CANADA ECONOMICS

Innovation, Science and Economic Development Canada. April 27, 2017. Statement on the petition by Boeing Aerospace Corporation

Ottawa, ON — The Government of Canada today made the following statement regarding the filing of a petition by Boeing Aerospace Corporation with the United States Department of Commerce, alleging the dumping of Bombardier aircraft in the United States market:

“The Government of Canada objects to the allegations made by Boeing. We are confident that our programs are consistent with Canada’s international obligations.           

“The aerospace industries of Canada and the United States are highly integrated and companies on both sides of the border benefit from this close partnership. For example, many C Series suppliers are based in the United States and it is projected that more than 50 percent of the components for the C Series, including the engine, will be supplied by American firms directly contributing to high quality jobs in that country. The C Series is a great example of how the North American industrial base can develop and produce a globally competitive product with industry-leading clean technologies.

Bombardier also has a significant presence in the U.S. across its aerospace and transportation divisions, directly employing more than 7,000 workers. In addition, the company works with more than 2,000 suppliers headquartered in states across the country thereby generating thousands of well-paid, high-tech American jobs.

“The Government of Canada will mount a vigorous defence against these allegations and stand up for aerospace jobs on both sides of the border.”

Hon. Navdeep Bains

Contact:

Karl W. Sasseville
Press Secretary

Office of the Minister of Innovation, Science and Economic Development

BLOOMGERG. 2017 M04 28. Boeing Accuses Bombardier of Jet-Dumping in New U.S.-Canada Spat
by Andrew Mayeda  and Julie Johnsson

• Aerospace giant asks for duties against upstart C Series
• Allegations add to tensions on lumber, dairy under Trump

Boeing Co. accused Bombardier Inc. of selling C Series passenger jets in the U.S. at “absurdly low” prices, adding a new salvo to an increasingly tense trade relationship between the U.S. and Canada.

The U.S. planemaker is asking the International Trade Commission to find that it has suffered injury to its business at the hands of Bombardier and to recommend that the Commerce Department impose duties on the Montreal-based jet builder. Bombardier fell in Toronto trading.

“Propelled by massive, supply-creating and illegal government subsidies, Bombardier Inc. has embarked on an aggressive campaign to dump its C Series aircraft in the United States,” Boeing said Thursday in its ITC complaint.

The allegations open a new front in trade tensions between the U.S. and Canada, which have intensified since President Donald Trump took office vowing to renegotiate the North American Free Trade Agreement and put “America First.” The U.S. recently imposed duties on Canadian lumber, reigniting a longstanding dispute, and Trump has complained about Canadian protections for dairy farmers.

Bombardier said it was is “closely reviewing” filing. In a statement, the company said it “structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate.”

The company’s widely traded Class B stock tumbled 5.4 percent to C$2.11 at 9:59 a.m. in Toronto after dropping as much as 6.7 percent for the biggest intraday decline in two weeks. Boeing was little changed at $183.43.

Delta Sale

Boeing said a 2016 sale of Bombardier jets to Delta Air Lines Inc. set a “new, low price ceiling” that’s depressing its U.S. jetliner prices. The Atlanta-based carrier agreed to purchase the cutting-edge Bombardier jets for $19.6 million apiece, less than the $33.2 million cost of manufacturing the airplanes, Boeing said.

The Chicago-based company urged the Trump administration to act before deliveries of the Canadian jet begin next year to Delta. JetBlue Airways Corp. is among the potential U.S. customers of the jet, Boeing said.

The emerging tussle echoes longstanding U.S.-Europe disputes stemming from the rivalry between Boeing and Airbus SE.

“Evidently taking a page out of the Airbus strategy book, Bombardier has blatantly and intentionally demonstrated its goal of muscling its way into the U.S. aviation market by offering its heavily subsidized planes at cut-rate pricing,” the U.S. company said.

