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An Opportunity to Revise NAFTA for the 21st Century

Posted By Stephen Cryne, November 25, 2016

During the 2008 presidential campaign President Obama had this to say about the North American Free Trade Agreement (NAFTA), "NAFTA's shortcomings were evident when signed and we must now amend the agreement to fix them." During President Obama’s term in office there have been some modest improvements, under the Beyond The Border Action Plan, to improve the flow of goods and people between Canada and the U.S.

 

Fast forward to the 2016 presidential campaign and (now President Elect) Donald Trump said this about NAFTA “We lose with Canada --- big-league. Tremendous, tremendous trade deficits with Canada. This is the worst agreement ever signed.” 

 

What can be expected going forward? Let’s look at the huge importance of trade between Canada and the U.S. Given the size of the Canadian market, a free trade agreement is more important to Canada than the U.S., but nevertheless it is a significant amount of trade, and it’s especially important to U.S. states in the Great Lakes region and southwest.   

 

Every day over $2 billion in trade and services pass between our two countries. The combined annual trade and investment amounts to almost one and a half trillion dollars. From an employment perspective, U.S. exports to Canada support some 8 million U.S. jobs, while about two and half million Canadian jobs (14% of the workforce) are dependent on Canadian exports to the U.S. Canada is the United States’ largest customer, and over 400,000 people cross the border every day.

 

In Washington State for example, goods sold to Canada amount to over $23 billion per year generating 244,000 jobs. In the state of Michigan 241,000 jobs are dependent on $75 billion worth of annual trade with Canada. In the State of New York, trade with Canada is almost $34 billion per year and creates 596,000 jobs.  (Mr. Trump singled out how bad NAFTA has been for New York State when he said, “New York State has been horribly, horribly hurt by NAFTA.”)

 

The movement of employees between our two countries, is vitally important in supporting that trade in goods and services. As an integrated economy we do more than make and sell things to each other; now, our companies increasingly innovate and make things together.

 

The NAFTA includes provisions covering labour mobility. The Trade NAFTA (TN) visa is designed to facilitate temporary entry of workers on a reciprocal basis. The TN provision is guided by a list of professional occupations to work in Canada, the U.S or Mexico.

 

One significant drawback of the TN list is that it’s over 20 years old. A lot has happened in that time that the list has not kept up with. New occupations have emerged, particularly in IT, finance, healthcare and many other industries. Only two professions have been added to the list since its inception.

 

This disconnect with the modern labour market hurts productivity. It creates inconsistency, delays and unpredictability for many businesses that need to mobilize employees between the two countries. In a survey we conducted of Canadian and U.S. businesses in 2013, the resounding message was that the TN visa list is out of step with existing and emerging occupations.

This is in contrast to the more contemporary approach Canada is taking on mobility provisions in agreements with its other trading partners, such as the Canada European Comprehensive Economic Trade Agreement (CETA). While CETA excludes key services in health care, public education and other social services, the temporary entry provisions will make it easier for highly skilled professionals and businesspeople, such as engineers and senior managers, to work in the EU. CETA’s temporary-entry provisions will expand on existing WTO access by setting a framework to facilitate temporary travel or relocation for selected categories of business persons, including short-term business visitors, investors, intra-company transferees, and professionals and technologists.

 

A further advantage of CETA, in comparison to NAFTA, is the inclusion of a framework for the mutual recognition of credentials. When regulatory bodies in two jurisdictions agree that the professional qualifications in each other’s jurisdictions are satisfactory, they can sign a mutual recognition agreement that allows professionals trained and qualified in one jurisdiction to provide services in the other.

 

Would it not make sense to have such arrangements in place within the North American trade pact?

 

Political issues aside, the economic benefits of NAFTA to Canada and the U.S are significant. Dismantling the agreement will exact a high price on business and affect the livelihood of over 10 million workers and their families in Canada and the U.S. alone.

 

Is NAFTA the worst trade deal ever signed? Far from it…but it sure could use a major makeover to the TN visa list to increase productivity and the economic benefits that go with it.

