinery to shake the Christmas trees. Also frustrating is the time-consuming paperwork to satisfy the Mexican bureaucracy that trees are "shooked". Some U.S. Christmas tree producers are throwing up their hands and are instead focusing on domestic markets where free trade is attainable.

Top International Trade Articles

Posted by Daniel Workman

The list below shows the articles with the most page views in September with the original publication date in brackets. The number of page views for the month is also shown.

Top Ten International Trade Articles in September 2006

Top Ten Oil Countries (May 18, 2006) ... 252 page views
Starbucks Global Sales (August 29, 2006) ... 213 page views
Wal-Mart Finally Gets It (July 31, 2006) ... 194 page views
China's Top Trading Partners (June 26, 2006) ... 146 page views
Starbucks Sues Copycats (August 31, 2006) ... 96 page views
T-Shirt Sweatshops (September 11, 2006) ... 94 page views
Slot Machine Monster (August 21, 2006) ... 92 page views
Brazil's Trade Buddies (September 13, 2006) ... 79 page views
Top Ten 'Pop' Stats (June 5, 2006) ... 78 page views
Top Chinese Investment Picks (June 28, 2006) ... 76 page views

Some 1,600 Google searches have led a growing audience to our international trade site.

Yahoo Bets on NFL to Win Audience

Posted by Daniel Workman

Announced on September 8, Yahoo's global reach and promotional strength will help the NFL deliver football game broadcasts to millions of sports fans outside the U.S.

For the first time, fans in Asia, Europe, South America, Australia and Africa will be able to watch live NFL games on the Internet. A service called NFL Game Pass powered by Yahoo! Sportstv will enable foreign sports fans to see nearly every NFL game in its entirey for the full season. For more details see www.nfl.com/nflgamepass.

The new online subscription service costs US$24.99 per week or $249 for the full season. Each game is archived for viewing for up to 24 hours.

A leading global brand and the world's leading advertiser, Yahoo has an audience of more than 500 million visitors each month. Yahoo maintains 38 country-specific sites around the world.

Eight sites can be found in North America with separate ones for English and French in Canada, and Chinese and Spanish in the U.S. The Asia-Pacific region has sites in 14 countries, including highly populated nations like China, India and Indonesia. Asia also has an English language site. Fifteen European countries have their own Yahoo sites.

Analysts say that global online sports betting will accelerate should the audience for NFL games expand via the Web.

Rich As A BRIC

Posted by Daniel Workman

First let's define BRIC as an acronym for Brazil, Russia, India and China. With the exception of Russia, we have written in some detail about the fast growth of these countries.

In mid-September, Claymore Investments launched its Claymore BRIC Exchange Traded Fund (ETF) which trades on the Toronto Stock Exchange (TSX) under the ticker CBQ. The ETF is expected to start trading in the United States in October (EEB on NYSE).

The BRIC ETF is weighted 48% in Brazil, 33% in China, 14% in India with about 7% in Russia. The fund closely resembles the Bank of New York BRIC Select ADR Index.

Within the BRIC Fund, 31% is in energy stocks, 17% is in telecom, and 15% is in materials. The fund owns both common and preferred shares of Petroleo Brasileiro (PBR on NYSE) for a considerable 15.53% of BRIC ETF's total holdings. PBR's price recently moved down on news that Bolivia's oil fields may be nationalized. Watch how movement in PBR's stock price affects the unit price for the BRIC ETF.

According to Claymore, BRIC countries should grow at an annual rate of over 8% over the next 10 years which should outpace more developed nations like the United States, England and France. As well, the 8% growth also betters estimated growth rates for Latin America, Asia and Eastern Europe.

Although Suite101 does not give investment advice, I'd like to share some of my own personal investing.

Putting my international trade insights to work, I bought 100 shares of CBQ for $19.59 on September 11, 2006. A week later it was trading for $20.45. On June 5, 2007 CBQ closed at $29.76 up 52% in less than 9 months.

On June 4, 2007, Claymore has launched a Global Water Exchange Traded Fund.

AIDS Medicine for Poor Countries

Posted by Daniel Workman

Don't miss our article on how anti-HIV drugs have been elevated to a special status in international trade, thanks to the initiatives of the Clinton Foundation and such commercial entities as Gilead and Bristol-Myers Squibb.