The C Series jets come in two configurations. A 100-seater lists for $76.5 million while a 150-seat variant goes for $85.7 million. Discounts from catalog prices are customary in the industry.

‘Vigorous Defense’

“The government of Canada will mount a vigorous defense against these allegations and stand up for aerospace jobs on both sides of the border,” the office of Canadian Innovation Minister Navdeep Bains said Thursday in a statement.

The ministry also said the North American aerospace industry is highly integrated, with companies on both sides of the border benefiting from the C Series program. More than 50 percent of the jet’s components come from the U.S., Bains’s office said.

The Commerce Department gives all petitions a thorough review and will do so in this case, said spokesman James Rockas. Further comment would be premature, he said.

The Canadian government earlier this year pledged C$372.5 million ($273 million) to Bombardier to finance two jet programs including the C Series. Last year, Quebec’s provincial government invested $1 billion in the jetliner.

Two-Way Benefits

“Our government will continue to defend with firmness and strength all of Quebec’s aerospace industry, including the commercial partnership we concluded with Bombardier,” Quebec Economy Minister Dominique Anglade said in a statement. “The U.S. and Quebec share a trade relationship that benefits workers on both sides of the border.”


Brazil, home to Embraer SA, has also complained about government aid to Bombardier. In February, the Brazilian government formally sought “consultations” with Canada in front of the World Trade Organization with the blessing of Embraer, part of a simmering battle that predated the Ottawa government’s aid package to Bombardier.

REUTERS. Apr 28, 2017. TSX ekes out gain as energy stocks gain; Bombardier falls

TORONTO (Reuters) - Canada's main stock index edged higher in early trade on Friday, as energy stocks broadly gained with higher oil prices and Bombardier Inc (BBDb.TO: Quote) shares weighed after Boeing asked the U.S. government to investigate pricing of the company's new jet.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 22.65 points, or 0.15 percent, at 15,529.12 shortly after the open. It is on track for a 0.5 percent fall on the week.


(Reporting by Alastair Sharp; Editing by Chizu Nomiyama)

REUTERS. Apr 28, 2017. Bombardier shares slide after Boeing seeks U.S. anti-dumping probe

TORONTO (Reuters) - Bombardier (BBDb.TO: Quote) shares fell as much as 5.45 percent on Friday after Boeing Co (BA.N: Quote) sought an anti-dumping probe against the company, adding to growing trade tensions between the United States and Canada.

Boeing on Thursday asked the U.S. Commerce Department to investigate alleged subsidies and unfair pricing for Canadian planemaker Bombardier's new CSeries airplane. The petition comes days after the Commerce Department imposed duties averaging 20 percent on imports of Canadian softwood lumber.

Bombardier's shares were last down 3.2 percent at C$2.13.

(Reporting by Fergal Smith; Editing by Bernadette Baum)

THE GLOBE & MAIL. Apr. 28, 2017. Bombardier rejects Boeing claim C Series was dumped into the U.S.
ROSS MAROWITS
MONTREAL — The Canadian Press

Bombardier and the federal government have rejected Boeing’s claim in a complaint filed with the U.S. government that its Canadian rival has dumped its new C Series commercial jet into the United States at below cost.

“Bombardier structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate, including those issues raised by Boeing,” the Montreal-based aircraft manufacturer said in an e-mailed statement.

The world’s third-largest airplane maker said it spends about $3-billion (U.S.) annually with U.S. suppliers and employs about 7,000 people in dozens of facilities in both rail and aerospace across 17 states.

The Seattle-based competitor said Thursday that it petitioned the U.S. Department of Commerce and the U.S. International Trade Commission for investigations into subsidies and pricing of the C Series.

It is also seeking an order to be issued against the sale of the plane in the important American market.

Economic Development Minister Navdeep Bains said the government objects to the allegations and vowed to mount “a vigorous defence.”

“We are confident that our programs are consistent with Canada’s international obligations,” he said in a statement.