 

Stephen Cryne is the President and CEO of the Canadian Employee Relocation Council and is located in Toronto.

 

 

 

 

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House of Commons Standing Committee Releases Recommendations for Revamping TFWP

Posted By Stephen Cryne, October 27, 2016

On September 19, the House of Commons Standing Committee, studying Canada’s Temporary Foreign Worker Program (TFWP) released its report containing 21 recommendations for revamping the TFWP.

A key recommendation in the report is to establish a Trusted Employer Program for companies that access the program. CERC has been a long-time proponent of a program that reduces red tape and recognizes the efforts of accredited employers that need to access the program for in demand skills, and this was 1 of 15 recommendations we provided to the Standing Committee.

While much of the report focused on low skilled worker issues, and cited cases of abuse of workers by employers…which was to be expected since the committee allowed only handful of business groups to appear before it, there were some positive recommendations that would improve the program.

A further shortcoming in the Committee’s report is the lack of focus on the need to develop a high skilled stream for temporary in demand talent. These are the very specialized knowledge workers and management executives that are in many instances holding back business growth. One example of that are the recent comments from Canadian clothier Lululemon, which is warning Ottawa that it could move its headquarters out of Canada because of the bureaucratic red tape surrounding the program.

The government has 120 days to respond to the committee’s report. 

 

Read More

 

Read CERC recommendations  

Tags:  CERC  express entry  immigration  Labour Market Impact Assessment  Temporary Foreign Workers  TPP  Trusted Employer Program 

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When bad Things Happen: It pays to be prepared in any location

Posted By Stephen Cryne, November 20, 2015

With the recent terrorist attacks around the world I thought our members and stakeholders would find this article of value. Although written in 2009, the article provides good reminders of the strategies that organizations should have in place in order to protect the safety of employees and their families while on international assignments.  And, as the attacks in Paris have once again proven such events are not limited to remote locations and unsafe third world countries.

 

Organizations will be well served to review their safety and emergency evacuation policies regardless of their location.

 

Read Article

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The Liberal Government’s New Plan for Canadian Immigration and Economic Opportunity

Posted By Stephen Cryne, President & CEO, CERC, October 20, 2015

On the morning after the federal election we take a closer look at the Liberal Government’s platform for immigration.  In a background paper published on September 25, 2015, the Liberal party outlined its priorities for reforming Canada’s immigration system.

 

From a business perspective, I am pleased to read that the platform includes a recognition that Canada’s future success is largely driven by attracting talented people from around the world, and that “with Canada’s aging population, having a robust, effective, and efficient immigration system is critical to our long-term economic growth.”


Central to the new government’s platform is a commitment to compassion and the creation of economic opportunity within the immigration system. This includes expansion of current refugee quotas from Syria and Iraq and making family reunification one of the core immigration priorities, including the doubling of budgets for family class processing.

 

For business, the paper takes a swipe at the temporary foreign worker program – and the levels of temporary workers in Canada. No doubt this will continue to be a hot issue in the coming months. Business will need to continue to press the case for more open access to highly skilled workers through the international mobility program, intra-company transfers and trade agreements.

 

Some positive measures for business in the new government’s immigration agenda include:

 

·         Providing greater access to applicants with Canadian siblings, by granting additional points under the Express Entry system.

 

·         A commitment to conduct a review of the Express Entry program, ensuring that processing times are efficient.

 

·         Restoring the maximum age for dependents to 22 instead of 19.

 

·         Granting immediate permanent residency to new spouses entering Canada, rather than imposing a two-year conditional status.

 

·         A commitment to restore the residency time credit for foreign students and other temporary residents applying to become Canadian citizens.

 

·         A commitment to make changes to the Canadian Experience Class to reduce the barriers to immigration that have been imposed on international students.

 

·         Reverse the roadblocks in the immigration system that have created unnecessary inconveniences and costs for Canadians and Canadian businesses.

 

CERC is developing a detailed paper for improving Canada’s economic immigration program that will be presented to the newly appointed Minister of Citizenship and Immigration in the very near future.

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TPP Update

Posted By Stephen Cryne, October 5, 2015

In an update to the post on TPP below, I have learned from a senior Canadian government official today that Canada has secured expanded labour mobility access to new markets, and successfully negotiated in the TPP coverage for Professionals and Technicians which go beyond Canada`s existing Free Trade Agreements with Chile, Peru and Mexico. For example, the TPP agreement goes beyond the NAFTA by expanding the mobility of business persons between Canada and Mexico. This includes coverage of after-lease services in the Business Visitors category and expanded coverage for Professionals and some Technicians at the NOC B level.  Mexico also took commitments for spouses of ICT, Investors and Professionals.

 

US government commitments on labour mobility do not appear to include any provisions for labour mobility

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/october/summary-trans-pacific-partnership

 

CERC has been a strong supporter of open mobility in trade agreements and we look forward to seeing the full text of the final agreement.

Tags:  TPP 

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Trans-Pacific Partnership Agreement

Posted By Stephen Cryne, October 5, 2015

We are pleased to see a Trans Pacific Partnership has been reached today following exhaustive rounds of negotiations. We congratulate Canada’s negotiating team in reaching this landmark agreement. The   TPP will give Canadian companies preferential access to an economic zone covering 800 million people and 40% of the global economy.

 

With the growth in international trade, having boots on the ground in international markets is vitally important to success.  The TPP includes important provisions for the temporary entry of business travelers, making it much easier for Canadian companies to get their employees into foreign countries.

 

Highlights include:

 

• Commitments from Australia, Brunei, Malaysia and New Zealand for business visitors providing after-sales services, as well as new commitments from Chile and Mexico to extend coverage for business visitors providing after-lease services, which helps Canadian companies offer installation and maintenance services for products sold or leased in these markets.


•Improves commitments for intra-company transferees from Australia, Chile, Japan, Malaysia, New Zealand, and Vietnam, which will further support Canadian investors in these markets.


•Provides new commitments from Brunei, Japan, Singapore and Vietnam for investors, which will help Canadian investors to establish a commercial presence in these markets.


•Provides new commitments for professionals and technicians covering a wider range of occupations from most TPP countries.These include:

 

·         improved access to Australia and Chile through the removal of existing economic needs tests; and

·         new commitments from Japan, Malaysia, Mexico and Peru to not impose economic needs tests or numerical limitations on professionals.


•Provides new commitments from Australia, Chile, Japan, Malaysia and Mexico to extend temporary entry privileges, as well as the right to work, for the spouses of certain covered Canadian business persons. It also provides new entry commitments from Peru for the spouses of certain covered Canadian business persons.


·         These commitments recognize the reliance of many Canadian households on two incomes and facilitate the relocation of business persons to these markets.


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What is the Current State of the US Housing Market?

Posted By Administration, July 20, 2015

The current housing market in the US is experiencing one of its strongest years in many. The housing market is very positive in almost all markets, with a shortage of inventory in many metropolitan areas. This is leading to bidding wars and price appreciation, which effects both buyers and renters. First time home buyers are starting to come back into the market, and signs are pointing to the Millennial becoming a strong component of that first time home buying segment. New home sales are also the strongest they have been since 2008 and are up 19.5% over 2014 YTD.

 

Join us in September for the CERC Conference and get an update on this fast changing market, and the US economy as a whole and learn how the US housing market may impact your mobility program.

 

 

Pandra Richie, SCRP, SGMS-T | President

Long & Foster® Corporate Real Estate Services

 

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Expatriate Housing

Posted By Administrator, July 20, 2015

After taxes, housing costs are typically the largest element of the cost of expatriate assignments. Establishing an appropriate housing budget for the expatriate and family to be able to rent suitable accommodation at the assignment location can however become a highly emotional issue if not properly managed.


One of the challenges in managing expatriate housing costs is the large number of individuals that can become involved in decision making. The different players can include global mobility managers, relocation firm employees, local management at the host location, and last but not least the expatriate’s spouse and children, all of whom can have different agendas. Unfortunately, expatriates very often have unrealistic housing expectations in terms of trying to duplicate their housing standard in the assignment location. For example, if they have a four bedroom home with an acre of land in their home country, they are not going to be able to find or possibly afford that type of housing in cities such as Hong Kong, Tokyo, as well as many other metropolitan areas.  It is critical that company management and the relocation firms that they use emphasize in advance to expatriates and their families the need to be able to adapt to the type of homes or apartments likely to be available at the host location.