Gilead Sciences aims to improve accessibility to AIDS drugs in underprivileged nations by:

offering anti-HIV medications at no-profit prices;
providing its medications for clinical studies designed to help determine the best treatment strategies for resource-limited settings; and
dedicating Gilead staff to support and mentor through treatment programs based on Gilead medicines like Truvada.

The 97 countries that benefit from the Gilead Access Program are:

Afghanistan, Algeria, Angola, Antigua and Barbuda

Bahamas, Bangladesh, Barbados, Belize, Benin, Bhutan, Bolivia, Botswana, Burkina Faso, Burundi

Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Côte d'Ivoire

Democratic Republic of Congo, Djibouti, Dominica, Dominican Republic

Egypt, Equatorial Guinea, Eritrea, Ethiopia

Gabon, Gambia, Ghana, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana

Haiti, Honduras

Indonesia, Jamaica

Kenya, Kiribati, Kyrgyzstan

Laos, Lesotho, Liberia, Libya

Madagascar, Malawi, Maldives, Mali, Mauritania, Mauritius, Moldova, Mongolia, Morocco, Mozambique, Myanmar

Namibia, Nepal, Nicaragua, Niger, Nigeria

Pakistan, Papua New Guinea

Republic of Congo, Rwanda

St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Samoa, São Tomé and Príncipe, Senegal, Seychelles, Sierra Leone, Solomon Islands, Somalia, South Africa, Sudan, Suriname, Swaziland, Syria

Tajikistan, Tanzania, Timor-Leste, Togo, Trinidad and Tobago, Tunisia, Tuvalu

Uganda, Uzbekistan

Vanuatu, Vietnam

Yemen, Zambia, Zimbabwe

Source: Gilead Access Program

Coke Launches Hot Brewed Drinks

Posted by Daniel Workman

Coke has named its new brand of premium coffee products as Far Coast.

Already the largest beverage supplier to the the restaurant industry, Coke will provide its trademarked expresso machines and brewing systems to clients in the entertainment and food services sectors including movie theatres.

Coke is targeting the growing cohort of well-heeled baby boomers. In early September 2006, the company introduced one new retail outlet in Toronto's upscale Yorkville area as part of a global test market.

As reported by the Globe and Mail, Coke says that it doesn't plan to open more retail stores nor does the company intend to compete with Starbucks or Tim Hortons.

We beg to differ. Coke will aggressively expand into the world hot beverage market if it proves to be profitable.

And profitable it is.

Market share for specialty coffee sales has increased some 15 percent annually for the past 10 years. Coffee is the number one beverage in Canada, with two-thirds of Canadians drinking coffee daily. In the U.S. soft drinks are still king, but coffee is a close second with 53% of Americans drinking coffee at least once per day.

Coca-Cola (COKE on NYSE) closed at US$58.38 on September 1, 2006.

International Trade Investments Zoom

Posted by Daniel Workman

Here's a list of investments with links to our original articles.

Exchange Traded Funds

iShares: FTSE/Xinhua China 25 Index (FXI on NYSE)

Price $65.50 on June 14/06

Price $78.38 on August 25/06 +19.7%

Power Shares Golden Dragon (PGJ on NYSE)

Price $14.20 on June 14/06

Price $15.63 on August 25/06 +10.1%

iShares: MSCI South Korea (EWY on NYSE)

Price $40 on June 14/06

Price $45.16 on August 25/06 +12.9%

For more details see Top Chinese Investment Tips

International Alcohol Stocks

Diageo (DEO on NYSE)

Price $65.25 on July 19/06

Price $71.89 on August 25/06 +10.2%

For more details see King of Alcoholic Beverages

Central European Distribution (CEDC on NASDAQ)

Price $23.40 on July 21/06

Price $22.65 on August 25/06 -3.2%

For more details see Polish Liquor Power

Constellation Brands (STZ on NYSE)

Price $24.40 on July 28/06

Price $26.26 on August 25/06 +7.6%

For more details see Wine Giant Still Thirsty

Note: Suite101 does not offer investment advice. Instead, we seek to educate and inform our readers by writing about the latest trends in world trade. Armed with these insights, you are in a much better position to make your own decisions. We encourage you to add your thoughts to our analysis by starting a discussion below.

