Canada, Y2K and international trade : LUSENET : TimeBomb 2000 (Y2000) : One Thread

I found this article at Sanger's Review of Y2K News Reports. We all know that international trade could be disrupted by Y2K. There was an additional complication mentioned in this article I had not read about before...letters of credit.


Another wrinkle in the import-export issue is the reliability of international financial systems.

Many importers and exporters deal with letters of credit for their payments. Transactions are performed electronically between banks in Canada and those overseas on behalf of the buyer and seller, who provide documentation to prove theyve sent and received the goods.

Larry Hahn, director of regulatory affairs for Livingstone International, the biggest customs brokerage in Canada, said the big fear now is that foreign banking systems arent stable enough to ensure the letters of credit will move smoothly.

He said hes received indications from the banking sector that it might not be willing to handle letters of credit with certain countries as the new millennium nears.

"That has a major impact on people selling their goods, and being assured that theyre going to be compensated for that sale," said Hahn.

"Imports coming into Canada as well will be effected."


-- Linkmeister (, March 22, 1999



Good catch. Very worrisome. Letters of credit are critical to trade!

Thanks for the post. Best wishes,

-- Watchful (, March 22, 1999.

Thanks, Linkmeister.

The article also contained this paragraph:

"Reports have been coming out of Japan that its had problems with its shipping industry already. One ships engine completely stopped on Jan. 1, and Hong Kongs shipping system went off-line in February."

Hong Kong's *shipping system* went off-line?

-- Rachel Gibson (, March 23, 1999.

Industry Canada Testimony Alliance of Manufacturers and Exporters STANDING COMMITTEE ON INDUSTRY COMITI PERMANENT DE L'INDUSTRIE EVIDENCE [Recorded by Electronic Apparatus] Thursday, November 26, 1998 Mr. Jayson Myers (Senior Vice-President and Chief Economist, Alliance of Manufacturers and Exporters Canada): Snip One point I'd like to make is that information technology today pervades almost every aspect of manufacturing and exporting businesses. We're looking not only at information systems, computer systems used for the communication and storage of information, but also at embedded systems where information technologies are becoming more and more important in design systems in communicating between computer systems and machinery on the shop floor and automated equipment being used in manufacturing and processing establishments. Snip The problem of Y2K really touches every aspect of manufacturing business, and this problem is not simply contained within Canada itself. Manufacturers today export 65% of their total production outside of the country, with 55% of the total production being exported into or through the United States. They're also purchasing 60% of all the goods and services they use in production from sources outside of Canada, again largely from the United States, although that's not always the case. Imports are also coming in from Europe, Asia and Latin America. So from our point of view, we will not be able to manage this problem if we simply look at it from a Canadian perspective. It is an international problem, and that certainly presents a lot of challenges to the manufacturing and exporting community in Canada. Snip Only 36% of companies surveyed said they had plans in place to upgrade or replace embedded systems on the shop floor. Only 48% of respondents said they had completed an assessment of supplier or customer capabilities, and only 34% had completed a risk management plan to deal with potential problems following the change in the millennium. A fewer number had any plan in place to deal with potential liabilities arising from a Y2K problem. Snip First, there's still a wide range and a considerable amount of disinterest in this problem. The end of the millennium is coming. I don't know how many days are left, but there is still quite a bit of disinterest that this is going to be a serious problem. That's certainly something that provides a communication challenge not only to our association, but also to government. Snip Mr. Eughne Bellemare: It's in huge printing shops. We have printing equipment that's made in Germany, France, and England, and we have machinery that creates plates and stuff so that we in turn can produce. They sometimes have robotics, and robotics have embedded chips. How pervasive is this in our manufacturers in Canada? Mr. Jayson Myers: Extremely. Mr. Eughne Bellemare: How do we correct that? How is it being corrected? Mr. Jayson Myers: That gets to some of the difficulties. I think the larger companies are taking measuresnot all of them, of course, but the degree of automation pervades almost every aspect of manufacturing now.  1050 Snip Ms. Francine Lalonde: For that, they would need to know that all the embedded chips in their system might fail. How can they be convinced? This spring, I sent a letter to all companies in my riding. I finished by saying that being ready would be the best way that they could become market leaders. They told me that they were pleased that I had done that, and that they were not alarmed. However, when it comes to embedded systems, the managers may not be fully aware of the situation. How can we make this credible? [English] Mr. Jayson Myers: There again, I think it may be in dealing with many of these matters and how technology is being integrated.  1055 We've been focusing on the problem of the embedded systems on the shop floor, on the use of computer technology and the growing importance of technology. I think the other problem here is that we also have to recognize that companies are extremely dependent on supply chains, on transportation systems, on communications systems, on energy systems, and everything else to make sure they remain in business. All of that has to be there. Again, I think to focus on the infrastructure is extremely important. End Post......

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-- Brian (, March 23, 1999.

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