Establishing appropriate housing rental budgets for each assignment location in advance is definitely preferable to dealing with the all too common situations where expatriates and spouses are allowed to go house hunting with little or no supervision and find a potential dream house or apartment at an outrageous cost.  As a result, management is forced to either to swallow the cost or deal with an already disgruntled expatriate and spouse. It is far preferable to invest the time in proactively researching rental costs for each location and establishing rental guidelines for different organization levels and family sizes.  Company guidelines vary, but tiering allowances for 3 or 4 organization levels and 3 or 4 different family sizes are fairly typical. In addition to providing regularly updated expatriate housing data on assignment locations, consulting firms such as Mercer can develop customized housing allowance guidelines to support company budgets and employee demographics.


Availability of suitable rental properties for expatriates can fluctuate significantly in many locations, as well as costs, so it is critical that companies make sure that their housing guidelines are updated regularly.  Even so, requests for exceptions will occur. Mercer’s International Assignment Policies Surveys regularly show that host housing allowances are the most frequent exception request that global mobility managers have to deal with. Our advice to clients is to institute a very clear approval process for dealing with exceptions.  Experience from clients is also that the higher the level of management approval required, the less the number of requests to be allowed to rent the Taj Mahal!


Roger Herod, SPHR, is a Principal with Mercer, based in Chicago. He carries out a wide range of consulting projects for major multinational clients in the United States, Canada, and Europe, particularly focused on global compensation, benefits, and mobility issues. Roger Herod has served on the Board of Directors of SHRM’s Human Resources Certification Institute and has been extensively involved in the development of the GPHR certification program. He has spoken at a wide range of seminars and conferences. In addition to being the author of SHRM’s Global Human Resources Management Series, he is also the Editor of the International Human Resources Guide, and is the author of WorldatWork’s booklets on Compensating Globally Mobile Employees and Compensating North American Expatriates.

Roger Herod can be contacted at roger.herod@mercer.com

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Mobilizing Canadians

Posted By Stephen Cryne, March 17, 2015

A recent article written by the Canada West Foundation, (Don’t punish the West for creating jobs, Globe and Mail Mar 13) makes a great case that the changes to the temporary foreign worker program (TFWP) were made in response to concerns that foreign workers were taking jobs away from Canadians. The article rightly notes that they haven’t really helped the unemployed in provinces such as Ontario, where many more Canadians are looking for work.

A part of the problem, and one that is often overlooked in the ongoing debate about Canada’s labour market and the TFWP, is mobility of the workforce. The fact is that mobility is in decline and few Canadians are interested in relocating.

According to a report from Statistics Canada and Haver Analytics, the percentage of the Canadian population moving between provinces has been in steady decline since 1977, when 1.5 per cent of the population was mobile, to less than one per cent in 2012.

To dive deeper into the reasons for this decline the Canadian Employee Relocation Council (CERC) commissioned Ispsos Research to survey Canadians about their attitudes towards moving for employment purposes. The study of over 2,000 Canadians found that just one in ten Canadians have the greatest willingness to move for employment with all expenses paid and a 10 per cent raise in pay.  

Survey respondents had the opportunity to consider scenarios ranging from employment to another city within their home province, and a city in another province. In perspective, 46% of Canadians would consider some form of relocation with a remaining 54% not interested at all. About one third of Canadians say they “might be persuaded to take the job if the right conditions and incentives were in place.”

In addition to a 10 per cent pay raise, and all expenses covered by the employer, respondents had the option to select additional inducements to accept the offer to move.  The top three inducements selected were; a further 10 per cent raise in pay (48%), followed by a guarantee of return to the current role after two years (39%) and in third spot, assistance for spouse/partner to obtain employment in the new location (31%).