AIDS Puts Human Face to Global Trade

Posted by Daniel Workman

This was my first stint as a project manager, so our staff really didn't know what we were in for. On Saturday August 12 we registered over 15,000 delegates. Lineups were huge. Our attendees were understandably impatient with waiting times in line for over 4 hours.

Some of our staff were doing registrations for the first time and broke down in tears. Some were so stressed that they left and simply never returned. We had one attendee in line faint; another went into labour. Tempers were short at times, and we had to close the doors at about 6 pm just to be able to keep up with the volume.

For those who stayed, perserverence paid off. I had the pleasure of guiding Mr. Roble Olhaye, Canada's ambassador to Djibouti (country in Northeast Africa, population 500,000) to his group presentation room. Similarly, I helped Aileen Carroll, Canada's former Minister for International Cooperation, moderate a session titled Learning from the Leadership of Young People and Positive Youth in the Global Response to HIV/AIDS.

While I was on Level 200 of the Metro Convention Centre I saw a lady in a wheelchair outside the entrance doors with her head in her hands. Security was not allowing her in the building. I went out and listened to her story. She was HIV positive and had travelled all the way from New Zealand to share her personal story speaking at a session, but security was blocking her from entering because her 12-year-old daughter didn't have a security badge. There was no way I could leave her in such pain after she had shown such courage in coming to Toronto to share her message. I had an extra security badge in my pocket which I put around the daughter's neck and gained entry. I then went to Guest Services and found out where the elevator was, and personally accompanied our New Zealand friends to the Speakers Centre on Level 300 of the North Building. I'll never forget the lady in the wheelchair's smile as I left her in the Speakers Centre; I could tell her spirits were uplifted.

Some of our other NASCO event staff had similar stories. Musa is a gentleman from Jordan. We had an HIV positive guest from the Middle East who could not speak a word of English and who had nowhere to stay in Toronto. Musa was the only person who could speak Arabic, and he took initiative to speak with the delegate. Musa explained the issue, and we were able to arrange that gentleman to stay at a care centre.

On Wednesday, Bill Clinton arrived through a secret passageway in the South Building where our staff were handing out delegate bags. Mr. Clinton took it upon himself to shake hands with each and every staff behind the counter, even though he had a busy schedule of multiple speaking engagements with the fight against AIDS. Everyone who met Bill was inspired; for some it was a life-changing experience.

So what does an HIV-AIDS conference have to do with International Trade? Plenty. On one level it's about getting affordable medication to AIDS survivors in places like Africa, the world's poorest continent.

But more than that, the HIV-AIDS conference shows us how people from all countries across the world can work together to rise above the trials and tribulations of a killer pandemic to bring to the table the best each person has to offer. I may not be as bright or as articulate as Mr. Bill Clinton or Mr. Bill Gates. But I now know that I share something with these great leaders: I'm part of the international human spirit which can overcome any barrier to defeat AIDS.

It may be a cliche, but if there's a will there's a way.

Dead Softwood

Posted by Daniel Workman

On July 4, 2006 we published an article A Softwood Shaft that explained that the proposed timber trade deal was unacceptable to Canadian business interests. Two days later we reinforced that position with another article Canada's Trade Follies.

Emerson issued the following statement on July 13:

"We should be very clear this agreement will go to Parliament... This agreement will have to be decided on by Parliament."

The Trade Minister overlooked that fact that the July 1 timber settlement was conditional on 95% of the Canadian lumber companies approving the deal before Parliament could enact the deal.

Their signatures would mean foregoing US$1-billion in duties that stronger negotiation would return to these Canadian companies. Also the Canadian timber firms would have to drop all legal actions even though many prior WTO decisions were going Canada's way. Not exactly good business, regardless of Emerson's political spin.

And Emerson seems to finally get it. He issued a statement on July 31 that stated in part: "If we do not have sufficient buy-infrom industry there really isn't an agreement to bring before Parliament. We have to ... get the agreement supported by the appropriate number of players in the industry. Otherwise, you're dead before arrival."

