Jun. 30, 2008 – New agreement may improve communication with China

By Neil Pascale
Editor
A Canadian industry group has taken what is believed to be the first recent step in North America to improve the quality of product coming in from China.
The Canadian trade association that represents industry manufacturers, distributors and retail outlets has established a memorandum of understanding with a Chinese group to ensure Chinese manufacturers and distributors understand and comply with Canadian standards for ATVs and motorcycles.
While most of the agreement centers around improving communication and does not contain any new enforcement plans or funding, it does have what one official calls a “big hammer.” The agreement was signed in May by the Motorcycle & Moped Industry Council, the Canadian trade association, and the Chinese Chamber of Commerce for Motorcycles, a relatively new group that has export licensing powers in China.
“That group has a similar desire to ensure good quality product because they don’t want the Chinese brand of motorcycling and ATV product to get a bad reputation,” said Bob Ramsay, president of the Motorcycle & Moped Industry Council. “That’s where working with this group seems to be the best way of doing it because we have a common interest on one level, and they have the authority to improve or not improve exports. That’s the big hammer that isn’t immediately evident when you read the memorandum of understanding.”
The Motorcycle Industry Council recently became aware of the agreement, officials say. They have not been approached by the Chinese Chamber of Commerce nor discussed the memorandum with its board of directors.
The new agreement reached in Canada relies heavily on the efforts of the relatively new Chinese association, the Chinese Chamber of Commerce for Motorcycles.
“Their mandate through their administrative commerce is to expand exports, but to do it in a way that the product meets international standards,” Ramsay said. “They’ve been really up front with us in saying some of the product that was received in the United States, Canada and around the world was not very good and did not meet the standards. So they are trying to clamp down on this.”
The Motorcycle & Moped Industry Council will try to help that occur in China by providing the technical information that Chinese manufacturers need to meet Canadian standards, which are similar to those found in the United States.
“Our government doesn’t have all the enforcement capabilities that would probably be necessary because there are so many importers that can buy a truckload here, a shipload there,” Ramsay said. “So we’re working directly with the manufacturers’ organization to ensure the manufacturers are the ones that understand the standards, make sure the product meets the standards and make sure nothing leaves China until it does meet those standards.”
Of course, Ramsay understands that even the new agreement cannot ensure all the standards are consistently met.
“Where there is some money to be made,” he said, “there will be importers that are trying to find a way to beat the system.”
That is especially a concern with what is perceived to be a potential third-party loophole, where the Chinese product is shipped to a country that does not have strict standards and then that product is shipped to North America through an independent distributor.
“We’re trying to work with (the Chinese chamber) to ensure if this starts happening then we can go back to them and say, ‘OK, this company is not playing by the rules that we’re trying to enforce,’ ” Ramsay said. “We do think we will have clout, but there will be a few challenges along the way.”
To cope with those challenges, the Canadian council has set up meetings with government enforcement groups, so they can more clearly identify importers who are not meeting vehicle safety standards. Those importers’ shipments can then be examined more closely than other shipments.
Even without containing enforcement capabilities, the new agreement has already benefited Canada, Ramsay says. Through its recent communications with the Chinese chamber, the Canadian trade association now knows there is slightly more than 30 Chinese companies exporting ATVs and motorcycles to North America.
“Now we have a clear picture of who they are, and now we can start to work to see what are the standards each of these companies are meeting and working with (the Chinese chamber) to ensure one, they’re aware of the Canadian standards and two, any product that is being shipped meets those standards before it leaves China.”
Ramsay acknowledges the latter effort will be an especially challenging one.
“At the one level, I think everybody sees this as a very positive step, a very constructive step,” Ramsay said of the new agreement. “But at the second level, they want to see results, and I understand that 100 percent. It’s one thing to have a nice, written agreement and nice signatures on that agreement, but it’s now up to us to show in good faith that we can work together and resolve the issues. It’s our responsibility to ensure we implement it and do it well.”