When asked what policies the federal government could implement to incent employees to consider relocating for employment, respondents identified assistance in housing costs, in the form of tax free housing allowances and non-taxable loans.

While there are tax allowances for families that move for work, the limits are not reflective of today’s relocation costs. The last time any changes were made to the limits on the deductions an employee can claim for income tax purposes was 1984.  The tax free allowance for an interest free loan is $25,000, which does little to help in today’s expensive housing market.

The OECD in a report published in July 2013, recommends that “Canada should also reduce barriers to geographical and occupational mobility” as a way of easing rates of unemployment and improving the economy.

If Canada is going to make any progress in resolving regional labour shortages and skills gaps, a serious discussion needs to take place that considers all of the barriers to mobility, such as professional and skilled licensing, employment insurance programs and improved tax incentives for families that want to move to where the jobs are.  

Tags:  Temporary Foreign Workers 

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New immigration rules threaten Canada’s competitiveness

Posted By Stephen Cryne, February 25, 2015

Immigration is vitally important to every nation looking to improve its competitive standing in today’s global economy.  The challenge is making sure the right programs are in place to attract the brightest and the best.

 

Yet in Canada, the overhaul of the Temporary Foreign Worker Program in 2014, coupled with the significant restrictions of the new Express Entry system are creating havoc and uncertainty for thousands of highly skilled workers and executives employed by some of Canada’s top employers seeking permanent residency.

 

While the federal government is promoting Canada to the world, aggressively negotiating free trade agreements, which include contemporary rules to facilitate greater mobility of workers, at the same time its invoking immigration reforms that make it ever more difficult for highly skilled workers admitted under these programs to remain in Canada

 

The Express Entry system is intended to provide expedited permanent residency to highly skilled workers. While we applaud the general direction, there are significant concerns emerging as program details become clearer.

 

To qualify under the new scheme applicants are awarded up to 1,200 points. No candidates with less than 800 points have been selected in the initial selection draws.  Of the total points available, 600 points are awarded for a qualifying job offer.

 

One key concern is that before an employer can provide an applicant with a qualifying job offer, a positive Labour Market Impact Assessment (LMIA) must be secured, which requires the employer to post the position (for which they have already hired a foreign national under one of Canada’s free trade agreements) on the government’s job board and prove no Canadians are available to perform the work.

 

In many cases these individuals have held the positions for several years, and so there are no negative consequences to the domestic labour market.  The same goes for foreign graduate students looking to make a permanent life in Canada. These are the very people that create employment opportunities for Canadians.

 

In today’s competitive business climate it is highly unlikely that companies want to re-post jobs and send any signals to investors or competitors that there may be upheaval in their leadership ranks. 

 

We are fearful these new requirements may lead some multinational companies to re-evaluate the viability of Canadian operations leading to potential job losses as key positions are moved outside of Canada.  

 

The new system is also doing a disservice to the thousands of international students that graduate from Canadian universities and would like to make Canada home. In the absence of a provincial nomination or qualifying job offer there is no bridge to permanent residency for these individuals. In the case of one of our member firms in the IT industry the new rules mean that over 100 international graduate and post graduate students who were LMIA exempt, will now have to leave Canada as their work permits expire.

 

What needs to be done?

The Temporary Foreign Worker Program must be revised to provide a separate stream that is not wrapped in red tape to expeditiously evaluate and process employer applications for high skill foreign workers.  

 

High skilled workers with valid work permits who have been working in Canada for over a year, should be deemed to have a qualifying job offer for Express Entry, without the employer having to re-post the job.

 

International students with Canadian degrees in science, engineering, management studies etc. should be given a clear and rapid path to permanent residency. Work permits for students on post-graduate work should be extended to allow them to qualify under Express entry.

 

For decades Canada has been fearful of the Brain Drain Syndrome – home grown talent moving abroad in search of better opportunity.  Today, we now have companies successfully attracting or moving high skilled talent to this country.  We should be grateful when those individuals choose to make a permanent contribution to our economic success and therefore seriously question the merits of any new application processing system that puts up roadblocks and impedes our global competitiveness.

Tags:  express entry  immigration  Labour Market Impact Assessment 

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