Forest companies like Canfor says that much work needs to be done on the agreement before anything can be salvaged. Two powerful B.C. lumberers - West Fraser Timber Co. Ltd. and International Forest Products Ltd. - flatly rejected the proposed deal.

We were ahead of the curve on this issue, as you'll read in our July 6 blog Softwood Talk, Talk, Talk.

Now let's change that to Softwood Deal Dead, Dead, Dead.

Behind the Scenes of Wal-Mart's Success

Posted by Daniel Workman

Our topic Wal-Mart Finally Gets It paints a fairly rosy picture of Wal-Mart's recent success in international trade from a business perspective. But there is a darker side to this coin.

Wal-Mart is shifting its manufacturing to foreign countries particularly in Asia. The reason for this can be summed up in two words: cheap labour.

One Wal-Mart factory in Southern China produces toys including battery-operated trucks for a paltry hourly wage of 33 cents. Factory workers are crowded into hot dormitories and work for up to 13 hours a day seven days a week. During the August peak production period, factory temperatures swelter above 90 degrees with 93 percent humidity. The pace is exhausting, since a worker has to paint one truck ever 14 seconds. And should an employee become ill from inhaling the paint fumes, it is the worker who is responsible for paying any medical bills.

In fact workers are denied health insurance, maternity leave, paid holiday leave, marital leave or leave to bury family members.

And factory inspections of Chinese sweatshops are not working. Factory workers are told exactly what to say to inspectors. Leading labour researchers in China are demanding open investigations by independent authorities like China Labor Watch. Also required is more thorough worker training so that laborers know their rights and can speak their minds.

It's gotten to a point where WalMart hides the location of its factories in China from the public. But out-of-sight is not-out-of-mind. For a more detailed discussion of Wal-Mart pros and cons, visit wakeupwalmart.com.

This just in from Beijing. On Saturday July 29, 2006, employees of Wal-Mart set up their first trade union in China. Twenty-five employees of a Wal-Mart store in Quanzhou in the southeastern province of Fujian, established the union. The union is a branch of the state-controlled All-China Federation of Trade Unions.

China's Wine Treasure Pirated

Posted by Daniel Workman

Not only had four other websites published my article without permission, Google's search engine now ranks the copycat articles higher than Suite101's original Web page.

Here's a link to the original Wine Treasure article on suite101.com.

The topic originated from insightful discussions that I had with a Chinese friend who runs Ying Ying Soy Foods which sells a unique line of gourmet tofu at the lower level of the south building in Toronto's historic St. Lawrence market.

Direct from mainland China, the top-ranked copycat is China Wines Information Website. Much of the site is in Chinese language symbols, so I can't be sure of the copycat's mission statement or editorial policies. China Wines does mention www.suite101.com and my name as author. But that certainly doesn't bestow the Chinese website with the unconditional right to publish our articles. Suite101's Terms & Policies page clearly articulates that our articles are protected by copyright, and that reproduction requires written prior permission. To add insult to injury, China Wines is a for-profit commercial website. Although most of the text on their site is written in Chinese symbols, you can clearly see photos of wine bottles with corresponding prices underneath on their home page.

In second place we have All Asia a blogger that adds some fancy graphics to a counterfeit reproduction of our good old China's Wine Treasure article. This time, instead of naming me as the author, one Li Fang Wei takes credit as the article's "poster" (or is that "imposter"?). The fact that Suite101.com is listed as a source makes a mockery of copyrighted material since we are not a "source" that can be copied and pasted on a whim. I was able to post a comment on the copycat site, specifying that the original article is on Suite101 and also mentioning several links to other articles that may be of interest to the Asian audience.

The third-ranked copycat is China Food & Beverage Online, a buy-and-sell site in China. Again, while I'm flattered by being published by such a large and prestigious site, neither Suite101 nor I received any compensation from them for our work.

The fourth site was Wine Life Today, wine news for wine lovers by wine lovers. I guess they loved the China's Wine Treasure article, because it was posted in its entirety and had received several "Toast" awards from viewers. When I posted a comment explaining that Suite101 owned the original story, the site administrators immediately took down the counterfeit copies of the story. The site now directly links to the original article at Suite101, certainly a welcome change from the other copycats. By the way, our editor-in-chief is investigating and has the legal tools to enforce our copyright.

Finally, coming in at number 5 on Google search engine we have the original China's Wine Treasure article at Suite101.

On reflection, it's supremely ironic that I subsequently wrote an article entitled Copycats Hurt Trade. Hopefully this won't turn out to be the first chapter in my autobiography as a Web writer. But my article does discuss how difficult it is to impose copyrights and trademarks across borders generally and into China specifically, which may be why we're finding the counterfeit articles on China's Wine Treasure. That doesn't mean that the copycats are right, however.

It's very unfair to both Suite101 and in particular our fellow Web writers who are paid based on page views on the Suite101 site. Who knows how many page views I've lost to some of these Chinese sites that have posted the article without permission? I do know that mainland China represents a huge potential market for our articles - one to which we should have fair and unfettered access. After all, we did all that hard work.

Or, as our fearless editor-in-chief at Suite101 would say, "Sheesh!"

Who Trades with North Korea?

Posted by Daniel Workman

Ready for their morning runs, trucks line up on either side of a narrow "friendship bridge" across the Yalu River between North Korea and China. Each day more than 200 trucks cross into Korea from China, delivering 70 percent of the North Korea's imports.

Chinese trucks transport electrical equipment, stainless steel goods, and new appliances into North Korea. In contrast, the North uses open-bed trucks to export scrap iron, crushed rock, sacks of mineral powder, and coal to China.

Another country that is committed to a stable North Korea is South Korea. That's because a collapse of North Korea could force an exodus of refugees and a potential security crisis. This might bring the America military to the borders of China and South Korea.

Kim Jong Il's diplomatic relations have also improved with Russia, which has considerable oil reserves. North Korea's leader has already visited twice Russia's Vladimir Putin who calls Jong Il "man I can deal with." Recently Moscow discussed a gas pipeline with the Democratic People's Republic of Korea (the North's official name).

The North has even improved its relations with regional states like nearby Mongolia.

As one Russian diplomat who lives in the North's capital city of Pyongyang observed, "The amount of goods coming into the North doubled last year." With international trade growing at such a robust rate, the collapse of North Korea does not appear to be imminent. And certainly not with trade partners that include China, South Korea and Russia.

Canuck World Exports and Imports

Posted by Daniel Workman

To help give further perspective on Canada's current trade situation, it's useful to look at some high-level categories for Canada's exports and imports.

The list below shows Canadian exports in 2005 (in C$ billions):

Machinery and equipment $94.6 (22% of total exports)
Automotive products $88.2 (20.5%)
Energy products $86.9 (20.2%)
Industrial goods and materials $84.6 (19.7%)
Forestry products $36.6 (8.5%)
Agricultural and fishing products $30.2 (7%)
Other consumer goods $8.3 (1.9%)

The list below shows Canadian imports in 2005 (in C$ billions):

Machinery and equipment $110.9 (29.5% of total exports)
Industrial goods and materials $78.6 (20.9%)
Automotive products $78.4 (20.8%)
Other consumer goods $49.5 (13.2%)
Energy products $33.7 (9%)
Agricultural and fishing products $22 (5.8%)
Forestry products $3.1 (0.8%)

As the above numbers show, Canada runs a positive trade balance for the following product categories: energy (+$53.2 billion), forestry (+$33.5b), agricultural and fishing (+$8.2b), automotive products (+$9.8b) and industrial goods and materials (+$6b).

Source: Statistics Canada

Softwood Talk, Talk, Talk

Posted by Daniel Workman

On Larry King Live on the evening of his birthday, president George Bush stressed that "When history looks back, I'd rather be judged as solving problems and being correct, rather than being popular."

Canadian Prime Minister Stephen Harper, who met with Bush on George's birthday, appears to have a different agenda. Harper and his supporting cast prefer to avoid addressing difficult challenges such as softwood exports. Their highest priority is to be politically correct.

Instead of taking a firmer position on Canadian softwood lumber exports to America, Harper took softwood off the table so that he and president Bush could be free to discuss Ottawa's concerns about looming border restrictions to be placed on travelers entering the U.S. from Canada and a range of other issues from the environment to the upcoming G-8 summit in Moscow. Both leaders briefly expressed relief at the recently signed softwood deal that appears to end an irritant to trade relations between the two countries.

