E-letter: Confidential? You bet.

Do you know anybody that would like to become an editor? Coverings is looking for a four-month intern. Details follow this month’s commentary.  

In March of 2018, U.S. President Trump voiced concerns to PM Trudeau that China might use its Canadian connections to transship steel and avoid U.S. tariffs.

That’s interesting, if you think about it. For one thing, the U.S. concerns about transshipment did not start or end with Canada. Vietnam, and other countries were also named. But if other countries were named, might there not also be other products? We saw recently that the U.S. American Kitchen Cabinet Alliance was successful in getting tariffs applied to Chinese cabinet imports to the States, so the answer is yes. There is more to the $6 billion monthly tariffs than steel.

Kerry Knudsen

The way that might work is that a Chinese company or associate working in Canada could upgrade their order into Canada, and simply add the surplus to an export order to the States. That would be simple and direct, but it would also be vulnerable to any cursory inspection by U.S. Customs, so it stands to reason there may also be more circuitous routes.

I’m not about to sit here and provide a blueprint for smuggling, but it raises a lot of interesting points. For one, if the U.S. suspects shipments from Canada are hiding Chinese goods, then the cross-border shipping issue gets slower and more expensive for all of us. We’ll count that as a negative.

Another thing that would happen is that the cash flow of the offending companies would increase. That’s why they do it. So on the one hand, your competitors get a competitive advantage by slowing down your shipments, and other other they get an advantage by increased cash flow, so they get you on both ends. A double negative.

Another, more subtle negative is the general degradation of respect for the law. As we have written before, there is a growing tendency in Canada to deal on a cash-only basis. In my personal experience, this is particularly evident in the service sector, since service is not carried in inventory, but in sophisticated, multi-national supply chains, plenty of information can get misfiled.

So what happens is a vendor collects in cash, fails to record the transaction and pockets any revenues due to the government in HST, income taxes and an assortment of fees. We all know that drill. However, those taxes are actually used, at least in part, to supply services and infrastructure to the country. We at W.I. Media pay our taxes – too much it often seems – and for it we get internet infrastructure, roads, a legal system, water, hydro, gasoline and natural gas, and so on. We get it because we pay for it. I totally understand much of what we are assessed goes for corrupt purposes, and I have nothing good to say about that. For the purposes of this discussion, it simply “is.”

On the other hand, corruption begets corruption, and every corrupt governmental official, company agent or individual necessarily needs somebody to be corrupt with. The corrupt roofer can’t collect in cash if I don’t pay in cash. So corrupt individuals look for corrupt or corruptible individuals, etc.

Corruption is nothing new to Canada. We made a pretty penny from U.S. officials during Prohibition, and we still have influence-peddlers within our organized crime syndicates and, in my opinion, our elected and appointed officials. If Adscam has faded from your memory, more the worse for you.

Back to the point, if China decides to use Canada to transship products to the States and beat the tariffs, we need to wonder whether we should do the easy thing and look the other way, or whether we should step up and report it.

As a media organization, W.I. Media, this magazine’s parent company, can offer anonymity to any source deemed in need of anonymity to get the truth out. We can laugh all day about truth and the mainstream media, but the fact is that we are interested in knowing more about transshipments and illegal foreign competition in Canada. If you have a story to tell, call me directly and tell me you want to make an anonymous report. I can make it stick.  

About that internship: W.I. Media is participating in the Magazines Canada internship program, and we are looking for a candidate to learn the business of trade magazines done right. The successful candidate will serve a four-month internship beginning in October, and can be a mature person from inside our industry. The position is full-time, offers a home-office/flex-hour protocol and pays $14 per hour. Candidates must be able to meet once per week in the western GTA, and daily or oftener by Skype or Facetime. Tasks will include writing, proofing and managing new product releases, news, features, departments and web material. The successful candidate will attend at least one trade show and learn basics of sales, circulation, editorial and design. Interested prospects should send me a resume and cover letter, along with writing samples, if available. Deadline is October 8.

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  1. I love the larger issue of what you have addressed beyond the trans shipments to the USA. I have a huge problem with this new Canadian society that is being co oped by people who use cheating to get ahead in life. We have always had it but is being magnified by some new immigrants bringing their cheating ways adding fuel. Immigration in my books is good, stopping the cheating is better.

    Further to your article I import from China and have been paying tariffs (to help protect Canadian businesses somewhat) for the past 15 years joyfully contributing to the system our tariffs and taxes. For the past year I have been harrassed by a Customs Recovery firm who has found a loophole in the system in partnership with one of the larger lowball importers to recover all our tax. A quick calculation say I could get back like all the other clients our contributions to Canada. I could take the $100,000 that I have contributed over the last couple of years and put it my pocket and go traveling. I have said no this is immoral as the tarrif is there to make some semblance of protecting Canadian businesses in our industry and our contribution goes to pay for healthcare , schools etc. The more I explain why I want to support Canada the more the rep wants to break me down. How many people are left that strive for integrity over every last penny in our pockets?

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