Boeing said it asking the Trump administration to act “to end Bombardier’s illegal and unfair business practices before it is too late to prevent significant harm to America’s aerospace industry and thousands of good-paying aerospace jobs.”

The aerospace giant said the threat against its suppliers will only grow as Bombardier increases the annual production rate of the C Series to between 90 and 120 airplanes by 2020.

It said more than $3-billion in government subsidies so far have allowed Bombardier to engage in “predatory pricing” for an aircraft that competes directly against its 737-700 and 737 MAX 7 airplanes.

Boeing claimed Bombardier has sold C Series planes that cost $33-million to produce for less than $20-million each and at prices below what it charged in Canada.

“It’s selling the aircraft in the U.S. at prices that are millions lower than those that they’re charging in Canada, which is the very definition of dumping,” Boeing spokesman Daniel Curran said in an interview.

Boeing joins Brazil, which filed a similar complaint with the World Trade Organization at the urging of rival manufacturer Embraer.

Delta Air Lines will become the first U.S. C Series carrier after placing a firm order a year ago for 75 CS100 aircraft valued at $5.6-billion. It also has options for 50 more planes and can covert some of the aircraft to larger CS300s.

Air Canada followed by ordering 45 CS300s for $3.8-billion at list prices, plus options for 30 more planes.

Airlines typically pay much less than list prices and early buyers of new planes usually get low prices.

The latest challenge against Bombardier’s largest aircraft came just days after the U.S. imposed preliminary duties of up to 24 per cent on softwood lumber imported from Canada.


With files from Peter Cameron in Toronto

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StatCan. 2017-04-28. Gross domestic product by industry, February 2017


Real GDP by industry
February 2017
0.0% increase
(monthly change)
Source(s): CANSIM table 379-0031.

Gross domestic product was unchanged in February following three months of growth. Gains in service-producing industries were offset by declines in goods-producing industries.

Chart 1   Chart 1: Real gross domestic product is unchanged in February
Real gross domestic product is unchanged in February



Service-producing industries were up 0.2% in February following a 0.5% gain in January, the highest monthly growth rate since January 2013. Goods-producing industries were down for the first time since October, declining 0.3% in February.

The real estate and rental and leasing, finance and insurance sectors both grow
The real estate and rental and leasing sector grew 0.5% in February, led by a 5.3% gain in output of real estate agents and brokers, mainly as a result of notable gains in activity in and around the Greater Toronto Area.

The finance and insurance sector was up for the fourth month in a row, rising 0.7% in February. Depository credit intermediation and monetary authorities were up 0.5%. Financial investment services, funds and other financial vehicles increased 1.4% from higher mutual fund activity related in part to the March 1 deadline for Registered Retirement Savings Plan contributions for the 2016 tax year. Insurance carriers and related activities advanced 0.7%.

Increases in both the real estate and rental and leasing, and finance and insurance sectors contributed to a 2.9% rise in the output of legal services, which was the main contributor to the 0.5% increase in professional, scientific and technical services.

Construction continues to grow
Construction increased for the fourth month in a row, rising 0.5% in February. Engineering and other construction activities increased 0.9% and repair construction grew 0.8%. Residential construction was up 0.3% due in part to more double and row housing construction. Non-residential construction was down 0.5% as industrial, public and commercial construction declined.

The manufacturing sector declines
The manufacturing sector declined 0.6% in February after growing in seven of the previous eight months. The majority of subsectors declined across both durable and non-durable manufacturing.

Durable manufacturing contracted 0.6%, led by lower wood product (-4.5%), transportation equipment (-1.6%) and miscellaneous (-5.0%) manufacturing. In contrast, fabricated metal product (+5.7%) and primary metal (+1.0%) manufacturing increased.

Non-durable manufacturing fell 0.7%, led by decreases in plastic and rubber (-4.3%), chemical (-1.5%) and paper (-1.4%) products. Beverage and tobacco (+3.2%) and food (+0.6%) manufacturing increased.