But it's not over. As we point out in our article Canada's Trade Follies, many Canadian provinces and lumber companies are flat-out rejecting the deal.

Sure Canada's Trade Minister David Emerson would beg to differ.

Emerson, who initialed the softwood agreement on July 1, points to the fact that Canada's largest lumber exporter (Canfor Corp) announced that it can live with the new softwood accord.

However, Vancouver-based Canfor Corp carefully chose its words; "can live with" does not translate into a Canadian trade victory. It's somewhat like a used-car salesperson quipping "This baby can really get you to where you want to go!"

Besides, David Emerson used to be the Chief Executive Officer of Canfor and no doubt still exerts significant influence on what the forestry giant has to say.

Being politically correct often does not translate to being correct.

Unfortunately, world trade relations are complex and it sometimes takes years for the full damages of a trade deal to be assessed.

And just like when you buy that "lemon" of a vehicle, the used-car spiels won't mean much when Canadians have to pay the price for a poorly negotiated agreement that will probably lower profits and therefore cost Canadian jobs.

Happy Canada Day (for Traders)

Posted by Daniel Workman

Compared with China's surplus of US$101 billion, and when contrasted against the U.S. deficit of US$792 billion in 2005, Canada's trade picture may resemble the Goldilock's economy: not too hot, not too cold - just right.

The Organization for Economic Co-operation and Development agrees that Canada's performance has been great, but that the Canadian government needs to spur productivity and find the right policies to deal with an aging population.

In particular, kudos to Alberta which finished 2005 with a record Cdn$8.7-billion surplus thanks to soaring oil and natural gas prices.

What happens why the cyclical resource sectors turns downward? We'll cross that bridge when we get there.

For now Canadians should be happy and celebrate Canada Day with a smile.

Cheers!

Canada Loves US Trade

Posted by Daniel Workman

Let me come right out and say that while I don't appreciate some overly aggressive and at times blustering American personalities, I fully support America's entrepreneurial spirit.

Fact is I am a descendant from a Montreal-area line of Workmans who led a strong annexation movement in the late 1880s calling for Canada to join the U.S.

Like most Canadians, I do appreciate the economic advantages and the security gained from living in the shadow of America's powerful military-industrial complex.

In my career as a technical writer and as an international convention specialist, I have been personally treated first-class by my American co-workers and clients.

Sure Canadians have beefs with Americans - like the softwood lumber trade squabble - just as Americans have their beefs with us. We do have a right to clearly articulate our positions, which is what makes a vehicle like suite101.com so great.

Tell you what: I promise to deliver some facts on Canada-US trade in upcoming articles so we can get perspective. What I have seen of the facts so far show me that the US is in sideways mode, with a new world trade superpower China emerging.

Enough of this rant.

Let's put aside our family feuds and start thinking logically about how Canada and the U.S. can work together as a team to profit from a new world order with a future increasingly tilted towards Asia.

China's Double Whammy Is Good

Posted by Daniel Workman

Similarly fewer Chinese yuan will flow out of China to buy U.S. imports. Net result is a fattening bottom-line surplus in Chinese-to-the-world trade.

In addition to currency gains, China's robust economy will gain further momentum from the increased demand for its exports.

Currency gains plus an accelerating economy gives China a winning hand.

For some potentional China-related stock tips, you may want to peruse Top Chinese Investment Tips.

For more insights on China's trade position, please see China Trade Dwarfs US - Stats, China Trade Dwarfs US - Growth and China's Top Trading Partners.

China Drives World Trade

Posted by Daniel Workman

In 2005 China's auto industry slows to a 10% growth rate and is considered a disappointment. For the rest of the world, 10% would be considered an accomplishment.

Fact is that Chinese demand for vehicles has risen by double and triple digits since the late 1990s. American, European and Japanese automakers have invested tens of billions of dollars in China as a way to ride the boom in Chinese auto sales.

In short, China is where the money is, baby. The 10% slowdown is just a blip in the tidal wave of Chinese auto demand.

And that's why we wanted to focus on China's automotive exports and imports. To share in a piece of this Chinese pie, other countries are launching branch plants and joint ventures within China.

Oil Shocks Affect World Trade

Posted by Daniel Workman

It should be no wonder that many countries are agressively looking for alternative fuels.

For example, Norwegian oil company Norsk Hydro ASA and paper maker Norske Skog ASA are exploring ways to produce biodiesel from wood. Biodiesel can already be made mainly from vegetable oil.

In our article Moonshine Fuel Replaces Oil we learn about one major South American country that has successfully introduced an alternative to gasoline.

But we shouldn't let our idealistic quest for alternative fuels get ahead of what's real now that oil prices have skyrocketed.

This weekend I went on a cruise of Toronto's harbourfront. The tour guide mentioned that the CN Tower, the world's tallest building at 1815.5 feet, sometimes sways 3 feet in either direction in a storm. Also, the tower is hit by lightning hundreds of times each year. However, that doesn't mean that the CN Tower will topple over any time soon. Most of the concrete in the tower is below ground level, which provides substantial support for the vast majority of stresses that hit above ground.

The same idea applies for replacing oil. Too many countries have invested too much in their oil industries for us to expect an overnight switch to more environmentally friendly fuels.

Think of car manufacturers whose vehicles are designed to run principally on gas. And the manufacturing processes that are fuelled by oil products. How expensive would it be to switch to an alternative fuel source? Probably exponentially expensive not to mention disruptive to the world economy.

The bottom-line on oil is that it does not by itself cause recessions. Rather it is the monetary policies that accompany oil price shocks that lead to substantial slowdowns in economic activity.

Don't just keep your eye on the gas gauge when evaluating the effects of oil and gas prices. Instead pay close attention to the rate and frequency of accompanying interest rate increases that can and probably will cause a global recession starting later this year.

And don't forget the winners, specifically the oil-exporting countries with deep reserves that we discussed in our article Top Ten Oil Countries.

Oil Imports Fuel U.S. Deficit

Posted by Daniel Workman

Before we start putting on our Chicken Little suits, let's be clear: oil is not going to run out. But the era of cheap oil is probably over.

Canada's tar sands and oil shale do offer the world a possible new source for world oil exports. And what's being discussed in the U.S. House of Representatives is the need for alternative sources of energy.

Until replenishments or a replacement for oil is found, we need to carefully evaluate the fact that the U.S. relies heavily on oil reserves from the Middle East, where the U.S. is not popular.

So take a look at the facts in the article Top Ten Oil Countries. And think about the potential impact on the world economy.

iPods, DVDs and China Wine

Posted by Daniel Workman

One of the most energizing aspects of researching international trade articles is when we realize that newspapers do not tell the full story. That's up to us.

Take iPods. Sure they get a lot of press. But the fact is that iTunes represent only 7% of music industry sales. Besides iPod users download only one song at a time, and buy albums on CD.

Now look at Internet movies. Do you think that people will download scenes from movies? And with more and more high-definition TVs being sold, will Internet movies replace DVDs?

Traditionally wine has had minimal sales in China, seen as "soda pop" or "fruit juices" by many hard-drinking Chinese who prefer beer and liquor especially in eastern China near Russia. With the growing wealthy class in Chinese cities, is there an opportunity to export top-end wines into China?

Notice how asking the right questions often leads to superior answers. So, do you have any questions?

Hmm... I Didn't Know That!

Posted by Daniel Workman

When I read that bird flu could cost the world economy up to US$800 billion per year I was shocked. When I read that chicken is the most consumed meat in the U.S. the threat of avarian flu really got me scared.

Then, I relaxed.

Hadn't we survived SARS? Sure SARS had a serious impact on the tourist and hospitality industries notably here in Toronto. But we recovered.

And yes, mad cow disease cost Western Canadian farmers until our U.S. neighbours agreed to lift the ban on Canadian beef.

I remembered from an Anthony Robbins tape the question "Isn't your greatest challenge or disappointment an opportunity to improve or excel in the face of adversity?"

In that light, International Trade articles will share insights on competitive advantages and opportunities. We'll start with bird flu, then look at whether Internet movies can eliminate DVDs.

We'll also write about the wine industry in China. Had any good Chinese wine lately?

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