Chart 2   Chart 2: Manufacturing output declines in February
Manufacturing output declines in February



Mining, quarrying, and oil and gas extraction declines
Mining, quarrying, and oil and gas extraction declined 0.2% in February after growing 2.2% the previous month.

Oil and gas extraction was unchanged in February as lower conventional oil and gas extraction was offset by a gain in non-conventional oil extraction.

Mining and quarrying excluding oil and gas extraction decreased 3.6% in February after four consecutive monthly gains. Metal ore mining declined 2.1%, led by lower activity in copper, nickel, lead and zinc extraction. Non-metallic mineral (-5.6%) and coal (-6.6%) mining also declined. The volume of exports of metal ores and non-metallic minerals was down in February.

Support activities for mining, oil and gas expanded 4.8% in February, continuing a growth sequence that began in the third quarter of 2016 following a slump that began in early 2015.

Wholesale trade declines
Following a 2.1% gain in January, wholesale trade declined 0.4% in February. Seven of nine subsectors recorded losses, while farm product and machinery, equipment and supplies wholesalers increased.

Retail trade is unchanged
The retail sector was unchanged in February after expanding 1.5% in January. Overall, seven of twelve subsectors increased, led by health and personal care stores, clothing and clothing accessories stores and general merchandise stores. Motor vehicle and parts dealers, building material and garden equipment and supplies dealers, and food and beverage stores also recorded declines.

Transportation and warehousing declines
Transportation and warehousing was down 0.3% in February. Rail transportation declined 2.3% as movement of coal, grain and fertilizer products (such as canola and potash), forest products and intermodal freight were all down.

Other industries
Agriculture, forestry, fishing and hunting was down for the fourth time in five months, declining 1.2% in February.

Accommodation and food services were unchanged in February. The increase in food services and drinking places was offset by the drop in accommodation services, which declined for the fifth time in six months.

The utilities sector contracted 0.2% in February as the output of electric power generation, transmission and distribution and natural gas distribution declined.

The public sector (education, health care and public administration) was essentially unchanged.

Chart 3   Chart 3: Main industrial sectors' contribution to the percent change in gross domestic product in February
Main industrial sectors' contribution to the percent change in gross domestic product in February




FULL DOCUMENT:  http://www.statcan.gc.ca/daily-quotidien/170428/dq170428a-eng.pdf

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ANALYSIS

SCOTIABANK. ECONOMICS. April 28, 2017. Scotia Flash: Weak Q1 US GDP Not Driven By Seasonal Distortions

FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/scotiaflash20170428A.pdf

SCOTIABANK. ECONOMICS. April 28, 2017. Scotia Flash: Canadian GDP Soft In A Solid Quarter

FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/scotiaflash20170428.pdf

SCOTIABANK. ECONOMICS. April 27, 2017. FOMC Preview — A Great Balance Sheet Experiment

FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/cmsr170427.pdf

SCOTIABANK. ECONOMICS. April 27, 2017. The Global Week Ahead

FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/globalweekahead170427.pdf

TD BANK. ECONOMICS. Analysis of economic performance and the implications for investors. April 27, 2017. Canada: CFIB Small Business Barometer

FULL DOCUMENT: https://www.td.com/document/PDF/economics/comment/CFIB_Apr2017.pdf

RBC. ECONOMIC RESEARCH. April 28, 2017. US GDP growth dipped below 1% in Q1 but don’t expect the slowdown to last

FULL DOCUMENT: http://www.rbc.com/economics/daily-economic-update/US%20Q1%20GDP_advance2017.pdf

RBC. ECONOMIC RESEARCH. April 28, 2017. Canadian GDP unchanged in February following a 0.6% jump in January

FULL DOCUMENT: http://www.rbc.com/economics/daily-economic-update/CA%20GDP_Feb2017.pdf

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LGCJ.: